ARCHIVÉ - Transcription, Audience du 6 mai 2013

Volume 1, 6 mai 2013

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

SUJET:

Demande présentée par Astral Media inc., dans le but d’obtenir l’autorisation de modifier son contrôle effectif d’Astral et celui de ses filiales de radiodiffusion autorisées, qui serait exercé par BCE inc.

TENUE À:

Salle Capitale

Hôtel Gouverneur Place Dupuis

1415, rue Saint-Hubert

Montréal (Québec)

6 mai 2013

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

Demande présentée par Astral Media inc., dans le but d’obtenir l’autorisation de modifier son contrôle effectif d’Astral et celui de ses filiales de radiodiffusion autorisées, qui serait exercé par BCE inc.

DEVANT:

AUSSI PRÉSENTS:

TENUE À:

Salle Capitale

Hôtel Gouverneur Place Dupuis

1415, rue Saint-Hubert

Montréal (Québec)

6 mai 2013

- iv -

TABLE DES MATIÈRES

PAGE / PARA

PHASE I

PRÉSENTATION PAR:

- v -

ENGAGEMENTS

PAGE / PARA

Montreal (Québec)

--- L'audience débute le lundi 6 mai 2013 à 0901

1   LE PRÉSIDENT : À l'ordre, s'il vous plaît.

2   Alors, bienvenue. Welcome to our cozy hall of mirrors. It reminds me d'une production que j'avais vue d'une pièce de Marivaux au Théâtre du Nouveau Monde à la fin des années 90, une production de « La Double Inconstance », puis on avait joué avec les miroirs comme ça aussi.

3   Donc, toujours est-il, bonjour, mesdames et messieurs et bienvenue à cette audience publique.

4   Au cours de cette audience, nous examinerons la demande d'Astral Media Inc. dans le but d'obtenir l'autorisation pour transférer le contrôle de ses services de radio et de télévision à BCE inc.

5   La transaction proposée consiste en l'achat, par BCE, de l'ensemble des actions émises d'Astral en vertu d'une entente conclue entre BCE et Astral en date du 16 mars 2012 et modifié le 19 novembre 2012. Cette entente serait notamment sujette au dessaisissement de certains des services de télévision et de radio d'Astral.

6   Il s'agit sans doute d'une transaction importante, d'une portée et d'une ampleur telle qu'elle pourrait potentiellement redéfinir le système de radiodiffusion canadien et avoir une incidence sur le système des communications dans son ensemble.

7   As for all applications to change effective control, the Commission will base its decision on the evidence presented within this proceeding. We will first and foremost seek to determine whether this transaction is in the public interest. We will do so against the backdrop of the mandate entrusted to us by the Canadian Parliament under the Broadcasting Act.

8   We will determine if this transaction would benefit Canadians, as well as the Canadian broadcasting system. We also want to be convinced that the application filed by Astral Media represents the best possible proposal under the circumstances. For all of these questions, the burden of proof rests squarely with the applicant.

9   Je n'ai pas besoin de vous rappeler que le CRTC a examiné une demande similaire l'an dernier. Je veux par contre clairement signifier à tous les participants que la présente instance est distincte et que la demande sera évaluée sur la base de ses propres mérites.

10   We received over 19,000 comments in connection with this proceeding, which we read with interest and added to the public record. We would like to thank everyone who shared their views on this application.

11   The panel will address the following issues with the parties:

12   - first, ownership concentration and questions related to vertical integration in the English- and French-language television sectors, as well as mechanisms to reduce the impact of concentration and its negative effects;

13   - second, various Commission policies, including diversity of voices and the policy on common ownership in radio and television;

14   - thirdly, the value of the transaction; and

15   - finally, the proposed tangible benefits package as well as the intangible benefits.

16   Among the numerous issues we will be examining during this hearing is the common ownership policy for the radio sector, which limits each owner to three English-language radio stations in the Montreal market. The applicants are seeking an exemption to continue operating the English-language commercial AM radio station CKGM Montreal.

17   Je vous présente les membres du comité d'audition :

18   - premièrement, madame Elizabeth Duncan, conseillère régionale de l'Atlantique et Nunavut;

19   - madame Suzanne Lamarre, conseillère régionale du Québec;

20   - monsieur Peter Menzies, conseiller de l'Alberta et des Territoires du Nord-Ouest;

21   - monsieur Tom Pentefountas, vice-président de la radiodiffusion; et

22   - moi-même, Jean-Pierre Blais, président du CRTC, et, évidemment, je présiderai l'audience.

23   L'équipe du Conseil qui nous assiste comprend :

24   - madame Rachel Marleau, coordonnatrice de l'audience et gestionnaire de l'analyse corporative réglementaire;

25   - ainsi que maître Romy Ochmann St-Jean et maître Anthony McIntyre, conseillers juridiques; et

26   - madame Jade Roy, secrétaire de l'audience et superviseure des audiences publiques.

27   J'invite maintenant la secrétaire, madame Roy, à vous expliquer le déroulement de l'audience.

28   Madame la Secrétaire.

29   LA SECRÉTAIRE : Merci, Monsieur le Président, et bonjour à tous.

30   Avant de débuter, j'aimerais souligner quelques points d'ordre pratique qui contribueront au bon déroulement de cette audience publique.

31   Tout d'abord, lorsque vous êtes dans la salle d'audience, nous vous demandons de bien vouloir éteindre vos téléphones car ils peuvent causer de l'interférence avec l'équipement utilisé par nos interprètes et sténographes.

32   The hearing is expected to last five days. We will begin each morning at 9:00 a.m. We will advise you of any scheduling changes as they occur. Participants are reminded that they must be ready to present on the day scheduled or, if necessary, the day before or after depending on the progress of the hearing.

33   You can examine all documents on the public record of this proceeding in the Examination Room, which is located on this floor in Room Rimouski.

34   Le service d'interprétation simultanée est disponible durant l'audience. L'interprétation en français se trouve au canal 2. Vous pouvez vous procurer les récepteurs d'interprétation auprès des techniciens à l'arrière de la salle. Nous désirons rappeler aux participants d'allouer un délai raisonnable pour la traduction lors de leur présentation à vive voix, tout en respectant le temps alloué pour leur présentation.

35   Please note that simultaneous interpretation is available during the hearing; the English interpretation is on channel 1. You can obtain an interpretation receiver from the technician in the back of the room. We would like to remind participants that during their oral presentation they should provide for a reasonable delay for the interpretation, while respecting their allocated presentation time.

36   Veuillez noter que les documents seront disponibles sur Twitter sur le compte du Conseil à arobase CRTCaudiences au pluriel, en utilisant le mot-clic diaise CRTC.

37   Just a reminder that pursuant to section 41 of the Rules of Practice and Procedures, you must not submit evidence at the hearing unless it supports statements already on the public record. If you wish to introduce new evidence as an exception to this rule, you must ask permission of the Panel of the hearing before you do so.

38   Please note that if parties undertake to file information with the Commission in response to questioning by the Panel, these undertakings will be confirmed on the record through the transcript of the hearing. If necessary, parties may speak with Commission legal counsel at a break following their presentation to confirm the undertakings.

39   Finally, please note that Public Works and Government Services Canada will be conducting a major power shutdown throughout various departments located in our complex. In light of this, our CRTC website, My CRTC account, GCKey, Partner Log In and emails will not be accessible from this Friday, May 10th, at approximately 4:00 p.m. until Sunday, May 12th.

40   And now, Mr. Chairman, we will begin Phase I of this hearing in which we will hear the Applicant's presentation.

41   Il s'agit d'une demande présentée par Astral Media inc. dans le but d'obtenir l'autorisation de modifier son contrôle effectif d'Astral et celui de ses filiales de radiodiffusion autorisées, qui serait exercé par BCE inc. (BCE). La transaction proposée serait conclue via l'acquisition de toutes les actions émises d'Astral par BCE et sa nouvelle filiale à part entière devant être constituée (BCE Filiale).

42   Please introduce yourself and your colleagues and you will then have 25 minutes to make your presentation. Thank you.

PRÉSENTATION

43   M. BIBIC : Merci, Madame la Secrétaire.

44   Bonjour, conseillers et Monsieur le Président. Je suis Mirko Bibic, vice-président exécutif et chef des affaires juridiques et réglementaires de BCE et de Bell Canada, et, au nom d'Astral et de BCE, c'est avec grand plaisir qu'on vous présente notre demande ce matin et on apprécie le temps que vous nous accordiez si tôt après les audiences que vous venez juste de terminer. Donc, merci et merci au staff.

45   Je vais tout bientôt vous présenter notre panel de témoins, et ensuite, je cèderai la parole à monsieur Greenberg, mais avant de le faire, j'ai deux petites annonces qui portent sur la preuve qu'on a déposée au dossier la semaine dernière. Nous avions déposé une copie de notre réplique en français, et mercredi dernier, nous avons aussi déposé une lettre qui porte sur notre processus de vente d'actifs, une version confidentielle et une version publique.

46   Et, avec ça, permettez-moi de vous présenter les membres de notre panel qui feront notre déclaration d'ouverture ce matin :

47   - premièrement, Ian Greenberg, président et chef de la direction d'Astral Media, à ma gauche;

48   - à ma droite, George Cope, président et chef de la direction de BCE et de Bell;

49   - à côté de George, Kevin Crull, président de Bell Média;

50   - à la droite de Kevin, Corrie Coe, première vice-présidente en charge de la production indépendante;

51   - ensuite, Judith Brosseau, à ma gauche, à côté de Jacques Parisien, vice-présidente principale, programmation de trois chaînes spécialisées d'Astral Media; et

52   - Jacques Parisien, vice-président exécutif et chef de l'exploitation d'Astral Media.

53   Les autres membres de notre panel sont :

54   - à la gauche de Judith, Chris Gordon, en charge de la radio de Bell Média et des chaînes locales;

55   - nous avons aussi, derrière Chris, Charles Benoît, vice-président exécutif d'Astral Media Radio;

56   - ensuite, notre groupe réglementaire, Claude Laflamme et Nathalie Dorval d'Astral Media, et Kevin Goldstein de Bell;

57   - à côté de Kevin, John Riley, président, Astral Television Networks et Astral Télé Réseaux;

58   - à côté de John, Catherine MacLeod, vice-présidente des chaînes spécialisées de Bell Média;

59   - ensuite, Wendy Freeman, President of CTV News;

60   - à côté de Wendy, Ken Goodwin, notre évaluateur indépendant; et

61   - finalement, Nikki Moffat, vice-présidente principale, finances, Bell Média.

62   Donc, avec ça, je cède la parole à monsieur Greenberg.

63   M. GREENBERG : Bonjour, Monsieur le Président, Monsieur le Vice-président, conseillers et membres du personnel du CRTC. Je me sens privilégié d'être ici aujourd'hui pour présenter notre demande modifiée et améliorée.

64   Let me start by saying when you spend your entire life building a company and a decision has been made to sell, your greatest hope is for its core essentials to survive you. In this rapidly changing and challenging environment, I believe that the strength and commitment of Bell will ensure the sustainability and continued growth of Astral's properties and opportunities for our people.

65   Mr. Chairman, when my three brothers and I started what became Astral over 50 years ago, we began the business with a small private loan of $15,000 -- which was quite a bit back then -- and a willingness to work hard. We also had a pretty good eye for opportunity.

66   This eye for opportunity enabled us to reinvent Astral several times over the years and, as a result, we have enjoyed tremendous success as well as long periods of sustained growth.

67   Une croissance qui nous a permis d'apporter de nombreux avantages aux consommateurs canadiens et qui a été la source d'un travail inspirant et productif pour de nombreux créateurs et des milliers d'employés, en grande partie ici, à Montréal, où nous sommes installés depuis nos tout débuts.

68   Le secteur des médias évolue continuellement et rapidement. Cette évolution exige de l'innovation et des investissements importants pour créer et présenter le meilleur contenu possible et faire en sorte que les Canadiens puissent se divertir et s'informer de la manière qu'ils désirent. Et nous savons qu'ensemble, Astral et Bell Média auront l'ampleur nécessaire pour investir, innover, livrer concurrence, ainsi que profiter des opportunités qui se présenteront dans l'avenir et d'en faire profiter tous les Canadiens.

69   Through this transaction we can enhance our existing services, launch new services and give Canadians access to even better alternatives when they exercise choices between made-in-Canada offers and those of foreign-based, over-the-top competitors.

70   As you know, the emergence of OTT competition captivates me, and rightly so because it impacts the very nature of our business.

71   OTT competition has only intensified since we were last before you. At the start of last year, Netflix had just over 1 million Canadian subscribers; one year later, we estimate they have just under 2 million Canadian subscribers. And Netflix is just one prominent example of the kind of scale being brought to bear on Canada's industry, challenges to our business that we believe we must meet head-on by expanding our own scope and scale. That's what this transaction enables.

72   The transaction also delivers more than $174 million in tangible benefits that will flow to consumers and the creative community in Canada, those who are at the heart of made-in-Canada content, whether they are actors, independent producers, singers, camera operators, writers, artists, authors or composers, directors, production designers, musicians, or new media innovators.

73   Aujourd'hui, l'occasion à saisir pour Astral est de jumeler ses actifs et ses forces à celles d'une grande entreprise canadienne qui partage sa passion profonde pour la radio, le cinéma et la télévision d'ici, une entreprise qui partage notre engagement envers Montréal et la province de Québec, et une entreprise qui misera vraiment sur l'expertise d'Astral, sur nos ressources et sur nos talents.

74   Cette entreprise, c'est Bell.

75   Merci, et maintenant, je cède la parole à George Cope.

76   MR. COPE: Thank you, Ian.

77   Good morning everyone, Mr. Chairman, Commissioners.

78   Ian spoke about how a focus on growth opportunities and a willingness to take the business in new directions have been critical to Astral's incredible success. These are traits Astral and Bell share, and they are the primary reasons Bell made the strategic decision to invest over $6 billion in Canada's broadcasting industry over the last several years.

79   Focusing on customer is at the heart of our vision for Bell. It is at the core of everything we do, from investing in next-generation mobile and fibre networks to working to ensure that our customer service becomes second to none.

80   And it means Canadian consumers are also the focus of our investments in media. By better connecting Canadians to the information and entertainment that they care about, including investing in the development of more great Canadian radio and television content, we are ensuring a strong role for Canadians, and for Bell, in the future media landscape.

81   Our investments won't be successful if they don't produce content that captures the loyalty of viewers and listeners, and delivers the attractiveness sought by advertisers. To do that, we must reach as many Canadians as possible.

82   So we are absolutely focused on delivering our content through as many platforms and as many distributors as possible.

83   Which is why, Mr. Chairman, we are here with you again.

84   The application before you now is very different from the one we initially proposed. Mirko will elaborate on this at the conclusion of our opening statement.

85   But I do want to emphasize that we studied very carefully the Commission's analysis of that proposal and the insight it provided regarding both public interest concerns and market share and we believe the enhanced proposal is clearly in the public interest.

86   We came to the important conclusion that for us to move forward, we would divest a significant number of English and French-language television properties, to ensure our combined market share is within acceptable thresholds.

87   We also believe the millions of dollars to be paid in tangible benefits in this new proposal will deliver very real benefits to consumers, content producers and Canadian citizens, conforming to longstanding Commission policy.

88   Fundamentally, we sharpened our approach. A focus on more production and promotion of Canadian programming in both official languages; more investment in Canadian radio; more stable local television stations, which we commit to keep open; more support for Canadian talent; more competition for consumers, all of which builds on a broadcasting system that, for Canadian consumers, is already one of the most successful in the world. Creators, broadcasters, distributors and the Commission have all worked diligently for decades to make it so and this transaction ensures stability going forward.

89   At the same time, the opportunity to strengthen our presence in Quebec with this transaction remains. We will move forward in ways that intensify competition and consumer choice in Quebec and build on what Astral and Bell mean to the province as employers, innovators and investors.

90   Canadians rightly expect their media leaders to work for them, to offer a wide range of world-class content, from Canada and elsewhere, readily available on any device, in both official languages, from any provider and all at an affordable cost. In short, they expect a broadcasting system that responds to them.

91   Together, Astral and Bell Media will deliver on this expectation.

92   Thank you. I will now turn things over to Kevin Crull.

93   MR. CRULL: Thank you, George.

94   I would like to start this morning by borrowing from a recent speech that you gave, Mr. Chairman, addressing a group of Canadian independent producers. You asked:

"How do we grow Canadian production companies into businesses that can successfully compete with the best the world has to offer?"

95   Of course, there is no easy or perfect answer to this question, but having strong Canadian broadcasters who can confidently navigate an uncertain future is a great start and it's an absolutely necessary element.

96   Those broadcasters must show a deep commitment to viewers, listeners and local communities, and to developing and promoting homegrown content and artists. That's what a combined Astral and Bell Media will deliver.

97   I would like to present the following video to illustrate the vital role that our properties play in the daily lives of all Canadians, as consumers, creators and citizens. What you will see here is precisely what we are working so hard to preserve, nurture and to expand.

98   Could we roll the video please.

--- Présentation vidéo

99   MR. CRULL: As for Bell Media, Mr. Chair, we are proud of our development into a confident and committed Canadian broadcaster, but it wasn't always like this. When Bell bought CTV in 2010, we acquired a great company that, despite its success, did face significant challenges.

100   All Canadian broadcasters at that time were struggling to adapt to industry changes, and to the global economic downturn which had significantly curtailed investment in our industry. Bell, and other Canadian companies, stepped in to stabilize the situation.

101   In fact, to get CTV back on track, we invested in more Canadian content, reaching a level in 2012 that was 37 percent higher than in 2010.

102   We upgraded all of our specialty channels to high definition broadcast. We rebranded the struggling A Channels to CTV Two, increased financial support for local TV stations, and introduced Canada's first mobile TV service.

103   We also launched TSN Radio, significantly upgraded RDS, and we launched RDS2.

104   There used to be a mindset that Canadian programming could not attract big audiences or that it just didn't make business sense. "Just produce and air what you have to" used to be the mindset, but that is not how we think.

105   We know that more Canadian hits across all of our schedules is strategic, vital to our future, and is part of our responsibility. And we have demonstrated this commitment in very tangible ways.

106   For example, we give Canadian programs pride of place in our schedule. We are promoting our original Canadian shows like no one else in the country, and we are delivering quality programming, as demonstrated by the tremendous audience response.

107   We want to do with Astral exactly what we did with CTV, that is, build on a successful media business, using additional investments in content and technology to make it even better and to confidently navigate the seismic changes which are, indeed, rocking the very foundation of our industry today.

108   We are excited, also, by the prospects of leveraging Astral's longstanding presence in the province of Quebec and its exceptional relationship with the independent production community here.

109   To this end, we will keep our decision-making centre for French-language content -- both television and radio -- headquartered in Montreal, ensuring that the distinct voice and the cultural fabric of Quebec remains an integral part of our operations.

110   Astral's Jacques Parisien has accepted a very senior role with Bell Media, based in Montreal and reporting to me, with responsibility for a wide portfolio of both French and English-language radio and television content.

111   Reporting to Jacques will be a French-language content champion. This individual will lead a team of individuals, who will be responsible for sourcing original programming across all of our French-language television portfolio.

112   Those who want to make a pitch for a French-language production, to get a pilot funded, or to brainstorm an idea, will do so right here, in Montreal.

113   Across Canada we will continue putting independent producers to work for the benefit of our audiences.

114   Plus, all of Bell Media's local television stations, as well as Astral's two local TV stations in British Columbia, will remain open, with current levels of programming maintained.

115   And in radio, as Jacques will explain shortly, we will deliver clear benefits to consumers, making local, national and international news more available to listeners, and also doing even more to develop and promote Canadian musical artists.

116   Mr. Chairman, as part of your speech to independent broadcasters that I referred to earlier, you also said that you are a promotionist -- a combined Astral-Bell Media can and will play a key role in executing that vision.

117   With this in mind, I would like to now turn things over to Corrie Coe and Judith Brosseau for some additional insight into how our plan can accomplish just that.

118   MS COE: Thank you, Kevin.

119   For people who work in our industry, perhaps our toughest task is working to get the audience attention and the commercial success that so many of our homegrown shows deserve. Over the years we have made some good progress, and I am really proud to say that since CTV became Bell Media, our support for independent productions has increased significantly.

120   For example, we supported 46 projects in 2012, up from 38 in 2011. That's a lot, and because most of these are series involving the production of multiple episodes, the total number of hours derived from these original productions over the past several years is growing at a high rate.

121   Let's put some names to these.

122   Flashpoint, Saving Hope, Motive, The Listener, Engraved on a Nation, Canada's Greatest Know It All, Orphan Black -- these shows have all proven to be very popular, and we believe that the same will be true for a number of forthcoming shows, like Spun Out, Satisfaction, Played, Bitten, and The Amazing Race Canada.

123   We always strive to work with the best Canadian talent in all of the shows we commission -- like Hugh Dillon of Flashpoint, Kristen Lehman and Erica Durance, two great actors who are happy to be home and working in Canada, who play the lead roles in Motive and Saving Hope, respectively.

124   There is the phenomenal Tatiana Maslany, star of Orphan Black, and many directors and writers, as well, such as John Fawcett, David Frazee, Graeme Manson and Greg Nelson.

125   For everyone involved, Bell Media's stronger commitment to the promotion of independent productions is making a huge difference. We gave Flashpoint, a great success over five seasons, the coveted network timeslot of 10 p.m. on Thursday. For its finale, Canadians responded with a record 2.1 million viewers.

126   We launched Motive right after the Super Bowl. Again, a very important timeslot, and again Canadians responded.

127   And in each case we aided the experience using mobile platforms and social media to generate and sustain interest.

128   As a next step, we look forward to adding Astral's premium pay services to the mix. The Movie Network, for example, will enable us to do much more with respect to the production and promotion of feature films, an extremely important type of programming for Canadian viewers and creators.

129   MME BROSSEAU : Merci, Corrie.

130   D'entrée de jeu, j'aimerais souligner qu'Astral a été bâtie avec la ferme conviction que nos industries culturelles sont d'une importance cruciale.

131   Les succès d'Astral sont tributaires depuis nos débuts de nos partenariats avec les producteurs indépendants ainsi qu'avec les artistes et les artisans de notre industrie. Ce partenariat est tellement vital pour nous que nous avons été les premiers et les seuls à ce jour à signer une entente commerciale (un « Terms of Trade ») avec l'APFTQ.

132   Notre expertise est aussi liée à la connaissance intime que nous avons de nos auditoires, des consommateurs et à notre capacité à répondre à leurs besoins.

133   Nos succès en font foi et ce, dans plusieurs catégories d'émissions. À Canal D, notre chaîne de documentaires, l'émission « Un tueur si proche » compte sur un auditoire hebdomadaire de 450 000 fidèles et cela, depuis des années. À Canal Vie, « Bye Bye maison » attire 400 000 personnes chaque semaine. À VRAK TV, « KARV, l'anti.gala », une formidable vitrine pour le talent québécois, est un succès de cotes d'écoute auprès des jeunes à chaque année. Enfin, à Séries+, la nouvelle série « Mon meilleur ami » vient tout juste de remporter un grand succès, avec un auditoire de plus d'un demi-million de téléspectateurs chaque semaine.

134   Aider à découvrir et à développer le talent local et contribuer au remarquable et unique « star system » du Québec font également partie de notre ADN. Notre série « Dans une galaxie près de chez vous » a été un tremplin pour des vedettes comme Guy Jodoin et Sylvie Moreau, et a également lancé la carrière de Claude Legault comme scénariste. Et nous pourrions en citer beaucoup d'autres.

135   Mais aujourd'hui nous faisons face à un défi de taille : celui de continuer à encourager cette créativité exceptionnelle et ces talents uniques au Québec, dans un univers où les consommateurs font face à une multiplication de choix de contenus.

136   Ayant travaillé avec Bell Média à la préparation de cette audience, et voyant ce que Kevin, Corrie et leurs équipes ont fait pour développer et promouvoir davantage le contenu canadien, je suis emballée par les multiples possibilités qui pourront être offertes dans le marché francophone.

137   Cela signifie que nous pourrons continuer d'offrir aux consommateurs et aux créateurs un choix solide, concurrentiel et vraiment dynamique, en particulier au Québec.

138   M. PARISIEN : Merci, Judith.

139   J'ajouterai rapidement qu'après avoir passé près de 20 ans chez Astral, je suis très heureux de me joindre à l'équipe de direction de Bell Média et j'entends poursuivre le fantastique travail que nous avons accompli chez Astral pour développer et promouvoir le talent et la créativité incroyables qui existent ici au Québec et à travers le pays.

140   Je suis également d'avis que dans le marché en rapide évolution d'aujourd'hui, l'innovation est plus importante que jamais.

141   Elle a toujours été au coeur de nos réalisations chez Astral. Toutefois, le rythme des changements technologiques est aujourd'hui si rapide, les habitudes des consommateurs si imprévisibles et la concurrence si intense, que pour continuer de créer des contenus exceptionnels en télévision et en radio, il faut nécessairement pouvoir compter sur des moyens et sur des masses critiques... bref, de la profondeur. C'est particulièrement vrai pour nos contenus de langue française.

142   Pour nos services, nous avons fait un excellent travail grâce au talent et à la créativité remarquable qui existe au Québec. Mais, en même temps, si d'un côté nous avons innové avec des services comme TMN GO et notre radio player, nous n'avons pas encore déployé la même capacité multiplateforme pour nos services de langue française. Nous voulons utiliser de nouvelles plateformes pour mieux interagir avec nos clients. Nous voulons livrer une concurrence plus efficace à Québecor. Et Bell Média, déjà à l'avant-garde du développement de nouvelles applications en ligne et mobiles nous amènera à ce prochain niveau.

143   De plus, grâce aux divers avantages tangibles et intangibles liés à cette transaction, nous innoverons de façon à mieux connecter les consommateurs aux contenus qu'ils désirent.

144   Aussi, en radio, nous étendrons notre système innovateur de salles de nouvelles Burli qui permet aux stations de s'alimenter les unes les autres en nouvelles locales, en informations et en annonces d'événement. Cela permet d'accroître la diversité et la qualité de la couverture de l'actualité locale.

145   De plus, avec ce système, les stations des petits marchés et autres stations locales généralement dépourvues de ressources ou de formules qui permettent une couverture approfondie de l'information ont la possibilité d'offrir des nouvelles où et quand cela apporte une valeur aux auditeurs.

146   Nous pourrons rassembler plus efficacement les nouvelles nationales et internationales, les combiner avec les points de vue de personnalités respectées et rendre ce contenu accessible aux auditeurs de la radio dans des dizaines de marchés locaux à l'échelle du pays.

147   Et nous étendrons les fructueux programmes mis sur pied par Bell Média et Astral pour soutenir et promouvoir les nouveaux talents musicaux du Canada, des programmes qui ont aidé à lancer les carrières d'artistes émergents comme Alyssa Reid et Vincent Vallières.

148   Écouter les consommateurs, leur offrir ce qu'ils désirent, améliorer nos offres par des approches novatrices et nous assurer que les voix des Canadiens sont clairement entendues, voilà l'essence de ce que font Astral et Bell Média. Et voilà pourquoi, ensemble, nous pourrons faire encore davantage. Thank you Jacques.

149   Mr. BIBIC: Thank you Jacques. To conclude, the application before you today is fundamentally different from the previous proposal in a number of ways. First, Bell Média will divest all of Astral's English language specialty channels in one national English pay TV service family. This leaves us with two English language regional pay TV licences in genres in which Bell Média does not operate currently.

150   Second, Bell Média will acquire less then half of Astral's French language specialty services, leaving us with a smaller view in share than media giant Québecor and smaller than Astral's share currently. Yet, still able to execute on our objective to enhance competition in Québec. Third, we will sell 10 radio stations to comply with the CRTC's common ownership policy. We're also seeking an exception to the policy so that TCN 690 in Montréal can continue to broadcast in English as an all sports station, a request that thousands of Montréal radio listeners passionately support.

151   Fourth, we have proposed a revised package of 174 million dollars in tangible benefits that conforms with long standing CRTC policy and is designed to support new independently produced content, promote it in a multiplatform world and respond to consumers. And, fifth, we have included a range of intangible benefits, including the establishment of new regional development offices to support the creation of Canadian content, a commitment to keep all local television stations open and a commitment to increase air play for emerging Canadian artists to at least 25% on relevant radio stations.

152   Mr. Chairman, Commissionners, we submit that we have discharged our burden to show this revised and enhanced application is in the public interest. Thank you.

153   LE PRÉSIDENT : Merci beaucoup, mesdames et messieurs, pour cette présentation. Merci en particulier à M. Crull pour avoir apporté une vidéo cette fois-ci, quoique j'aie remarqué que la jeune famille qui semblait regarder la télé en prenant leur petit déjeuner semblait écouter la télévision sur leur micro-ondes. Donc, c'est peut-être là une prochaine étape de la convergence.

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154   LE PRÉSIDENT : Toujours est-il, je vais commencer avec des questions portant sur le marché francophone. Effectivement, il semble que, si on regarde l'écoute, que, dans le marché francophone, avec la transaction proposée, on irait d'une part de cote d'écoute de 7,8% à 22,6% selon nos chiffres, qui est évidemment moins que la dernière fois, qui était à 33% si je me rappelle bien. N'est-ce pas?

155   M. BIBIC : La dernière fois, c'était 33%, vous avez raison. Cette fois-ci, ce serait 22.6%.

156   LE PRÉSIDENT : D'accord.

157   M. BIBIC : Ce qui est moins que Astral aujourd'hui à 25.4%

158   LE PRÉSIDENT : D'accord. Ca, c'est pour l'écoute. En ce qui a trait aux revenus de la télévision spécialisée, je constate que vous iriez d'un pourcentage des revenus des services discrétionnaires d'environ 27% jusqu'à 59%, 59,2%. En plus, ça refléterait environ 61% des revenus de tous les services de catégorie A. Et, comme vous savez, on n'octroie plus de services de catégorie A. La seule façon d'obtenir un service de catégorie A, maintenant, c'est de l'acquérir.

159   A votre avis, pourquoi le conseil ne devrait pas être préoccupé qu'un titulaire ou un groupe corporatif contrôle 60% des revenus dans un marché donné?

160   M. BIBIC : Bon, Monsieur le Président, vous avez fait référence à... on parle d'un marché de revenu pour les services discrétionnaires. Vous avez aussi fait référence aux services de catégorie A. Donc, je vais commencer avec les services de catégorie A, si vous me permettez.

161   Bell Média et Astral, si la transaction serait approuvée, détiendrait 6 des 15 services de catégorie A francophone comparé à 10 de 15 la dernière fois. Donc, vous connaissez bien les dessaisissements de quatre chaînes de catégorie A.

162   Il y aurait le même nombre de joueurs ou de radiodiffuseurs qui demeurerait au Québec en ce qui concerne ceux qui se... Il y aurait le même nombre de détenteurs de licence de catégorie A. Après la transaction, il y aurait trois joueurs qui détiendraient de multiples services pour faire livrer de la concurrence et offrir du choix aux consommateurs.

163   En ce qui concerne encore les catégories A, si on parle de revenus, il y aurait une baisse de revenus pour les chaînes spécialisées de catégorie A de 25 points. Donc, avant, Astral aujourd'hui, Astral et Bell Média, sans dessaisissement, ce serait 85% des revenus de catégorie A; mais, après les dessaisissements, 60%. Donc, une grosse baisse.

164   Et le dernier point sur les services de catégorie A, les revenus des chaînes spécialisées de catégorie A baisseraient de 87% pour Astral aujourd'hui à 66% après la transaction, dû au dessaisissement.

165   En ce qui concerne les revenus, la part de marché de revenus pour les services spécialisés, je vais répondre en deux parties, si vous me permettez. Premièrement, nous, on croit fermement que le marché, il y a une grosse différence entre la télé payante et les chaînes spécialisées, à deux niveaux, au niveau du service au gros, l'offre au gros et aussi l'offre aux consommateurs. Et, pour ça, je vais demander à John Riley d'expliquer pourquoi on croit que pay is different from specialty. And then, I'll come back and I'll finish the answer if you allow us. John?

166   M. RILEY : Pardon. Merci Mirko. Si vous me permettez, je vais reprendre en anglais. Absolutely, pay TV is a little bit of an...

167   LE PRÉSIDENT : Qu'est-ce que vous auriez fait si j'insistais de continuer en français?

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168   LE PRÉSIDENT : Vous avez le droit de vous exprimer dans la langue que vous préférez.

169   M. RILEY : Je préfère la réponse en français, mais il y a seulement cinq days pour la réunion.

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170   M. RILEY : Mais avec plaisir. Pay TV is a little bit of an apple to the orange of specialty TV. It's certainly sold on a completely different basis. There's a fully discretionary service that usually comes at the end of a bide. It's not sold in larger tiers as specialty services, at least historically it tended to be sold.

171   It's a premium service. So individually, it cost much more than a package, let's say, of specialty services. And part of that is the quality nature of the programming and part of it also that it is commercial free so that it relies completely on a wholesale rate.

172   It tends to be and it's our experience that pay television is also the level or package that tends to be cut first if someone's looking at their bill, due to that expense. It's essentially a bide that has to be made every month and subscriber turnover or a churn is always a significant issue in pay television.

173   As a result of these distinguishing factors, it tends to be dealt with, it tends to be handled separately from other services in the negotiation. And given... another issue of that is as a result of the discretionary nature and the cost it tends to be in much fewer homes, I'd say our penetration, let's take the movie network, for example, overall is probably about 25% of the market. So it's a completely different animal and tends to be one that is not necessarily seen as, let's say, a leverage service. C'est tout, Mirko.

174   M. BIBIC : O.K. Donc, merci, John. La raison pour laquelle j'ai demandé à John d'intervenir, c'est qu'on croit que -- comme vous l'avez constaté -- que le marché de télé payante est différent du marché des chaînes spécialisées. Et ce qui m'amène à mon dernier point.

175   Si on examine la part de marché des services spécialisés en excluant la télé payante pour les raisons que John a soulignées, et si on se fie sur les données de deux mille onze (2011) qu'on a au dossier public, là-dedans, Astral aujourd'hui a une part de marché/revenu de 41%. Après la transaction, étant donné les dessaisissements, en se fiant sur les donner qu'on a sur le dossier, il y a aurait une hausse de seulement 4% après la transaction.

176   Il ne faut aussi pas oublier les sauvegardes réglementaires qui assurent que le contenu doit être offert au distributeur. Il y a les mécanismes d'offres d'arbitrage qui permettent au Conseil d'arbitrer s'il y a des disputes et je peux continuer, il y a plusieurs sauvegardes, vous les connaissez bien.

177   Il nous faut aussi ne pas oublier monsieur le président, que les revenus des services spécialisés ou télé payante qu'une grande partie dépend sur les EDRs.

178   Ici au Québec, les EDRs, les gros EDRS avec les positions de parts de marché quand même assez dominantes sont Vidéotron et COGECO et pour qu'on ait du succès ici au Québec, on se doit d'offrir les services à COGECO et à Vidéotron pour s'assurer que les services soient accessibles à l'auditoire.

179   Et le dernier point avant que je vous cède la parole, c'est même une réponse, constatez que dans la dernière décision du 18 octobre au paragraphe 51 le Conseil a indiqué que... si vous me permettez en anglais, j'ai la décision en anglais devant moi :

"With the combination of the largest and third largest participants in discretionary services by revenue, one entity would control more than 63 percent of revenues from French language discretionary services."

180   Donc, le Conseil avait fait référence à 63 pour cent des revenus de langue... des services spécialisés ou discrétionnaires de langue française. Mais ce 63 pour cent incluait les revenus de publicité.

181   Donc, si on inclut les revenus de publicité dans le calcul, il faut aussi inclure les services de télévision conventionnelle parce que, évidemment, il y a de la concurrence entre les chaînes spécialisées et la télévision conventionnelle en ce qui concerne la publicité.

182   Donc, si on inclut les revenus de publicité, on inclut la télévision conventionnelle, Bell Astral aujourd'hui aurait une part de marché de revenus de 24.5 pour cent et Québecor 21.2 pour cent.

183   LE PRÉSIDENT : Mais le fait demeure qu'en matière de service de Catégorie A je comprends bien qu'Astral avait une position très importante par le passé. Mais, là, si la situation changeait cette part de marché se retrouverait dans un groupe corporatif qui est intégré verticalement.

184   Donc, un 59, 60 pour cent, entre les mains d'un indépendant comme Astral, c'est peut-être une chose, mais lorsque ça tombe entre les mains d'une compagnie intégrée verticalement, vous n'êtes pas d'avis que c'est une autre chose, une autre paire de manches qui devrait susciter la préoccupation du Conseil?

185   M. BIBIC : Moi, si je peux prendre un peu de... je vais céder la parole à Kevin dans un instant, mais si on prend un peu de recul avant de se lancer dans les chiffres, ce qu'on essaie de faire c'est vraiment de répondre aux consommateurs, donc de livrer de la concurrence, ici au Québec encore plus de concurrence au groupe intégré verticalement, verticalement intégré de Québecor, offrir plus de choix, du meilleur contenu, le livrer d'une façon multi plates-formes, de s'engager avec les créateurs indépendants.

186   Et les "stakeholders" qui se sont prononcés nous appuient, que ça soit les producteurs indépendants, que ça soit les consommateurs, que ça soit les annonceurs et c'est ceci qu'on essaie de faire.

187   Donc, livrer plus de concurrence à un joueur énorme ici et étant donné les désaisissements, ce qui va être bien, c'est qu'après la transaction, il y aura Québecor, Bell-Média Astral, on permet l'entrée d'un nouveau joueur intégré verticalement qui est CORUS-SHAW qui va pouvoir offrir encore plus de choix et faire des investissements ici au Québec dans la télévision de langue française.

188   Donc, pour nous, si on prend un recul des chiffres, ce qu'on essaie de faire c'est offrir plus de choix et livrer plus de concurrence.

189   LE PRÉSIDENT : Je sais que vous revenez à vos lignes parce que c'est comme ça que vous vous êtes préparé, mais vous n'avez pas vraiment répondu à ma question. Puis la question c'est : Est-ce que vous croyez que 60 pour cent n'est pas trop? Vous auriez en plus six des dix premières chaînes spécialisées dans le marché francophone.

190   M. BIBIC : On aurait six de 15.

191   LE PRÉSIDENT : Six de 15 ou six de dix, ça revient à la même chose, là. Moi, je le fais sur dix qui... Je comprends pourquoi vous le mettez sur 15, ça semble un plus faible pourcentage.

192   M. BIBIC : Mais il y a 15 services de Catégorie A d'après mes calculs?

193   LE PRÉSIDENT : Oui, oui, mais en terme de ceux qui ont les plus haut revenus, c'est quand même six des plus... avec les revenus... de ceux qui ont les revenus les plus élevés, ça revient à six sur dix.

194   J'aurais pensé que votre réponse aurait été, puis vous avez commencé à le donner tout à l'heure, que si on regarde les revenus on doit regarder tous les revenus publicitaires.

195   M. BIBIC : Absolument. Si c'est une question de calculer la part de marché des revenus publicitaires, il faut... bel et bien il faut inclure la part de marché et la concurrence que donne la télévision conventionnelle.

196   Et dans ce cas-là la part de marché n'est pas de 80 ou 66 pour cent ou 59 pour cent, elle est de 24.5 pour cent qui est bien au-dessus du seuil de 35 pour cent qu'on utilise comme benchmark.

197   LE PRÉSIDENT : Donc, en deça, en deça.

198   M. BIBIC : En deça, c'est vrai.

199   LE PRÉSIDENT : Oui.

200   M. BIBIC : En deça de 35 pour cent qu'on utilise comme benchmark typique dans le monde de la concurrence. Donc, ça serait -- Jacques peut intervenir -- ça serait une part de marché de 24.5 pour cent si on inclut tous les revenus de publicité conventionnelle et spécialisée marchés francophones.

201   M. PARISIEN : Et si on regarde tous les revenus publicitaires, toutes plates-formes confondues, il faut regarder les revenus nationaux pour pouvoir comparer les spécialisés pomme à pomme et exclure les revenus locaux des conventionnels.

202   LE PRÉSIDENT : Donc, vous nous invitez à regarder les parts de revenus en regardant tous les joueurs. Jusqu'à maintenant je pense seulement en télévision, malgré l'ajout de monsieur Parisien, et que, par conséquence, c'est là qu'on devrait regarder. On ne devrait pas regarder seulement les réseaux spécialisés.

203   Cela dit voilà depuis plusieurs années qu'on nous dit, qu'on entend dans le domaine de la radiodiffusion, que l'avenir de la télévision conventionnelle est en péril, que la part de revenus qu'ils ont, parce qu'ils se basent entièrement sur les revenus publicitaires, que les coûts de production montent.

204   C'est vrai que la télévision francophone va chercher des parts d'écoute intéressantes, particulièrement ici au Québec, mais que ce n'est pas une industrie qui n'est pas sans ses défis, particulièrement si on regarde vers l'avenir.

205   Donc, est-ce qu'on peut présumer que la télévision conventionnelle, notamment du Groupe Québecor, va être maintenue à court ou moyen terme pour que le Conseil puisse se sentir à l'aise de venir à la conclusion que globalement votre part de marché n'est pas indue?

206   M. PARISIEN : Bien, si vous vous limitez au Québec, les francophones, national, c'est sûr que tous les télédiffuseurs vont avoir leurs propres défis et vont avoir leurs propres plaintes pour expliquer l'évolution ou le manque d'évolution de leurs revenus.

207   Mais la réalité, ce n'est pas tout à fait comme ça aujourd'hui parce que si vous êtes un annonceur et que vous êtes approché par un des groupes, ce qu'on va offrir aux groupes ce n'est pas juste la télévision.

208   On va offrir toutes les plate-formes et on va offrir ce qu'on appelle un "package" ou des synergies médias, ce qui fait que quand vous me parlez de la télévision conventionnelle et que vous vous inquiétez pour savoir s'ils vont pouvoir se maintenir, moi, les présentations et les offres que j'ai vues, que ce soit de Québecor ou d'autres joueurs, ce n'était jamais ou très rarement juste des spots télévision 30 secondes.

209   C'était un habillage qui faisait appel à toutes les plates-formes et je pense que c'est comme ça que le média évolue au Québec et, d'ailleurs, au Canada. Les annonceurs, they want the buck for their money puis on se sert de toutes les plates-formes.

210   Donc, j'ai beaucoup de difficultés à penser que si vous regardez l'avenir, que les mêmes tendances qu'on a vues dans les cinq dernières années vont continues pour les cinq prochaines. Un annonceur national, n'importe lequel, va demander à son agence ou au groupe média de lui présenter une proposition qui repose sur plusieurs plates-formes. Et plus son produit est destiné à un auditoire qui est jeune, plus c'est vrai.

211   MR. COPE: So, if I could add and then Kevin can maybe make a few comments as well on the conventional.

212   As we looked at the TV market in Quebec as you have indicated and after the best that you are seeing ourselves at a 22.6 share of your ship and then when you go as you highlighted to the revenue share, which was to set around the 24, 25, 24.5 Twasat starts to put us close -- not as strong, it's one of the competitors in Quebec, but puts this as we think a true competitor against Quebecor in the marketplace, adding to that marketplace now which is so different in this application, another major player who is entering the marketplace, we think enhances the competitive environment here in Quebec, including the consumer that always generally drives, thrives more choice.

213   So we think it puts -- it makes the market more competitive and then Chris, on your comment on the vertically integrated of course, our largest competitor here in Quebec is the most vertically integrated media company in the country in almost by any measure if you take it just in this marketplace and as we had said before, we think this time a little less in terms of how much we'll have, but we believe we can compete effectively with them, we can bring more choice to the market.

214   But you look at our overall shares after the best, you know we are going to be in part having a real competitive battle here and one of the benefits I think not anticipated by us a while ago in the transaction, is there will be a third major player as we see the interests of the best share of our assets will then make a major market play here as well.

215   And maybe what I could do is ask Mr. Crull to make a few more comments on your question on the future conventional, which is clearly a significant part of the future of our business.

216   MR. CRULL: Mr. Chair, I think that the conventional business clearly behaves differently in French language than in English language and, yes, both are challenged vis-à-vis the trends, but to date the French language conventional business has been very healthy in terms of viewership stability and share as well as much healthier financial performance than in the English language.

217   We think that this low to mid-twenties comparison for the French language market is absolutely the relevant one because dissecting it to just the Category "A" specialty service affiliate revenue share would bring an implication that the concern about concentration there is vis-à-vis the affiliate relations for distribution.

218   I don't think that that would introduce a viewer relevance to dissect that small, but it does introduce the relationship with distributors.

219   I think there is two points that the panel and the Commission should take comfort in relative to that -- three key points.

220   The first is, as Mr. Cope said, there's two sides to a negotiation. There is certainly the seller's side but there's also the buyer's side and, for sure, doing business in the Province of Quebec with French-language Category A channels requires doing a deal with a distributor that has 80 percent of that market. So therefore, I think that the buy/sell side both have strong established players.

221   The second thing is that positively for distributors in the Province of Quebec, deals have been done by Astral for long term security on pricing, packaging, non-linear rights availability.

222   All distributors in the province have completed recently renewals of their distribution deals with Astral except for Videotron and Videotron and Astral, as I understand, have now initiated a proceeding to seek some dispute resolution which will, for sure, over the coming months resolve that.

223   And then you'll have a period of five, six years of stability in the availability of that content. And of course Bell Media would fully honour every agreement that's been completed prior to us getting there.

224   And then just finally, I do believe absolutely as the executive in charge of both developing the strategy for going to market and for negotiating distribution agreements, I feel that the code of conduct absolutely lays out parameters by which we create our distribution plans that ensure balance in the system and ensure a healthy competitive market.

225   THE CHAIRPERSON: We'll get to the safeguards in a moment. I am just -- was trying to get my head around your argument saying that your revenue share is not significant especially if you consider the French market, conventional French-language television.

226   Fair enough that's your position. I'm hearing that you're a little bit more bullish than I may have heard people say in the past in terms of the future French-language conventional television. I can tell you, I've heard a lot of noise about the need for future carriage and LPIF and all kinds of support mechanisms for conventional television.

227   So that's why I was asking the question, when you're mixing both --

228   MR. CRULL: Right.

229   THE CHAIRPERSON: -- and coming to a less significant percentage than the 60 percent I was using.

230   MR. CRULL: I would certainly concur the financial model of conventional television with advertising only is challenged, but I don't think it's going away any time soon. I think it will continue.

231   And in this province what excites us so much about the viewer passion for homegrown content and for their homegrown local stars is the viewer response to programs that, indeed, many of them are on conventional television.

232   So the financial model is very challenged. I don't think that the business is going to stop serving viewers any time soon.

233   MR. COPE: One other key point, I think, if you think about a business with mix, adding some of these assets with some of the conventional issues you've raised, we actually show this in our investor's slides to Wall Street and Bay Street that say one of the advantages of this transaction from a business perspective for conventional is it balances out our revenue portfolio with not as challenged a business as some of the conventional.

234   So we think it allows us to up our investment in media by diversifying our revenue risk, which I think is healthy for the system.

235   THE CHAIRPERSON: Okay. I`ll be moving to English television now. Do you have anything to add on revenue shares on French television? No? Okay.

236   So on English television, as I see it, based on our numbers which are 2012 because we recently published, your TV audience share excluding the proposed divestiture would be about 35.8 percent. Is that correct?

237   MR. BIBIC: Yeah, we have 35.7 about.

238   THE CHAIRPERSON: Well, it's not a major change. But you would agree that that is within the 35 to 45 percent range, perhaps at the lower end of the range but it is still within the 35 to 45 percent range of the diversity of voices policy.

239   MR. BIBIC: For sure.

240   THE CHAIRPERSON: And therefore it would require careful examination.

241   MR. BIBIC: Absolutely.

242   THE CHAIRPERSON: We also have three -- in this case three of the top 10 English -- you would have at the end three of the top 10 English discretionary services. You already have two, you know, powerhouses in the form of TSN and Discovery. You would be adding the Movie Network.

243   Shouldn't we be concerned about that, particularly into -- you know, particularly that there are channels that you have nearly 35 percent of English-language discretionary revenues?

244   MR. CRULL: Mr. Chair, as Mr. Riley explained earlier, we really believe that pay behaves as an apple to an orange of specialty. So that would be one point that I would reiterate.

245   Secondly, the market today would see in the Category A, English Category A, the combined Bell/Astral would have about 28 percent of the viewing compared to the largest provider, actually at 55 percent. The Shaw/Corus combination would have 55 percent of Category A viewing.

246   We will have fewer than one-third of the Category A services and that is reflected also, as you say, in the top 10 of three of 10. So about a third of the market we would say is not cause for concern of concentration.

247   THE CHAIRPERSON: Even if you have the three top powerhouses in terms of programming services?

248   MR. COPE: Well, I think there is a benefit to the Canadian consumer here of us acquiring these very specific assets. Mr. Greenberg and I can join in this for this part in that.

249   As we talked before about how we see the OTT world evolving, we really do believe, Ian and I, that the one place maybe where the Canadian consumer will win and therefore the broadcasting system will win and, in fairness, also make it important to Bell so they all need to align, is having the scale to be able to compete for some of this acquisition of this content on the movie side, we think, allows us to distribute this through all the BDUs which, of course, is our strategy and has been. But it ensures that there is some scale here to compete.

250   I mean so even, you know, in the last year our largest OTT provider who is buying movies competitively, what Ian has been doing and what we're going to have to do, their market cap is now four times the size of Astral, a larger market cap that would be double Bell Media if it were to be a public standalone company. The great thing is we have the backing of BCE here to support that to compete with what's happening globally.

251   So I would acknowledge we're over the 35 percent. And we have to think about it, I imagine for a logical reason, for the Commission to say why are we comfortable versus being at 1.7 less if we don't acquire it, is I think there is a benefit across the entire system.

252   Whether or not my competitors will say that at the hearing I don't know, but my instincts tell me they will even sleep better at night knowing that the movie assets are in the hands of BCE trying to acquire those assets to distribute to Canadians against some of the OTT providers.

253   I think that's a win for everyone. That's why I'm hoping the Commission will consider going above the 35 percent for this specific reason.

254   Ian, I don't know if you want to add some of your experience.

255   MR. GREENBERG: You know, in listening to the 9(1)h hearings, I kept hearing about the lack of promotion of Canadian content. To me, the most exciting aspect of this acquisition is to think that all the content of TMN and of pay services with the high level of Canadian content can be promoted across the CTV platform. That is something that has never been done in this country. Frankly, it cannot be afforded.

256   Astral alone cannot afford under a pay service to buy national time across the country for pay TV. This opportunity for once and for all will allow pay TV to come to more prominence.

257   As we said before, when we talk about a service of pay it's a completely different animal than specialty. We talked about the market penetration. We talked about services like TSN and Discovery. You're up over 80 percent. We're at 25 percent with a lot of unlicensed competition.

258   So besides the scale that Mr. Cope talked about in purchasing programming, the fact that we'll be able to promote the content, particularly Canadian content, across the country on the CTV platform and all the other English-language specialty channels, I think will be a boon to the content providers in this country and for the Canadian broadcast system.

259   THE CHAIRPERSON: Okay. Well, we'll see what their views will be in Phase II hearing and we can perhaps come back to this.

260   I'd like to move on now to safeguards. As you know in the Diversity of Voices Policy 2008-4 we said that in addition to quantitative threshold the CRTC would look at the effectiveness of safeguards to ensure fair access by programming the services to BDUs. In fact, in the 2012-574 decision we said that thresholds are not determinative. You have to look at the transaction globally.

261   We also said, and the Commission noted, that we had not -- you had not provided any safeguards in your original application at the time but through the oral hearing phase you accepted to have the VI code, vertical integration code, as a condition of licence.

262   When I look at the application today as it stands, you've obviously reiterated your offer to have the VI code as a condition of licence and there is additional conditions of licence proposed relating to tied selling.

263   Are you of the view that this is sufficiently responsive to the concerns expressed in 2012-574?

264   MR. BIBIC: Absolutely, Mr. Chairman.

265   So I think where we sat down and said, okay, we're going to re-file, how do we put together our application in a way that responds to the Commission's concerns, of course what we wanted to do is put together a package of tangible and intangible benefits that was responsive directly to the consumer into the system, responsive directly to all the issues outlined in 2012-574.

266   That's the philosophy we used to put together the tangible benefits, the intangible benefits --

267   THE CHAIRPERSON: I'm just talking about safeguards.

268   MR. BIBIC: -- and the safeguards.

269   Which brings me to, on the safeguards issue, the fundamental point as I read 2012-574 or as is expressed in paragraphs 64 and 65. So in that decision the Commission indicated that it:

"...shared the concerns of many interveners about the ability of a distributor with the content properties of a combined BCE/Astral to exert market power in an anticompetitive manner."

270   And of course that was in the context of the transaction then before you.

271   Then in paragraph 65 the Commission goes on to say:

"While BCE agreed to accept the VI code of conduct as a condition of licence..."

272   Which we have reiterated here, Mr. Chairman:

"...it did not propose or clearly accept any other possible remedy to address these concerns including functional separation or divestiture."

273   So we looked at that sentence, that paragraph, we said, "Okay, the first thing we're going to do as a structural safeguard is put forward significant number of divestitures." So that -- I mean it's not a safeguard in the classic regulatory safeguard sense, but it is a structural safeguard dealing with the fundamental issue identified in paragraph 65.

274   So that's the point one that I don't think we should lose sight of.

275   Then, on top of that, we did identify a number of safeguards, the VI Code of Conduct being one;

276   the issue of tied selling, as you mentioned, being a second;

277   a third one was not preventing any BDU from launching a programming service if it chose to as we negotiated affiliation agreements. So that's three.

278   We then examined the record -- which heartened us to hear last week the point being made by yourself, Mr. Chairman, that you are an evidence-based Tribunal -- and so looking at the record we saw that several interveners raised the concern about non-linear rights, so we added a safeguard in our reply being responsive to some of the interveners about negotiating linear and non-linear rights together if a BDU so chooses down the road. So we have added that to the mix. I think that's four.

279   We have added a fifth as well, having had the benefit of reviewing the record, which is a commitment to provide a minimum of 90-days written notice of the impending launch of a new programming service.

280   On that one, if you allow me, this is an issue that has come up in the past, it has actually come up in the proceedings following the VI decision where the Commission initiated a regulation consultation, and in that parties like CIDG and Rogers had asked for a rule requiring VI entities to provide 60-days advance notice of the launch of the new service. When the regulations were finalized last summer the Commission said no, we don't need to impose that rule because clearly when a new service is licensed the world is put on notice that there is an impending launch, but we do expect entities to give reasonable notice. That's what the statement was in the decision finalizing the regulations.

281   So despite the fact that the Commission made that ruling and that CIDG and Rogers had asked for 60-days advance notice, we have stepped forward with a commitment to give 90-days advance notice and then we also reiterate -- I'm not going to go through them unless you would like to discuss them, we have also reiterated on the record of this file all the commitments that we had made to the Competition Bureau in the consent agreement we have with them.

282   THE CHAIRPERSON: Right.

283   So I take it, then, you are still in disagreement with structural separation?

284   MR. BIBIC: Yes.

285   I'm happy to discuss that with you. The reason is, we start first going back to paragraph 65, the Commission said: Well, you know, in light of all this why didn't BCE kind of propose a remedy to address those concerns and the words are "including functional separation or divestiture".

286   So when we looked at those two things we said, well, much better to go at it directly rather than through the indirect -- through divestiture rather than the indirect mechanism of functional separation.

287   We don't believe that there is any market power. Certainly BCE or Bell Media doesn't have any today, the Commission looked at that when we acquired Bell Media, looked at those issues and allowed Bell to acquire CTV. There is no evidence on the record of any anticompetitive behaviour since we have taken ownership of CTV, nothing.

288   There only have been two disputes, CIDG and TELUS, and those have been ruled on and no finding there of anticompetitive behaviour. In fact, in both those files last year the Commission indicated that both parties, TELUS and Bell on the one hand, TELUS and CIDG on the other hand, had put forward commercially reasonable offers, but chose one or the other.

289   Mr. Chairman, I think if we are going to engage in a discussion about functional separation we really kind of really need to know what that means. How far would extend? Do we talk about no common back office, no common infrastructure.

290   If ultimately the concern is about confidential information sharing, then we can have a discussion directly about that, but I don't think that requires functional separation to deal with.

291   MR. COPE: I will just add a few comments.

292   I think I'm really hoping our behaviour since we acquired CTV is very clear to the Commission, 159 out of 164 agreements met, reached. Two disputes, one you said that we were on probably closer to commercial; the other, you said the other group was a little closer to commercial. That's where we ended up on that.

293   Our market change is 1.4 percent as a result of this 1.7 percent as a result of this transaction in English and most of that is about the direct movie consumer buying material; and in the Quebec market we are absolutely upping the competitive marketplace by making this investment, so things will become more competitive.

294   So our overall history, our results and what we are doing would say that we are having competitive discussions and resolving issues. Are they intense, sometimes absolutely.

295   But I also want to put in context for the Commission so that we don't -- if we are going to talk about vertical integration we have to recognize the relationships also in some of those scales.

296   With TELUS we do over $750 million a year of commercial relationships. We solve things without the commission all the time. We can solve things commercially and we always do.

297   With Rogers we have transactions over $350 million and we figured out how to buy a $1.8 billion asset together. We can sort out these arrangements and we always have.

298   With Quebecor, as tough as the two of us talk about each other and how hard we compete, we do over $100 million a year of transactions and those transactions always get settled without coming here.

299   So $159 and $164, the minimus market share we are adding -- and more importantly our behaviour, stewards of assets over 130 years, you know, we are hoping that the Commission sees comfort in that and evidence would be if we had behaved wrongly since we acquired the asset. If anything, we have upped our investment, settled arrangements and moved -- yes, changed the market share little bit and there are some competitors who prefer to buy some of these assets, some of them are now as a result of some divestitures.

300   So that's really how we try to address these issues.

301   THE CHAIRPERSON: Right. So you propose a number -- you are not for structural separation, but you are saying that divestiture and other safeguards are the way to go.

302   But you have proposed that as a condition of license the VI Code would be embedded as a condition of license.

303   Which licence would that be, the program undertaking or the distribution undertaking?

304   MR. BIBIC: All Astral television services being acquired by Bell, all Bell Media television services and all Bell BDU services.

305   THE CHAIRPERSON: So if we were to accept that, you would, within a period of time, apply for those changes?

306   MR. BIBIC: That's correct

307   THE CHAIRPERSON: And our approval, were we going down that road, would be conditional on you meeting that requirement of filing requests for amendments to conditions of license.

308   Is that how you would see that rolling out?

309   MR. GOLDSTEIN: Yes.

310   THE CHAIRPERSON: Okay. And of course if we were down that hypothesis it would mean that you might not be able to close until you have actually filed those requirements.

311   MR. GOLDSTEIN: We could file them very quickly.

312   THE CHAIRPERSON: Okay. Just so we understand each other.

313   MR. GREENBERG: Yesterday I think they were filed actually.

--- Rires

314   THE CHAIRPERSON: Now, a number of parties in the proceeding commented on the use of the VI Code as a condition of license and, frankly, I think many of them believe that it's not adequate or responsive to concerns.

315   Among other things, they are saying that the code of conduct for commercial is about commercial arrangements and interaction and it wasn't really intended in its drafting to be a condition of license. It uses words like 'should" rather than "shall", words like "where applicable", it's really a guideline and was never intended to be a condition of license and therefore they are not very supportive of it merely just taking the code and putting it as a condition of license.

316   MR. BIBIC: Okay. We will take this in two parts I think. I would like Kevin to answer about how the VI Code plays into -- from an operational point of view how it factors into our decision-making and then there are some regulatory and kind of legal perspectives that I have to share on that, if you allow.

317   MR. CRULL: Well, Mr. Chair, in Mr. Cope's opening remarks one of the things he talked about is the success that we all should be proud of of the Canadian broadcasting system as stewards on behalf of consumers.

318   Today consumers enjoy just about the greatest variety of channels, very high quality programming, and they enjoyed it at very reasonable costs, as we indicated I believe in an appendix to our reply submission.

319   The ongoing and future success of continuing to meet Canadian consumers' needs in that way is absolutely dependent on balance within many different parts of the system, from creators to broadcasters through to distributors.

320   The commercial arrangements that provide for the distribution of these services are complicated and unique and they all take place under very different circumstances. The Code of Conduct, I am often reminding our regulatory team and others that it might as well be tattooed for me as a part of our business planning and our commercial plans that we take to market. In fact, I was perplexed when I read several interveners' almost accusations that it was only a guideline and that confused me, not understanding the context that they were going to within those comments.

321   But then I read some comments from the Commission after VI was issued and the Commission said that it:

"... wishes to underline the Code of Conduct is a set of principles that must be read as an ensemble and its purpose is to provide guidance on matters that should be considered by parties in their negotiations."

322   So that guidance I guess translates into the view that they are a guideline to encourage commercial solutions to these big complicated negotiations.

323   So it is definitely our interest that we reach win-win-win -- including the consumer, the distributor, the broadcaster -- outcomes to maintain the success of the system and that is the spirit with which we look at what is really a very comprehensive set of guidelines. It's not vague and it's not minor, it's actually very detailed and very comprehensive, about commercial reasonableness.

324   I would also point out that in reading the record, as Mr. Bibic pointed out, I think it's very important to acknowledge -- because this forum has unfortunately I think given rise to a great deal of rhetoric and accusations and comments that in my view are actually unsubstantiated because none of them have been backed up by formal complaints for dispute resolution or intervention or any activity other than what we went through last summer with a very important -- frankly, a very important change in our industry to move from the way that Category A services were packaged in the history of our industry to a much more consumer-friendly packaging flexible world.

325   And the Commission and the parties to those disputes committed 10 months of work, a lot went onto the record and careful consideration was given and decisions were rendered. That outcome of that process, in my mind, can in no way be construed that any unreasonable behaviour was exhibited by either party in dealing with something that was that big and complicated.

326   So we currently have some negotiations that are underway on TV Everywhere and I also read from various parties, from a handful of distributors, their concerns about the pricing.

327   I think there is universal celebration for our product description, the breadth and the quality of the product that we are bringing to market. In fact, the discussions with distributors have been constructive and robust since October on the product itself and the technical implementation. But since then we haven't had price negotiations and there seems to have been -- I would infer waiting for this hearing, there seems to have been a chill in commercial negotiations to resolve these things.

328   We are anxious, and indeed eager to have price negotiations. I am getting zero revenue today from TV Everywhere and with the zero revenue anything is better than that and I am anxious to negotiate an outcome to get the service to market for consumers. So we look forward to that taking place and we are confident that after this hearing that will in fact loosen up.

329   So as to the effectiveness of the existing safeguards, I think that the record of the last couple of years, as Mr. Cope said, definitely points out that it ensures a very important balance in the system.

330   THE CHAIRPERSON: I understand your point about effectiveness, my point was more about regulatory drafting.

331   The VI Code was drafted in a particular proceeding in a particular context, it was never drafted as a potential condition of license. When we draft conditions of license, in fairness to those that are bound by them, we like them to be clear, measurable, you know, where if you are on one side or the other side of the line and words like "should" instead of "shall" and "where applicable" are really difficult in a regulatory sense and I would have thought it would be in your interest -- but you seem to be resisting -- to actually provide more specific wording that we will know and there will be no ambiguity if you are onside or offside.

332   MR. BIBIC: Mr. Chairman, let me start first with some of the interveners who have expressed a concern that -- so there's two points, the interveners who have expressed the concern that the VI Code is not strong enough and what will it do if it's a COL. There's that issue that was raised in your first question.

333   And then the second issue of in fairness to those who have to live by COLs, how do we insure precise language.

334   So on the first point, in terms of those who think, well -- I'm not sure what the concern stems from. I think the concern, it seems to me, that because the Code is a guideline or because the words are "should", not "shall", that somehow we won't follow the Code. I guess that's what the fear is, speaking for interveners now, and I may be over interpreting.

335   In response to that, if I have the concern properly interpreted, I guess the response to that is that can't be the reason to say that the commitment we are willing to step up to isn't good enough, because at the end of the day if there is an issue or a dispute between Bell Media and another party, the other party will go to the Commission, if they feel they need to, and we all understand that the Commission, in resolving the issue, will have regard to the factors and the considerations in the Code. So we all know that and that's why, as Kevin explained operationally how it's kind of tattooed in his kind of way of operating.

336   So that's the response to the intervener concerns.

337   In terms of the language, I think that we are prepared to have the Code as a condition of license just to kind of give the Commission confidence that we take this seriously, that we will abide by it and it just amps up the level of scrutiny, because there are consequences, as you know, to being in breach of a condition of license.

338   That being said, I think it would be very difficult -- and the reason we have resisted going from "should" to "shall" for example -- it would be difficult to provide kind of the precise language as you suggested in your last question, because we have to also appreciate that every single negotiation can be different, has its own set of facts and circumstances, and to give absolutely no leeway to one party or another in arriving at what may make the most sense commercially because there's a condition of license that binds Bell to doing things exactly one way forever for all negotiations would be impractical.

339   That doesn't mean, though, that accepting the VI Code of Conduct as it is today and as it might be amended for all parties in the future as a COL means nothing, it really does put a level of seriousness and emphasis on how seriously we will take this.

340   So I hope that I have answered why we haven't provided very specific wording or accepted the suggestion that the "shoulds" should be changed to "shalls".

341   THE CHAIRPERSON: Right. Just to pick up, you just said "as amended from time to time".

342   MR. BIBIC: Correct.

343   THE CHAIRPERSON: Okay. So I just want to make sure that I understood that that's part of it.

344   But here is the concern I think I'm hearing from others, is that because the Code is not, you know, saying a bit like we have some other regulation, it's this big and that large and you can actually measure it, what is likely to occur is that there will be a long back-and-forth with smaller, often, less financially solid independent programming undertakings, eventually they will have to -- because they often say at hearings that they are afraid of bringing these disputes forward, so they would have to complain, if the norm is not clearly defined they will be back-and-forth that whether it is breached or not and during all this time there is the risk of a potential regulatory gaming occurring and delays occurring -- and that is always to the detriment of a smaller player in any dispute -- and that it is not really a very clear outcome, and in fact not a very reassuring mechanism for a safeguard because of all the ambiguity, especially since we know that in the end if you are found in breach of a condition of license -- and I know you wouldn't want that, but the what-if scenarios always arise -- we would have to do a mandatory hearing, at which point we register the mandatory hearing in the Federal Court and now we are now a year and a half later because of due process and we might get out of the Federal Court a contempt judgment for $5000 or $6000.

345   That's why I think people aren't quite convinced that putting the Code, writ large, is an adequate safeguard.

346   MR. BIBIC: Well, there is an element of -- I mean we all have to accept that even today, forget this transaction, if somebody alleges that there is an undue preference in the marketplace there is a clear regulation that says -- and all the regs actually -- one party can't act in an unduly preferential manner. we all have to accept that. That can be in the eye of the beholder and where parties don't agree it does have to go to the Commission even today, and the Commission has to make rulings and that there are, you know -- there is a span of interpretation there because every party does have a particular point of view and puts their best point of view forward, sometimes there are issues of interpretation and we do need the Commission every once in a while to step forward.

347   So yes, that happens. It does happen that there will be differences and that the Commission will have to resolve them and that both parties may have perfectly valid positions and the Commission chooses one or another and there may need to be enforcement at the end of the day.

348   But I think Bell Media and most parties in the industry have a very good track record of abiding with Commission decisions at first instance. Once the Commission makes a ruling, parties abide by them. Of course they have their appeal rights and some choose to exercise their appeal rights and then if they don't want to abide by the decision they need to seek an injunction. That's how things operate. That's one aspect.

349   The second aspect is, I'm not sure in most cases there is the significant prejudice to smaller players as a result of how longs things may take, because we can't lose sight of the fact that there is a whole panoply of safeguards that currently exist.

350   So it's not like a BDU -- it could be Rogers, Bell TV -- is going to yank an independent service off its system and then force the independent programmer to chase the BDU for year and a half to get back on the system, because of course we have a standstill provision that makes certain that things are frozen in time while the dispute happens, and if it's a rate dispute for example and it gets resolved eight months later, there is a retroactive adjustment as the case may be.

351   So if you take a look at the whole panoply of protections, there are mechanisms in there that make sure to preserve the situation for any party so that they aren't prejudiced while a dispute resolution occurs.

352   MR. CRULL: I think, Mr. Chair, I'm glad that Mr. Bibic -- I think that the Commission did a fine job in ensuring that during a dispute that consumers are not harmed and nor are distributors or -- independent distributors or independent programmers. There are a variety of safeguards such as the standstill that ensure that.

353   But I think that to speak to the challenge that we have as an industry as we try to grapple with the evolution of our industry, with vertical integration and with -- I understand the preoccupation of the Commission and others in fair commercial treatment is that this Code has to define something called commercial reasonableness and that -- I believe that that is an indefinable parameter that must be subject to the individual information of every dispute, of every product and of market circumstances at the time.

354   As you can see, I listened to the Chair's words carefully and in the speech that I referenced in our opening remarks you also challenged our industry to innovate not just on the screen, but to innovate with business models and, as such, there are new things. As the industry changes to adapt to that, new business models emerge, new trials emerge, and I believe that the Commission must take care to recognize the difference between a rational business behaviour that, in fact, anybody would do under the circumstances, and one which is commercially unreasonable, or accused of being commercially unreasonable.

355   After the last hearing, I met with the intervenors who had things to say about our business practices. I sat down with each of them, individually, and had a dialogue about this, and I asked them: Please tell me, how do you discern between a rational business practice, based on me looking at my input costs, me looking at the changing competitive marketplace, me looking at changing consumer demands, and developing a business model -- how do you discern that from being rational and then say that, oh, now you are using undue competitive leverage?

356   I would say that, in those circumstances, they were sympathetic to that challenge.

357   So the Commission, I think, has to take care, and that is why the Code and that is why words like "shall" are important, because it gives the flexibility to the Commission to apply it to the unique circumstances.

358   THE CHAIRPERSON: And it should.

--- Rires

359   MR. COPE: The only thing I want to add is, our track record, since we acquired the asset, of 159 agreements -- 2 that came here, 1 that the Commission actually said: Bell is correct.

360   Although the other party wasn't unreasonable, Bell is correct.

361   And to the other you said: We think the other party is correct.

362   The standstill provision for our side of the business is absolutely brutal, and incredible leverage on the other side.

363   It used to be, if you couldn't come to commercial arrangements, you could withhold that broadcast. You cannot do that anymore. That was one of the key points of the vertical integration rules, because prior to us coming into vertical integration play, Bell didn't have the Blue Jays on TV because Rogers took it off the air.

364   One of the main reasons that we got into this investment was to secure a balance against three very strong vertically integrated cable operators who were following that model.

365   So what we have done since that time is balanced the playing field, and what is so painful when you don't resolve -- and it really shouldn't be lost on this -- we are the ones who then provide the standstill, and for quarter after quarter, if we don't book the revenue, we wait for the Commission on that incremental side.

366   So the large companies that are public, we are handed a real tough time there, and what I would say is really important is that we are so motivated to reach agreements.

367   And we are also, as BCE, very, very aware of our obligation to make sure that smaller players aren't caught in those big arrangements with the Rogers and the TELUS's of the world.

368   That is not what you want to be seeing us over. We know that. We know that is not responsibility.

369   THE CHAIRPERSON: I am willing to look at the track record, but I can't prevent myself from mentioning what you said at the last hearing on September 10th. You said that the VI rules -- this is at paragraphs 5.10 and 5.11 -- VI rules go too far, add a burden, and take productivity out of the market.

370   So now you are saying: Oh, but this thing that you don't want, that is drafted in very open-textured language, now becomes a condition of licence.

371   In the spirit by which you seem to be approaching the VI rules, I wonder how effective it will be from a regulatory perspective.

372   MR. COPE: I would say this. If you asked me could the market resolve these issues, I always, personally, would believe that the market could resolve these issues.

373   But that pull-out of the station quite a while ago, even with the previous Commissioner -- you said: We are putting vertical integration rules in place.

374   So, in the context of that plea in this hearing, it would have been saying: We don't need to go further than what we have done on the vertical integration rules, because they are working, by evidence.

375   And, more than anything, as Kevin says, we live knowing that that's an obligation that we need to resolve if we don't want to come back here to have you have to resolve a commercial issue.

376   And where the comfort should be on the large players -- we do multi-million dollar arrangements -- some of them come here, I think, to test the rules, not with seriousness on the commercial arrangements.

377   Look at the size of the arrangements between TELUS and Bell. What were we doing in front of you?

378   That's ludicrous. We shouldn't have been in front of you. That's our fault and that's TELUS' fault. We should not have to come to you to resolve an issue when we do over $700 million in transactions.

379   With a smaller player, I have sympathy for your comments, and we have an obligation to do that as a company.

380   MR. BIBIC: Mr. Chairman, just on the last question -- and I am not going to repeat George's answer -- I will add that the views on the VI rules, as they are -- and George has answered that -- they are there. And as long as they are there, and they are there, and if they are in a condition of licence as well, we clearly follow and abide by them.

381   So there is a difference in your view and our perspective of who has leverage as a result of the rule and our firm commitment to follow the guidelines.

382   MR. COPE: Mr. Chair, this is the last point -- because, as you can see, this is an important point to us, so I appreciate your permission.

383   Some of the intervenors who are complaining, in fact -- I just question what is really their perspective on the effectiveness of the Code of Conduct, because some of the intervenors, when it was released in 2011, were very public about their celebration of a Code that was largely written based on their input.

384   In fact, I quote Cogeco in their annual report saying that the vertical integration regulation consultation resulted in a decision that favoured independent distributors and programming services, as well as consumers. In its decision, the CRTC accepted most of the proposals presented by Cogeco for a framework governing the operations of vertically integrated entities. In the end, this decision will support healthy competition and benefit consumers directly, which we applaud.

385   Similarly, TELUS' chief marketing officer has been on record celebrating the fact that, when it comes to buying content, the economics of the media business and the regulatory framework both provide great comfort to TELUS about a fair market. There are very clear rules around withholding, and they are very black and white, said David Fuller.

386   I think that the industry, when we are fair to each other -- we all looked at the Code of Conduct and the vertical integration rules objectively and said: Yes, this is pretty effective at providing balance.

387   Do we wish that the free market were the ultimate governor? Yes, we do. We think that would be better, but we have what we have.

388   THE CHAIRPERSON: You have had the opportunity to explain why you would rather not have more detail, so let's move on now to the hypothesis that we don't agree with you and we decide to draft something more accurate and more precise, inspired from the VI Code obviously.

389   I would like to have your reaction to a few of these, which would be more prescriptive, but I would like to know what the impact would be on you.

390   For instance, clause 1(b) says that one shouldn't force distribution in packages that are inconsistent with the service theme or price points.

391   What if we were to convert that into a standalone condition of licence? What would be the impact?

392   MR. BIBIC: In other words, taking clause 1(b) and actually stating it as a standalone condition of licence, with a "shall" --

393   THE CHAIRPERSON: Yes.

394   MR. BIBIC: -- and dropping 1(a), (c), (d) and (e)?

395   THE CHAIRPERSON: I am just asking about 1(b) at this point.

396   MR. BIBIC: There are chuckles in the room, and the reason I ask is not to be argumentative with you, it's just that if there were just one clause -- the assessment on this side of the microphone may change if you were to say that only 1(b) would be embedded, as compared to we would embed 1(a), (b), (c), (d) and (e). Because it is a complete Code, so to speak, and putting aside "should" and "shall", (a) through (e) recognize that there are multiple factors that may go into an issue.

397   THE CHAIRPERSON: How about forcing distribution on basic as something prohibited, what would the impact be on you then?

398   MR. CRULL: Mr. Chair, I view that as being prohibited, and we don't currently force any distribution on basic. It was really clear and it was agreed upon by the Commission that the offer that we made with set packaging and with a penetration-based rate option met that criteria.

399   So we view that as an obligation and --

400   THE CHAIRPERSON: Therefore, there shouldn't be a problem embedding it as a condition of licence.

401   MR. CRULL: I am going to leave that to Mr. Bibic --

402   MR. BIBIC: This is great. The dialogue is really important, and I am happy to engage, of course. It is very important, but in terms of giving a definite answer, I would like an opportunity on all of these to kind of think them through and come back, if you would allow.

403   THE CHAIRPERSON: Then, perhaps we should do that. You have had a good opportunity to put your case that you would rather have the VI Code, generally, as a condition of licence.

404   MR. BIBIC: Right.

405   THE CHAIRPERSON: Fair enough. You are entitled to make that case.

406   Our purpose here is to develop a record, so that we have everything in front of us, and I think it is in your interest for us to have -- you don't want to do this yet again -- that we have everything in front of us to make a decision. And this may be an important point -- all with the understanding that it may not be your Option 1, 2, 3, or even 4, but if we were down at Option 5, which is the one we might choose down the road, in our decision, it would be very useful for you to provide us, instead of a general reference to a code, more specific conditions.

407   And we have been asking through the deficiency process for this, and the answer seems to always come back: No, no, we just want this general clause.

408   I appreciate that it may not be your preferred position, but I think that we need to have more meat, regulatorily speaking.

409   MR. BIBIC: I completely respect and understand -- I respect the process and the questions.

410   So, the question, just to reiterate, is: Would we accept a condition of licence stating that Bell Media shall not force distribution of a service on the basic tier.

411   THE CHAIRPERSON: I think it goes beyond that. I am asking you to take the VI Code and propose a condition of licence that is, from a regulatory perspective, much more precise, telling us which parts just could not be converted into a condition of licence.

412   MR. BIBIC: Okay. By when?

413   THE CHAIRPERSON: How long do you need?

414   We have asked this question on several occasions, you must have given some thought to it.

415   MR. BIBIC: We have.

416   Wednesday morning?

417   THE CHAIRPERSON: That's fine.

418   That is an undertaking to come back and deconstruct the VI Code to have specific, measurable obligations that are more in the nature of a condition of licence, all with the understanding -- and you don't have to repeat it in your submission -- that it is not your preferred option.

419   Is that fine?

420   MR. BIBIC: Got it. Thank you.

Engagement

421   THE CHAIRPERSON: Thank you.

422   Let's take a break. We are adjourned until 11 o'clock.

--- Suspension à 1048

--- Reprise à 1103

423   THE CHAIRPERSON: Just to be clear with respect to the undertaking, we are conscious that there are parties adverse in interest that might want to see it before they finalize their comments. Once we see the results of your undertaking -- and there may be other undertakings -- we will figure out whatever process will be required to make sure that everyone adverse in interest will have a chance to comment.

424   MR. COPE: Could I make a comment, just to follow up?

425   THE CHAIRPERSON: Yes.

426   MR. COPE: Absolutely, we will meet that commitment on Wednesday. And two specific things. One is -- and I know that the Commission is aware of it -- our track record in the vertical integration rules, we have commented on that, and you have acknowledged that. The fact that we are adding 1.7 percent market share was directly related -- and I am sure that you will take that into account -- when we proposed this.

427   And, then, the third one, which will be very important -- and I am told by my colleague that you will say "That is a separate hearing". So, with all due respect, I have been advised of that.

428   Whatever happens here, we would obviously assume, confidently, that any other vertically integrated carrier would be under those same types of obligations eventually, so that BCE would not be put at a competitive disadvantage to Rogers or Shaw, or Vidéotron, as a result of this.

429   I have been told by Mirko that that would be a different time and place, but it would be something that we would be suggesting on Wednesday, so we wanted to make sure that we were clear on that.

430   THE CHAIRPERSON: Yes, and he is perfectly right, that is for another place.

431   I have some questions, just so I can clarify the status of negotiations with respect to Astral's affiliation agreements right now with the BDUs.

432   Exactly where are we?

433   Did I hear you say that, except for the ones that are the subject matter of some disputes pending before us, all of the other ones have been resolved?

434   MR. GREENBERG: With respect to the actual French-language services, with the great majority of the large BDUs, the answer is yes.

435   THE CHAIRPERSON: And on the English side?

436   MR. GREENBERG: I believe that everyone is in contract now, some for shorter periods of time, some for longer periods of time.

437   But Astral -- it is interesting for me to listen to all of these negotiations with the contracts. Way before I ever had discussions with Bell, we always had issues on negotiations. We have launched services where BDUs refused to launch them for two years after the fact, only when market conditions forced them.

438   So I don't know why, all of a sudden, it has become this big deal, as if only Bell is in this position.

439   And I am not here to speak on Bell's behalf in this case, but just from my own practical experience, I can tell you that whenever we came to the market with a new service, Bell TV was the first BDU to launch it in Canada. Most other BDUs took more time, in the case of services even with the Disney name, which you would think everybody would want.

440   It took two years for other major BDUs in this country to carry them.

441   So, in the end, we have been able to have agreements with all BDUs, through negotiations. Other than in the present case, with Vidétron, we have never come to you before with a dispute resolution.

442   THE CHAIRPERSON: I was just looking for the factual as to where we were.

443   MR. RILEY: Mr. Chairman, I can confirm what Mr. Greenberg said about the arrangements on the English side with respect to pay television.

444   MR. BIBIC: Astral agreements on the English-language side with respect to the services that Bell Media would retain -- TMN, TMN Encore -- Astral has arrangements from 2015 to 2016 with the principal BDUs who have filed interventions on the record.

445   TELUS does not purchase TMN and TMN Encore from Astral, for reasons that you are well aware of, and neither does MTS.

446   And on the French-language side, contracts go from 2016 all the way to 2018. In fact, TELUS just signed an agreement with Astral on the French-language side for the services that Bell Media would retain, should we receive your approval. They signed that just last month, and it goes to 2018.

447   MTS is a principal intervenor in this proceeding. Let me just say that their purchases on the English-language side are zero. On the French language side it is really, really, really de minimis, like in the low 5 figures.

448   And, then, Rogers is 2017. Cogeco is 2017. EastLink is 2016.

449   So those are more of the precisions that you were looking for, I believe.

450   THE CHAIRPERSON: Thank you for that.

451   Now I am going to move on to some questions with respect to the relationship with independent producers.

452   As you know, in the Diversity of Voices Public Notice, in addition to the quantitative thresholds, the CRTC did refer to the existence of Terms of Trade Agreements.

453   First of all, the CMPA agreement continues to be in force.

454   Is that correct?

455   MR. BIBIC: On the English-language side?

456   THE CHAIRPERSON: Yes.

457   MR. BIBIC: Correct.

458   THE CHAIRPERSON: The CMPA terms of trade arrangement does provide for a reopening, does it not, which could be available for reopening in June 2013?

459   What are your intentions with respect to that?

460   MS COE: We have every intention of continuing the Terms of Trade Agreement.

461   There is a working group attached to the parties to that agreement, which works through any issues that may crop up as the agreement is in force, and that committee continues to meet to take care of issues and talk about any points that might need to be inserted for a new or renewed agreement. But, certainly, it is our intention to continue the arrangement past the current expiry date.

462   THE CHAIRPERSON: And your current agreement includes an MFN clause.

463   Is that correct?

464   MS COE: Yes, it does.

465   THE CHAIRPERSON: Do you think it is appropriate that your negotiations on terms of trade, which affect you as a corporate entity, then become imposed, de facto, through the MFN clause, to other entities in the Canadian broadcasting system, on the English side?

466   MS COE: The reason that we, as broadcasters -- and there is a group of us to the current Terms of Trade Agreement -- felt that it was appropriate to have an MFN clause was because we were concerned that entities such as over-the-top services, Netflix and others, might be able, because they weren't parties to this agreement, to have a competitive advantage over those of us who were parties to the agreement and we didn't feel that that was appropriate.

467   THE CHAIRPERSON: So, your view is that the MFN clause targets solely unlicensed over-the-top providers?

468   MS COE: Well, that was certainly one of our key concerns at the time. Obviously, CPC had a separate Terms of Trade Agreement with the CMPA which has expired and I know that they're continuing to negotiate their agreement and its renewal, and obviously there are small independent broadcasters who are not parties to our current agreement.

469   What we were trying to do with our MFN clause was to ensure that in our negotiations with the CMPA, where we all felt in the end after quite a long and protracted negotiation process that we had come to a good and fair place, both parties, I think, had really tried hard to understand the other party's positions and to try and work out a way and a framework that would be manageable going forward.

470   We felt after all that effort that we wanted to try and ensure that not only was it an example perhaps for other parties but it was also something that everybody should be mindful of in their negotiations with producers if they weren't already a party to the agreement.

471   THE CHAIRPERSON: Even though they may not have been participating in the negotiations, they in a sense get bound by it. One could argue that that's exercising a lot of power, maybe not the intention but maybe the consequence.

472   MS COE: Well, it wasn't intended to be binding to other parties. What it was intending to do is that if producers felt that they wanted for various commercial reasons to give a better deal to entities large or small on the very same issues that we had collectively ourselves agreed to be bound by, we wanted the right to be able to reopen those as well.

473   THE CHAIRPERSON: Right. But one could argue that you are dictating the terms for others, other broadcasters. If you were saying just over-the-top, that's one thing, but here you're actually imposing it on other broadcasters that may not have been part of the original deal. Is it not the case?

474   MS COE: Well, certainly right now, we are not actually -- we're adhering to the Terms of Trade Agreement. The CBC currently, I'm not sure whether or not they are continuing under their prior agreement, which has since expired.

475   I don't think there's any discussion on any of the broadcasters' part that we should be looking to see whether there's room to manoeuvre based on whatever that party is doing with the CMPA, et cetera.

476   I also don't think that we've had a situation where any of the broadcasters to the agreement have taken issue with any agreements -- certainly, they're confidential and we don't really know the terms -- that the CMPA members individually may have entered into with respect to productions with any independent broadcaster.

477   It was more kind of a way, as a general principle, that we were trying to ensure that both parties were treating each other fairly as we came together in this. And it was a new thing for us to come together on. That's probably why it took a while for us all to get there.

478   LE PRÉSIDENT : Du côté francophone, qu'en est-il de l'entente avec l'APFTQ et sa reconduction?

479   MME BROSSEAU : Je pense que, comme vous le savez, il y a un historique entre l'APFTQ et les gens d'Astral d'une très bonne entente. Il n'y a pas de méfiance de part et d'autre.

480   Donc, on est en train de négocier une deuxième entente commerciale. Ça semble très bien engagé, et ça devrait se conclure sous peu. Il y a déjà eu... En fait, il y a eu une rencontre la semaine dernière, et tout était, semble-t-il, sur les rails pour les deux parties.

481   LE PRÉSIDENT : Et comment que le Conseil peut s'assurer, à la fois du côté anglophone et francophone, qu'une entente demeure en place malgré la possibilité de la réouverture du côté anglophone et la renégociation du côté francophone? On l'imposerait comme condition de licence, et si vous ne pouvez pas vous entendre, qu'est-ce qui va arriver?

482   MME BROSSEAU : Je vais passer la parole à mes collègues.

483   MR. CRULL: I'm sorry, the question is what will happen if we can't agree on a renewal --

484   THE CHAIRPERSON: Yes, or you reopen the file in June 2013, or in the French side if you can't agree, but, as I said earlier, it is a preoccupation of the Commission as stated in Diversity of Voices. So assuming there is no agreement, and by all means if you can agree that's fine, but what if there is not?

485   MS COE: I'll jump in. Kevin, I don't mean to cut you off. It just never even has occurred to anyone on our team that we wouldn't just extend that agreement. So I think that's why we sound sort of flummoxed by your question, to be honest.

486   MR. CRULL: Well, I think, Mr. Chair, in fairness though, there has been noise in the industry and we have not been a party to questioning the Terms of Trade Agreement. In fact, Corrie and other leaders from Bell Media were champions of getting it done. We remain committed to it.

487   I will, however, say you heard us talk about seismic changes in the industry, revenue model challenges. The beauty of the Terms of Trade is that it actually assured business model stability and integrity for the creators of our industry.

488   A number of the issues that we are grappling with, whether it be OTT, whether it be cost structure challenges, ad revenue problems, in order for us to be able to have confidence in extending a CMPA Agreement under these terms, there does need to be some revenue stability for the industry and some reasonable market control over the revenue of the business in order to lock in those costs for a long term. It would be our full intent to do it, to renew it under the terms this June.

489   I think that our commitment to independent producers -- you heard that in the last year Bell Media did business with 174 different independent producers. I think that our commitment and our support of that industry is exemplary and in this case shouldn't be questioned, but there does have to be some consideration in a negotiation like this for the overall business.

490   As for MFNs, I think it's entirely reasonable as a business practice when ensuring a long-term commitment to another party of a contractually committed cost basis to have some protection that you aren't just subsidizing a competitor or somebody else riding on your investment in that business to get lower pricing, and that's a well-established commercial practice.

491   MR. BIBIC: Mr. Chairman, I take note of the question, which is how do we work the mechanics of the condition of licence and the potential for the agreement to come to expiry.

492   So I've got some ideas in the back of my mind. If you allow this to be undertaking number 2, we would love to give it some thought and come back on Wednesday morning with potential mechanics if we can think of some that address where I think you're going.

Engagement

493   THE CHAIRPERSON: Great. And that's exactly the nature of the question. At one point the agreement of the parties may fall apart, and yet, it's important to have one of those agreements in place and I'm not sure what happens if an agreement can't occur.

494   MR. BIBIC: Okay. Got it.

495   LE PRÉSIDENT : Sur le même sujet, mais à propos de l'Association des producteurs francophones du Canada, dans votre demande, vous avez dit être ouverts à négocier des ententes par rapport à cette association-là. Je voulais m'informer sur le statut.

496   Où est-ce que vous en êtes avec vos négociations avec l'Association des producteurs francophones du Canada? Est-ce que vous vous attendez à résoudre des négociations pour avoir une entente à court ou à moyen terme?

497   MME BROSSEAU : Je suis moins au fait de cette entente-là que je ne le suis de celle de l'APFTQ. Je pense que c'est bien engagé. Encore là, il y a toujours du respect de part et d'autre avec l'association. Mais concrètement, je ne peux pas vous dire où on en est. Je ne sais pas si quelqu'un dans mon équipe pourrait répondre à ça.

498   LE PRÉSIDENT : Peut-être vous pourriez l'ajouter...

499   MME BROSSEAU : À la liste de mercredi?

500   LE PRÉSIDENT : À la liste de mercredi, oui, s'il vous plaît. Parce que vous en avez promis. Donc, je pensais qu'il y aurait... Peut-être que vous étiez occupés à préparer l'audience. Donc, vous n'avez pas eu le temps de négocier avec ce groupe-là. Mais voilà!

501   I've got some other questions now for --

502   Wednesday, same time.

503   MR. COPE: Yes.

Engagement

504   THE CHAIRPERSON: Okay.

505   With respect to program acquisitions, now, I know that when there are mergers there's always a tendency and a desire -- it makes perfect business sense -- to seek synergies and perhaps bring programming acquisitions together.

506   Now, in the case of -- if we were to approve this transaction, you would have both the CTV platform and The Movie Network platform. So is it your intent to purchase programming concurrently for both TMN and CTV?

507   MR. CRULL: I'll pass this to Ms Coe and to Mr. Riley in just a minute, but we think that actually, Mr. Chair, one of the things that we're so excited about by the common ownership of CTV and TMN and as it relates to our multiplatform efforts is the promotional megaphone that comes.

508   During the 9(1)(h) hearings we heard a lot of discussion about the lack of promotional support and exposure for Canadian films and we view actually the experience that we've demonstrated, that we talked about earlier, on our Canadian scripted and non-scripted programming, the promotion there, that that is going to be a tremendous benefit for Canadian films.

509   As for the window in negotiating, I'll turn it actually to Catherine and to John Riley.

510   MS MacLEOD: Well, speaking for the acquisition part of it, and I know John will speak to this, as far as I understand, TMN is currently in long-term agreements with two studios, HBO and Showtime. So that effectively prohibits us from trying to go at the market together.

511   Working with the studios --

512   THE CHAIRPERSON: Which suggests that might be something you would want to do.

513   MS MacLEOD: It might be, but what we're finding is that, you know, in our experience with the studios, it doesn't really matter if we're coming to the table, it's what the different windows are.

514   So coming together all together, there's a programming team that deals with conventional acquisitions, there's a programming team that deals with specialty acquisitions, and similarly, there will be somebody who deals with pay acquisitions.

515   It would -- you know, you would think that that would make sense, but in most cases it actually doesn't because you're acquiring -- in most cases as you develop these brands you're acquiring different types of programming, exclusive programming. So it doesn't lend itself so easily just to saying here's a big deal.

516   The other thing that we know we're facing now with the studios is protecting ourselves against the OTT players. So if something like Netflix is coming in over the top, they're willing to buy -- and I know we've talked in large part here today about pay television, but they are now opening up windows for cable programming as well as looking at some conventional plays and getting closer to where our broadcast windows are.

517   So in that light, you know, the studios are looking to them and looking for the dollars that they can get for that programming and that becomes our real competitor in that market.

518   THE CHAIRPERSON: Right.

519   MR. COPE: I would add one thing, and that is, obviously, we are hoping though that the relationships that Astral has had and Bell has help secure in a sense access to some of that content under the Canadian cost structure for the other broadcasters as well, I mean all the other BDUS, so that if we're able with those relationships to make them matter a little bit more, that will be a good thing for the marketplace here against people who are buying some of this on a global basis.

520   THE CHAIRPERSON: Right.

521   MR. COPE: In some of the arrangements, in time definitely there will be some benefits. We've talked about that before.

522   THE CHAIRPERSON: Yes. Well, the advantage of TMN is that it's historically been adding to the broadcast system edgy, scripted comedies and dramas, and the risk is that we might lose that to the system and if you're buying them together, it may be more popular than a broad conventional window.

523   MR. CRULL: I now understand the question. So it was more about the mass genre of conventional appeal versus the more niche appeal and edginess of specialty channels --

524   THE CHAIRPERSON: Because we've seen that occur in the past and I've heard criticism, for instance, of Showcase, which used to be a more edgy channel, and following some acquisitions, not necessarily my view but I've heard it said that it's become a rerun channel.

525   MR. CRULL: Right. Okay. Well, for sure, Mr. Chair, following the tastes -- we are witnessing, I would say, in our industry in many ways a golden age of creativity as a result of the competitive emergence of cable channels and specialty channels that are indeed producing the kind of content that you referred to that may not have mass market wide audience appeal but that is very appealing to certain audiences as well as the investment of original productions by OTT.

526   We have to serve viewer tastes across that spectrum of services and I think Mr. Riley has some experience in this as well.

527   MR. RILEY: Mr. Chairman, it would be a death wish for pay television to water down its product. The fact of the matter is, as I indicated earlier in another context, we are an apple to the oranges of other players in the system.

528   One of the promises of pay television is exactly that, is that it's edgy. It's programming that you may not see elsewhere. Sometimes it's experimental. It's different.

529   If we don't distinguish ourselves from other services in that manner, there will be no motivation for any subscriber to pay the premium cost for pay television if that kind of programming is there.

530   So given the nature of where pay is in the structure, it wouldn't make any sense and, as I said, it would ultimately be a death wish for pay TV to do that.

531   MS MacLEOD: And may I just add that it would also actually be a death wish in that sense for specialty and conventional, to be honest. We've worked hard over the last, I would say, couple of years at least to try and build up specialties as places for finding exclusive content, destination content. You will go to Space and you will get to see something like "Orphan Black."

532   There's appropriate places and the demand for exclusive, fresh, innovative content sticks with each brand and we want to build up each brand, including the TMN brand.

533   What I think there's opportunity for us to do is to take, you know, our assets and really identify to Canadians that this is a place on TMN where you can find incredibly interesting, diverse, complex storylines, difficult and sometimes flawed characters, and people don't really know about all those great programs necessarily. I think CTV and our Bell specialty assets bring us the opportunity to promote those programs more readily.

534   MR. RILEY: And one other thing I might just add is that it doesn't mean that there won't be occasion and opportunity where there is some program that might benefit in succeeding windows, and in fact I think one of the promises of this application is in particular with respect to Canadian programming, that those opportunities may exist, and if so, all the better for the creators by providing additional windows and providing additional licence fees.

535   So it's not to say that there won't be a program but the services will need to maintain a distinct nature or they will become unappealing to consumers.

536   THE CHAIRPERSON: You see, the risk from the subscribers' perspective is that they may have to pay more than once for different services to see the same recycled program. So what kind of guarantees might we get out of that?

537   MR. RILEY: Well, I would say that programming that's on pay television, some of it does find a home in subsequent windows. Not everybody subscribes to pay television. It's a little bit like a book coming out in hard cover. Some people choose to buy the book and have the book in hard cover and some people wait to buy that book in soft cover.

538   So given the nature of pay television, given the nature of subscribers who receive it, I don't think there's a big danger or worry that people are just paying double for recycled programming.

539   MR. CRULL: Mr. Chair, there are 450 or so odd specialty services available in Canada. It's an immensely competitive market and now with packaging flexibility and the demands of the consumer for more choice in that regard, the consumer is the ultimate governor. If we are recycling content on a specialty channel, it will not get carried by the consumer and we lose.

540   So I can tell you our programmers, our channel brand managers are committed every single day to unique original programming that makes that channel in demand.

541   THE CHAIRPERSON: Mr. Greenberg, I think you wanted to add something.

542   MR. GREENBERG: I just want to add, if you're concerned about this kind of programming disappearing from pay, that can never happen for two reasons: number one, because the consumers want it; number two, we have output agreements with HBO and Showtime, which means we have to take all their programming.

543   So there will never be a diminution of this kind of programming on pay TV. As John said, it would be a death sentence for us. And second of all, that's our raison d'être to offer different programming on the pay platform.

544   THE CHAIRPERSON: With respect to French- and English-language rights, I mean there is a potential that having platforms in both markets that you might decide to acquire rights concurrently for the English and French markets. Is that your intention or will they be very much negotiated separately?

545   MR. CRULL: I think that on occasion that will be a benefit that we'll be able to bring to producers whenever we can do that. The content demands are very different and the markets are very different. So our first interest is programming to the consumer desires, but where there is an overlap, then that would be something that we would be interested in.

546   MR. BIBIC: Mr. Chair, on that question, I took note that last -- I think it was last week, Monsieur Dion of TVA raised a concern, or it was in the intervention of Quebecor -- one or the other raised a concern about well, here's Bell, it's going to operate in French and English. If they have the same genre in French and English, they can buy up all the rights.

547   Related to the question you just asked, I found it kind of interesting last week, le 2 mai 2013, TVA Sports issued a press release saying that it has an association with CBC/Radio-Canada:

"TVA Sports devient une chaîne spécialisée officielle des Jeux olympiques de Sotchi 2014."

548   And what's interesting, in answer to your question, is at the bottom of that press release something I want to call out:

"TVA Sports a conclu plusieurs ententes de diffusion à long terme avec bon nombre de propriétés de prestige très populaires auprès des amateurs de sport dont les Sénateurs d'Ottawa, l'Impact de Montréal, la LHJMQ et la Coupe Memorial..."

549   It goes on to say IndyCar. Well, IndyCar, the North American rights to IndyCar are owned by ESPN. ESPN, as you know, is a shareholder in TSN. Despite that, it's TVA Sports that got those rights for French-language, not RDS.

550   TVA Sports also has NBA and Toronto Raptors. Well, we're an owner, as you know, part owner of MLSE, the Raptors. MLSE has the rights for all NBA games in Canada. Despite that, it's not RDS that has those rights, it's TVA Sports -- Coupe du monde de la FIFA 2014.

551   And the point is the owners of these rights, whether or not we own part of it or not, is out to maximize those rights. In those cases, I guess, even though there's kind of part ownership of MLSE or a connection with ESPN, those rights holders sought out the maximum they could get and if it's TVA Sports that offered the best offer, they got the rights.

552   So there is a connection but there is also a market and rights holders seek the best offer.

553   THE CHAIRPERSON: Fair enough.

554   I'm just trying to get a good understanding then, if it all comes to the point where you will try to maximize the value for all parties, but on top of that you're buying French and English together, buying all the multiplatforms together potentially, I'm having difficulty understanding what the role of the champions are and how they all report to the same person.

555   Are they really champions? What's a champion as opposed to a decider is I guess the essence of my question. I take it then, therefore, there is only one decision-maker ultimately and what's the role of the champion, both the English and French champions?

556   MR. CRULL: Well, maybe I can allow Corrie to describe the process within Bell Media, which includes, as you can imagine, brand leaders who run channels.

557   Catherine runs Space, Much, a number of our specialty channels.

558   We have a programming council that includes a cross-section of management in the company that makes programming decisions for many of the channels or new acquisitions.

559   And Corrie, as our champion for the independent production sector, I think it's an unfair characterization to say that Corrie wouldn't have authority because the decision-making rests with Corrie and her team as part of serving the brand strategies and the overall programming council.

560   MS COE: First, before I describe the process within, if I may, I just wanted to address, Mr. Chairman, your point about French and English.

561   The markets are so so different, and that was alluded to already by Kevin, the types of programming and the sensibility, it's not just the language, everything about it is so different, it wouldn't make any sense for us, for my team anyhow working on the English side, to try and develop and commission programs which suit the English market and think that we could somehow make a success of those in the French market on any kind of widespread basis.

562   And similarly, the projects that might be developed or produced by Judith and Jacques and their teams, which are specifically suited to their channels and to the French market, don't necessarily readily translate to our market and our tastes and what our audiences are looking for.

563   So I don't anticipate at all any kind of co-development or situations where one market's development group would basically be in charge of developing shows for across Canada, across both language markets. I just don't think that would happen.

564   I think it's a different point that others have already addressed about -- to the extent that foreign programming is being acquired, might you try and acquire that for channels across the country in either language? You've already heard the answers already given. But just in terms of commissioning and developing I just did want to draw that distinction.

565   On the English side, as I work with my team to develop and commission shows and look after the ones that are in production for our various channels where there is CTV or CTV Two or any of the specialty channels that we work for, essentially what we do is, based on what we hear from the channel heads about their brands and what they're looking for, so CTV has a certain style of programming and we are looking for widespread appeal, mainstream but a certain polish, et cetera, whereas Space is looking for genre programming and it's a much narrower market and they are like serialized storytelling, we go out and try and find ideas and projects that are going to be suitable for those specific channels. We develop them, as many as we can, that we think are going to become potential hits.

566   We meet with the various programming heads to say, "Here is the ones we think are the strongest and here is why". There is input. There is a decision made about which should be ordered, and away we go.

567   We produce them and then we work very closely with our promotions and communications departments to try and get them promoted as loudly and as well as possible and hope that they are a success.

568   But that's our role. We wouldn't by any means think to input into whatever might be done on the French side.

569   M. PARISIEN : Si vous permettez, Monsieur le Président, j'aimerais vous parler un peu du champion ou de la championne pour le marché francophone. On verra.

570   Vous avez fait allusion au fait que -- at the end of the day -- il y a un décideur. Et vous semblez suggérer que peut-être ce décideur-là sera pas dans le marché francophone.

571   Vous avez probablement raison. On a tous un patron. Puis le patron a toujours un autre patron, etc.

572   Moi je peux vous dire qu'au niveau des budgets, peut-être que ce sera approuvé de façon plus centralisée. Mais une fois les budgets approuvés, ils vont être dépensés entièrement et de façon très autonomie ici au Québec.

573   Moi, je rassure tous les intervenants qu'il y aura un champion ou une championne qui dirigera le contenu, la programmation ici au Québec, qui sera le seul intervenant avec les producteurs indépendants et le centre de décision pour la programmation va être ici, basé surtout sur le fait que ce qui fait notre succès jusqu'à présent, c'est de refléter les valeurs et la culture québécoise. Et que de diverger, ça c'est encore une fois c'est quasiment un -- là aussi. On va perdre des cotes d'écoute. On va perdre des revenus publicitaires, on va perdre l'intérêt de l'auditoire.

574   Alors notre modèle d'affaires est construit sur le respect de l'auditoire, puis il va continuer à se faire de cette façon-là.

575   Présentement chez Astral, on a plusieurs champions. Ce qu'on a voulu faire dans la demande, c'est rassurer tout le monde que ça va continuer de cette nature-là, et que le centre de décision en programmation va se faire au Québec, va se dépenser au Québec, les projets en développement vont se faire au Québec également.

576   LE PRÉSIDENT : Donc, les préoccupations de certains producteurs indépendants à l'effet qu'ils vont perdre des portes, soit dans le marché anglophone ou francophone, des portes sur lesquelles ils pourraient aller cogner pour faire des « pitch » pour proposer du développement.

577   C'est une préoccupation qui n'est pas...

578   M. PARISIEN : C'est une grande préoccupation. Puis c'est des discussions qu'on a eues à l'interne aussi.

579   Mais moi, j'aimerais ça le changer dans l'autre sens que personne va être obligé d'aller à Toronto pour faire une présentation pour un produit francophone.

580   Et ce qui est intéressant, c'est que ceux qui vont se pointer chez Bell Média et dans le marché du Québec et qui ont des intérêts à présenter des projets en anglais vont avoir une porte d'accès incroyable, peut-être beaucoup plus forte que ce qu'ils n'ont jamais eu avant.

581   Alors, ça ouvre des marchés aussi pour les producteurs francophones vers les marchés anglophones.

582   LE PRÉSIDENT : J'imagine que par contre, les producteurs francophones en situation minoritaire auront à prendre l'avion pour Montréal.

583   M. PARISIEN : Non, parce que... non. La dernière audience, on a eu cette discussion-là. Et vous savez qu'Astral a toujours soutenu, acheté. On vous a donné des exemples concrets qui sont dans notre transcription, sur le fait qu'on achète en français de la programmation dans les provinces de l'Atlantique, qu'on en achète dans la région de Winnipeg et même dans l'Ouest.

584   Et on va continuer à faire ça. C'est dans notre intérêt de continuer à mettre en ondes ces programmes-là pour que le consommateur reste à l'écoute. Alors, ça va continuer.

585   LE PRÉSIDENT : Donc, aux bureaux de développement à Vancouver et Halifax appuieraient l'anglais et le français? Est-ce que je...

586   M. PARISIEN : On va faire un appel à la meilleure programmation disponible en anglais ou en français.

587   LE PRÉSIDENT : J'ai encore un peu de difficulté à bien saisir la notion des champions.

588   Si, comme madame Coe dit que c'est les services qui, sachant comment qu'ils veulent se présenter, se « brander » vont agir d'une façon particulière parce que c'est dans leur intérêt, c'est la marque du service. Je ne comprends pas le rôle additionnel des champions.

589   Puis peut-être que vous devez tenter de me l'expliquer encore une fois.

590   M. PARISIEN : Je vais tenter de...

591   LE PRÉSIDENT : Du côté anglais et français, s'il vous plaît.

592   M. PARISIEN : Bien, je vais le faire pour le côté francophone pour commencer.

593   Du côté francophone, il va y avoir une personne qui va maîtriser la fibre et les valeurs de chacune des chaînes.

594   Et, les piliers de ces chaînes-là, c'est connu par les producteurs. Ils savent à quelle niche ça s'applique. Puis Judith va pourvoir peut-être entériner ça.

595   Et présentement, c'est qu'on veut un seul point de chute où le dossier commence puis où le dossier va être reçu. Et c'est ça un champion.

596   C'est quelqu'un aussi qui va pouvoir appeler des producteurs puis dire : « Voici où est-ce qu'on s'en va », faire des présentations à des groupes de producteurs avoir des relations avec l'APFTQ pour expliquer notre développement puis notre vision.

597   MME BROSSEAU : Je pense que les succès dans chacune de nos chaînes illustrent bien notre écoute et notre sensibilité à la fois au public québécois, mais aussi aux producteurs indépendants du Québec.

598   Et chacune des marques, Astral en français a une ligne éditoriale très claire. Il y a une marque forte qui a été créée pour chacune de ces chaînes-là et ça serait -- j'ose pas utiliser l'expression de mes collègues anglophones -- mais un death wish.

599   Ça serait vraiment... ça serait courir à notre perte que de ne pas aller à l'encontre de ça.

600   Et pour répondre, donc, à votre question du personnel, pour chacune de ces marques-là, il y a des gens qui, depuis des années, ont à coeur de développer les meilleures séries possible en lien avec ces marques-là et en lien avec les attentes des publics vis-à-vis ces marques-là.

601   Dans un univers où les consommateurs sont extrêmement sollicités, c'est très important de leur donner ce à quoi ils s'attendent pour chacune des marques.

602   Alors moi je pense que le fonctionnement de base de nos équipes avec nos directeurs de productions originales est là pour rester. Quant à la super structure, à mon avis, c'est plus un enjeu de gestion qu'un enjeu de marque et de programme.

603   M. PARISIEN : Mais c'est aussi un enjeu qui est nécessaire par la multiplicité des plateformes et un champion va maîtriser très bien nos marques de télévision spécialisée, mais va aussi bien maîtriser les plateformes numériques.

604   Alors tout ça se tient ensemble aujourd'hui. Puis les producteurs agissent en conséquence. Et le fait d'avoir un point de chute, ça va juste aider tout le monde. Ça va simplifier beaucoup.

605   MR. CRULL: Well, Mr. Chair, it's really at the heart of how we run our business day to day. We spend today, on behalf of Bell Media, more than $600 million on production and procurement and commissioning of Canadian content. I can assure you that for that amount of investment that it receives the highest amount of attention. It has a structured governance process for decision making and to make sure that we're delivering the very best product.

606   Now, it also has resulted in, as you would expect, the natural creative process. It's resulted in spreading that spending, as we said, among 174 different partners which has created a very wide variety of opportunity for producers across the country and has satisfied the needs of viewers. But at the heart of the role, as you're confused about this champion, I'm trying to understand and unpack if there is a concern underlying.

607   In no way does Corrie or the French champion -- in no way would they say to a channel manager, a brand manager, "Oh, I'm doing a deal with studio A or producer A and so you have to change your programming strategy to take another product from them". It's not going to be where the champion or the executive --

608   THE CHAIRPERSON: My concern is the other way. My concern is -- my understanding is you were doing this anyway and these two champions are just regulatory marketing.

--- Rires

609   MR. CRULL: Well, we were sensitive to the feedback that we heard from the independent community and so, therefore, I think that we say we would enhance and identify in some cases a single point of contact where they know that they can go to, to get ideas heard.

610   We added the regional offices which is something that provides a little bit more assurance of an ease of face-to-face meetings balanced, frankly, with the sensible use of resources in the system.

611   I would just say that we spent a lot of time talking about the track record over the last two years and I think that some recognition needs to be provided to the way that the business is actually performing on behalf of those independents today.

612   But we are not in business to protect an idea just because it's Canadian. We're in business to go find the very best ideas and work with getting them to screen or to air to benefit viewers and listeners.

613   And when we champion and promote Canadian success stories we actually don't say, "Hey, Flashpoint is a really fantastic police procedural". We say, "That's the very best police procedural we've had on air in the last six years and it just so happens to be Canadian."

614   MR. BIBIC: If I could --

615   THE CHAIRPERSON: Fair enough.

616   MR. BIBIC: -- if I could sum it up.

617   THE CHAIRPERSON: Yes.

618   MR. BIBIC: Because I think -- I mean, you expressed the concern one way, but when we -- you know, having gone through the process last year as well and having had interactions with the independent production community, including in French, there was just -- I mean, you expressed one concern but there were multiple concerns.

619   One concern writ large was, "Well, if we are a French-language independent producer here in the province or anywhere in the country and we want to talk to the programmers right here in Montreal what assurances do we have of that?" So we wanted to address that, which we did.

620   There was another concern which was, "Hey, as an independent producer I'm dealing with the programming champions within each Astral service and I have a relationship with them and they are true to their brand vision. How do I make sure that that continues?

621   That was a concern. So we said, "No, the folks who are dealing with programming for their services will continue to be there".

622   But then there was a third concern which was, "Well, okay, but how am I going to be sure that these people are going to have kind of the clout of the decision making ability within a much bigger broadcasting entity?"

623   And we said, "Well, there will be a champion, a senior leader, so to speak, of all the programming champions within the brands who will have overall management responsibility and the, you know, complete vision of content acquisition, content promotion, distribution on multiple platforms." So those teams that you're used to dealing with will report to a very senior leader within Bell Media reporting to Jacques.

624   So we tried to cover those three concerns. So it wasn't regulatory marketing. It really was an attempt to say we want to address the concerns on those three levels and we think that having the team up to one leader reporting to the most senior leader on the French-language content side was the way to do it.

625   Now, on the English-language side it's kind of how we operate now, and Corrie explained that.

626   But that's what we're trying to do, have a parallel structure of French and English. That was the motivation.

627   THE CHAIRPERSON: Fair enough. Let me now turn to multi-platform digital media rights.

628   I'll start this with a bit of a preamble. Now, when Astral was a pure play programming undertaking, the current situation, it has every advantage to provide all the BDUs with content for multiple platforms. It's got valuable content non-linear rights which have value and they want it out there.

629   Now, some have suggested, though, that as part of a VI BCE/Astral combo there may be an attempt to maximize revenues from the BDU side to the detriment of being more open in providing non-linear rights or at least not as eager to give the non-linear rights. What do you respond to that?

630   MR. COPE: It's a 100 percent incorrect accusation in any way, shape or form.

631   Bell cannot spend $6 billion investing in the media business in any way, shape or form to monetize that content specifically only through the Bell BDU distribution channel. It's nowhere near large enough. It's 2.3 million customers. We have not got any opportunity to get a return on our money if we behave that way in one iota.

632   That's why I'm so passionate about why we don't need the VI rules, but that's a whole other different story. That has passed.

633   It doesn't work. We are competing on a global basis. We are buying NHL hockey games. We are buying movies. We are buying stuff on a global basis. We have to distribute this through all the BDUs.

634   In fact, we are probably the most committed of any broadcaster in the country to making sure the ecosystem of the BDU market works on behalf of all the BDUs.

635   Kevin has these seven large, incredibly great companies who supply services and then all the smaller carriers in the country. That's a beautiful model for a distributor. He doesn't have to go out and directly talk to 30 million Canadians. He has this great opportunity working through Rogers, working through Shaw, working through all those players.

636   In fact, we're doing very creative things in the whole area of digital rights and the distribution of it to try to maintain the ecosystem that we have that's so powerful in Canada for the cable operators, the satellite providers and for over the top. We have been open to that.

637   I mean, on the wireless side we launched mobile TV. Videotron launched mobile TV. Ironically, we both carry each other so we have been able to resolve those issues in Quebec and leave. Other carriers haven't wanted to pay a few million dollars to carry it. That's the only thing I know, we're getting close to a sum.

638   But our model fails if we don't distribute this content to every one of those channels. It does not work. Our stock will be hammered, the business will fail and the $6 billion will have to be written off.

639   This is a ridiculous question that people are asking to try to get as much leverage from you on price negotiation and you don't need to get in the middle of that. That will be resolved. That's what this is all about.

640   So you have our commitment. It is impossible to work.

641   THE CHAIRPERSON: Okay. So what is your practice with respect to non-linear rights?

642   MR. COPE: We are in the midst of discussions right now with a number of different companies across the country to try and get that product into the market including our own Bell which we just got in the market. I'll let Kevin take you through that.

643   MR. CRULL: Well, we have that, Mr. Chair, on the conventional side of the business for many years. In fact, for three or more years we've had what's called catch-up window rights available to all CTV and all CTV Two shows which have been distributed commercially through several of the large BDUs. So as a matter of fact, we have had participation in that space.

644   On the specialty side of things, so rights for Discovery Channel, Comedy Channel, Bravo, things of this sort, when we went through, if you rewind the clock back to 2000 -- late 2010 and 2011, at that time we really experienced, and this happened right after Bell bought CTV and it was kind of -- the welcome gift was to renegotiate 29 specialty distribution agreements with every single distributor in the country. It was a complicated commercial process of which the Commission is well aware.

645   We chose at that time not to include non-linear distribution for a couple of reasons. One is we didn't, frankly, have the business model nailed down. TV everywhere at that time had not emerged. In fact, it wasn't even really talked about south of the border as the go-to-market strategy. We were indeed looking at strategies of going direct to consumers. We were evaluating all kinds of options.

646   Secondly, we hadn't acquired all the rights necessary. Acquiring the rights for 3G and 4G wireless for in home and out of home WIFI, for live streaming versus advertising video on demand supported or subscription video on demand took a great deal of effort to assemble. Each of our channels can have 10s or, you know, 20, 30 or 40 different suppliers to fill a schedule and we had to go acquire those rights.

647   So we just weren't ready in 2011.

648   Following that process, however, we did settle on TV everywhere supporting the ecosystem which means you authenticate a subscriber to their cable or satellite or telco TV subscription and then you provide a plethora of on demand services available to any screen over any network. We worked with our distribution partners and, as a matter of fact, it was discussions that were probably a year in the making.

649   We included in our submission in one of the appendices, we included a description of the product which also outlined how we had adapted the product to feedback from the various distributors; in specific, how we would deliver it in a way that would make it inexpensive enough and flexible enough for a small cable company, all the way to sort of proprietary enough, if you will, for a big cable company that wanted to own a lot more of the user interface and presentation of that content.

650   We went to market in October of last year with all of the major distributors including the CCSA on behalf of many of the smaller distributors. As I said earlier today, we've been in technical discussions for the delivery of that and the price discussions are just underway.

651   As a matter of fact, in our reply we pointed out, I believe in response to some of the concerns raised, we pointed out, "Hey, we haven't been able to get engagements going". The good news is that even since our reply, and we put that on the record, the log jam seems to be breaking up and dialogue is now underway on the price side of that availability.

652   But I would say this, that in support of George's commentary on the principle by which we go to market, these rights do have a cost. There is no question. And I put confidentially in our submission right now the spending of my entire programming budget that is attributable to these non-linear rights.

653   THE CHAIRPERSON: I saw that.

654   MR. CRULL: -- they do have a cost. And so we do have to have a business model both to recognize that additional cost but also we have to have a business model as an industry that captures all of the viewing that's moving there and the ad measurement has to move and dynamic advertising insertion and targeted advertising.

655   There is many things that require us to, frankly, work together as programmers and distributors in order to satisfy this. These are big commercial agreements.

656   MR. BIBIC: Mr. Chairman, so on the record, some interveners raised issues around non-linear rights. So there's really two issues there.

657   A lot of it really was about the discussions with Bell Media about getting access to Bell Media's current non-linear rights. We have provided a complete response in reply. It is Appendix 9 which is what Kevin referred to. This explains our product and the state of negotiations with respect to that.

658   So we responded to that out of respect for the record but, of course, that doesn't have -- it's not about this transaction. This transaction is the acquisition of TMN and TMN Encore in English and the specialty services and SuperEcran on the French-language side. We covered this right after we came back from break.

659   On that, Astral currently has long term non-linear rights deals in French and English with the BDUs. So when you ask the question, "What is the state of the affiliation agreements?" those affiliation agreements include access to non-linear rights. We would respect those extending to 2015-16, all the way up to 2018 for TELUS.

660   So you know, if we look at this transaction there is that certainty of access. We will get deals done for Bell Media which is not about this transaction but the issues were raised so we responded.

661   And then going forward with the safeguards we have proposed to negotiate linear and non-linear rights together in the future, should the BDU choose, that will ensure kind of a stability going forward.

662   THE CHAIRPERSON: Would it be correct that it's with the goal that they be available on a timely basis?

663   MR. BIBIC: For sure.

664   THE CHAIRPERSON: And obviously, you would add something about commercially reasonable terms.

665   MR. BIBIC: Of course, which I think we have in our proposed safeguard. What we said is we would provide those rights to get to -- we'll negotiate non-linear at the same time as linear -- I'm paraphrasing -- "two BDUs on a timely basis and on commercially reasonable terms". So those are the exact words we proposed in our reply.

666   THE CHAIRPERSON: Right. And once you`ve negotiated those rights what kind of clauses, in case somebody wants to use them on a platform with some new features? What kind of oversight rights do you keep for yourselves?

667   MR. CRULL: Well, I think --

668   THE CHAIRPERSON: Because the allegation is that through your oversight you might be preventing others from innovating or at least gathering that innovation as marketing intelligence.

669   MR. CRULL: So I think that for a programmer there is no question that the integrity of their content and its presentation to the viewer is paramount. I think that for the longest time as part of the broadcast regulations that the obligations were codified of a distributor to present that content to a viewer under certain parameters.

670   As we move into a nonlinear realm and so much more is capable by way of interactivity and so much more going on on the screen, we are, one, very excited about the innovation and the viewer engagement that comes about by way of various social networking tools along with the content and we support the industry's view that this increased viewer engagement is good for everybody.

671   We are also, however, at the same time, concerned about anything that threatens sort of the business model. If there is advertising that is sold on the same screen as our content, then we are not in favour of that. We are not in favour of other people using sort of the content that we produce and buy to simply fill a part of the screen that then they sell other advertising to that. We would not be in favour of that.

672   Second, even something as innocuous as putting a Twitter feed up -- and, you know, we can come to resolution with distributors on these things, but we have to do it in a partnership collaboratively.

673   When a Twitter feed shows up alongside of a broadcast content, you can get promoted Twitter feeds that are showing up and I will have advertisers for example -- I'm not saying that this has happened -- but a Coca-Cola or a General Motors is advertising in my programming and then that marketing executive sees a Ford or a Pepsi ad in a promoted Twitter feed alongside of it, over time that's going to cause discomfort about the efficacy of the advertising model.

674   So we work with distributors and, you know, on the record TELUS has done some interesting and innovative things for interactivity and we have been actually supportive. We do the same on the same platform for Bell TV. But it has to be done in a measured sense of protecting the interests of each party, all while driving towards innovation to benefit the consumer and the system.

675   THE CHAIRPERSON: Now, you will be going down to LA -- maybe not you personally, but maybe your team, for the LA buys I guess next week -- what is your assessment of how nonlinear rights are being negotiated these days? What are the studios providing and how different are your practices, or not, with respect to what is happening south of the border?

676   MR. CRULL: Thank you, Mr. Chair.

677   Well, the nonlinear rights are being made available and I will be -- it's a very important exercise for us, this annual pilgrimage so I will participate.

678   I think that there are two commercial marketplaces that need to be examined. One is the studio, the studio and producer or rights owner sale of nonlinear rights and then in the U.S. we are very familiar with how similarly situated broadcasters such as Bell Media are making those rights available to then distributors. So it's really kind of two different marketplaces.

679   And I'm glad that you asked this question because there is not a uniformity. Some of the deals we will negotiate will have an inclusive fee that we pay for programming that covers the linear rights as well as the nonlinear rights, but in that case there is no question that -- and in fact my team's job and their direction is to negotiate nonlinear rights in every deal that we do. So when they sit down and a price is negotiated for the content, for sure if we were buying linear only versus the entire suite of rights, there would be two different prices. But some studios will say, "Okay, pay Z for this television program and that includes all rights"; other studios will say, "Pay X for the linear right and then pay Y for wireless rights and Z for live streaming rights".

680   So we have a number of agreements that illustrate a variety of different structures like that and I think that that will probably continue.

681   Similarly, as for the distribution from broadcasters to distributors, it's important whenever you sort of study the commercial reasonableness and look at a comparison of different deals, some broadcasters will negotiate affiliate fees, say for a specialty service and say, "Okay, this service is $.50 and that includes all linear and nonlinear rights and we are going to provide some library content to this extent for that fee". Others will negotiate them separately and say, "Okay, this service is $.42, but if you want to add nonlinear it's another $0.08", ultimately getting to sort of a total value for the service, but they are being sold in different ways.

682   That goes to kind of complete the circle from what I said earlier as to that we chose to sell them separately and so now it is an add-on fee on top of the linear service that we are negotiating.

683   THE CHAIRPERSON: So let me go back to what you raised before when you put in your reply about this minimum 90-day notice of the impending launch of a new programming service.

684   To whom would the notice be sent? What would be the form of the notice? And to what extent does it include nonlinear rights?

685   MR. CRULL: Well, the notice would be sent -- and we had an experience with this last fall with our TV Everywhere where we did send a notice in that October timeframe that included the presentation and included an indication that we planned to bring it to market and the distribution would have gone to all of our BDU customers in that case.

686   THE CHAIRPERSON: So all the BDU customers you have currently and it would be a notice -- what would be the content of it? Description of the service?

687   MR. BIBIC: Description of the service, general terms of carriage, which includes price.

688   THE CHAIRPERSON: It would include price?

689   MR. BIBIC: Yes.

690   THE CHAIRPERSON: And other restrictions as well?

691   MR. BIBIC: The full offer.

692   THE CHAIRPERSON: Okay.

693   MR. CRULL: In the case of TV Everywhere, Mr. chair, the full offer is a complicated process, so I think that there are sort of a couple of ways to look at it.

694   This could be a new channel launch and in that case the terms of carriage, the description of the channel, the price and of all of that would be included.

695   For TV Everywhere, as evidenced by the dialogue that has been ongoing, we continue to enhance the information about the product that we are making available to distributors, so I don't want to imply that on the record of last October was everything they needed to know about the product because it is a major new initiative.

696   THE CHAIRPERSON: Right. But they would need to call --

697   MR. CRULL: Yes, that's right.

698   THE CHAIRPERSON: -- to get more of the details. And it would extend both to new services as well as new nonlinear rights associated with an existing service; is that correct?

699   MR. CRULL: That's correct.

700   THE CHAIRPERSON: Okay.

701   Now, some have described TV Everywhere and I think -- I don't want to put words in their mouth, but certainly a lot of BDU's were, CCSA, Cogeco, EastLink, Execulink, MTS Allstream, Novus, Quebecor and Rogers -- and I'm paraphrasing -- as just another means for BCE to gain an advantage for itself because it then becomes the exclusive BCE content aggregator and doesn't allow others to provide their own offers.

702   What is your response to that?

703   MR. CRULL: Well, when we listened -- I don't know, Mirko, if we can go to the diagram in our reply that showed the structure of the product?

704   MR. BIBIC: I think the best way to do this is in our reply we provide -- there was a statement by some interveners that the way TV Everywhere was offered we were kind of limiting the scope of their ability to innovate because they had to do it our way and then we put in our reply an extract from the offer. The note -- go ahead, Kevin.

705   MR. CRULL: It is Appendix 9 of our reply, but I can describe it --

706   MR. BIBIC: Sorry, Kevin, it's paragraph 137, Figure 8, page 32 of 60, for the record now.

707   MR. CRULL: We did initially -- we did initially intend, Mr. Chair -- so this would be going back well before last October, this would be probably in early 2012, late 2011, and this is in dialogue with distributors, that we intended to have authenticated multiplatform access be on a Bell Media site and the customer would go for example to Rogers on Demand or to Rogers TV Anywhere and would click through that whenever they wanted to see a CTV piece of content or a Discovery piece of content, would click through that and then would be in a branded environment of Discovery or of CTV.

708   The motivation behind that was simple, frankly, it was because we think that that brand immersive environment of being in the vertical content landing space was important for cross-promotion of programs, was important for advertising effectiveness and things of that sort.

709   So that was initially an initiative that we went.

710   We ran into two things as we developed that plan.

711   One is the feedback that you have on the record here which is reflective of feedback, frankly, that's about 18 months old. That's a little bit bothersome to me when that happens, but we did hear that feedback, so we adapted the technical delivery of our service such that there are three options for distributors.

712   One is for small distributors who don't have the capital or the IT resources to develop their own sites and their own apps for mobile use. It's very expensive to develop android apps, IOS apps, now BlackBerry 10 apps, Windows 8 apps, if a small distributor doesn't have the resources to do that, they indeed can authenticate through our apps and they can redirect to our websites or they can authenticate customers through our branded apps.

713   Alternatively there is a middle ground. They might choose to create their own branded landing space, if you think of a webpage first of all where a small cable company might want to have their own branded landing space, but not ingest all of the convent and build the data centre capacity necessary to literally on a daily basis take hundreds of videos and ingest them for presentation. So they could embed our viewer into their website. That provides a degree of customization, but also some operational simplicity.

714   At the other end of the spectrum, we had distributors who said, "You know what, we really want to control the whole user experience and we are investing quite a bit in our own interactive TV Everywhere apps. We want to ingest your content in our own data centres and we want to present that to consumers in the environment within our player". And we said, "Okay". That's the third option".

715   There are parameters around, we say you can't sell advertising on any page that has our video playing. There are a few other parameters, but I think we have shown product design and technical flexibility and, you know, frankly, those comments are 18 months out of date.

716   THE CHAIRPERSON: I wanted to give you the opportunity to put that there, so we will hear in Phase II the views of others.

717   My final question or subject matter, you know, deals with choice and flexibility for subscribers.

718   So as you know, we have historically been concerned about affordability of distribution services to subscribers, we know that Canadian subscribers are looking for even more flexibility, the suggestion is that if we were to approve even this redesigned proposal the result would be it would have a direct impact because it would raise the wholesale rates in the market -- maybe not short term because some of your deals have not been made, but on renewal -- that would have an impact on the wholesale rates and therefore a direct impact on affordability and choice in the retail market.

719   What can you say to assure us that this won't happen?

720   MR. COPE: Well, number one, we can't assure you that the BDUs won't raise price, because that's totally up to them. They are the ones that raise the price to the end user and generally have been significantly more than the cost of content given that all of their margins were up in this quarter. So that would be one, so we can't guarantee that.

721   Now you are asking I think a deeper question of us, because you obviously know we don't have that control.

722   We believe the consumer will win by this transaction. First of all, the Canadian consumers are going to -- we will be investing more in Canadian content, we will definitely be promoting more, as you have heard, on the Canadian content in terms of promoting those shows, a lot more opportunity for artists and Canadian artists, all of that of course good for the broadcast system.

723   We will be bringing more competition to Quebec. You know, for the first time Bell will have a media asset, not as large as Quebecor's, but Quebecor with its 80 percent BDU market share and the strongest broadcaster of the independence has market power that we are going to, quite frankly, weaken in the market. That will be good for the consumer.

724   Ultimately, one of the biggest challenges for us, Commissioner, is our content costs do continue to go up. There is no doubt about it, you know, content is not dropping in price. That's one of our challenges.

725   As I said before and I think even holds here, our scale, the scale of Rogers, the scale of Shaw and the scale of Quebecor I think is actually the future of a way to maybe keep these costs reasonable as they pass through to the consumer. We do need scale in this industry, that hopefully helps keep that content cost amortized over bigger companies. Maybe that helps us with the end final price that the consumer pays. More choice, larger buyers help us out, because all this content we are buying is computed, you know, outside, and then, on top of that, with the benefits package, investing in what we are going to on the content side of course helps grow the Canadian broadcast system as well.

726   So I can't give you -- I don't think anyone of us at this table can give you a guarantee on a consumer price point, but we can guarantee the consumer more choice, healthier environment here in Canada, probably on balance the cost a little bit lower than they would be if it wasn't BCE and the scale of Rogers and Shaw and Quebecor in this business now, then if it was just smaller providers buying.

727   I think that's one of Ian's -- as he has tried to convey, one of the major reasons they have moved to this transaction with us is so that when we are competing for some of this stuff we maybe get it at a little better cost structure. In the end that always does get passed to the consumer because we have such a competitive industry.

728   Then I think the other point is, what will make even more competitive, we can say what we want, we have to celebrate these OTE competitors coming here because the consumer is are saying they want them. We have to find out how to compete with them and ultimately that will keep prices also at a different level because we have increased competition and that always proves it.

729   Hopefully that helps answer the question.

730   THE CHAIRPERSON: Well, that may be a historic announcement that OTT is good for the Canadian broadcasting system.

731   Because you know and you --

732   MR. COPE: Well, it is if it's good for the customer. That's my point.

733   THE CHAIRPERSON: Yes.

734   MR. COPE: And if it's good for the consumer we have no choice but to adopt that as a media company or we are not going to be here, right.

735   THE CHAIRPERSON: Right.

736   MR. COPE: That's what I meant.

737   THE CHAIRPERSON: Right. But you are well aware of that chart we have in our monitoring report, I can't remember, it's in Chapter 4 or something like that, but it clearly demonstrates that basic and non-basic programming costs in Canada are outpacing inflation by a significant margin so what do you foresee as the future?

738   MR. COPE: Yes, we hear you. I mean our content -- Kevin should almost take this over, our content costs, that's one of our biggest challenges. The input costs are regulated, we all know that, and so we are trying to drive them down. That's one of the biggest --

739   MR. CRULL: Well, I think, Mr. Chair, if you look at -- if you actually look at the 2012 filings for specialty services you see that costs are going up much faster than revenue, almost twice as fast. Programming and production costs for the specialty and pay industry as a whole went up almost twice as fast as revenue. So as a matter of fact broadcasters are right now absorbing the costs and not passing them on or -- recouping them in advertising or passing them on to distributors.

740   When you just talked about the pay or the basic and discretionary pricing, George said it well and so I don't mean to repeat, the pricing is in the control of distributors, not in the control of the broadcasters. I think to say that certainly a factor in that decision of broadcasters is the wholesale input costs, but it is by no means the sole factor in the pricing decisions that they make.

741   I have looked at various opinions on is it reasonable to look at the cost of entertainment television entertainment and yes, it has been increasing at faster than the rate of inflation, but so have a lot of things and there are a lot of commodities, consumer goods and products that have been increasing faster than inflation and some that go down.

742   The value of television entertainment in Canada is astonishing. When you look at the amount of television that Canadians watch and you divide it by the average cost of a cable or a satellite subscription, it works out to about $.25 an hour and, as a matter of fact, that has been coming down over the last decade when you look at the amount of viewing options that have been available in the investment in more content.

743   And what is the satisfaction? I know we all have the record and, believe me, Bell for its behalf of having 30 million customers of our various products, we get a lot of feedback about all facets of our service delivery and pricing, so we hear a lot from consumers, but consumers who are just voting with their wallet, Canada actually enjoys the highest penetration of pay television services and so I think by virtue of the value that's being delivered and voted for by spending by their wallet Canadians are saying that they are pretty satisfied with the value proposition.

744   THE CHAIRPERSON: Thank you for that.

745   So I have it at 12:20 right now. There will be more questions, you're not done yet, but why don't we take an hour break for lunch and on revient à 13 h 20.

746   Merci beaucoup.

--- Suspension à 1220

--- Reprise à 1321

747   LE PRÉSIDENT : Order. À l'ordre, s'il vous plaît. Bon, j'ai un micro, cette fois-ci. Merci. Donc, madame Lamarre.

748   CONSEILLÈRE LAMARRE : Nous allons parler... Attendez, peut-être qu'il n'est pas assez proche. Est-ce que ça va mieux? Non. Une fois, deux fois, trois fois?

749   LE PRÉSIDENT : Ah, O.K. Est-ce que ça fonctionne?

750   CONSEILLÈRE LAMARRE : Oui, ça va? Ah, parfait, merci. Nous allons parler de radio. D'abord quelques questions générales de principe et de principe sur la diversité des voix et sur la publicité. Ensuite, on va parler plus spécifiquement et dans un certain détail du marché radiophonique anglophone de adresse. Alors, d'abord, la diversité des voix.

751   Et ne vous inquiétez pas si je n'aborde pas tout ça dans le détail. Mes questions se veulent des questions de clarification. Donc, ça devrait signifier que, le reste, on a bien compris. Ça ne veut pas nécessairement dire qu'on est d'accord, mais ça veut dire qu'on a bien compris.

752   Alors, tout d'abord, l'acquisition qui est proposée va entraîner l'ajout d'un très grand nombre de stations de radio au portefeuille de BCE, toutes les stations de radio d'Astral et on peut par ailleurs constater sur le terrain que les machines de vente publicitaire sont déjà très efficaces, là, autant d'Astral que de Bell.

753   Comment envisagez-vous mettre en oeuvre des synergies ou économies supplémentaires, si c'est possible, suite à la transaction relativement à votre capacité de vente de publicité de la radio? Et je me permets de noter, monsieur Parisien, votre réponse de ce matin à une question du président alors que vous disiez que, pour un gros groupe, c'est intéressant d'offrir toutes les plateformes. Alors, je me demande comment, ça, ça peut se traduire, là, au niveau de la radio.

754   M. PARISIEN : O.K. Alors, ça me fait plaisir de répondre à la question, mais j'aimerais ça juste clarifier votre commentaire d'ouverture. C'est que, depuis quelque temps, ce n'est pas nous qui sommes actifs dans les marchés locaux, mais plutôt notre compétition, qui profite de l'incertitude et du vide que crée la transaction. Alors, c'est plutôt nous qui en sommes victimes, pas que je m'attende à ce que ça fasse pleurer grand monde, mais, quand même, ça met les pendules à l'heure.

755   Dans la radio à travers le Canada, en anglais comme en français, nous allons faire comme Astral a toujours fait et comme Bell a toujours fait avec leur propriété, c'est-à-dire d'avoir des offres combo pour nos différentes stations, quand il y en a plus qu'une dans un marché. Et ces offres combo-là sont basées sur le fait que les formats s'adressent à différents groupes cibles et très, très rarement aux mêmes groupes cibles.

756   Donc, c'est complémentaire un et l'autre. Et les annonceurs locaux en particulier profitent beaucoup de cette offre-là. Et ça leur fait une plateforme intéressante à aborder quand, sur le plan local, tout ce qui leur reste très souvent, c'est un journal régional ou un journal hebdomadaire.

757   Ce que nous allons aussi faire et faisons d'ailleurs chez Astral et chez Bell Média, mais à une moindre échelle, mais chez Astral on le fait dans toutes nos 84 stations de radio, c'est que nos représentants radios offrent la plateforme Web sur le site Web de la station puisque toutes nos stations ont un site Web actif commercial.

758   Nous avons chez Astral et il y a chez Bell aussi pour des raisons d'administrations et de back store une certaine synergie comme la facturation puis toutes ces choses-là qui vont continuer à être en place.

759   Au niveau -- puisque vous m'amenez sur ce sujet-là -- au niveau des synergies de contenu, très peu au niveau des synergies d'information, à part le système Burley dont je pourrai parler un peu plus tard, très peu. Chaque station est dédiée à son contenu local, à sa communauté, à son groupe cible local, avec des émissions dédiées le matin. Et, au retour aux marchés locaux partout.

760   Je vous rappelle que, dans la transaction, on se retrouve avec 107 stations de radio présumant que TSN reçoit votre aval, sinon 106 et que, là-dessus, il y a 43 petits marchés non urbains que nous supportons de par la grosseur que nous avons. Ça nous permet d'être capables de supporter ces petites stations qui, autrement, auraient probablement beaucoup de difficulté à survivre. Et les ventes nationales pour tout Astral radio et pour Bell radio sont regroupées sous un chapeau national, Vancouver, Toronto et Montréal, qui vont visiter les agences pour vendre du contenu national sur nos ondes. Alors, ça répond spécifiquement, ça, à la question que vous aviez sur les revenus.

761   CONSEILLÈRE LAMARRE : Merci. Maintenant, au niveau de votre capacité en tant qu'entreprise fusionnée -- si nous approuvons la transaction -- d'influencer les tarifs publicitaires qu'aurait le groupe BCE/Astral. Et je vais me servir d'un exemple, parce que c'est plus facile dans ce temps-là.

762   Si on prend comme exemple les marchés de Winnipeg, Toronto, Ottawa, Gatineau, ce sont des marchés où présentement autant BCE qu'Astral exploitent des stations, ont des activités radiophoniques qui sont importantes. Vous allez respecter, là, la politique sur la propriété commune. Mais il reste que, dans ces marchés-là, vous allez avoir des stations radiophoniques très, très intéressantes si votre proposition est approuvée.

763   À ce moment-là, est-ce qu'il n'y a pas un danger qu'avec un tel pouvoir de concentration entre vos mains, en ce qui concerne la vente de publicité radio locale, qu'on doive faire face à deux situations qui peuvent être problématiques et qui sont, là, les deux côtés d'une même médaille, à savoir d'une part : est-ce qu'il pourrait y avoir un effet à la hausse des tarifs publicitaires, ce qui ultimement aura un impact sur les consommateurs quoique indirect.

764   Et, d'autre part est-ce que vous ne pourriez pas être en mesure de déclencher une guerre de tarifs publicitaires excessivement agressive qui mettrait en péril la diversité, l'équilibre de la diversité des voix dans les marchés locaux? Alors, j'aimerais ça savoir... Et, si c'est le cas, dans un ou l'autre, est-ce qu'on devrait s'en inquiéter ou est-ce que ça devrait nous contenter?

765   M. PARISIEN : Alors, ce que je peux vous offrir comme réponse, c'est de partager notre expérience chez Astral et c'est toutes ces expériences chez Bell en radio. Puis on va distinguer national et local. En...

766   CONSEILLÈRE LAMARRE : Excusez-moi, monsieur Parisien, c'est plutôt au niveau local que ça me préoccupe en premier.

767   M. PARISIEN : Je vais faire un bref commentaire sur le national quand même.

768   CONSEILLÈRE LAMARRE : Oui, oui.

769   M. PARISIEN : Juste pour le dossier. Au national, on marche par coup, par mille. Puis c'est décidé par les agences de publicité. Puis c'est plus eux autres qui ont leurs fourchettes de prix qu'ils sont prêts à payer. Il y a pas grande négociation qu'ils ont là-dedans. On a des négociations de volume évidemment, mais, pour le tarif lui-même, pour avoir une influence sur le tarif, il y en a très peu.

770   Sur le plan local, la décision sur le tarif, c'est l'annonceur qui la prend. L'annonceur sur le plan local a des choix locaux particulièrement, comme j'ai dit tantôt, sur les hebdos qui sont habituellement des journaux hebdomadaires. Il y a plein de supports publicitaires locaux aussi sur toutes sortes d'autres plateformes. Ca va du napperon dans un restaurant jusqu'aux différents panneaux publicitaires qu'il peut y avoir dans la ville, dans le village, dans la communauté, et caetera.

771   C'est très rare qu'on peut arriver chez un client local et imposer un tarif. Habituellement, ça se négocie avec le client. Le client, très souvent, est un repeat, quelqu'un qui était là ou a déjà été là. Et ce n'est pas nous qui déterminons le tarif. On a une fourchette, nous aussi, puis un minimum, puis un maximum, et caetera.

772   En plus de ça, dans beaucoup, beaucoup, beaucoup des marchés, on a créé de la compétition et il y avait déjà de la compétition d'autres joueurs de toutes grosseurs. Les principaux, les Rogers, Corus sont là. Les joueurs régionaux sont aussi très présents. Donc, penser qu'on est tout seul puis penser qu'on a tant d'influence que ça sur le tarif, ce n'est pas la réalité qu'on vit dans ces marchés-là.

773   CONSEILLÈRE LAMARRE : Mais vous allez vivre quelque chose de différent une fois que la transaction serait acceptée, parce que le choix qui a été fait au niveau des stations qui seraient conservées et de celles qui seraient dessaisies, de toute évidence, vous avez fait des choix stratégiques, là, vous estimez être plus rentable que la situation que vous avez présentement. Donc, est-ce qu'il n'y a pas, est-ce qu'il n'y a pas un risque? Mais je ne le dis pas de façon dangereuse, là, mais est-ce qu'il n'y a pas une probabilité -- disons-le plutôt comme ça -- que...

774   M. PARISIEN : Vous ne présumez de rien.

775   CONSEILLÈRE LAMARRE : ...que la fourchette entre le minimum et le maximum s'élargisse...

776   M. PARISIEN : Oui.

777   CONSEILLÈRE LAMARRE : ...et que ça puisse avoir des effets néfastes dans ces marchés-là?

778   M. PARISIEN : Je vais laisser Mirko vous parler du processus de décision derrière les stations que nous délaissons. Mais je peux vous dire que vous allez vous retrouver dans un marché, comme Vancouver, où la station qui est présentement la deuxième meilleure station la plus performante en est une qu'on vend. À Toronto, on vend une station aussi qui a une excellente performance. Puis, encore une fois, Mirko va pouvoir vous parler des critères par lesquels on a décidé ça.

779   Mais il n'en demeure pas moins que, dans tous les marchés, les gros, comme les petits, comme les moyens, il y a pour revenir à votre question beaucoup, beaucoup d'options à l'annonceur. Et, nous, on n'a pas avantage à jouer sur le tarif ou à mettre de la pression, ou à essayer de prendre qui que ce soit en otage. Ce n'est pas comme ça que ça fonctionne. Si on fait ça, il va y avoir un backfire sur nous autres terrible qui va faire qu'on va perdre du revenu au lieu d'en gagner plus.

780   M. BENOIT : Et je pourrais vous amener à titre d'exemple le marché de l'Alberta où à Calgary et à Edmonton, la venue de nouveaux joueurs, notamment quatre nouvelle stations, a fait que dans l'ensemble du marché les tarifs publicitaires ont diminué quand même assez grandement.

781   L'autre question, comme Jacques le disait, c'est qu'il faut tenir compte que 60% de nos revenus proviennent d'annonceurs locaux.

782   Mr. CRULL: Might I, Commissioner Lamarre, I might put in the perspective, because it has been a powerful point that, actually, with the combination of the two radio portfolios, there's only five markets, I think, for a high level view. Five markets where the assets overlap.

783   They're big markets, Vancouver, Calgary, Winnipeg, Toronto and Ottawa. And, in four of those markets, after the divestitures, Bell Media is equal or smaller to the market share of the Bell or Astral portfolio prior. So there's no increase. So four out of the five markets where we overlap post-divestiture, there's really no change in market place negotiation position as a result of this in any market.

784   The vas majority of the combination is actually winding up serving -- Mr. Parisien said it -- small markets. We'll have a presence in 43 very small markets across the country. And, in those five markets where there was overlap in resulting divestitures, you also have Corus and Rogers in each of those markets, one of the two or both are at the maximum ownership level, creating a very balanced market.

785   CONSEILLÈRE LAMARRE : Donc, si je fais un sommaire de toutes vos réponses, vous estimez que, après la transaction, même s'il devait y avoir un effet transitoire au niveau des tarifs publicitaires, ce ne serait pas un effet transitoire qui serait dommageable pour les marchés où vous serez installés.

786   M. PARISIEN : Oui, tout à fait.

787   CONSEILLÈRE LAMARRE : Merci. On va passer au marché anglophone radiophonique de Montréal. Dans le cadre de la transaction, le fait est que, dans certains marchés, vous ne pouvez pas respecter la politique radiophonique de propriété commune sans vous dessaisir d'un certain nombre de stations. Votre temps de dessaisissement, s'il est approuvé par le Conseil, ferait en sorte que l'entreprise résultant de la transaction respecterait les dispositions actuelles de cette politique, sauf pour le marché anglophone de Montréal où vous demandez une exception, faute de quoi votre plan B serait de renoncer à CKGM ou TSN 690. Et je vais utiliser CKGM et TSN 690 de manière interchangeable, là, dans ce qui suit.

788   La solution que vous préconisez -- et j'insiste sur le « vous », il est souligné sur ma page -- pour garder TSN 690 en ondes est d'obtenir une exception à la politique sur la propriété commune. Donc, nous allons examiner le marché radiophonique anglophone de Montréal et considérer votre demande d'exception.

789   Vous comprendrez bien que notre rôle est d'examiner toutes les alternatives possibles avant d'arriver, le cas échéant, à la conclusion qu'une exception est effectivement nécessaire.

790   C'est donc une analyse exhaustive que nous allons faire de votre demande, et, de toute évidence, je vais la mettre à l'épreuve.

791   Mais avant de sauter dans le vif du sujet, vous allez me permettre quelques points de précision.

792   First of all, I am sure that you will agree that when we deal with such a special issue, it is easy to wander off in the discussion. So I have this examination set up in what I think is an adequate orderly fashion, so we will try to stick to it.

793   So if I ever interrupt you and try to get back to the point, you may make a note and we will get back to it later. Don't worry, I will give you a chance.

794   Although I have to add that, if experience at the Commission has taught me just one thing, it is that you need to be ready for anything.

795   Secondly, before I get to the questions, I would like to share with you what I have taken away from reading through the interventions that were filed with the Commission in support of your request for an exception to the Common Ownership Policy for the Montreal English market. I am doing this because, obviously, these interventions have influenced my line of questioning, and I feel that you might as well know where I am coming from. That will make it easier for all of us.

796   I have a list here of the Top 9 elements that I derived from the interventions filed in favour of keeping TSN 690 on the air and owned by BCE.

797   TSN 690 listeners are very vocal.

798   TSN 690 listeners are unconditionally loyal to the station.

799   TSN 690 listeners are all Habs fans -- and I hope that someone is cheering them up on the air today.

--- Rires

800   COMMISSIONER LAMARRE: TSN 690 pushes back frontiers, as it is listened to not only within the Montreal metropolitan area, but also beyond it, outside Quebec, and even in the U.S.

801   The nighttime coverage issue was obviously fixed by moving 990 to 690, if I may say so myself.

802   TSN 690 draws not only anglophone listeners, but also francophone listeners, leading me to the next point, which is that TSN 690 is the only all-sport-talk radio station in Montreal.

803   Keeping TSN 690 on the air is not a question of money, but a question of value to the community.

804   The last two points: It is important to keep on the air all available English radio stations currently operating in Montreal, and listeners want to keep TSN 690 on the air, alive and kicking, in its current format, and with the current programming.

805   With this out of the way, but keeping it in mind, would you explain thoroughly why you believe that the preservation of CKGM, as an all-sports station, may be guaranteed only by BCE?

806   MR. BIBIC: I will ask Chris to jump in and support the answer, as required.

807   I think, ultimately, it comes down to a few elements. Number one is the rights issue.

808   Well, let me start with a different one. Actually, number one is that it is a very, very expensive format to operate. It's a niche format, and sports radio, especially on a standalone basis -- not part of a broader group -- is the most difficult format that you can have and operate successfully and profitably.

809   That is a key point.

810   A second one is that, currently, Bell Media owns the long-term rights to the Habs broadcasts, which brings us to a couple of the principles that you had on your list of 9. Listeners, whether they be in the community, in Manitoba, or in the U.S., are avid Habs fans. So what drives a lot of the listenership to the station are the Habs broadcasts, and if Bell were not operating the station, that station would not have the Habs broadcasts.

811   Those are two key elements to why it is BCE that can ensure that we continue to keep this station operating in the English language, in Montreal, to continue to serve the listeners who have so passionately spoken up to provide their support, which is one of your other elements of 9.

812   In fact, an interesting point here is that 20 percent of TSN 690 listeners wrote in to support this exemption. That is a huge number, 20 percent.

813   Feel free to bring me back to your question, but we had a couple of options here -- we could sell the station and return the licence -- but we thought: Let's step forward and try to obtain an exemption, because this way we could continue to support that community which made their views clear to us.

814   Chris, is there anything that you would like to add?

815   MR. GORDON: Sure. Thanks, Mirko.

816   TSN 690 has been a labour of love for us in Bell Media. The station has been a sports station for over a decade, and we have appeared in front of you before to talk about how we want to move this station to profitability and in the long term ensure its success.

817   We still have a little bit of work to do in order to get there, but we are very close, and we believe that, with this exemption, the station will have a long future life in Montreal, serving the fans that, as everyone can see, are so passionate about the format.

818   COMMISSIONER LAMARRE: Mr. Bibic, let me get back to a few points that you just raised.

819   You said that 20 percent of listeners had written in. Either written in or signed a petition is what you meant.

820   MR. BIBIC: Yes, that's correct.

821   COMMISSIONER LAMARRE: Okay, thank you.

822   You referred to the fact that a sports format is a very expensive format, and you also referred to the fact that TSN 690 is a standalone.

823   Whether or not we grant you the exception that you ask for, if you do keep the station, it wouldn't be a standalone anymore, would it?

824   MR. BIBIC: The point I was making is that sports radio, especially when operated on a standalone basis, is the most difficult format that you can have.

825   It is difficult for Bell Media today, because it is the only station we have here. It will be even more difficult to be operated on a standalone basis by a player that is not BCE. As things get easier -- I mean, we are not out of the woods, but things are less difficult if you can operate it as part of a cluster. I think that is the point.

826   COMMISSIONER LAMARRE: Thank you. I get you.

827   Now, I am not asking you to reveal any confidential information, but I was wondering if you have heard of or received signs of interest for CKGM by third parties, so far, to acquire the station in its current format.

828   MR. BIBIC: In its current format? In the last few months --

829   I would have to get back to you to give you an accurate answer. I don't believe, based on the knowledge I have now, that in the last few months there have been.

830   Of course, in terms of the other stations, the 10 stations that we are selling, there has been an immense amount of interest in those stations. Two have already been sold, or we propose to sell to Corus, as you know. The other eight, we are nearing the end of the auction process, and there was strong interest and --

831   COMMISSIONER LAMARRE: And we have confidential information on file for that.

832   MR. BIBIC: Right.

833   The reason I bring that up, even though it doesn't apparently seem related to your direct question, is that all of the focus has been on the auction process for the stations we are proposing to sell, and there has not been any on TSN Radio, especially since the marketplace understands that we are trying to get an exemption for it.

834   But I will double-back to make sure that I have given you an accurate answer.

Engagement

835   COMMISSIONER LAMARRE: Thank you.

836   Now, you started to answer the question, but I am going to ask it again and give you a chance to elaborate a little bit more.

837   From your experience in radio, do you believe that the sports-only format is medium or long-term financially viable?

838   MR. GORDON: Absolutely. It is a long-tail format. It takes a lot of investment upfront. It is very personality driven. It is very rights driven, which are very expensive. But, at the end of the day, it is unique, unduplicatable content that other radio stations don't have, and because of that, as we move to more digital platforms and mobile platforms, that is the kind of content that we believe will be extremely valuable going forward.

839   COMMISSIONER LAMARRE: You said long-tail, I said long-term, is that the same thing?

840   MR. GORDON: Pretty much.

841   COMMISSIONER LAMARRE: Similar, okay. I just wanted to make sure, so that we don't lose anything in the translation here.

842   Now, if we do not grant you the exception to the Common Ownership Policy -- and later I am going to get into the justification as to why you believe that we should grant it. But if we do not grant the exception to the Common Ownership Policy, and we allow you to divest CKGM -- and I am being careful with every one of my words here -- what happens to the rights to broadcast the Habs games on Montreal radio?

843   MR. GORDON: We would retain the rights to the Montreal Canadiens broadcasts and move them back to CJAD, where they resided for a long period of time.

844   COMMISSIONER LAMARRE: Okay. And if I may ask, and if you may answer, what is the deadline for the current deal for those rights that you got?

845   I believe it was 2010 or 2011.

846   MR. GORDON: The deal, I believe -- and I would have to check on this and get back to you, but I believe that we have five years left on our current agreement.

847   COMMISSIONER LAMARRE: But you had more than five years from the start.

848   MR. GORDON: We had a seven-year agreement from the start, yes.

849   COMMISSIONER LAMARRE: Okay, thank you.

850   Now, tell me how you define public interest in the Montreal anglophone radio market. Because, from your brief, it seems that you are arguing that the community needs CKGM, and that, in itself, it is a public interest, that it fulfils the public interest of the anglophone radio market.

851   Have I got it right, or is there more to it than this?

852   MR. GORDON: No, I think you are absolutely right. I would be very interested to hear the station today, based on the game last night, and how the hosts and the on-air folks would be interacting with the listeners of the radio station.

853   I think that, in the case of the Montreal Canadiens, they are a different sports animal than perhaps any other franchise in North America, and because of that we really feel that this station is a very unique piece of Montreal culture and an opportunity for listeners to express their views about something that is really important to them.

854   COMMISSIONER LAMARRE: But surely this is not all there is to the public interest in Montreal for English radio. I would be interested in understanding how you view it globally.

855   MR. PARISIEN: We also could add to the public interest piece that English media have been, in the last two years in Montreal, beaten pretty badly. A lot have closed or disappeared. I am thinking mostly of papers and weeklies.

856   So keeping an additional English voice in Montreal, I think, is essential for that community, and that is in the public interest of that community.

857   MR. BIBIC: Madam Lamarre, just to clarify, when you ask about public interest, you mean with respect to our application regarding CKGM specifically?

858   COMMISSIONER LAMARRE: No, I am interested in understanding how you view the general public interest for the English radio market in Montreal.

859   MR. BIBIC: Okay. I think that Chris really answered the bulk of it, but there are two or three elements in my mind. One is, responding first and foremost -- essentially, Chris' answer, the first point -- responding first and foremost to the passionate listener response.

860   Recognizing that, in this particular case, this station does operate in the minority language of the community, so preserving that voice and that language is very important.

861   Three, it is stepping up, in our case, by committing to keep the station in that format for seven years, to serve the community which has so passionately spoken up.

862   And then there are, one could say, smaller elements, but they are, nevertheless, important elements -- the commitment to provide a certain amount of donations to sports journalism and amateur sports in Montreal.

863   So it is the entire application, which was designed, we hope, in a way that does serve the public interest, defined first and foremost by the public reaction to it.

864   COMMISSIONER LAMARRE: Don't worry, the questions are going to get more difficult as I go along.

--- Rires

865   COMMISSIONER LAMARRE: Currently on the air in Montreal, commercially, we have two operators in the English market. I'm sorry, we have three right now. Should the transaction go ahead, we would have two.

866   Now, one is waiting to launch. Messrs. Tietolman, Tétrault and Pancholy will be ready at some point in time to also launch a station in English.

867   But following approval of the transaction, we would be faced with having one very large owner, even more so if we granted you the exemption, and another player that doesn't own as much in the English market as you would.

868   Shouldn't we be concerned about so much concentration of ownership in one particular language, that language being in the official language minority group? Shouldn't we be worried about that?

869   MR. BIBIC: Thanks for the question. I think the one large player that you referred to is Astral, in the English-language market.

870   Astral is the size that it is currently. So what we are really talking about now, when we are considering this exemption, is the increment that would be added to Astral by granting the exemption for CKGM.

871   I think that when you are considering whether or not that increment causes you concern, there are a number of factors that I would ask the Commission to consider.

872   One is that the exemption is for a station on the AM band.

873   It operates in a niche format.

874   It is the last ranked station in the market, with a very small share of the revenue.

875   And, again, I am going to sound like a broken record on this one, but one factor that we can never lose sight of in this particular case, of course, is the listener response.

876   So I guess what I am saying is, when you consider the band, the format, that it is ranked last, hopefully you will be convinced that the increment added is not going to be a cause for concern in the English-language radio market.

877   COMMISSIONER LAMARRE: Despite the fact that, even though the station is expensive to operate, as Mr. Gordon pointed out, and as you pointed out, it is highly valued content.

878   Even though the increment may be small for the entire listenership in the English radio market, nonetheless it is for a very attractive and marketable product.

879   MR. GORDON: It is, but it is a very small audience and a very niche audience.

880   And I would add that, to the Montreal anglophone community, there will be another player, as you mentioned, which has been licensed for two radio stations, which are two stations that will compete directly with both TSN 690 and with CJAD.

881   So there are a lot of market dynamics and competition for English listeners in Montreal.

882   M. BENOIT : J'aimerais également, Madame Lamarre, peut-être spécifier que le marché de Montréal, comme vous le savez, est considéré comme deux marchés, le marché francophone et le marché anglophone, un marché anglophone qui se range au sixième rang des marchés canadiens, et, post-transaction, Bell Média obtiendrait à peu près 74 pour cent de part de marché, alors que dans le marché francophone, le plus grand marché francophone en Amérique du Nord, notre compétiteur en détient 65 pour cent dans un marché qui est quand même plus grand, où il y a plus de revenus publicitaires encore.

883   CONSEILLÈRE LAMARRE : Répétez-moi-ça une deuxième fois, Monsieur Benoit.

884   M. BENOIT : Dans le marché anglophone post-transaction si l'exception nous était accordée, la part de marché de Bell Média serait à peu près aux alentours de 74 pour cent dans le marché anglophone, donc, qui se situe au sixième rang des marchés publicitaires au pays, alors que quand vous regardez le marché francophone, qui est le plus grand marché francophone en Amérique du Nord, Cogeco détient 65 pour cent des parts de marché. Donc, c'est un écart qui, somme toute, n'est pas si grand que ça par rapport à Bell, qui, dans le marché francophone, aura 35 pour cent des parts de marché.

885   CONSEILLÈRE LAMARRE : Je note.

886   Maintenant, you do mention that it is your opinion that the exception would not have an adverse effect on current broadcasters, licensees in Montreal.

887   I would like to take you to page 57 of your brief.

888   Give me a moment to get it.

--- Pause

889   COMMISSIONER LAMARRE: I will find it later, but you will know better than I where to find it. You say in the third bullet of the four points as to why we should grant you the exception: Approval of this application would not have an adverse impact on other radio stations in the market.

890   Let's just keep that part of that bullet, just that phrase, and assume for the sake of the discussion at this point that we do agree with that statement.

891   Shouldn't the burden of proof in requesting an exception not be that allowing it will not have adverse effects or impacts, but rather that it will have significant advantages?

892   MR. BIBIC: We approached it both ways. We looked at it from the perspective of adverse impact on competitors and on the marketplace, and we made an assertion to that effect, and we hope that we have backed it up. We filed an expert analysis conducted by Communications Management Inc.

893   So we made a statement and we supported it with an analysis.

894   And, then, our whole application, really, is about the benefits to the community of continuing to operate this station as an all-talk sports format, and we hope that by the end of this we will have convinced you that, yes, that is of value to the community; yes, that is in the public interest; and, yes, it requires Bell Media to do it, given the multiple factors that we discussed at the very beginning of this line of questioning.

895   COMMISSIONER LAMARRE: Before I jump into the alternatives, I need a few more clarifications, assuming that we grant you the exception.

896   You have proposed that, if we do grant you the exception, you are willing to keep the same format that you currently have, and have it as a condition of licence.

897   Now, we don't regulate format, especially on AM. We don't have a definition of what should be a station that is entirely dedicated to sports. Yet, you did not provide us with such a proposed definition.

898   If we grant you the exception based on the fact that it would be implemented and be respected as a condition of licence, how would we enforce such a condition of licence if we don't have a definition?

899   MR. BIBIC: That is a fair point. We could, again on Wednesday, if allowed, put our thinking caps on and come up with a definition that would be directly responsive to that question.

900   COMMISSIONER LAMARRE: If you would, please.

901   MR. BIBIC: Thank you.

Engagement

902   COMMISSIONER LAMARRE: Is that all right, Mr. Chairman?

903   THE CHAIRPERSON: Yes.

904   COMMISSIONER LAMARRE: Thank you.

905   Now, you mentioned in your brief and you mentioned it again during our exchange that you would be willing to keep the current format for CKGM for seven years.

906   Now, if we granted you the exception based on that condition of licence and in seven years' time you decided that you don't want that condition of licence, what happens in seven years?

907   Does the exception drop? What happens to the condition of licence in seven years? What are we looking at here?

908   MR. BIBIC: The condition of licence would drop. It doesn't mean that we wouldn't continue to operate the station as an all-sports format, but what it was, the reason we time-limited it was just an attempt to recognize that, you know, formats do change, listener tastes do change, circumstances do change, market realities change. So that's why we didn't make it a commitment in perpetuity.

909   But we were trying to put forward a period of time that really we were hoping would convince the listeners and the Commission that we really are committed to this station in this format in this community.

910   In fact, we're committed to TSN Sports Radio across the country, as you know, because we have the brand in several communities. But it's just difficult as we sit here today to project what things will be like seven years from now.

911   COMMISSIONER LAMARRE: Okay.

912   MR. BIBIC: But from a technical point of view, your question is yes, the COL, the condition of licence would drop at that point.

913   COMMISSIONER LAMARRE: Okay.

914   But if we granted you an exception based on the existence of this COL and the definition of it and you decide to drop it, and to use your expression, circumstances do change, and that would be a significant change of circumstance if you chose to drop the condition of licence, and you mention yourself the format could change, then wouldn't you expect and shouldn't we the Commission expect that then we would reconsider the fact that BCE/Astral has an exception to the common ownership policy in Montreal taking into consideration that the policy has not changed?

915   MR. BIBIC: Okay. Well, there's a huge -- well, I don't mean to dodge the question by -- you know, sitting here today, I find it very hard to kind of give you a precise answer to that because I don't have a crystal ball. What if the policy does change?

916   COMMISSIONER LAMARRE: Okay. Well, let me rephrase that then.

917   If you're willing to commit to getting a condition of licence for seven years, are you also willing to accept that we will only commit for the exception for seven years?

918   MR. BIBIC: So, in other words, you're asking if we would be willing to accept that the Commission would reconsider again if the exception remains justifiable seven years from now?

919   COMMISSIONER LAMARRE: Yes.

920   MR. BIBIC: We --

921   COMMISSIONER LAMARRE: You're taking it under advisement?

922   MR. BIBIC: Well, I think so, because it's easy for me here to say yes or no, but I think I need the advice of my colleagues who are actually kind of on the ground operating these stations.

923   COMMISSIONER LAMARRE: It sort of feels like the counterpart, like if we grant you an exception based on a premise, if the premise changes, circumstances may also change, but then if you can reconsider it, then shouldn't the Commission be allowed to reconsider it?

924   MR. BIBIC: I totally understand the philosophy behind the question. So we'll answer that as well.

925   COMMISSIONER LAMARRE: Okay.

926   THE CHAIRPERSON: As an undertaking?

927   MR. BIBIC: My apologies, Mr. Chairman. Yes, as a formal undertaking.

Engagement

928   THE CHAIRPERSON: Thank you.

929   COMMISSIONER LAMARRE: Now, you have proposed -- as a benefit to getting this exception if we were to grant it, you have proposed grants for amateur sports that are not admissible CCD initiatives.

930   Now, why haven't you proposed admissible CCD projects for Montreal as the official language minority group? Why haven't you done that?

931   MR. GOLDSTEIN: The amateur sport initiative wasn't intended to be CCD. It was just intended to be --

932   COMMISSIONER LAMARRE: And that's why I'm asking why haven't you considered CCD?

933   MR. GOLDSTEIN: In exchange for the exemption? The station --

934   COMMISSIONER LAMARRE: I don't do trade-offs.

--- Rires

935   MR. GOLDSTEIN: I'm sorry, that wasn't my -- just a clarification.

936   COMMISSIONER LAMARRE: You mean in support of the request?

937   MR. GOLDSTEIN: In support for the request. Better language.

938   I think when we put it together we recognized that the station does have ongoing annual CCD obligations and what we wanted to do was in recognition of the format in which the station operates provide a measure of support that was more consistent with, you know, what we were actually looking to preserve in the community, which is the community outreach of the station in terms of amateur sport and other programs that exist in the community.

939   So instead of putting it into sort of a CCD box, we actually wanted to try to think outside that box and provide an alternative that was consistent with the format the station operates and the community it serves.

940   COMMISSIONER LAMARRE: And how would that benefit the broadcasting system?

941   MR. BIBIC: Well, the sports journalism donations would benefit the system by providing funds to the training of journalists in this area in terms of news, information, skills training, that kind of thing.

942   In amateur sports, it would obviously benefit the amateur sports community, but there's a link obviously to the broadcasting of events or if not the broadcasting of events, the reporting of them at the local and hyperlocal level here in the community.

943   So it's in that sense. It would be local content or news and information relating to local content and it would train new journalists who are interested in this particular area.

944   COMMISSIONER LAMARRE: To that point, currently is there a scholarship program for sport journalism at Concordia University in Montreal or would that be a brand-new beast, if I may use that word?

945   MS LAFLAMME: A sport component is part of the journalism program but let me check to make sure and we will get back.

Engagement

946   COMMISSIONER LAMARRE: Okay. We would like a little bit more precision on who may be benefitting from that and obviously some of the students, but would it be like les étudiants du premier cycle ou un cycle supérieur?

947   MME LAFLAMME : Normalement quand on fait des ententes avec les universités, on établit quels vont être les critères justement pour approuver des bourses. Ça peut être justement journaliste spécialisé en sports, étudiant en deuxième année qui a obtenu telle note. Donc, il y a plein de critères qui sont mis de l'avant et discutés avec l'université pour octroyer des bourses.

948   CONSEILLÈRE LAMARRE : Mais ça justement, la définition des critères, cette discussion-là n'a pas encore eu lieu?

949   MME LAFLAMME : Non.

950   CONSEILLÈRE LAMARRE : Non.

951   MME LAFLAMME : Mais on le fait dans d'autres universités. Donc, on a déjà eu ce genre de critères-là que nous avons montés. On a des ententes avec l'Université d'Ottawa et la Cité collégiale pour des bourses en journalisme. Donc, à partir de ce modèle, on va pouvoir développer un modèle avec l'Université Concordia.

952   CONSEILLÈRE LAMARRE : Merci.

953   Now, surely you must have read the -- I'm going to say a word but I know it's not -- for the lack of a better word, you must have read the criticism in the intervention by l'ADISQ regarding maybe a better way and more extensive benefits you could have given for CCD, and they can be found, from what I read, in paragraphs 43 to 58 of their intervention, and you have replied to that in your reply in paragraphs 272 and 273 of your reply.

954   Now, if you would like to comment or add anything on this specific aspect at this point, I'm giving you the opportunity to do that.

955   MR. PARISIEN: And I will take the opportunity.

956   CONSEILLÈRE LAMARRE : Allez-y, Monsieur Parisien.

957   MR. PARISIEN: You know, I respectfully submit that if one argues for more benefits, it's more a question of policy than a question of transactional hearing and we could discuss that when we are asked by the Chair to submit written comments on some possible items that will be reviewed.

958   Six percent of the biggest radio transaction in the history of Canada is a major, major tangible benefit amount. It's huge in the history of radio. It's a huge infusion of new money. Many of the funds were going dry and this transaction for the radio industry is very timely.

959   L'ADISQ a évoqué l'exemption de Cogeco, et je me retiens pour ne pas commenter sur l'exemption. Je vais commenter juste sur votre question qui porte sur le pourcentage.

960   Neuf pour cent avait été payé par Cogeco lorsqu'ils ont acheté de Corus la station, mais c'était un environnement qui était tout à fait différent de ce que nous avons ici. À cette époque, 98.5 était un FM et non une station AM, et on sait qu'une station AM est beaucoup moins porteuse, beaucoup plus dispendieuse à opérer. D'autre part, la station ne perdait pas d'argent, et la station avait aussi un marché. Il y avait d'autres parties qui étaient intéressées à l'acheter.

961   Donc, à défaut d'un autre terme, pour packager tout ça ensemble et faire du marketing réglementaire, c'était peut-être plus avantageux à ce moment-là d'offrir un pourcentage plus élevé.

962   Ce n'est pas du tout le cas auquel on fait face aujourd'hui. On est dans une situation où est-ce que -- monsieur Gordon l'a expliqué -- la station perd de l'argent, c'est une station AM, ça va prendre du temps avant de la remonter, et on considère que 6 pour cent de bénéfices, ça rencontre la réglementation et les normes.

963   CONSEILLÈRE LAMARRE : Merci.

964   Maintenant, on va aborder les questions un petit peu plus difficiles.

965   And I will refer you to Schedule 9 of your application. More specifically, keep page 6 close by.

966   You describe in Schedule 9 the current state of the English radio market in Montreal in a very visual way and that's always very much appreciated, and at the top of page 6 of that Schedule you detail or expose what you believe are the consequences of not approving the exception you're requesting.

967   Now, what you do say there, you say:

"What would happen if an exemption is not granted?"

968   You say:

"The station could be closed, the station could be sold with a new owner trying to maintain the current format or the station could be sold with a new owner seeking to change the format."

969   And then you go on to explain why you believe that the only reasonable conclusion to that would be that the station would close.

970   Now, in this exercise in Schedule 9 you jump to the conclusion that should you not get the exception for CKGM, CKGM is finished, but have you not considered the possibility that the Commission may require that you keep TSN 690 operating in its current format and yet not grant you the exception?

971   MR. BIBIC: Sorry, I'll just put my books away here.

--- Rires

972   MR. BIBIC: It's a great question.

973   COMMISSIONER LAMARRE: Thank you.

--- Rires

974   MR. BIBIC: It is and we've given it some thought. So think through the implications of that is the way to address your question, Commissioner Lamarre.

975   So if you were to require that we continue operating this station in this format and sell another station in order to meet the common ownership policy, essentially what we would have is -- take for example, it could be CJAD.

976   Now, as someone who grew up in this City, and there are others here on the panel who have, we all know that CJAD is an iconic station in the City. It operates kind of an all-talk AM news and information format which is also very, very expensive to operate, and we do not believe that, for example, if that station were to be sold that a new owner could maintain that station at the level that Astral has maintained it over the years and I think that would also be harmful to the English listenership in the City.

977   So, you know, one of your items was the AM, CKGM listener is a very vocal listener. Hazard a guess that the CJAD listener is also a very passionate and vocal and engaged listener. So we would kind of be serving one segment of the listenership and harming another.

978   We can take -- I'll just give you one more example. If it's --

979   COMMISSIONER LAMARRE: Well, you only have two more, so keep going.

980   MR. BIBIC: Well, okay. Well, Virgin. If we take Virgin. Well, Virgin is a national brand that's designed to serve a niche youth market. There's tremendous things we can do and Astral is already doing with that brand nationally. There's a nice tie-in with Virgin Mobility.

981   Now, this sounds like a business answer but it's more than that. It's about targeting that demographic with very relevant content. It's a brand that's very supportive of emerging artists, rock concerts, music festivals. We would lose the ability to serve that demographic and I think that ultimately kind of the brand elements of that and what it brings to the creative community would also be lost.

982   I mean there's two examples.

983   I don't know, Charles, if you want to talk about CHOM.

984   M. BENOIT : Oui. Vous savez, ces trois stations, CHOM, Virgin et CJAD, sont d'abord liées ensemble par... une complémentarité commerciale est vraiment importante. Je ne pense pas que si CJAD, comme monsieur Bibic l'a dit, était opérée as a standalone qu'elle connaîtrait autant de succès.

985   Vous savez, Virgin s'adresse aux jeunes auditeurs, à la femme notamment 18-34, CHOM à un homme 35-44 ans. Cette complémentarité commerciale là nous permet d'aller chercher un peu plus que notre part de marché pour CJAD, donc, nous permet de protéger la station CJAD.

986   L'autre aspect qui est très important, ces stations-là, ces trois stations-là sont intimement liées depuis plus d'une quinzaine d'années. C'est également que CJAD sert à CHOM et Virgin au niveau de l'information, au niveau de la circulation, à tout niveau des services. Donc, briser ce tout-là qui opère bien ensemble aurait un côté très négatif sur l'ensemble des opérations.

987   MR. BIBIC: So, Madame Lamarre, if I could just wrap up because it is a really important question.

988   We were trying to come with the application to fix a problem and not create a new one. So we were trying to be responsive to listeners. So if this station is required to be kept open and another one sold, I think the whole basis of the answer so far has been that could cause harm to another segment of the listenership.

989   I'd like you to consider, I'd like the Commission to consider that we wouldn't be deriving a significant commercial advantage through the exemption and we didn't want in any way to jeopardize the bigger transaction with this request. So that's why we kind of said, okay, look, we're going to apply for the exception because we do want to respond to the community, but we also are prepared to return the licence or sell this particular station.

990   We feel it would be unfair in the circumstances to ask us to sell another station and to keep this station because the other stations do have a passionate listenership as well.

991   COMMISSIONER LAMARRE: I said I was going to look into every possibility, so let me dig in a little bit more.

992   The Commission could go as far as either identifying the station it wants you to divest or give you a limited choice of what you should be divesting, and in your brief you did mention that granting you the exception would not hurt new entrants in the market, but if you had a profitable FM station to sell in the market of Montreal, wouldn't that be a missed opportunity for the Commission not to take that possibility, that opportunity to get possibly a new owner in the English Anglophone market?

993   MR. COPE: The only comment I'll make and I'll turn it to Mirko, we're not in the business of selling profitable businesses and maintaining unprofitable businesses. That's not a business.

994   COMMISSIONER LAMARRE: Okay.

995   MR. COPE: We're in the business of maintaining profitable businesses and what we've done, as Mirko said, in this transaction, propose a solution to an issue, is we start with what's in the greater public good.

996   The Commission will make that final decision but the concept that we would keep a money-losing station and sell a profitable station, if that's a consistent strategy, BCE would be bankrupt, so we don't follow that strategy.

997   So this is a solution to a problem and we wouldn't consider that a viable option. It may make people more competitive, but to give our answer to the question, we think this is a great solution to a possible very unique genre that's losing money that we can fund because of our scale.

998   The concept that we would keep funding that and then also lose a profitable business seems -- it's a request -- it's a question but it's one that we find hard to reconcile.

999   COMMISSIONER LAMARRE: Okay. But I'm going to tell you, what I do find hard to reconcile is that your Plan A in this case, and it's your preferred plan, and, quite frankly, everybody understands that it is and it's fair that you ask for the exception, to get the exception in the market. But your Plan B if you don't get the exception is to drop TSN 690.

1000   Now, looking back at the transcription of the October 2011 hearing which took place in Montreal and following which the Commission granted 690 AM to CKGM, I would like to remind you what was discussed at that time.

1001   In the reply phase, starting on paragraph 2691, and it was Mr. Gordon speaking, he said that the station was in limbo for a little while and then BCE acquired it.

1002   And then in paragraph 2692 he says:

"However, under BCE's ownership, there has been a commitment to radio. This year alone, we have invested millions in our radio operations."

1003   Skipping one paragraph, he says:

"The first two elements of this strategy were to acquire the English-language broadcast rights for the Montreal Canadiens and to rebrand as TSN Radio Montreal. However, even with these investments, the station remains in a loss position.
Improving our signal quality is the third prong of our strategy necessary to bring the station..."

1004   And he goes on in paragraph 2697 to say:

"Bell Media is committed to the listeners in this market. We are committed to Quebec."

1005   And Mr. Bibic renchérit. In paragraphs 2713 and following he says:

"We just ask for an opportunity to step up to the next level with a better frequency because of our target market, a huge portion of which is on the West Island, and that's key."

1006   So in the fall of 2011, with this particular station in which you invested, you took important steps to in the long term hopefully make it profitable. You got 690, you put in on air just last fall, and, quite frankly, given the difficulty of such technical sites, it was an extraordinary performance that you managed to put it on air in such a short period of time.

1007   That being said, I mean your third leg of your strategy to commit to this market, to commit to Quebec, those three elements have been together only for eight months and it sounds like you're willing to throw in the towel already, and that's BCE's current asset and --

1008   MR. COPE: We're not asking to throw in the towel. We're actually asking you to give us the exemption so we don't have to throw in the towel.

1009   COMMISSIONER LAMARRE: But you're saying that --

1010   MR. COPE: But what you said is exactly consistent. If you're asking us to continue to lose money and then sell a profitable asset to even double-down that investment, that's not a place we're comfortable with. But if you're asking are we prepared, very correctly to your point, to continue to follow the strategy of losing money for a while to try to get through, we're comfortable with that.

1011   COMMISSIONER LAMARRE: But in 2011 when those statements were made --

1012   MR. COPE: We weren't acquiring Astral. We weren't doing -- it wasn't this transaction.

1013   COMMISSIONER LAMARRE: You're right, it wasn't a suggestion.

1014   MR. COPE: Right.

1015   COMMISSIONER LAMARRE: And yet, you were willing to keep it on air, be patient with it --

1016   MR. COPE: Yes.

1017   COMMISSIONER LAMARRE: And now that you will have more radio assets in the market that are very profitable, you're willing to drop it. That's what I have trouble -- it's sort of counterintuitive.

1018   MR. BIBIC: Well, I don't see it as counterintuitive at all and I find it entirely consistent.

1019   We were -- what did we say there? We said we were committed to this format and to the listeners in the community. That's what we said then and that's what we're saying now, and in fact that's why we're asking for the exemption. I remember that hearing extremely well.

1020   What else did we say? We said that this was the beginning of trying to do more as Bell in the radio business in the Province of Quebec, and in fact we have taken the next step.

1021   In fact, we've taken the next step in radio and television to serve the francophone -- well, in television to serve the francophone viewer and in radio in Quebec with francophone and English radio stations.

1022   We subsequently came to an agreement to acquire Astral subject to your approval. So that's entirely consistent with kind of broadening our scope in media in Quebec.

1023   The circumstances were different then. Now, what we're trying to do is come forward and fix a problem.

1024   You know, when Cogeco asked for its exemption in this community for a more profitable station in a more profitable band, FM, the Commission did not put to Cogeco or ask Cogeco to keep a station or another and sell another. What was looked at was, is the exception going to be granted or not? I mean, I haven't been --

1025   COMMISSIONER LAMARRE: Mr. Bibic, if I may just -- so we keep the train of thoughts here, you know, you're right. We did not put it to them.

1026   But opposition to the exception made those representations to the Commission that that's what we should be doing. So I'm putting it to you now in the same way. It shouldn't be what we would be considering.

1027   I did mention it would be difficult questions. We are in there right now.

1028   MR. BIBIC: But we've answered it, Commissioner Lamarre. You know, in this case I don't think -- there is widespread support, not widespread opposition. And having been --

1029   COMMISSIONER LAMARRE: There is widespread support for what?

1030   MR. BIBIC: For the granting of the exception.

1031   COMMISSIONER LAMARRE: No, that's not what I read when I read the interventions. When I read the interventions, what I do read is that there is widespread support for maintaining TSN 690 on air as it is. That's what I read.

1032   You know, in the 1,200 plus letters that were written I did find about a dozen or so that specifically speak to the exception. But that's it.

1033   And in some of them, in a few of them also there is an argument made by your supporters on TSN 690 that we should request that you divest another station should you request that you divest one. So that's why I'm putting it to you.

1034   MR. BIBIC: But that's the key point: Should you request that we divest one? Of course, the listener who is so passionate about this station says, "Keep the station open. We support the request but if you decide not to, ask them to sell another station". Some have said that but -- and I respect, completely respect that the Panel will make a decision.

1035   But I disagree that listenership has not stepped up to support this exception. I disagree with that. Now, you will decide. That I respect too, but I disagree that they have not supported this application because they fundamentally have rather vigorously.

1036   MR. PARISIEN: As the operator of the three other English stations in this market, I question if the public interest is better served by selling one of these three stations and jeopardizing the other two. And I really don't get it as far as the Canadian broadcasting system benefiting from selling one of these three stations and, you know, messing up a market that is going pretty well.

1037   I think an exception is an exception and, to me, obviously it's obvious and it's not out of the ordinary course of the power that you have. It's in the better interest of the consumer which has been driving this whole process for the last year and a half.

1038   COMMISSIONER LAMARRE: If you could elaborate on that, Mr. Parisien, as to how you see the public interest in Montreal being better served as having --

1039   MR. PARISIEN: Because if you don't grant the exceptions we will either sell or turn back the licence.

1040   COMMISSIONER LAMARRE: But we have the option of --

1041   MR. PARISIEN: Of TSN. Yes, you do of TSN --

1042   COMMISSIONER LAMARRE: Okay.

1043   MR. PARISIEN: -- which doesn't serve the public interest.

1044   And if you force us to close another station -- I question whether that's possible but, let's assume it is, I don't see how the public interest in Montreal would be better served by jeopardizing the two orphan stations after selling the one you will identify that is an actual station. And I don't see how the Canadian broadcasting system benefits from that. I think you're --

1045   COMMISSIONER LAMARRE: By getting maybe a new operator and having a -- on s'est un peu promené dans mes notes, alors laissez-moi retrouver le bon point... Vous avez répondu aux autres questions que j'avais. Maintenant j'y vais avec des questions un peu plus faciles.

1046   Si vous vouliez résumer...

1047   If we were to grant you the requested exception what would be the benefit to the public interest and the broadcasting system within the Montreal Anglophone community and its radio market but, not only that, in the broadcasting system as a whole and what would be those tangible and non-tangible benefits?

1048   It's an open question.

1049   MR. BIBIC: Okay. Well, to summarize it's being directly responsive to the passionate listenership. The public, in effect, is keeping the station operating in that niche format that's very expensive to operate for that period of time.

1050   Subject to coming back to you, of course, on a couple of undertakings we've given you, it's about contributing to, you know, the training of sports -- contributing to sports journalism in the city of Montreal as an intangible benefit, to contributing to amateur sports in this community.

1051   There are the tangible benefits elements that go along with this, of course, because it's part of the valuation and then from that flows the 6 percent and the programs we have put forward as the general benefits package in radio.

1052   There is an element, of course, linked to CKGM because it's part of the valuation. And it's the fact that -- so that's responsive to the public interest in terms of the community served.

1053   And then there is the element of the other stakeholders in the system with whom we compete. I think -- but to summarize there too, we have talked about that a little bit throughout your questioning. It's an Am station, the last ranked station and the expert report and the analysis we've provided on how competitors would not be harmed. So that's an element of the broader public interest as well.

1054   So all in, just we hope to convince you to take away that we really did come here with this exception request in the spirit of fixing an issue because we did hear loud and clear from the listeners and we want it to be responsive. It wasn't to create additional problems.

1055   COMMISSIONER LAMARRE: And by fixing an issue you mean?

1056   MR. BIBIC: The worry of the listenership to TSN 690 that they would lose a radio voice that's very important to them in this community and, as you've pointed out, across the country and in fact around the world I guess. That's great that that's the issue, because just like if the exception were granted or if we hadn't come forward and applied for the exception what we would; have done is we would have added this station to the mix of the stations to be divested.

1057   Just like in the other communities we identified the stations. We would offer to sell and kick start an auction process. CKGM would have been the one we would have identified to sell in Montreal. So that's the problem we're fixing.

1058   If we return the licence or sell it, that format ceases to operate and that has an impact on the listenership. That's specifically the problem we're trying to address.

1059   COMMISSIONER LAMARRE: Okay. If we were to grant you the exception, would BCE accept to make all the commitments relating to this exception, would accept to make them approval conditions on the transaction?

1060   MR. BIBIC: So are you --

1061   COMMISSIONER LAMARRE: Changing the condition of licence, would you accept that as an approval condition?

1062   MR. BIBIC: Yes. So yeah, the approval of the broader transaction would be conditional on Bell applying to add to the rate, the CKGM --

1063   COMMISSIONER LAMARRE: Yes.

1064   MR. BIBIC: -- licence, the fact that we would keep it open for seven years?

1065   COMMISSIONER LAMARRE: Yes.

1066   MR. BIBIC: Yes.

1067   COMMISSIONER LAMARRE: And to keeping the commitments the ex -- the other companies have made?

1068   MR. BIBIC: The $245,000, yes.

1069   COMMISSIONER LAMARRE: Okay, you would accept that?

1070   MR. BIBIC: Yes.

1071   COMMISSIONER LAMARRE: Okay. Like I said, it was not all easy questions. There were difficult ones and we had to go thoroughly through all the options so we can think about this -- pour demain.

1072   M. BIBIC : Thank you. Merci.

1073   CONSEILLÈRE LAMARRE: Merci.

1074   Merci, Monsieur le Président.

1075   LE PRÉSIDENT : Merci beaucoup.

1076   Just we'll take a break in a moment but, as important as all this has been, this conversation about the exception for TSN radio it's probably more important at this particular juncture when we're in the playoffs. But I just wanted to develop a good record on it and, of course, to some listeners it's very important.

1077   But in the bigger scheme of things how much importance do you put on this particular aspect of your overall application?

1078   MR. BIBIC: It was important. We felt it important based on last year to try to come forward with something that fixes the problem as I said. So it responds to that listenership.

1079   But we've also indicated in our application and we reiterated, I believe, in our reply that should the Commission not see fit to grant the exception we would accept returning a licence or selling it. So we are prepared to do any one of those three and if you ask us to sell it we will kickstart an option process for that one just as we have for the other 10 stations.

1080   THE CHAIRPERSON: So it's not at the heart of your application?

1081   MR. BIBIC: No, it's important in its own right but it's not at the heart of the application per se.

1082   THE CHAIRPERSON: Okay. That was, I think, important to specify.

1083   Why don't we take a short 10-minute break and come back at quarter to three? Thank you.

--- Suspension à 1236

--- Reprise à 1447

1084   LE PRÉSIDENT : Donc, à l'ordre, s'il vous plaît. So, monsieur le vice-président, s'il vous plaît.

1085   CONSEILLER PENTEFOUNTAS : Alors, bonjour à vous tous.

1086   Je vais d'abord commencer avec quelques questions sur la programmation locale, le système Burli, le partage de votre programmation suivi d'un regard sur votre proposition quant aux artistes émergents et, finalement, on va peut-être jaser un petit peu des nouvelles plates-formes.

1087   Et si je tombe en bas de ma chaise, continuez à parler entre vous autres le temps que je me remette.

1088   Nous comprenons tous l'importance de la programmation locale et l'emphase que le Conseil met sur la programmation locale, le fait que ça reflète la communauté locale, le talent local, également la diversité des voix.

1089   Qu'est-ce que vous avez si

1090   on peut regarder ça d'un regard éloigné, à proposer pour nous aider à comprendre les bénéfices dans le système suite à cette transaction sur la programmation locale?

1091   M. PARISIEN : Alors, si vous permettez...

1092   CONSEILLER PENTEFOUNTAS : Et je regrette, je vais vous interrompre deux minutes, monsieur Parisien.

1093   M. PARISIEN : Oui allez-y.

1094   CONSEILLER PENTEFOUNTAS : Je dis dans le contexte de votre système Burli et au premier regard, quelqu'un peut dire que ça va avoir un effet contraire qu'à la place d'augmenter la programmation locale, ça va la diminuer en raison de ce partage que vous avez l'intention d'introduire.

1095   M. PARISIEN : Alors, merci de me donner la chance de parler et de la radio et de notre vision et de la façon qu'on voit les choses. Je vais commencer par répondre à une certaine altitude à votre question et aussi je vais demander à mes collègues Chris et Charles Benoit de compléter plus spécifiquement sur Burli puis les artistes émergents, et caetera.

1096   Nous avons chez Astral et chez Bell et maintenant chez Bell-Astral post-transaction, espérons-le, une vision de la radio dont on parle sous l'acronyme SOLOMO. Pour nous, ça veut dire « social, local, mobilité ».

1097   C'est ce qui pour les 18, 24, 36 mois nous inspire dans nos opérations, dans notre gestion de la radio, SOLOMO, puis on va vous parler des trois dans quelques... dans quelques minutes.

1098   L'important pour nous is obviously to put consumers and listeners front and centre of our product to connecting consumers with the community where they live.

1099   Dans le monde digital d'aujourd'hui, tout change tellement vite, tellement vite que c'est important pour nous d'avoir accès au maximum de ressources et au maximum de potentiel et au maximum de capital nécessaire pour évoluer avec cet environnement-là.

1100   Nous autres, on pense que le fait d'avoir plusieurs propriétés et d'avoir une masse critique ça va nous permettre justement d'arriver à développer cette théorie-là.

1101   Pour nous, local, ça a un sens très précis également. Pour moi, local, et pour mes collègues, ça veut dire d'être connecté et d'être en ligne avec les intérêts et les émotions du consommateur. Ça veut dire de bien comprendre le centre d'intérêt des consommateurs partout au Canada.

1102   Puis qu'est-ce que c'est le centre d'intérêt des consommateurs? Très souvent c'est le quartier, le neighbourhood, les activités locales, sociales, culturelles, politiques. C'est les services, le sport, la météo, l'humeur de la ville, the flavour of the market.

1103   Tout ça ensemble, pour nous, ça se traduit beaucoup par des moyens qu'on peut avoir, de justement rencontrer ça, livrer de l'information locale, supporter les annonceurs locaux. Ça veut dire jouer un rôle dans la communauté, ça veut dire s'impliquer dans la communauté. Ça veut dire d'avoir comme valeur corporative, de l'empathie envers nos communautés, de les supporter.

1104   On s'attend à ce que nous-mêmes et nos employés pensent de cette façon-là et se comportent de cette façon-là et, d'ailleurs, vous remarquerez chez Astral, et je le remarque chez Bell aussi, très impliqués dans les communautés, très impliqués auprès de leurs consommateurs.

1105   Ça veut aussi dire pour y arriver qu'il faut faire des investissements puis qu'il faut supporter our words with facts and actions et, évidemment, c'est Burli, c'est les services et l'information, c'est les artistes émergents, c'est toutes ces choses-là et on est capable de vous les décliner en détail et si vous permettez je vais demander à Charles Benoit et à Chris de compléter.

1106   CONSEILLER PENTEFOUNTAS : Est-ce qu'on peut rester sur la programmation locale pour l'instant et...

1107   M. BENOIT : Oui, oui. Je vais revenir et je vais...

1108   CONSEILLER PENTEFOUNTAS : Alors, voilà.

1109   M. BENOIT : Voilà, c'est moi. Alors, pour être plus spécifique, quand je regarde la moyenne de nos heures de programmation locale au Canada anglais, on est environ à 90 heures/semaine. Et au Québec, on est environ à 70 heures/semaine sur les obligations de 42 heures/semaine.

1110   Notre mandat à l'information, pour toutes nos stations, que ce soit anglophones ou francophones est de couvrir 70 pour cent d'information locale et 30 pour cent d'information régionale et internationale.

1111   Là où ça devient intéressant l'émergence des nouvelles plates-formes depuis les dernières années c'est assez fulgurant. Quand je regarde le nombre de visiteurs uniques qui viennent consulter les sites, la section information ou, donc, l'information locale dans nos stations, durant la dernière année il y a 928 000 visiteurs uniques du côté anglophone qui viennent consulter la section information.

1112   Il y en a au Québec 692 000 visiteurs uniques qui viennent chaque semaine consulter nos produits d'information locale et ça, ça monte, c'est exponentiel, de mois en mois, on va le nombre de ces visiteurs uniques là grimper.

1113   Donc, je pense qu'on fait... on s'assure... le succès de nos radios, c'est justement cette proximité-là avec les communautés locales et je pense qu'on le fait très bien.

1114   CONSEILLER PENTEFOUNTAS : Et c'est-à-dire qu'il n'y aura pas suite à la transaction, de la programmation locale de rajoutée?

1115   Il n'y a pas plus que vous êtes prêts à mettre sur la table et on peut retourner sur les décisions antérieures, incluant la Décision 2012-574, une des faiblesses de la proposition puis certains puissent dire qu'il n'y avait rien de nouveau au niveau de la programmation locale, il n'y avait rien de rajouté, il n'y avait pas de valeur rajoutée suite à la transaction.

1116   Et c'est en quelque sorte ce que le Conseil cherche dans les cas de transfert de propriété à ce qu'on rajoute au système.

1117   C'était évident en 2010-942 où COGECO a promis clairement de rajouter du local à Sherbrooke, à Gatineau et à Trois-Rivières si ma mémoire est fidèle. Astral Standard à l'époque qui avait certains engagements. Il n'y avait rien de nouveau de rajouté, si on peut retourner jusqu'en 1986, dans la transaction refusée de Télé-Métropole.

1118   M. PARISIEN : Si vous cherchez une réponse en terme d'heures ou de minutes, la réponse c'est non.

1119   Par contre, on sait très bien que le fait de l'introduction de nouvelles plates-formes et de nouvelles innovations technologiques font faire en sorte qu'il va y avoir plus de contenu local sur nos sites web radio et sur nos stations de radios accessibles aux consommateurs.

1120   CONSEILLER PENTEFOUNTAS : Comment est-ce qu'on va arriver à voir plus...

1121   M. PARISIEN : Mais si vous regardez sur une station à Calgary qui est Virgin et que vous allez sur son site web, il y a beaucoup de contenu local sur le site web de Virgin-FM à Calgary puis c'est la même chose pour Vancouver, la même chose pour Montréal, et caetera.

1122   Donc, c'est pour nous un pendant de la licence de radio, mais c'est aussi une façon pour nous, comme on l'a exprimé précédemment, de rester connecté avec l'auditeur radiophonique en lui offrant la flexbilité de continuer à écouter sa radio là où il est puis la façon qu'il veut l'écouter.

1123   Donc, le résultat net c'est qu'il y en a un peu plus, mais je ne peux pas le chiffrer en terme d'heures et tout ça, d'autant plus que ce que monsieur Benoit vient de dire c'est qu'on fait déjà beaucoup plus que l'engagement qui avait été pris.

1124   CONSEILLER PENTEFOUNTAS : C'est ce que vous diffère avec les autres propositions antérieures où vous êtes au-delà de ce qui est des exigences.

1125   M. PARISIEN : Oui. Tout à fait. Puis on a reçu... oui, et on a reçu aussi une grande leçon industrielle dans les dernières années avec ce que les Américains ont fait et de la façon qu'ils ont délaissé les marchés locaux pour faire du syndicated puis du networking puis tout ça et ça leur a coûté... l'industrie a reculé alors qu'au Canada l'industrie a été très résiliente.

1126   Elle a même été en croissance dans les cinq dernières années, pas des chiffres énormes, mais quand même de la croissance, parce qu'elle est restée connectée sur sa communauté puis c'est le business model qui va survivre et c'est pour ça qu'on a du succès.

1127   CONSEILLER PENTEFOUNTAS : Et il n'y aura pas de... Well, allez-y, monsieur Bibic.

1128   MR. BIBIC : What I was going to say, Mr. Vice Chairman, is the example you gave of applicants having come forward before and made commitments for more local. What I suspect they were doing quite rightly is saying, okay, here is how the transaction as it relates to radio will be in the public interest and they went through a number of factors and in those cases that you cite it would have been local.

1129   We did a very similar thing. We understood and understand the burden we have to show that this transaction is in the public interest and there is a significant radio element to it.

1130   So, we do believe that our application at large does have some significant public interest benefits to it. It doesn't if you borrow in on radio local programming specifically. I mean, we have answered that.

1131   CONSEILLER PENTEFOUNTAS: Hum, hum.

1132   MR. BIBIC: And we are where Astral is well above the minima as Jacques and Charles said, but we have also had the element of, as you mentioned in your opening question about a sharing content on a cost recovery basis with small market broadcasters, and I think there was an element in you question, I may have been misinterpretated of how does that sustain local. And that wasn't part of your question, so clearly is on the record there was some element of concern about that and I just wanted to clarify that our willingness to share content with small market broadcasters is not meant for them to supplant or displace their local news with ours, it's to augment, allow those small market stations, to augment their local news with a broader regional and national perspective that Astral and Bell would provide.

1133   And there is also the music elements to our application with the emerging in the artist initiative and the flour on playing your music emanating from emerging artists.

1134   So, I guess I wanted to step in and just say that we hope to convince you that we've put forward an application that is clearly in the public interest, albeit that their elements are different than zeroing in on more local programming for radio.

1135   CONSEILLER PENTEFOUNTAS : Non. Je comprends ça puis je comprends l'ensemble.

1136   M. BIBIC : D'accord.

1137   CONSEILLER PENTEFOUNTAS : Et vous allez être jugé sur l'ensemble de l'oeuvre et il n'y aura aucun doute, mais juste pour rester sur la programmation locale se partage également. Puis monsieur Bibic a répondu à la question avant que ça arrive directement, mais la programmation locale doit être produite séparément et exclusivement pour la station en question.

1138   M. PARISIEN : Tout à fait.

1139   CONSEILLER PENTEFOUNTAS : Et ça soulève quelques questions et quelques préoccupations est-ce qu'on va remplacer puis monsieur Bibic a répondu à la question également. Est-ce qu'on va remplacer puis monsieur Bibic a répondu à la question également, est-ce qu'on va remplacer en quelque sorte cette programmation du réseau? Est-ce que ça va remplacer de la programmation locale, distincte, exclusivement créée pour cette station comme telle qui est à la base de ce qui constitue la programmation locale?

1140   L'autre préoccupation quant au système Burli c'est un système d'exploitation et est-ce que ça va jouer un rôle de... en tant que rationalisation de votre système d'exploitation et est-ce que ça va avoir des conséquences sur le nombre de personnes qui seront nécessaires pour gérer et faire fonctionner votre station?

1141   M. PARISIEN : Alors, en ce qui concerne le système Burli puis je vais laisser Charles Benoit compléter la réponse, c'est non, ça n'aura pas d'impact sur le nombre de personnes qui vont l'opérer et ça ne pénalisera pas non plus le contenu puisque le système Burli est basé sur le principe suivant:

1142   C'est un serveur où chaque station de radio envoie son TOPO sur un sujet donné qui concerne sa communauté. Très souvent, le sujet peut être intéressant pour plus qu'une communauté, même peut être intéressant pour la province ou même le pays et le directeur des nouvelles de chaque station, c'est lui qui décide ou elle qui décide qu'est-ce qu'elle va chercher dans Burli.

1143   Donc, c'est vraiment marché par marché que l'éditorial information est dessiné, décidé et exécuté.

1144   Ce que ça leur donne, c'est accès à une banque incroyable de contenus qu'ils n'auraient pas autrement. Nous allons prendre ce système-là et le rendre aussi disponible sur les stations de Bell et ça va faire en sorte qu'avec 150 journalistes à travers le pays, moi, je pense que le contenu général de l'information... la qualité va augmenter, la quantité va augmenter aussi, parce que ça fait une banque incroyable. Et c'est simplement une--

1145   CONSEILLER PENTEFOUNTAS : Ça serait complémentaire, autrement dit, à la programmation locale qui--

1146   M. BENOIT : Toujours décidé localement.

1147   CONSEILLER PENTEFOUNTAS : O.K.

1148   M. BENOIT : Juste vous dire, Monsieur le Vice-président que le système Burli, pour dans les stations en anglais est déjà fonctionnel dans l'ensemble du pays, anglais/français. Puis, il fonctionne de façon admirable.

1149   Puis vous donner le plus bel exemple : lors des derniers incidents à Bostons, la station CJAD de Montréal a dépêché un journaliste à Boston et qui envoyait ses topos directement sur le système Burli. Et les stations, localement, avaient accès à ça et l'adaptaient pour leurs propres besoins.

1150   Donc, c'est juste de gagner en efficacité, puis on va l'étendre à 107 stations plutôt qu'à 84, ce qui est le cas présentement.

1151   CONSEILLER PENTEFOUNTAS : Burli est déjà fonctionnel, est déjà en place. Je ne pense pas que c'est un système qui est utilisé exclusivement par Astral...?

1152   M. BENOIT : Non.

1153   CONSEILLER PENTEFOUNTAS : Il me semble qu'il y a d'autres radiodiffuseurs qui l'utilisent.

1154   Alors, si on tient compte de ce fait-là, comment est-ce une valeur ou un avantage, tangible ou intangible, suite à la transaction? C'est déjà en place. Qu'est-ce que ça rajoute?

1155   M. PARISIEN : Ça va nous permettre d'avoir accès au lieu de 102 journalistes à 150 journalistes radio. Déjà, c'est un gros avantage, juste la masse accessible d'informations, de sujets, de contenus. Alors, ça, c'est le point numéro un.

1156   Point numéro deux, il y a Burli 2.0, 3.0, 4.0... Aussitôt que ça change et que ça évolue, nous, on va être capable de suivre, à cause de la profondeur que Bell a. Et aussi, nous, c'est un... vous le savez, surtout en radio, c'est un défi continuel d'avoir les capitaux nécessaires pour faire évoluer nos technologies.

1157   Autre chose que j'ajouterais, c'est que sur nos sites Web, on va éventuellement aussi, par Burli et les applications vidéo, pouvoir traiter de la vidéo sur nos sites Web, ce qu'on fait très peu présentement.

1158   CONSEILLER PENTEFOUNTAS : Ça reste, Monsieur Parisien, un coût normal de vos activités?

1159   M. PARISIEN : Oui, ça reste--

1160   CONSEILLER PENTEFOUNTAS : Qu'il y ait transaction ou non, vous auriez été obligés de réinvestir dans votre système, n'est-ce pas?

1161   M. PARISIEN : Non. Ça reste un coût normal et un objectif normal de nos opérations, mais aujourd'hui, ça change tellement vite, et les habitudes des consommateurs, et les technologies, que pour pouvoir suivre l'évolution et aller aussi vite, ça nous prend plus de ressources, plus de moyens, plus de profondeur, ce qu'Astral n'a pas au niveau où Bell l'a.

1162   Et mettre Bell et Astral ensemble, ça va nous permettre de faire plus, plus rapidement. Et c'est évidemment nos marchés qui vont gagner, c'est le consommateur qui va gagner, parce que...

1163   Tu sais, j'ai plein d'exemples, je vais vous... On a un « radio player » qui est assez exceptionnel. C'est une plateforme musicale pour nos stations de radio.

1164   CONSEILLER PENTEFOUNTAS : Oui.

1165   M. PARISIEN : On n'a pas les moyens, puis on n'a pas les ressources pour le faire sur toutes nos stations francophones pour le moment, parce qu'on a d'autres choix à faire puis on fait d'autres choses comme TMN GO.

1166   Oui, mais ça fait rien, c'est important, puis...

1167   CONSEILLER PENTEFOUNTAS : Mais c'est déjà sur place--

1168   M. PARISIEN : Oui.

1169   CONSEILLER PENTEFOUNTAS : ...puis c'est pas un avantage qui découle--

1170   M. PARISIEN : Non, c'est un avantage...

1171   CONSEILLER PENTEFOUNTAS : ...de la transaction?

1172   M. PARISIEN : Non. Bien oui, parce que la transaction va nous amener plus de ressources et plus de moyens financiers, puis on va pouvoir aller plus vite pour le faire.

1173   Sinon, on tire le pas, puis on est toujours un petit peu en arrière. Puis par le temps qu'on va l'avoir fait, il va y avoir quelque chose d'autre à faire, puis quelque chose d'autre de plus innovateur qui va nous--

1174   CONSEILLER PENTEFOUNTAS : Sans doute, mais ça fera toujours partie de vos activités--

1175   M. PARISIEN : Oui, mais plus vous êtes solide, plus vous êtes gros, plus vous avez une masse critique, plus vous pouvez y aller.

1176   Bien oui!

1177   CONSEILLER PENTEFOUNTAS : Et je comprends que c'est bénéfique pour Astral, et c'est sans doute bénéfique pour Bell-Astral, mais pour--

1178   M. PARISIEN : C'est bénéfique pour l'industrie au complet.

1179   Bien oui, parce que ça fait une industrie de radio qui est en santé, ça fait une industrie de radio que les annonceurs supportent, les annonceurs s'identifient à du succès, s'identifient à ces nouvelles technologies-là.

1180   Si la radio tire de la patte, tire de la patte, tire de la patte, les annonceurs vont nous abandonner, un jour.

1181   CONSEILLER PENTEFOUNTAS : Bien, ça ne tire pas de la patte pour l'instant.

1182   M. PARISIEN : Bien...

1183   CONSEILLER PENTEFOUNTAS : Ça continue à être une industrie en santé, puis il y a d'autres beaucoup plus petits qu'Astral et qui seraient certainement beaucoup plus petits qu'Astral-Bell combinés...

1184   M. PARISIEN : Oui... oui...

1185   CONSEILLER PENTEFOUNTAS : ...qui continuent à innover, à investir, à fournir des « players » semblables aux--

1186   M. PARISIEN : Mais c'est parce que ça prend les deux à quelque part, quand même, pour inspirer... Et c'est ce qu'on fait.

1187   CONSEILLER PENTEFOUNTAS : Mais c'est l'avantage de la transaction. Est-ce ça--

1188   M. PARISIEN : La transaction vient ajouter à ça.

1189   CONSEILLER PENTEFOUNTAS : O.K.

1190   Vous voulez rajouter quelque chose, Monsieur Bibic? Allez-y, moi...

1191   MR. BIBIC : Oui, mais--

1192   COMMISSIONER PENTEFOUNTAS: Just I want you to speak to the question of incrementality.

1193   MR. BIBIC: Yeah, okay. So where we see this incrementality is we're providing -- I think the transaction will allow us to stabilize radio stations, particularly in small markets and the maintenance and stability of the ecosystem and of the broadcasting system whether it is TV or radio is important. And you know, radio does well but in small markets there are struggles. So this allows for stability.

1194   We are providing terms of incrementality. You know, if we look at it from the perspective of talent, the on-air talent and the newsgathering talent now have a platform where they can expand their careers. We have a lot of examples of somebody, a journalist or a reporter starting on TV in one community and moving over to radio and then developing his career.

1195   COMMISSIONER PENTEFOUNTAS: That's the way -- I'm sorry. That's the way talent has progressed for 100 years in this industry, from small town to middle town to big town.

1196   MR. BIBIC: Yeah, but now, now --

1197   COMMISSIONER PENTEFOUNTAS: There's nothing incremental about it. There is no advantage, tangible or otherwise in that transaction.

1198   MR. BIBIC: The concept is not new and therefore not incremental, but the opportunity to expand one's career across a broader number of services in a broader -- across the country whether it's TV or radio is important. So now if you're on-air talent and you're working within Bell Media and you're in radio you don't have an opportunity to expand your career across TV in 33 radio stations. It's now, you know, in 107 stations and TV.

1199   There is also the benefit for the listenership. Of course there is the commitment to hyper local programming but there's an opportunity to share, as I mentioned earlier, regional and national stories.

1200   There is an opportunity for a small community listener in a small community to hear a perspective from, you know, Lisa LaFlamme or Bob McKenzie in sports, et cetera. These are examples we gave in our application.

1201   I mean, all these examples are incremental in the sense that they don't happen to the same extent or at all.

1202   It depends on the example without the transaction. And there is the opportunity -- just on my last point, if you're wanting to jump in -- there is opportunity to take investment to the next level.

1203   Astral has Burli. Bell doesn't have Burli. So now Bell Media radio stations get access to Burli and together we have more capital to go, as Jacques said, to Burli 2.0, 3.0 down the road.

1204   So I think all these are incremental to what we would do independently.

1205   COMMISSIONER PENTEFOUNTAS: I'm just worried that we're not going to be confusing what's in the best interest of Bell Astral but what is in the best interest of the system. And looking at your proposition there is a lot of excellent synergies and advantages to being -- to coming together. But I'd like us to focus more, if possible, on the benefits to the system.

1206   You talk about talent having -- you know, going from 33 stations to 130 stations. They can always go outside Bell. I mean we were with the CWC a few weeks ago and there was a young lady there that's working in Miami now and I think she was working in Saskatchewan or some small market. I think most of the markets in Saskatchewan are smaller than sort of Toronto. She's in Miami now and she is -- I think she is on Fox Sports maybe.

1207   You can go outside the box. People are always looking for talent whether they grow from within your organization or find greener pastures outside of the organization. I don't -- I'm trying to understand how that constitutes a benefit, how the Bell/Astral transaction creates a benefit for young talent above and beyond what's already been the case for ever and a day.

1208   On the Lisa LaFlamme and Bob McKenzie point, and not taking anything away from them, they're great news and television and sports personalities, but they're already there. It's not like we're adding another Bob McKenzie and another Lisa LaFlamme as a consequence of the transaction.

1209   MR. BIBIC: Yeah, but they're -- okay. So these are all fair points. In respect for first principles, we really -- we try to start with and Jacques started with expressing the vision that Astral and Bell have for radio programming.

1210   You know, it's the SoLoMo. It's very social. It's very local. We're totally committed to local. We understand that for radio to be successful it has to be local. More and more it's about providing multiplatform listening opportunities. So there is the mobile aspect to it.

1211   So we bring kind of that expertise to a stable of radio stations that Astral owns that, you know, we can bring more to bear in terms of those investments there. And I guess I would challenge you on a notion that that's just uniquely good for Bell or Astral. Of course that's good for Bell and Astral. But it's ultimately good for the listener. And it's access to an expertise on the technology side and focusing only on the mobility aspect that Astral can bring to bear on its own today. So there is that.

1212   COMMISSIONER PENTEFOUNTAS: Okay. There is the continued commitment -- Mr. Bibic, I'm not --

1213   MR. BIBIC: Yeah.

1214   COMMISSIONER PENTEFOUNTAS: -- I have a premonition that interveners will come in tomorrow and the next day and tell us, you know, "We're social. We're local and we're mobile".

1215   MR. BIBIC: Well, of course you have to be social and local. This is about expressing a vision that we --

1216   COMMISSIONER PENTEFOUNTAS: There's nothing to be added to the system as a consequence of the transaction?

1217   MR. BIBIC: Except that that scale that we can bring to bear that costs hundreds of stations with the mobile and technological aspect of it is something that, frankly, we don't believe any other player in the country can because of the Bell expertise, the Bell commitment to this, and our drive towards multiplatform, which we tend to think about only in viewership terms, but there is also a very clear listenership aspect to it.

1218   COMMISSIONER PENTEFOUNTAS: Does that creating an unfair advantage almost for the system if we want to look at the benefit of the system? Will you once again be getting too big, too strong, too powerful, too overwhelming into that decision --

1219   MR. BIBIC: -- to bear innovation and capital --

1220   COMMISSIONER PENTEFOUNTAS: On the radio front.

1221   MR. BIBIC: Well, it's the same thing. It's bringing innovation and capital to bear in markets which may not be able to sustain it on their own, especially in all the small market radio stations that Astral owns.

1222   And I think, again, back to radio being local, we had the discussion with Commissioner Lamarre about the impacts on competition in each local market. I think it's too easy to say, "Well, you'll have 107 stations". Well, radio is local.

1223   So you know, in every market you slice the markets by markets, we are actually not going in size, except in a couple as Kevin mentioned.

1224   COMMISSIONER PENTEFOUNTAS: So one of the benefits will be offering better programming to smaller stations that are having a harder time.

1225   MR. BIBIC: Or enhance listenership options, especially as we adapt the mobile and the multiplatform aspect to it. There is one tangible -- intangible benefit.

1226   MR. CRULL: I think, Mr. Vice-Chair -- sorry for that. I've been quiet too long.

--- Rires

1227   MR. CRULL: I think, Mr. Vice-Chair, that undoubtedly we talked about Lisa LaFlamme and Bob McKenzie and some of the stars that the star system, if you will, in the English within our TV and radio portfolio, making those personalities available and making their talent available to small markets is absolutely a significant content enhancement and programming enhancement to those markets.

1228   As for the talent, I think you have to step slightly above just the radio portfolio and look at the challenge that there is today being a media company in a country that is relatively small like Canada. You may have followed some news if you're a sports fan that was happy to celebrate the success of two of our children out of TSN, Jay Onrait and Dan O'Toole.

1229   But we're sad to see them go. We're sad to see Canada leave two person... lose two personalities that have had an incredible impact on sports fans and sports viewers. And they're going to a network that is in 90 million homes. And I can just tell you that, for me, we build talent in this country, it's a bit of perennial problem.

1230   And they, you know, they weren't exactly looking to leave. They were very happy having developed their career here. But a provider that's in 90 million homes can do things for them that I can't do.

1231   So having a broader portfolio absolutely that, the small examples that we gave of some our talent either crossing platforms, crossing stations or working in multiple locations absolutely does allow me to enhance careers and keep talent, keep home grown talent here.

1232   COMMISSIONER PENTEFOUNTAS: So it's a pride that you see two of your own do so well, but it's also a source of heartbreak, I guess, watching them having to go.

1233   MR. CRULL: That's right.

1234   MR. BIBIC: And, Mr. Vice-Chairman, just to reiterate, there's also the emerging and artist and initiative which is incremental and intangible and there's the hard floor commitment on emerging artist air play which is incremental and intangible and we shouldn't lose sight of the fact that, you know, we are stepping forward as the policy requires and adding 50 million dollars to radio benefits, which is incremental, intangible, which doesn't flow into the system absent of transaction.

1235   COMMISSIONER PENTEFOUNTAS: No, absolutely. And we'll get into emerging artists in just a moment. Pour retourner, je pense qu'il y avait une discussion également antérieurement sur les champions des petits marchés ou ces spécialistes de la programmation visant des petits marchés. Est-ce qu'il n'y a pas déjà des spécialistes de la programmation des petits marchés et en quoi est-ce un avantage qui découle de la transaction?

1236   M. BENOIT : Oui, en fait...

1237   CONSEILLER PENTEFOUNTAS : Il me semble que vous devez avoir déjà une armée déjà de spécialistes de programmation des petits marchés et des gros marchés.

1238   M. BENOIT : On n'en a pas comme tel.

1239   CONSEILLER PENTEFOUNTAS : Non?

1240   M. BENOIT : Cela dit, on a un comité des petits marchés qui va bénéficier, je pense, aussi, à l'ensemble du groupe. Et, dans ce comité-là, aussi, ce qu'on fait, en fait, c'est un échange des meilleures pratiques. Quand je regarde dans... Colombie-Britannique, BCI, BC Ontario, où on a une vingtaine de stations, qu'il y a vraiment, là, de très, très, très petits marchés, le fait de pouvoir grouper ces gens-là ensemble et de pouvoir échanger avec les stations du Nouveau-Brunswick puis avec quelques-unes des stations du Québec, pouvoir voir comment ils arrivent à développer de façon extraordinaire des spécialités, du marketing pour les petits marchés développés, comment retenir le talent, comment créer des produits exclusifs. Là, on le fait, mais, là, on va l'amener à un stade supérieur.

1241   CONSEILLER PENTEFOUNTAS : O.K. Ça va. On améliore l'offre. Ça va.

1242   M. BENOIT : Absolument.

1243   CONSEILLER PENTEFOUNTAS : Très bien. Pour retourner à ce partage de programmation et de contenu comme tel, vous avez également inclus dans vos avantages proposés l'idée que vous allez partager avec la radio communautaire et les petites stations comme telles. Est-ce qu'il n'y a pas un conflit entre le mandat de la radio communautaire et la programmation que vous serez en mesure de partager?

1244   Si on regarde le mandat de la radio communautaire, le fait que les bénévoles doivent être impliqués, le fait que ça doit être hyper local, le fait que ça doit servir les communautés et la radio qui n'est pas disponible ni dans le domaine privé commercial ni dans le domaine public si on parle de CBC/SRC, comment est-ce que vous allez faire, effectuer ce partage de contenu de programmation avec la radio communautaire?

1245   M. BENOIT : Bien, je vais vous donner un exemple bien précis. Prenons la radio communautaire francophone de Toronto.

1246   CONSEILLER PENTEFOUNTAS : Si.

1247   M. BENOIT : Choq-FM.

1248   CONSEILLER PENTEFOUNTAS : Um-hum. Oui, oui.

1249   M. BENOIT : Qui sont venus me voir, qui ont sérieusement des problèmes au niveau financier, au niveau de relève, au niveau de contenu. Ils sont venus nous voir et on a regardé ensemble comment on pouvait les aider, comment on pourrait les aider à se sortir de ce pétrin-là. Et on a pu regarder ensemble que, bon, d'abord, un, on va leur donner un support au niveau de la musique. On va leur donner un support. Nous, on a déjà à l'interne chez nous une banque de relève à l'animation qui couvre différentes tailles, différents marchés. On va leur donner accès à ça.

1250   On va également leur donner accès à notre feed d'information. Après ça, eux autres, c'est à eux de prendre ce qu'ils ont besoin pour couvrir leur mandat. Mais on leur rend ça disponible. Alors que quand on amène pour... dans le cadre de la transaction ici, c'est un peu la même chose. On va rendre à l'ensemble de ces petites stations communautaires et de petits marchés l'information et ils verront eux à voir comment ils vont la traiter à l'intérieur du mandat qu'ils ont.

1251   CONSEILLER PENTEFOUNTAS : Sauf que, l'idée de la radio communautaire, c'est de se démarquer de la radio traditionnelle, si vous voulez. Et je vois mal en quoi la programmation de la radio traditionnelle d'Astral ou d'Astral/Bell puisse servir les besoins de la radio communautaire.

1252   M. BENOIT : Ah, bien, là, ça, c'est discutable parce qu'on peut... tout dépendant du sujet, s'il y a des éléments de l'actualité, moi, j'ai écouté plusieurs radios communautaires au pais puis, souvent, les radios communautaires parlent de l'actualité et la traite à leur façon dans la mesure de leur marché. À partir du moment qu'on leur fournir la base en information, comment ils vont l'adapter et comment ils vont la traiter, c'est libre à eux, mais je pense que c'est important, ça peut leur être très utile.

1253   CONSEILLER PENTEFOUNTAS : D'après votre mémoire, vous avez également entamé des discussions avec les membres de l'ARC et d'autres organisations qui représentent la radio communautaire?

1254   M. BENOIT : Oui.

1255   CONSEILLER PENTEFOUNTAS : Où êtes-vous dans ces discussions-là avec eux?

1256   M. BENOIT : Ça, je vais demander à ma collègue, Claude Laflamme, qui maintient ces discussions-là avec l'ARC.

1257   MME LAFLAMME : Je m'excuse.

1258   M. BENOIT : On parle de nos relations avec l'ARC.

--- Rires

1259   MME LAFLAMME : Excusez-moi, je vais...

1260   CONSEILLER PENTEFOUNTAS : Je vais essayer de répéter.

1261   MME LAFLAMME : Oui, s'il vous plaît.

1262   CONSEILLER PENTEFOUNTAS : Dans votre mémoire, mention a été faite au fait que vous avez entamé des discussions avec l'ARC en exemple et de la radio communautaire généralement parlant pour le partage de votre programmation et comment ça peut être utile à la programmation, à la radio communautaire. Alors, ma question est à savoir : où êtes-vous rendus dans vos discussions? Quels sont les fruits de ces discussions-là?

1263   MME LAFLAMME : Bien, en fait, à ma connaissance, c'est très préliminaire. Je vais demander à mon collègue Kevin.

1264   MR. GOLDSTEIN: Sorry, I'll try in English and hopefully --

1265   COMMISSIONER PENTEFOUNTAS: No problem, yes, yes.

1266   MR. GOLDSTEIN: At this point in time, we actually haven't initiated conversations yet with ARC.

1267   COMMISSIONER PENTEFOUNTAS: Okay.

1268   MR. GOLDSTEIN: It's very, very preliminary. Right. I just wanted to clarify, because I might have misunderstood from the translation, the offer to share with small independent broadcasters and communities in which we don't operate is not community radio.

1269   COMMISSIONER PENTEFOUNTAS: No, that was a separate question earlier on. This is for the community radio.

1270   MR. GOLDSTEIN: There's sort of two commitments, yes, there's two commitments.

1271   COMMISSIONER PENTEFOUNTAS: I think that was answered earlier.

1272   MR. GOLDSTEIN: Yes, okay. The second element is relating specifically to community in campus and specifically relating to official language minority communities. I think we're really --

1273   COMMISSIONER PENTEFOUNTAS: Yes.

1274   MR. GOLDSTEIN: -- thinking in terms of French content going from, that could go from Québec to outside of Québec. I don't think we're envisioning fully packaged programmes that would go, that would be some promotional vehicles for us. I think it's more the content --

1275   COMMISSIONER PENTEFOUNTAS: No, no, that wasn't the --

1276   MR. GOLDSTEIN: Okay.

1277   COMMISSIONER PENTEFOUNTAS: There was no insinuation there. I think it was already answered to the --

1278   MR. GOLDSTEIN: Okay.

1279   COMMISSIONER PENTEFOUNTAS: And correct me or you can add if you want, that the programming will be made available given the limited means of community and campus radio. And they'll present it in a way that is in conformity with their mandate, which is quite different from that of commercial radio.

1280   MR. GOLDSTEIN: That's absolutely correct.

1281   COMMISSIONER PENTEFOUNTAS: Okay. Do you want to add anything to that? And on the discussions with community and campus radio, is there any movement on that? Is there anything that you have to report? Because it's part of your submission. If not, not.

1282   MR. GOLDSTEIN: No.

1283   COMMISSIONER PENTEFOUNTAS: Great. Okay. On peut continuer avec les artistes émergents. Je pense, du côté -- et corrigez-moi si je me trompe -- du côté anglophone, c'est 25%. Et, si je fais le calcul, ça leur donne un chiffre de 8,7%. La moyenne de l'industrie, c'est 13,3%. Et ça fait partie -- je n'ai pas l'annexe en face, là, mais ça fait partie de vos soumissions -- comment se fait-il, à moins qu'on se trompe dans nos chiffres, que la proposition de Bell Astral nous laisserait avec un appui à des artistes émergents qui est en deçà de la moyenne nationale? Je parle de la radio de langue anglaise pour l'instant.

1284   M. BENOIT : Je ne suis juste pas sûr... I'm just not sure where you get your 8%.

1285   COMMISSIONER PENTEFOUNTAS: 25% of -- So 20 -- I think it's 25% of Canadian selections. And if Canadian selections are at 35% as a minimum, then that would bring us to 8.75. That's your proposition in English language. And if you want, we can come back to it, if you want to take a closer look at it.

1286   MR. GORDON: Sure. I'm not entirely sure where the math is coming from. I know for --

1287   COMMISSIONER PENTEFOUNTAS: Well, if you're proposing 25% of Canadian content stem from emerging artists, then 25% of 35% is 8.75%. And that's how I get my number. And, when I look at the national average, we're well higher than that. So in this case, it wouldn't be an advantage benefits in the system, it would be sort of the opposite thereof. And that's certainly not what we want in the case of a transaction. We want to add to the system and not subtract from it.

1288   MR. GORDON: Right. I think if you look at the stations that we operate between Bell and Astral, where we came up with that number, for example on CHUM-FM in Toronto when we did the calculation, that station was playing 16 percent emerging artists. To raise that number to 25 percent, a 9 percent increase, that's a very substantial increase on a station that reaches over 4 million people a week.

1289   So when we looked at all of our stations combined, some stations that are in the Bell Media portfolio are currently playing between 5 and 10 percent of emerging artists, to raise that up to 25 percent is a real incremental increase.

1290   COMMISSIONER PENTEFOUNTAS: That's where you got the number?

1291   Tell me something, if I just sort of read off a couple of stations here, CICF Vernon; is that a Bell property or is that an Astral property?

1292   MR. GORDON: Astral.

1293   COMMISSIONER PENTEFOUNTAS: It's an Astral property.

1294   CKZZ Vancouver?

1295   MR. GORDON: Astral.

1296   COMMISSIONER PENTEFOUNTAS: CHBD Regina? CKXA Brandon? CKFM Toronto? CHVR Pembroke? CJBX London? Another London, CIQM? CKLH Hamilton?

1297   I mean these are all stations that are doing 10 percent on average emerging artists already.

1298   If you want to take some time and take a look at it -- and I understand now how you got your 25 percent figure, that was another one of my questions -- and maybe we can get back to it after one of my colleagues has had a chance to question you on their topics.

1299   À moins que vous êtes prêt à répondre immédiatement.

1300   MME LAFLAMME : On va vous revenir. En fait, vous faites référence probablement à nos demandes de renouvellement dans le formulaire...

1301   CONSEILLER PENTEFOUNTAS : En partie également. Parce que vos demandes de renouvellement, votre offre en tant que sur la question des artistes émergeants, est supérieure à l'offre qui est faite par Bell/Astral combinés.

1302   MME LAFLAMME : En fait, faut voir. C'est pas toujours la même base. Parce que dans le formulaire, il n'y a pas une base. C'est pas sur le 35 p. cent. Ça peut être sur la grille totale.

1303   Donc, il faut vraiment qu'on le regarde...

1304   CONSEILLER PENTEFOUNTAS : Bien là...

1305   MME LAFLAMME : ...puis on va vous revenir avec les comparaisons exactes, juste pour prendre la même base.

1306   CONSEILLER PENTEFOUNTAS : Là, on arrive sur une autre question, à savoir, surtout dans le contexte francophone.

1307   Est-ce que d'après votre calcul, puis je vous pose la question immédiatement, comme ça, ça va vous donner la chance de le regarder.

1308   Quant à votre proposition des artistes émergeants dans les stations qui jouent de la musique de langue française, est-ce que vous vous êtes basée, votre pourcentage, sur la journée de 6 h à 18 h, à 55 p. cent ou sur la semaine à 65, quant à la musique vocale de langue française?

1309   MME LAFLAMME : De mémoire dans le formulaire, c'est sur... de 6 à minuit.

1310   CONSEILLER PENTEFOUNTAS : Parce que c'était pas clair.

1311   MME LAFLAMME : Non.

1312   CONSEILLER PENTEFOUNTAS : Ni pour nous, ni pour nos...

1313   MME LAFLAMME : Non, la question était aussi large. La réponse, on a donné une réponse.

1314   On n'a pas... je crois que c'est sur de 6 h à minuit. Donc, je vais vérifier. O.K. avec chaque demande, puis je vais vérifier avec la...

1315   CONSEILLER PENTEFOUNTAS : Parce que ça change le pourcentage.

1316   MME LAFLAMME : Oui, tout à fait.

1317   M. BENOIT : Oui, parce que moi, si je me fie à mes chiffres à moi, je prends le réseau Énergie, les stations du réseau Énergie, présentement on ne diffuse en moyenne 15 p. cent d'artistes émergeants avec l'engagement qu'on prendrait ce niveau-là de 15 et on le monterait à 25.

1318   Donc là, je veux juste...

1319   MME LAFLAMME : Non, non, non.

1320   CONSEILLER PENTEFOUNTAS : Non, c'est pas ça. O.K.

1321   MME LAFLAMME : Quinze global, versus 25 sur 65.

1322   CONSEILLER PENTEFOUNTAS : C'est ça.

1323   MME LAFLAMME : Alors O.K. On va...

1324   CONSEILLER PENTEFOUNTAS : C'est ça. Ça vous ramène à la moyenne si vous voulez.

1325   MME LAFLAMME : À peu près à 16.

1326   CONSEILLER PENTEFOUNTAS : Oui, si on fait le calcul sur la journée et non pas sur la semaine. Sinon, vous êtes en deçà de là à 75.

1327   M. BENOIT : Vaudrait mieux vous revenir après.

1328   MME LAFLAMME : Oui, on serait mieux de revenir justement, puis utiliser les mêmes paramètres.

1329   CONSEILLER PENTEFOUNTAS : Parfait. Et pour retourner sur la question, est-ce que vous avez l'intention de faire votre calcul sur la journée, la semaine, le mois? Parce que ça non plus, il n'y a pas de réponse à ça dans votre mémoire.

1330   Si vous voulez prendre le temps...

1331   MME LAFLAMME : On va en discuter.

1332   COMMISSIONER PENTEFOUNTAS: It's not a trap. If you want to take your time, Mr. Goldstein.

1333   MME LAFLAMME : Non, non. Normalement, c'est la semaine de radiodiffusion.

1334   CONSEILLER PENTEFOUNTAS : La semaine, c'est...

1335   MME LAFLAMME : Mais on va en discuter entre nous, on va vous revenir.

1336   CONSEILLER PENTEFOUNTAS : O.K. Parfait. Et également nous revenir avec ce que Bell joue présentement d'artistes émergeants.

1337   MME LAFLAMME : Oui.

1338   M. BIBIC : Oui.

1339   CONSEILLER PENTEFOUNTAS : Et Astral.

1340   M. BIBIC : Oui.

1341   CONSEILLER PENTEFOUNTAS : Alors, Monsieur le Président demande quand? Est-ce qu'on peut faire ça aujourd'hui?

1342   M. BIBIC : On peut le faire mercredi matin avec les autres engagements. Est-ce que ça va?

1343   LE PRÉSIDENT : Bien, j'essaie de voir qui a un intérêt dans l'enjeu. Puis, il me semble qu'ils sont après vous.

1344   M. GREENBERG : Oui, O.K. Ça va aller.

Engagement

1345   M. BIBIC : Ils sont après?

1346   CONSEILLER PENTEFOUNTAS : Oui, ça va. Merci, Monsieur le Président.

1347   LE PRÉSIDENT : Donc, mercredi matin, ça vous convient?

1348   M. BIBIC : D'accord.

1349   CONSEILLER PENTEFOUNTAS : Il y a également proposition quant aux artistes Indies. Et est-ce que vous êtes capable de mettre un petit peu de Shaw autour de cet os-là? Chair, pardon! À savoir, comment est-ce qu'on va choisir ces artistes Indies, parce que nous avons déjà une définition, le conseiller en définition qui date de 2011, je pense, en ce qui constitue un artiste émergeant dans le domaine francophone et anglophone. Voyez-vous?

1350   Mais sauf qu'on n'a pas de définition comme telle sur les artistes Indies. Alors peut-être nous aider à comprendre comment vous allez décider qui est un artiste Indie. Ça va jouer dans l'initiative qui est proposé par la transaction Bell/Astral.

1351   M. GORDON : Vous parlez encore...

1352   COMMISSIONER PENTEFOUNTAS: Mr. Gordon, do you have an answer to that already?

1353   MR. GORDON: Sure.

1354   COMMISSIONER PENTEFOUNTAS: Go ahead.

1355   MR. GORDON: Yes. I mean, the Bell Media emerging artist and Indie initiative is happening already on a number of Bell Media stations. To be eligible for the initiative, the artist or group must be either signed to an independent record label or be self-distributed, the artist or group's masters must be Canadian-owned by either the independent label or the artist or group.

1356   COMMISSIONER PENTEFOUNTAS: Okay.

1357   MR. GORDON: And the artist or group cannot have previously had a song charted on the Top 40 playlist of the media-based Canadian panel for Hot AC.

1358   So it's a pretty stringent bar to be considered for eligibility in this --

1359   COMMISSIONER PENTEFOUNTAS: And the promotional aspect of the initiative, do you want to speak to us on that?

1360   MR. GORDON: Sure. The promotional aspect -- I will just step back for a second and just tell you kind of how it works.

1361   COMMISSIONER PENTEFOUNTAS: Please.

1362   MR. GORDON: Independent artists are encouraged to submit their music to a panel of program directors and music directors and every month those program directors and music directors vote on a particular artist and a particular song that receives airplay across the majority of our radio stations. That airplay is a minimum of one month. Sometimes it goes far beyond that and when you look at the list of artists that have currently enjoyed airplay there is a substantial amount of people who receive far more airplay than a month.

1363   Also over the course of the month the stations air a minimum of 10 30-second commercials per week promoting the artist's latest release as well.

1364   COMMISSIONER PENTEFOUNTAS: But it's one artist per month?

1365   MR. GORDON: One artist per month.

1366   COMMISSIONER PENTEFOUNTAS: Okay.

1367   MR. GORDON: What we are proposing with both companies is to have a two artist per month, one in the contemporary hit music realm and one in more of the Hot AC and AC music realm. So we would have two independent artists receiving airplay on a monthly basis across a vast majority of Bell and Astral stations.

1368   COMMISSIONER PENTEFOUNTAS: And you would be creating a subcategory in the Cancon category.

1369   MR. GORDON: No, it's not a subcategory, it's part of --

1370   COMMISSIONER PENTEFOUNTAS: Is it above and beyond your 25 percent?

1371   MR. BIBIC: Mr. Vice-Chair, if I could step in, I just want to -- I have a feeling we are maybe talking about different initiatives.

1372   So we have two intangible commitments, we have the one you were questioning on before, which is the 25 percent subject to the --

1373   COMMISSIONER PENTEFOUNTAS: Emerging artist.

1374   MR. BIBIC: -- airplay for emerging Canadian artists. And then we have a separate initiative called the Emerging Indie Artist Initiative which is a Bell Media initiative proposing to extend to the Astral station.

1375   COMMISSIONER PENTEFOUNTAS: That's my understanding.

1376   MR. BIBIC: Okay. So you were asking about the emerging --

1377   COMMISSIONER PENTEFOUNTAS: I'm asking about the Indie artists.

1378   MR. GORDON: The Indie.

1379   MR. BIBIC: The Indie artist initiative, okay.

1380   COMMISSIONER PENTEFOUNTAS: I think Mr. Gordon was responding to that.

1381   MR. BIBIC: Then I was the only one confused, so were good.

--- Rires

1382   COMMISSIONER PENTEFOUNTAS: It's good for once, it's someone else.

1383   So, Mr. Gordon, yes, back on that issue.

1384   MR. GORDON: Right.

1385   COMMISSIONER PENTEFOUNTAS: The Indie artist proposition, is that above and beyond the 25 percent emerging artist proposition?

1386   MR. GORDON: No, that would be included in it.

1387   COMMISSIONER PENTEFOUNTAS: So that's a subcategory.

1388   MR. GORDON: We don't categorize music that way, we play it based on its merits.

1389   COMMISSIONER PENTEFOUNTAS: But here you are going to make a concerted effort to be playing Indie artists within the emerging artist category.

1390   MR. GORDON: No, they go into regular rotation. It's not an Indie artist category, they go into regular rotation on the radio stations, depending on where the music directors of those particular radio stations believe that music should fall.

1391   COMMISSIONER PENTEFOUNTAS: But that one artist a month, I mean what percentage of the 25 percent -- if we go to his example, what percentage of the 25 percent emerging artist play would be comprised of Indie artists? That's my question.

1392   MR. GORDON: I will ask Mr. Goldstein to respond.

1393   MR. GOLDSTEIN: I'm sorry, we would have to look in terms of overall spins as to how many spins we do in week as to working out the exact percentage.

1394   But just to your earlier question, the spins attributable to the emerging Indie artist --

1395   COMMISSIONER PENTEFOUNTAS: Yes.

1396   MR. GOLDSTEIN: -- will be included within and count against 25 percent number --

1397   COMMISSIONER PENTEFOUNTAS: Right.

1398   MR. GOLDSTEIN: -- just as all other devoting -- you know, exposure to other Indie artists would.

1399   COMMISSIONER PENTEFOUNTAS: I understand that, yes.

1400   My question was, is there a way of calculating what percentage of that would be attributed to Indie artists?

1401   MR. GOLDSTEIN: I think we would have to -- we could get back to you. We would have to look at how many spins overall the station would average, it would vary, but we could look at how many spins there is. It's in high rotation.

1402   I don't know if Chris can comment on what generally for how many spins we give to the emerging Indie artist.

1403   MR. GORDON: Right. I mean, it depends on each station, on each station's format. Clearly CHR stations play their music a lot more often than a Hot AC would, so it's a station-specific and format-specific amount of spins per week, but it all goes to the 25 percent.

1404   COMMISSIONER PENTEFOUNTAS: I understand that. That was answered.

1405   Thank you, Mr. Gordon.

1406   CONSEILLER PENTEFOUNTAS : Monsieur Parisien, vous avez fait référence il y a quelques minutes à votre player pour Moncton, pourquoi devrait-il être considéré comme un avantage de la transaction? C'est déjà en place, c'est pas nouveau.

1407   M. PARISIEN : Ce qui devrait être considéré comme un avantage de la transaction, c'est deux choses. C'est premièrement de pouvoir en faire bénéficier toutes les stations de Bell et deuxièmement, c'est de pouvoir le prendre et le rendre disponible sur des stations francophones où il n'est pas disponible présentement.

1408   CONSEILLER PENTEFOUNTAS : Okay.

1409   M. PARISIEN : Et dernière chose aussi, c'est que déjà, notre player commence à être un peu dépassé et on devrait être capable de le faire avancer un peu plus vite.

1410   Et je vous répète que sans la transaction, il y a des choix à faire et on a décidé de faire d'autre chose, et on fera pas ça tout de suite. Puis par le temps qu'on va le faire, on va être pas mal en retard.

1411   L'arrivée de Bell nous donne accès à plus de ressources.

1412   CONSEILLER PENTEFOUNTAS : Je comprends.

1413   M. PARISIEN : Et plus de talents, plus d'innovation et ça va nous permettre d'aller plus vite et d'en faire bénéficier les auditeurs.

1414   CONSEILLER PENTEFOUNTAS : Et moi je vous répète que vous l'auriez fait de toute façon.

1415   M. PARISIEN : Pas à cette vitesse-là, pas avec ces investissements-là.

1416   CONSEILLER PENTEFOUNTAS : Et que vous devez suivre votre auditoire qui émigre de plus en plus vers des plateformes mobiles.

1417   Alors ça va peut-être vous aider à accélérer le pas.

1418   M. PARISIEN : Ah! C'est ça. Vous mettez le doigt dessus.

1419   CONSEILLER PENTEFOUNTAS : Sauf que... oui.

1420   M. PARISIEN : Monsieur le Vice-président...

1421   CONSEILLER PENTEFOUNTAS : Sauf que, parlez-en du système. On prend en possibilité que c'est pour Bell/Astral. Mais parle-moi-en du système.

1422   M. PARISIEN : Bien, ça rend la radio accessible sur d'autres plateformes. C'est bon pour toute l'industrie de la radio au lieu de voir les auditeurs quitter nos radios conventionnelles et s'en aller sur des radios internet, ils vont rester sur nos marques.

1423   Autant les nôtres! Puis, ils vont prendre l'habitude de rester sur les nôtres. Rogers va faire pareil, Corus va faire pareil et ça va être bon pour l'industrie en général. On veut garder nos auditoires chez nous.

1424   M. BENOIT : Si je peux juste nuancer un petit peu...

1425   CONSEILLER PENTEFOUNTAS : Oui, certainement.

1426   M. BENOIT : Vous dire que le lecteur ou le « player », il est disponible sur deux marques seulement, présentement. Une francophone, Énergie, et Virgin.

1427   Ça a nécessité beaucoup d'investissement pour notre division radio. Le bénéfice de la transaction va nous permettre, justement, comme il le disait, d'aller à plus que deux marques. Mais pour ça, ça prend beaucoup, beaucoup, beaucoup de fonds.

1428   CONSEILLER PENTEFOUNTAS : Beaucoup d'argent.

1429   M. BENOIT : Et c'est unique, hein. C'est unique au Canada, ce lecteur-là. C'est un partenariat entre nous et l'industrie de la musique, au Canada.

1430   CONSEILLER PENTEFOUNTAS : Qui plus est, ça va vous permettre de vous présenter sur le marché francophone également, avec le lecteur. Ce qui n'est pas là présentement--

1431   M. BENOIT : On est présent, présentement, avec Énergie. Ce qui est intéressant sur le côté francophone, c'est qu'on ne peut pas l'être autant qu'on le souhaiterait, parce qu'au Québec, on se retrouve dans un phénomène plutôt particulier où près de 70 pour cent des droits numériques sont détenus par Musicor, qui appartient à Québecor et qui, eux aussi, ont un modèle de lecteur, qui s'appelle zik.ca, qui nous empêche d'être aussi agressif qu'on le souhaiterait sur le marché francophone.

1432   CONSEILLER PENTEFOUNTAS : Maintenant, juste pour retourner à notre point sur les artistes émergents, de mémoire, le 25 pour cent n'est pas inclus pour Rouge FM. Y a-t-il une raison?

1433   M. BENOIT : Bien, parce que...

1434   CONSEILLER PENTEFOUNTAS : Pour les... Je vais retourner à la question, juste pour mettre les gens en contexte.

1435   Sur la question des artistes émergents, Rouge FM ne fait pas partie des stations où on va aller essayer de chercher 25 pour cent des artistes émergents?

1436   M. BENOIT : Non, parce que quand on a pensé à ça, c'était avant tout pour les formats Top 40 et les Grands succès contemporains, mais pour ce qui était des ATC, c'était un petit peu plus difficile à se commettre...

1437   Pour les AC, je m'excuse, pas pour les ATC.

1438   CONSEILLER PENTEFOUNTAS : Je comprends peut-être pour les stations classique rock, disons, où on reste--

1439   M. BENOIT : Bien, classique rock, c'est encore plus difficile.

1440   CONSEILLER PENTEFOUNTAS : ...sur les années '70... C'est encore plus difficile, presque impossible, mais Rouge FM et ce genre de stations-là, je vois mal... il y a des artistes émergents qui font ce genre de musique? Pourtant--

1441   M. BENOIT : Vous avez totalement raison. Est-ce qu'il y en a pour 25 pour cent, c'est...

1442   CONSEILLER PENTEFOUNTAS : Oh! On peut se tirer un petit peu, là.

1443   M. BENOIT : Mais quand on fera l'analyse des pourcentages, on se penchera là-dessus puis dans notre réponse, on vous reviendra.

1444   CONSEILLER PENTEFOUNTAS : Good. Excellent.

1445   Alors, pour retourner au lecteur, est-ce que vous avez prévu de faire préinstaller ce lecteur-là sur les téléphones intelligents de Bell?

1446   M. BENOIT : Oui.

1447   M. PARISIEN : Non. Pas à ce stade-ci, non.

1448   CONSEILLER PENTEFOUNTAS : Pas à ce stade-ci?

1449   M. PARISIEN : Non. Mais on a été --

1450   M. BENOIT : Je vais informer mon éminent collègue--

1451   M. PARISIEN : ...approché par plusieurs.

1452   CONSEILLER PENTEFOUNTAS : Pas de chicane de famille, là.

1453   M. BENOIT : On a un projet, oui--

1454   CONSEILLER PENTEFOUNTAS : Est-ce qu'on maintient la réponse?

1455   Deuxième rangée?

--- Rires

1456   M. BENOIT : Oui. On a un projet qui... Enfin, on est en discussion avec Bell Mobilité pour voir si effectivement on pourrait pas, sur les appareils qui sont livrés par Bell, avoir déjà de téléchargé le lecteur et les applications de certaines de nos stations.

1457   CONSEILLER PENTEFOUNTAS : Sans trahir de confidences quelconques, est-ce que vous êtes en discussions avec d'autres fournisseurs de téléphones intelligents?

1458   M. BENOIT : En fait, c'est intéressant, on a eu des discussions avec le fournisseur... pas un telco, mais avec BlackBerry, afin de voir à développer notre lecteur pour le nouvel appareil Z10 qui, à ce moment-là, viendrait... serait disponible à l'ensemble des compagnies de télécommunications, j'imagine.

1459   COMMISSIONER PENTEFOUNTAS: Mr. Cope, go ahead.

1460   MR. COPE: I just think we are in competitive territory now. I think the questions could be toned around what may be going on or not with BlackBerry I'm not sure is --

1461   COMMISSIONER PENTEFOUNTAS: No, not necessarily BlackBerry.

1462   MR. COPE: -- very relevant to this transaction or our management team behind it.

1463   COMMISSIONER PENTEFOUNTAS: Yes.

1464   Will, as a consequence of this transaction --

1465   MR. COPE: Yes.

1466   COMMISSIONER PENTEFOUNTAS: -- the possibility to gain access to music be restricted to Bell cell phone users I think is of interest, and exclusively to Bell cell phone users. That is the nature of my question, Mr. Cope, and not getting into the deals that are going to be struck with Samsung or BlackBerry.

1467   MR. BIBIC: And I can't venture off into confidential territory because I'm not aware one way or the other, but what I would say to the question is that there is a whole host of choices available to listeners to access the music and the radio content that they want whether it's on a laptop, tablet or their cell phones.

1468   So the issue here we are trying to convey is the kind of delivering easy access to our content to listeners so that they remain within their local community and within the Canadian radio broadcasting system would be a great thing. That doesn't mean that -- and I don't know the answer if the player would be embedded only in Bell Mobility phones and not others, but users of other wireless providers handsets would have access to all kinds of content through their web browser through radio apps that are offered by Bell Media for example.

1469   COMMISSIONER PENTEFOUNTAS: Right.

1470   MR. BIBIC: You can get the Bell Media radio app on any device that you want, you just download it.

1471   COMMISSIONER PENTEFOUNTAS: Let me give you a hypothetical.

1472   Would it be in Bell/Astral's best interest to have the content that is available on the player available to all wireless providers, as was mentioned by Mr. Cope, as it regards to BDUs?

1473   MR. BIBIC: I hadn't given that thought, to be blunt, but I can say that for our stable of services now --

1474   MR. CRULL: Me neither, I just sort of --

1475   MR. COPE: -- if you download the Bell Media radio app you can listen to radio stations in the Bell Media stable from all around the country.

1476   MR. CRULL: Yes, you can do it now. If you are on the Web with a Smartphone (off microphone)

1477   COMMISSIONER PENTEFOUNTAS: Yes.

1478   MR. CRULL: Sorry. There's no restriction today. We have never contemplated any carrier restriction on the apps for radio.

1479   COMMISSIONER PENTEFOUNTAS: Okay. And on the player is there any thought that has been given towards giving certain emphasis towards emerging artists, emerging Canadian artists?

1480   M. BENOIT : Oui, c'est... Enfin, oui, parce que comme je vous le disais, le « player » a été développé en partenariat avec l'industrie du disque au Canada et une des priorités pour l'industrie, puis pour nous également était de mettre en valeur les artistes émergents. Et oui, de façon très « In Your Face ».

1481   CONSEILLER PENTEFOUNTAS : Oui.

1482   M. BENOIT : Il y a un programme...

1483   CONSEILLER PENTEFOUNTAS : Autrement dit, le lecteur ne contribue pas financièrement au DCC, mais très certainement, contribue à promouvoir la musique canadienne et les artistes canadiens.

1484   M. BENOIT : Absolument. Il y a les artistes du mois qu'on retrouve chaque mois, évidemment, qui sont à la une du lecteur. Ensuite, c'est soutenu par un programme d'auto-promo sur l'ensemble de nos stations de radio... oui.

1485   CONSEILLER PENTEFOUNTAS : C'est un bénéfice qui découle, vous diriez?

1486   M. BENOIT : Absolument.

1487   CONSEILLER PENTEFOUNTAS : O.K.

1488   Je pense que ça complète pour moi, Monsieur le Président.

1489   LE PRÉSIDENT : Merci beaucoup.

1490   Madame Duncan...?

1491   COMMISSIONER DUNCAN: Good afternoon.

1492   Now, we are going to get into the really exciting stuff, valuation. I have a number of questions and a number of areas that I would like to ask questions about just to help you ensure that we understand your points and maybe to expand on some of yours if you think we haven't quite got the message.

1493   First of all, with respect to debt, you refer in your valuation report to using net debt, but the Commission's practice is to use gross debt and so I'm just wondering if you have any special reason for advancing the fact in this instance it should be net?

1494   MR. GOODWIN: The debt that we used as the add-back to the price to get at the transaction value, you're right, it's the net book value that appears on the financial statements and it was our understanding that in prior decisions you had also done that.

1495   One thing to keep in mind is that the gross debt is before deferred amortization expenses, so if you go out and you do a debt deal and it costs a few million dollars to get the deal done, then the accounting lets you amortize that over time.

1496   I think the important thing to consider here is that that money never went into the company as capital, it was paid to the adviser, so in terms of the net or the actual amount of debt that's funding the company, it would be the net book value that's on the financial statements. That's why we think using the net debt versus gross debt is actually a better number.

1497   COMMISSIONER DUNCAN: I would have to say, frankly, that that went over my head.

1498   MR. GOODWIN: I can try it again if you want.

1499   COMMISSIONER DUNCAN: Okay, if you would. Yes.

1500   MR. GOODWIN: Yes. So let's say I go out and I raise $100 million in debt financing, it's going to cost you when the adviser does their job, they might take 5 percent, so the amount of money that actually gets into the company is $95 million instead of the $100, so what the accounting lets you do is, instead of taking the expense on the underwriting you get to net it in the debt so that your debt and your balance sheet says $95 instead of $100, with the $5 then having gone through the P&L.

1501   So really if we are talking gross versus net, I think in this case what we are saying is: Do you add back debt before the commissions or the expenses that were incurred to raise the debt or do you take it net?

1502   The financial reporting guidelines in GAAP is to take net. We did that so we are consistent with GAAP.

1503   I think the other consideration, too, is, if we are looking at the amount of money that is actually being funded into the company, in other words what is the capital at work, it's the net amount because the expenses were paid to the advisors, it never actually went into the company.

1504   COMMISSIONER DUNCAN: Okay. I think I understood from what I read was that the net that you were referring to was net of the cash-on-hand.

1505   MR. GOODWIN: Oh, I'm sorry, I thought you were talking about -- she's talking about cash. Oh, okay.

1506   COMMISSIONER DUNCAN: Yes. Yes.

1507   MR. GOODWIN: Well, in the prior decisions I didn't think that you were netting cash.

1508   COMMISSIONER DUNCAN: I think in 2008-57, which was where the policy was outlined --

1509   MR. GOODWIN: Right.

1510   COMMISSIONER DUNCAN: -- we referred to just "debt", and so unless you have a reason we will be consistent with the way we have treated it in the past.

1511   MR. GOODWIN: Well, I think actually if you go back to the CTV transaction, which is one that I'm close to because I prepared the valuation there, it was net debt, you know, the gross debt less the cash, and that was accepted as treatment. If you look at how the transactions are done in the marketplace and how the analyst community or M&A advisers look at debt that's funding, it's a net concept.

1512   So you would need to give me some specific examples or decisions where you have actually said it's before the cash, because I haven't seen that happen before.

1513   COMMISSIONER DUNCAN: It's my understanding that there has only been two exceptions and that the Commission found that parties were getting inconsistent and so we went back to the 2008-57 that says "debt".

1514   MR. GOODWIN: Well, but I mean I'm not sure that would make sense because in terms of the amount of debt that's in the company on a net basis, it's the debt less the cash.

1515   COMMISSIONER DUNCAN: Okay. What I will let you do, then, if you want, if you want to submit something more on that, but that is the position consistent with 2008-57. And yes, there were a couple of exceptions.

1516   MR. BIBIC: We will take that and we will come back.

1517   COMMISSIONER DUNCAN: That's fine.

1518   MR. BIBIC: Mr. Chairman, I think we will do that for Wednesday morning as well.

1519   THE CHAIRPERSON: Okay.

1520   MR. BIBIC: Okay. We will take that as an undertaking.

1521   Thank you.

Engagement

1522   COMMISSIONER DUNCAN: Now, with respect to leases, as I'm sure you know that it's the commission's practice to take the amount of the leases gross off the audited financial statements and we note that in 2012 you adjusted that year -- 2012, sorry, we note you adjusted that year for half a year and so our practice is, of course, to take the full year.

1523   In the interest of consistency, do you have another argument that we should consider?

1524   MR. GOODWIN: Well, the reason why we would have taken only a half year is because the valuation date was halfway through the fiscal year. So if you are looking at the remaining commitments from the valuation date onwards you need to take into account that half a year has gone by,

1525   COMMISSIONER DUNCAN: Thank you. So we have just traditionally gone back to the note.

1526   Just following on with the leases, and I know that you have made considerable argument why the leases for the out-of-home properties should be excluded.

1527   Again I'm going back to the fact that we rely on the note and that note was not available, that detail was not available in the audited statements.

1528   Not to criticize, it's just not the level of detail that was in the statement, but however we are willing to consider if you were to have your auditor's report on the amounts that related to out-of-home directly and according to the August 31, 2011 statements, which are the statements we are working on, just the leases that relate directly to the out-of-home assets, not the ones that are allocated for some other reason, we would propose to do those -- or consider doing those in the normal fashion.

1529   I think you have quite a few dollars that you said are directly attributable to out-of-home.

1530   MR. GOODWIN: Yes. I guess I'm just going to try to clarify the ask.

1531   COMMISSIONER DUNCAN: Sure.

1532   MR. GOODWIN: Commissioner Duncan, are you asking for something from Astral's auditors to confirm that the amounts that are directly attributable to the out-of-home division are in fact directly attributable?

1533   COMMISSIONER DUNCAN: Yes.

1534   MR. GOODWIN: Okay. I can't commit their auditors on that particular topic.

1535   I do know that as part of the last application I think the leases were filed.

1536   COMMISSIONER DUNCAN: It's just that we don't have the resources to go through the leases so if your auditors --

1537   MR. GREENBERG: We will get you that number, Commissioner Duncan.

Engagement

1538   COMMISSIONER DUNCAN: Okay. So if they could consider the full year for 2012 as well; thank you.

1539   So that's on the leases. So now I want to talk to you about the Astral-specific risk factor and it has caused us some interest and concern that you have attributed additional risk to Astral in terms of the Alpha factor that you have put into your calculations.

1540   We are just wondering, what is it that is additional risk with respect to the Astral properties that is not present in the market, given the success that the Astral properties have had?

1541   MR. GOODWIN: Well, I think that, just to be clear, what you are referring to is what we in the bus call the Alpha adjustment or a company-specific adjustment to discount rates.

1542   I will go through the examples for you, but I think it is worth highlighting for the panel that if we are talking about Pay TV or we are talking about specialty TV what we ended up concluding on for the discount rate was 9 percent and if you looked at out-of=home or online we concluded at 9 and 10 percent. So on an all-in basis we are not saying that the regulated businesses are more risky.

1543   What you have to remember -- and I think it's very important to be able to step back a little bit -- that when we are talking about an Alpha adjustment it's just one component among many that go into the discount rate and our job is to try to conclude on what's reasonable from an overall perspective.

1544   So my posit to you is that we are not saying the regulated businesses are riskier all in, we are saying an investor would want the same return.

1545   With that said, there will be specific reasons for an Alpha adjustment, some of those might be forecast risk, so part of our job when we are doing our valuation is to look at the assumptions that have gone into a forecast and based on our due diligence, which involves interviews with management looking at budget to actual results, doing industry research, we have to make a call as to whether or not we think there is an additional element of risk to hitting those forecasts which, if I am an investor I'm going to want an incremental return.

1546   So if we are looking at Pay TV for example, we thought that was relevant because of the OTT threat that is there, the pressure that was being felt on the business and, you know, I'm just talking about revenue, but the same pressure was existing on content cost, so that just gives you an example.

1547   There may be other company-specific issues like the maturity of the services. So again, if we are talking about some of the specialty or the pay assets, you know, those are mature businesses and the growth rates were slowing down. If I'm looking at Astral's trajectory and the assumptions that are baked into the forecast, I have to make a call as to whether or not I think there needs to be an element of a minor adjustment.

1548   So I can keep going through the examples, but ultimately where we got to -- actually one other point I think which is important is that the valuation of the Astral regulated businesses was very specific, so we were looking at Pay TV, we were looking at specialty TV with very focused operations. The comparable companies that we have to work with are very broad in terms of their product diversification, not only in terms of the services within broadcasting, but a lot of them are also integrated players, so again we need to be able to make a call as to whether or not we think that if I'm looking specifically at Pay TV or a French specialty do I need to make an incremental adjustment -- or do we need to make an incremental adjustment, which we did.

1549   If you counter that with, say, out-of-home, it's a very different proposition. There are very high barriers to entry in that market. The Astral business is a leader in Canada, there are few players in the market, there is a scarcity of locations and there was conservatism built into the forecast because there were specific revenues that hadn't gone into the plan that were potential upside to what was in the forecast.

1550   COMMISSIONER DUNCAN: I think, Mr. Goodwin, a lot of those points are outlined in the report.

1551   MR. GOODWIN: They are.

1552   COMMISSIONER DUNCAN: I was just looking for anything additional, if you had anything additional to add to what is in the report.

1553   MR. GOODWIN: Well, maybe --

1554   COMMISSIONER DUNCAN: And just one question on the -- if I could just ask you one question on the projections and the reliability of projections, that wouldn't already be taken into consideration in the industry risk factor? All projections would have an element of risk.

1555   MR. GOODWIN: Well, the one thing to keep in mind is that when you are building up a discount rate through industry data it's based on historical returns and measures of risk within the market measured over a historical period. At least if we are talking about some of the elements of the cost of equity, you are then also taking other market inputs for things like debt and your risk-free rate.

1556   But suffice it to say, those market inputs are not going to give you a sense of comfort around whether or not there are specific business issues or specific risk factors in the forecasts that need a little extra contemplation in the context of the valuation.

1557   COMMISSIONER DUNCAN: With respect to the Alpha risk factor -- and I have been given a sheet, an appendix to, I gather, the November 2011 Astral statements, and it's talking about "impairment testing", which I don't want to talk about, but what I do want to talk about is the Alpha risk which is showing as 3.5 for out-of-home as a low and 4 for the high, and the same on the radio side, 3.5 and 4.

1558   I'm just wondering, as compared to the Alpha factor that you used in your projections for out-of-home -- you used 0 and for the radio you used 2.7 -- I'm just wondering how those would reconcile that in this document the risk is seen equal radio and out-of-home?

1559   MR. GOODWIN: Well, before I -- I will answer your question, but I think what's extremely important to understand -- and this is going to form the major basis for my response -- is that the assumptions that are -- you can use different assumptions to get to the same overall discount rate and stepping back, you know, that good-will impairment test uses a different value proposition, it's value in use, and the objective is to be comfortable that there is no, say, good will or asset impairment within the business units that are in Astral.

1560   That is a different value construct and a different purpose than trying to allocate the value of the transaction within the component pieces as part of this deal that was negotiated.

1561   So I think that we need to be very careful about saying that because Astral and its auditors took a look at assumptions for the purposes of good will impairment that they are somehow signing off that they would be appropriate for this purpose. I mean, I just don't think that would be correct at all.

1562   COMMISSIONER DUNCAN: But even the relationship radio to out-of-home here it's seen the same, but on your valuation there is quite a difference.

1563   MR. GOODWIN: But there are all kinds of differences within the context of those various assumptions. At the end of the day I think that what we took away from that is that generally speaking the assumptions in the good-will impairment test have higher discount rates and ours were a little lower, but that's across the board, right. Like whether you are talking about TV, radio or out-of-home, the discount rates that we used were lower, but we came up with those discount rates as a result of the work that we were doing and, more importantly, you know, when we were doing them, because there was a six month difference between, say, the August 11 good-will impairment test -- we did our work in March, six months had gone by, we had a chance to see how the business had performed against those forecasts.

1564   And then, frankly, the grouping of the assets is different because within TV for the good-will impairment test you have online, within radio you have conventional TV, so that's --

1565   COMMISSIONER DUNCAN: Radio with -- conventional TV within radio did you say?

1566   MR. GOODWIN: Yes. Because those little conventional TV stations are actually part of the radio group, sorry. I may have mixed up my words, sorry about that.

1567   COMMISSIONER DUNCAN: Sure.

1568   MR. GOODWIN: So again, just the what's where in terms of the exercise is important.

1569   But again, you know, if people are concerned that somehow we are trying to move value from regulated to unregulated, I'm just going to come back to this point about the discount rates overall, which is that for the bulk of the regulated assets that are being retained the discount rates that we are using are the same as the ones on the unregulated side.

1570   COMMISSIONER DUNCAN: It's just that we just want to make sure we understand, so we appreciate the explanation.

1571   MR. GOODWIN: Okay. Sure.

1572   COMMISSIONER DUNCAN: Now, with respect to the pressures on revenue and margins due to new entrants in Calgary and Edmonton, the question is specifically, I think, how would new players in Calgary and Edmonton have a drastic effect on 56 radio stations?

1573   And the other aspect of it, when you are considering the answer, is: To my mind, when you approve new radio stations in a market, it takes a few years for competition to work its way up in the market, and you recover.

1574   So I just don't see the impact of this being such a major consideration, or what appears to me to be a significant consideration, for a long-term projection.

1575   MR. GOODWIN: Well, again, I think that particular item was one of many that were cited as a reason for us deciding, relative to whatever raw industry data suggested in terms of a discount rate, that we needed to make an adjustment for it.

1576   So, yes, you are right, there were new entrants in the west, and those were putting pressure on the results.

1577   There were also some ratings issues in the larger markets. You have the fact that the TRAM, which is the Terrestrial Radio Advertising Market, wasn't performing all that well.

1578   So the listing, or the order of appearance, maybe that was conveying a sense of importance in terms of what was the biggest impact. It wasn't meant to be that way. There is more than one --

1579   COMMISSIONER DUNCAN: It's not like the drug bottles, or the products --

1580   MR. GOODWIN: Or the ingredients listed on the back of the Kellogg's box.

1581   COMMISSIONER DUNCAN: Yes, it's not like that.

1582   MR. GOODWIN: Yes.

1583   COMMISSIONER DUNCAN: Okay. That's interesting, and it leads me to another quick question.

1584   When you get all of those factors in your mind, these influences, can you actually quantify it, attribute a specific amount, or do you just look at all of these reasons and say, "Oh, yes, it has this much of an effect"?

1585   MR. GOODWIN: Without a doubt, the valuation exercise is one that has a lot of professional judgment to it.

1586   If it was simply a question of easy mathematical calculations to figure out how much the adjustment should be, I would be out of work.

--- Rires

1587   COMMISSIONER DUNCAN: And it might be easier for me to understand.

1588   MR. GOODWIN: But to help you out, one of the things that we do is that we say: What are transactions going for in the marketplace? What do other companies trade for in the marketplace?

1589   And we take a look at, let's say, the discounted cash flow result, which is the primary push, and we ask: Do the results coming off of our analysis reconcile with these other indicators?

1590   Because this is how the market does deals.

1591   Just to add to that, yes, it is the judgment to say: Yes, we need a little bit.

1592   And you are right, we can't say that it is X percent or this many millions of dollars, but based on the experience that we have, and the number of times that we have done this, and the size of the adjustment that we are talking about, as well as these other reasonableness indicators, that is how we get comfortable.

1593   Not to mention the fact that everything we do here, all of the evaluations that we perform as part of this deal, have to add back up to the negotiated price. That is part of our check on this, as well.

1594   COMMISSIONER DUNCAN: Okay. I am not going to comment on that part, only because --

1595   I guess I should finish my statement, really.

1596   It is just that it is somewhat of a miracle how close it comes to the price. I know they are both publicly traded companies, so, of course, they are both trying to get the best deal, the buyer and the seller, but to get as close as you get is impressive.

1597   At any rate --

1598   MR. GOODWIN: We are trying to take into account what your definition is, and the definition for transaction value is the negotiated price.

1599   So, certainly, when we are going through the work, there is an element of tweaking and refinement to be as close as possible, but that is also why we present the valuation within the context of a range.

1600   COMMISSIONER DUNCAN: Okay. That's great, thank you.

1601   In talking about the beta now, we would first like to have a little more explanation on why you used only -- it appears that you used only U.S. comparable company betas, and in some instances didn't even use Astral's own beta.

1602   MR. GOODWIN: I think that we did use Canadian companies.

1603   COMMISSIONER DUNCAN: A few, yes.

1604   MR. GOODWIN: Yes, we did.

1605   There aren't that many. The Canadian broadcasting market, if you are looking at publicly traded companies, only consists of, I think, four. You have Corus, Astral, TVA and Newcap.

1606   So a sample of four, for the number of different assets that were part of the valuation here, just wouldn't be sufficient. So, by necessity, you have to broaden your scope.

1607   We didn't go any further than U.S. companies, at least for the broadcasting side, simply because we wanted to be focused on the North American market, where we know that other valuations that have been put before the Commission have also looked to U.S. and Canadian comparables for those reference points.

1608   And, then, if you are talking about the inclusion of Astral, we did include Astral in those market segmentations where we thought they were the closest fit. So Astral as a comparable wouldn't have shown up in every single table, for example.

1609   We didn't put it in the out-of-home table, because out-of-home is less than 10 percent of the enterprise value of Astral. So to put it in an out-of-home group of comparables wouldn't have been an accurate reflection.

1610   COMMISSIONER DUNCAN: I understood that you were using the S&P 500 beta, and we are asking that you file supporting evidence providing the Canadian TSX beta for Astral and for all of the companies that you consider to be comparable and for which there is a TSX beta.

1611   MR. GOODWIN: We can do that, but what I would like to stress is that the reason why we used the S&P -- it has nothing to do with trying to move value in an untoward manner. It really gets down to the fact that, if you are looking at the TSX, it is dominated by the banks and by natural resources. And the theory behind the beta is that you want a wide basket of comparable companies, so that when you are measuring the market and the risk inherent in the market, you have every single sector represented as best you can.

1612   So if you are using the TSX, you are not going to get that, because if the banks have a good quarter, guess what happens? It moves the needle.

1613   If the mining sector is off, look what happens.

1614   By using the S&P 500, you are getting that broader base, and the benefit is that you actually get more explanatory power in that variable, within the context of the discount rate, than you would had you just used the TSX.

1615   COMMISSIONER DUNCAN: What is the significance of the difference between the Canadian market versus the U.S. market? Wouldn't that be significant, too?

1616   MR. GOODWIN: Whether you are talking the Canadian market or the U.S. market, if you are in the world of broadcasting, you are trying to get eyeballs to watch the screens, you are trying to drive advertising revenue, you are trying to monetize those people, you are fighting for content. Everyone has alternative choices that they are dealing with, in terms of competition.

1617   So I think that in many, many respects the markets are acting in a similar way.

1618   COMMISSIONER DUNCAN: Okay. I appreciate your explanation.

1619   So, if you could give us that information, and if there are any other enlightening things that you want to add -- and I am not being sarcastic. If there is anything else that you feel we should know, so that we can better understand your approach, that would be appreciated.

1620   MR. GOODWIN: Okay.

Engagement

1621   THE CHAIRPERSON: Mr. Goodwin, could you do that for Wednesday, as well, or does that take a little bit more time?

1622   MR. GOODWIN: No, we could do that for Wednesday.

1623   THE CHAIRPERSON: Thank you. That's an undertaking.

1624   COMMISSIONER DUNCAN: With respect to the discounted cash flow calculations that are set out at Schedules 2 to 18 of the Valuation Report, for some of the asset groups, for example, English pay TV, which is Schedule 4, and online and other broadcasts, which is Schedule 16, there is a significant variation in revenue and/or EBITDA in some of the projection years. We were just wondering if you could give us some explanation as to the reasons for the differences. Not now, but if you could undertake to do that --

1625   MR. GOODWIN: Sure.

Engagement

1626   COMMISSIONER DUNCAN: Some of the changes, year-to-year --

1627   MR. GOODWIN: Sorry, Commissioner Duncan, which schedules again?

1628   COMMISSIONER DUNCAN: Schedules 2 to 18, the discounted cash flow calculations.

1629   MR. GOODWIN: Okay. But are there specific years or specific schedules where the variation is --

1630   COMMISSIONER DUNCAN: There are some years, when you look at -- it will be obvious to you that the percentage increase is much higher than in all of the other years, so it just looks questionable.

1631   MR. GOODWIN: Is that for the revenue growth or for the EBITDA?

1632   COMMISSIONER DUNCAN: Both, actually.

--- Pause

1633   MR. GOODWIN: I'm sorry, I am just making some notes.

1634   COMMISSIONER DUNCAN: That's okay, I understand.

1635   MR. GOODWIN: Okay, thanks.

1636   COMMISSIONER DUNCAN: Now this is talking about multiplatform synergies. There was a press release on March 16th, 2012, and Bell stated -- and I will quote it: "The transaction provides multiple other benefits for the Bell team and its strategy, including enhanced control of rising content costs, particularly in French-language media, and strong opportunities for cross-platform, for innovation and advertising packages, spanning digital TV, radio and out-of-home advertising. Astral products currently represent Bell's largest single content cost."

1637   In your response, on February 15th, you indicated that the discount rate that was applied to English pay TV was reduced from 9.5 percent to 9 percent, which it was in the original valuation that we got.

1638   You go on to recognize the potential impact of multiplatform delivery related to English-language programming.

1639   But then you go on to say: "Given the dynamics of the French-language market, while the impact related to multiplatform opportunity was considered for French pay TV, there was no change to the discount rate selected."

1640   I am just wondering if you could expand or elaborate on the reason for not reducing the discount rate on the French-language pay TV side.

1641   MR. GOODWIN: Sure. When we looked at it in the context of the multiplatform opportunity, just coming back to the English side for a second, we did give consideration to it. As it relates to a synergy or as a huge value enhancement to the asset, we didn't think that it was overly material, but we did want to recognize something, in light of the direction that BCE was going to take.

1642   On the French side, we didn't see the opportunity to be as large, and when we looked at where the valuation was already coming out, the implied multiple that we were getting for French pay TV was already so high as for us to believe that to try to add in anything more would end up resulting in a valuation that didn't make any market sense.

1643   In other words, you would never see a transaction going for that kind of multiple in a market setting.

1644   So we thought: No, it is fully priced as it is, we have to leave it as is.

1645   COMMISSIONER DUNCAN: So would I conclude from that that French-language customers won't be as interested in multiplatform opportunities as English-language customers?

1646   MR. GOODWIN: No, I am not trying to make a comment about what the consumer is interested in, I am just thinking about it in terms of a value proposition that a buyer and a seller would be willing to pay for, in light of where our valuation result was already coming out.

1647   I am not trying to make any assumptions about whether French consumers are going to say yes or no to the offering.

1648   COMMISSIONER DUNCAN: It just seems to me that that would be a factor in the value going forward.

1649   MR. GOODWIN: But I think, just stepping back a little bit, if you look at the value of all of the retained TV assets, the multiple that we come up with -- or, at least, the implied multiple -- is 10.5 times. That is consistent with the overall value of the transaction that was announced on March 16th, 2012.

1650   And given that most of the assets here are TV, I think that the end result, in terms of our valuation, is very consistent with the overall market multiple that resulted on this deal.

1651   I can tell you that within French pay TV, our implied multiple is actually higher that. And to go any higher would mean that it is a stratospheric valuation that isn't grounded in anything.

1652   There are opportunities to take an asset in a particular direction, but you take on risk, you make capital investments, and you have to convince people that it is worth taking the service.

1653   To me, that is a possibility; it is not a clear-cut synergy.

1654   COMMISSIONER DUNCAN: I noticed when looking at this that the terminal growth rates are the same for both of those services, English and French-language pay TV. So I just wondered if that didn't tell me that I would expect the discounts to be the same.

1655   I think it was 13.3 here, or whatever --

1656   MR. GOODWIN: What the terminal growth rate is trying to get at is what type of revenue and earnings growth, and cash flow growth for that matter, will the business continue to generate into perpetuity, beyond the discrete cash flow period.

1657   There is a connection to the discount rate that you want to pick, and then the terminal growth rate.

1658   For example, if I have the same business and someone purports to me that it is going to grow at 5 percent into perpetuity, then I have the view that that is an aggressive assumption, versus someone else saying, for the same business, that it is only going to be 2 percent.

1659   In the 5 percent example, I need a higher discount rate to offset the perceived risk that is in the terminal growth rate.

1660   But just because I have a high terminal growth rate in one business doesn't necessarily mean that I have to make a discount rate adjustment.

1661   I am considering them together, but one doesn't necessarily flow to the other.

1662   COMMISSIONER DUNCAN: I have more questions that relate to the multiplatform synergies, just so that we have a good handle on this.

1663   Referring to your schedule comparing the discount rates and the enterprise value EBITDA multiples in your Valuation Report of January 2013, as compared to April 2012 -- you will remember the schedule that I am talking about -- you explain in the "Comments" column that the reduction in the discount rate for English-language pay TV reflects consideration of the potential future opportunities related to multiplatform delivery of content.

1664   Again, we are just wondering, wouldn't this consideration apply equally to specialty TV, both English and French?

1665   And yet there was no change in the discount rates for those services.

1666   MR. GOODWIN: I think the biggest bang for the buck, in terms of a potential for the multiplatform, is going to be English pay TV. It is the biggest service, it is the best known. And contemplation of that potential got us back to a discount rate of 9 percent.

1667   When we look at the rest of the business, including the French specialty, our conclusion was, given the balance of our work, that 9 percent for those assets was the right element of discount rate.

1668   COMMISSIONER DUNCAN: Just as a follow-on comment to that, we were hearing earlier about the penetration level for pay TV, and there is a lot of potential for it to grow. I am just wondering, where the level of penetration is already higher on the specialty services, why you wouldn't think there would be exposure there that would be worth putting into new platforms.

1669   MR. GOODWIN: I'm sorry, Commissioner Duncan, I am not quite sure that I understand the question.

1670   COMMISSIONER DUNCAN: What I am thinking is that already -- we have already heard this morning, and we know that pay TV has a lower penetration rate. So the product has less exposure.

1671   But the specialty services have higher exposure. So I don't understand why you wouldn't think there would be opportunities for those services -- just going back to what you just said -- and maybe I misunderstood it, but why you wouldn't think that those services would have future opportunities on the new platforms -- the programming on those services, the original programming --

1672   MR. GOODWIN: They might. It is possible that they might, but I think that when we assessed where we got to on the discount rate, and then looked at where the valuations were coming out on those French specialty assets, our view was that the resulting multiples were already fully valuing those assets.

1673   And, again, looking not only at where those valuations were arriving, but also then saying that we have to look at that valuation in the context of the greater whole, which includes a bunch of other things, which we have also valued, we are coming back to, ultimately, what would the market bear in terms of a valuation, and we felt that we were already there.

1674   MR. GREENBERG: If I could add a comment to that, Commissioner Duncan, when we talk about pay and speciality, they are two different worlds. While the average specialty channel is $1 or less, pay TV is over $10.

1675   COMMISSIONER DUNCAN: Yes, I have been a customer since 1983 or whatever.

1676   MR. GREENBERG: I hope you are enjoying the service.

1677   COMMISSIONER DUNCAN: Oh, yes.

--- Rires

1678   MR. GREENBERG: The point is, even though pay is at 25 percent and specialty can be at 80 or 90 percent, there is no way, if you look around the world, whether it is the United States or Canada, that we could ever get the rate of penetration in a pay service to be the same as specialty.

1679   COMMISSIONER DUNCAN: Thank you. I was just thinking that there might be some programming on those specialty services that would be worth putting on multiplatforms. That's where I was coming from, that they do have good programming, some of the original programming.

1680   I am wondering how many dollars the 50 bases points equates to in your calculation for pay TV, where you went from 9.5 to 9 for English, and if you could file with us an unprotected spreadsheet with your calculations.

1681   MR. GOODWIN: It's about $25 million.

1682   COMMISSIONER DUNCAN: About $25 million, okay.

1683   Is there a spreadsheet that you could provide, or is it just a rough calculation?

1684   MR. GOODWIN: You have the model already, so if your analysts simply go into the model and change the discount rate assumptions, it will automatically calculate it.

1685   COMMISSIONER DUNCAN: We just wanted to see if we had the same answer.

1686   MR. GOODWIN: Sure, we will do that for you, no problem.

Engagement

1687   COMMISSIONER DUNCAN: Thank you.

1688   The other thing is, in the way the calculation is calculated -- these are Schedules 18 and on, for each service -- the synergies are shown at the top of "Cost Reductions". You know, when you come down in the revenue.

1689   So why wouldn't this adjustment here, representing multiplatform synergies, which are really additional revenues that you are going to get -- why aren't they reflected in the calculations up at the top of your schedule, instead of down in the discount rate?

1690   Because they are a revenue adjustment.

1691   MR. GOODWIN: Just for everyone's benefit in the audience, I don't think that the schedules you are referring to were actually part of the report. I think they were part of the model that we filed.

1692   But that's fine, I can still explain the synergies --

1693   COMMISSIONER DUNCAN: I'm sorry, I thought that it was all part of the Valuation Report.

1694   MR. GOODWIN: I am looking at our report, and beyond Schedule 18 --

1695   COMMISSIONER DUNCAN: Just let me turn to --

1696   MR. GOODWIN: Yes, that would have been filed confidentially. That's all I am trying to say.

1697   In case people are trying to follow along with the report, which I know everyone has a copy of, because --

1698   COMMISSIONER DUNCAN: Oh, okay. Try not to say any numbers.

1699   The whole thing is here in pink, and I am sure that it is not all intended to be in pink, but I am trying not to speak of numbers.

1700   I am just asking you why it doesn't show, because it is revenue that we are talking about, new revenue that you are going to get in the future. Why doesn't it show?

1701   MR. GOODWIN: I think that it's important to realize that when we did our work back in March -- it would have been just after March, but the valuation date is March 16th, 2012 -- the multiplatform opportunity hadn't been quantified by BCE as part of its due diligence and its pricing.

1702   The synergies that are incorporated into the Valuation Report are the ones that were quantified and taken into consideration by BCE.

1703   So, if they had been, maybe there would have been some revenue. I can't comment. The reason why you are not seeing the revenue is because they hadn't been quantified and there was nothing for us to work with, which is why we, instead, looked at the qualitative aspects and made the discount rate adjustment that we have talked about already.

1704   COMMISSIONER DUNCAN: That would look to me like an arbitrary thing to do.

1705   MR. GOODWIN: I'm sorry, what would be arbitrary?

1706   COMMISSIONER DUNCAN: All right. We don't have the number, so rather than reflect it in the calculation, we will put 50 bases points.

1707   MR. GOODWIN: Again, it comes down to looking at the information that is available and making a judgment call on what kind of adjustment would make sense, taking into account where the market has priced these kinds of transactions in the past, but also what is the overall multiple inherent in this transaction.

1708   So it is done, you are right, in the absence of specific information, but our role as the valuator is not to come up with the forecast. We can't do that. But we are trying to work with the information that is there, and then look at it within the other parameters that we have access to.

1709   COMMISSIONER DUNCAN: So you recognize that there is some benefit, and this is how you have --

1710   MR. GOODWIN: That's correct, which is why, relative to the first Valuation Report that you would have seen, we have put more value to pay TV now.

1711   COMMISSIONER DUNCAN: Okay, thank you.

1712   Now, with respect to the multiples, I have some questions that are in the nature of an undertaking.

1713   You provide in your reply to the interventions, at paragraphs 240 and 241, an adjusted earnings value, enterprise value, EBITDA multiple for regulated television assets and out-of-home. We are just wondering if you would provide the detailed calculations and assumptions for those multiples, and also if you would provide adjusted multiples -- those same multiples, but adjusted on that basis -- for each of the group of assets that are listed at page 44 of the Valuation Report.

1714   MR. GOODWIN: Okay. Let me keep up just for a second here.

1715   COMMISSIONER DUNCAN: Sorry.

1716   MR. GOODWIN: That's okay.

1717   COMMISSIONER DUNCAN: I believe that you calculated an adjusted multiple in response to Quebecor's comments, so we just wanted to get the details, first of all, on that adjustment.

1718   MR. GOODWIN: Okay, that's not a problem.

Engagement

1719   COMMISSIONER DUNCAN: And also, so that we can compare the impact of that other way of looking at it, that multiple factor, if we could see that calculation for each of the other categories of assets on page 44 of the Valuation Report.

1720   MR. GOODWIN: Yeah. Is it page -- oh, sorry, you said 44.

1721   COMMISSIONER DUNCAN: 44, yeah. Is that okay?

1722   MR. GOODWIN: I'm just finding the page so I know what it is.

1723   COMMISSIONER DUNCAN: Yes, okay.

1724   MR. GOODWIN: Okay.

Engagement

1725   COMMISSIONER DUNCAN: Yeah.

1726   And can you also identify the period covered by the trailing 12-month multiples?

1727   MR. GOODWIN: Okay.

Engagement

1728   COMMISSIONER DUNCAN: Now, turning to --

1729   THE CHAIRPERSON: You can do all that for Wednesday as well?

1730   MR. GOODWIN: Yes, I can.

1731   THE CHAIRPERSON: Thank you. That's an undertaking.

1732   COMMISSIONER DUNCAN: Thank you.

1733   So, for subscription video on demand, this is an interesting thing and I personally spent a lot of time trying to figure out what your argument is here.

1734   And, so, I guess I'd like you to try again, if you would, to explain to me why subscription video on demand shouldn't be included as part of the tangible assets subject to tangible benefits.

1735   MR. GOODWIN: In the case of an SVOD offering Astral is the content provider, the actual signal that people are watching is not on Astral's licence, it's on the licence of the BDUs.

1736   So it's not physically or from a regulatory perspective one of Astral's undertakings, it's that of the BDU.

1737   COMMISSIONER DUNCAN: Okay.

1738   MR. GOLDSTEIN: If I could add to that?

1739   COMMISSIONER DUNCAN: Sure.

1740   MR. GOLDSTEIN: In many ways you need to actually -- the providers of the VOD are the licence -- in all instances are essentially the licenced BDU has a separate licence to offer VOD programming and that VOD programming takes a number of forms.

1741   So there's transactional VOD in terms of you paying to get -- you buy a movie or some other type of, you know, event. There's subscription VOD where it's just included generally as free, you know, and it's acquired from a variety of sources.

1742   But in each of those instances, whether it's the transactional VOD where you're acquiring movies or it's the content that would have appeared on the Astral services or Bell Media services or whatever, it's -- you're essentially entering into a program licensing deal with a program distributor; you're not actually entering into a program deal with the broadcaster.

1743   So, for example, you know, there's no -- you know, it's no different -- the deal with some of the Hollywood studios to license the programming is no different than the deal that's done to license it from a Canadian broadcaster. They're acting in a non-regulated capacity in doing that.

1744   COMMISSIONER DUNCAN: I guess from a consumer point of view, because I also have that service, I'm just wondering -- and as far as I know we pay for that all in the same price, and I understand further that Astral accounts for it with their broadcasting assets. So, I just don't quite understand.

1745   Let me ask you this question. When I look at the description on page 86 of the Valuation Report of what goes into online and other non-broadcast activities, what is it that's -- most of the services or, if not all of them, talked about they are online delivered over the Internet, but this is not, this is delivered over the television, and I just --

1746   MR. GOLDSTEIN: It's actually delivered by the BDU in connection with the BDU's licence.

1747   COMMISSIONER DUNCAN: Yeah. No, I got your licence part.

1748   MR. GOLDSTEIN: Yes.

1749   COMMISSIONER DUNCAN: I just want to understand the distinction.

1750   MR. GOLDSTEIN: I guess the point from our perspective is, is that if a production company in Canada licenses that product to a BDU they're offering it in the same capacity as whether they license it from Astral or they license it from Bell Media. And if a production company gets sold, it's an unregulated entity.

1751   The fact that we happen to have a broadcasting licence does not actually grant us the ability to give these rights, the actual contractual relationships we've entered into with the producers of that programming or the distributors, whoever they have licensed it to that allow us to do that.

1752   So that's, I think, the point we're trying to make.

1753   COMMISSIONER DUNCAN: Sorry. Just -- in your February 15th reply to Question 8 you provided an Appendix B which is a discounted cashflow analysis for the SVOD services and it combined three services, more than one service.

1754   And I'm just wondering if you could give us that same breakdown, discounted cashflow analysis by service.

1755   It's just one in total and it's confidential, so I don't --

1756   MR. GOODWIN: Yeah. I will check what we filed. It's possible you may have it, but what we can always do is provide you with a pdf of whatever gets you to those numbers.

Engagement

1757   COMMISSIONER DUNCAN: Okay.

1758   MR. GOODWIN: Okay.

1759   COMMISSIONER DUNCAN: Thank you. We just want it broken out.

1760   And there is an example on that schedule, when you're just going back to the earlier question I had, where the revenue growth is really significant in the first few years.

1761   So maybe you'd want to include an explanation for that as well.

1762   MR. GOODWIN: And, sorry, Commissioner Duncan --

1763   COMMISSIONER DUNCAN: The revenue --

1764   MR. GOODWIN: -- that's within the context of the SVOD programming?

1765   COMMISSIONER DUNCAN: Yes. Yeah. It's a similar question, but it wouldn't be picked up in the other.

1766   Now, turning to over-the-top. In September, 2012 Astral indicated to the Commission that Astral on its own would not be in a position to launch a service competing with foreign over-the-top service providers, and I think we heard that again today.

1767   But La Presse reported on January 11th, 2013 that after trials over a one-year period Astral was to launch an app that would compete with such services.

1768   And, so we're just wondering if we had that correct, those two facts.

1769   MR. GREENBERG: Commissioner Duncan, I think there's a little confusion. What we were talking about is the TMN GO application which is strictly for pay TV and it in no way is comparable to what a Netflix over-the-top offering would be, which is a much broader range of programming.

1770   So what I think La Presse was referring to was the introduction of a TMN GO which is now in the marketplace which means consumers, for no additional cost by the way, can see the programming on their iPad, on their iPhone or on their tablet.

1771   COMMISSIONER DUNCAN: Okay.

1772   MR. GOODWIN: And contemplation of TMN GO was already built into the forecasts that we worked with as part of the Valuation.

1773   COMMISSIONER DUNCAN: Because I notice that you started with projections provided by Astral.

1774   MR. GOODWIN: Correct.

1775   COMMISSIONER DUNCAN: Okay. Thank you.

1776   Now, I'm getting here to the end. And this is with respect to the benefits on the stations to be divested and how the benefits would be handled.

1777   So, you propose that BCE would be exempted from paying the benefits and tangible benefits on the property to be divested, and just to make up for the shortfall, if there was any in the future.

1778   And, so, we'd first of all like you to comment on the possibility that the Commission may instead conclude that it's more appropriate to have you pay the benefits on the value of the entire transaction and leave it to the trustee to negotiate a price accordingly at the time of divestiture.

1779   MR. GOLDSTEIN: Thank you, Commissioner Duncan. Sorry, I'm trying to see you.

1780   COMMISSIONER DUNCAN: Yes. I'll wheel over here.

1781   MR. GOLDSTEIN: Okay.

1782   COMMISSIONER DUNCAN: I have to be careful I don't go off the end.

1783   MR. GOLDSTEIN: I think our primary concern with that approach is that we'd be developing -- you know, it is actually multiple, you know, issues, but I think we'd be developing a benefits proposal that would ultimately then bind the ultimate owner of those assets and those parties may have different plans for the assets and different ideas for how the benefits could be used to better the assets in the Canadian Broadcasting System and it would be up to them, as part of their applications, to come forward with an appropriate benefits package that both is consistent with Commission policy, but also help demonstrate that what they were proposing was in the public interest just as what we're trying to do today.

1784   You know, in doing that, we recognize that the potential issue that might arise is, is that we might end up with a situation where we would sell the assets for an amount that was lower than what we previously had valued them at.

1785   So we wanted to ensure that, you know, as a whole, once all of the divestitures have occurred and our transactions closed, that we ended up with a situation where the amount of benefits being paid into the system was at least at the level that it would be if we had retained all of the assets.

1786   So we essentially built a backstop or a guarantee into the proposal and we identified in our application specific areas where those benefits would go.

1787   So, in the case of the television assets, it would be P&I and it would just get topped up onto the other P&I envelope in our benefits package; and in case of radio, I think it would go to the designated area.

1788   So that essentially ensures that the system, you know, is -- you know, at a base minimum is made whole. Of course if it's sold for more, then the system actually benefits because we'll pay our benefits on the value of what we're acquiring and the purchasers of those assets will pay it on what they're acquiring and it will be greater than the sum as if we had paid.

1789   I think, though, it's important to also recognize, just as a final point, that what we tried to do with our proposal is be consistent with past Commission policy which is that you only pay benefits on transfers of ownership and control.

1790   And, in fact, with respect to the divested assets, whether it's the radio stations or the specialty services, we're actually never going to control those assets.

1791   Immediately on closing, they're going to go into trust and the trustee's going to control them. So, technically a transfer of control will occur, but it will never occur to us. So, we sort of said, okay, well, you know, if we want to ensure that the system is made whole, that ultimately the purchasers who come forward would be in a better position to advance benefits proposals in those situations.

1792   MR. BIBIC: And, Commissioner Duncan, we view this as a really important point for, you know, the three reasons Kevin mentioned.

1793   One is, we are not taking transfer or control of those assets, so we should not have to pay the benefits.

1794   We recognize, however, that there is no -- you know, the issue about, you know, to not short changing the system. So, we're prepared to backstop that to the degree that Kevin mentioned and that you indicated in your question.

1795   And the third point is, we really do think it is better for the system for the ultimate owners of those assets to come forward with a proposal on tangible benefits. They may have different ideas, other ideas, better ideas.

1796   And I don't think we should -- we ought to foreclose the possibility of them coming forward, the new buyers of the various assets to do that. So, for the regulatory kind of /legal reasons amd just practical reasons and the creative reason around the new buyer doing what they might think is a better thing or, you know, have a better idea, we think it's best to do it the way we propose.

1797   COMMISSIONER DUNCAN: That leads to the clarification part of part 2 of my question, and I appreciate that. If you could provide a detailed description along with detailed assumptions on how your proposal would work, the one that you outlined in your supplementary brief that supports what you just said.

1798   So we're wondering, in the valuation you provided two different values for two of the radio stations to be divested. So if you could indicate which value would be used in calculating the shortfall or not and why the value --

Engagement

1799   MR. GOLDSTEIN: Okay. We'll take that on.

1800   COMMISSIONER DUNCAN: It's a three part question.

1801   And the other thing is if you would indicate how the shortfall is to be determined, whether it is to be calculated on an overall basis on the outcome of all the properties being sold, on an individual basis or on the basis of stations involved in a particular transaction so in one instance you have somebody buying four or five properties.

1802   Would it be -- would you propose that the shortfall would be calculated on each or as a group?

1803   MR. GOLDSTEIN: I can actually do that now, so we can actually maybe eliminate one of the undertakings.

1804   The way we envisioned it because TV benefits are paid at the 10 percent level and radio benefits are paid at the 6 percent level, and if we were acquiring all of these assets we would pay on the total, not on a broken-down basis but by station.

1805   We would pay -- you would aggregate up all the television assets. There is a value associated with that. If there is a shortfall on that then we would pay on that shortfall the total for TV. The same for radio.

1806   COMMISSIONER DUNCAN: Okay, that's clear. Okay, thank you.

1807   And so then the other thing is just a quick question. I know that you're making great progress, but I'm just wondering how you would intend to compensate for the cost of delays in finalizing the sale of these various assets to be domestic. I know you're hoping it's going to be done very quickly, but if that weren't the case there would be a difference.

1808   MR. BIBIC: In terms of, if there is a delay then the money is not flowing into the system --

1809   COMMISSIONER DUNCAN: Yes.

1810   MR. BIBIC: -- as quickly as would otherwise be the case.

1811   COMMISSIONER DUNCAN: Otherwise, m'hmm.

1812   MR. BIBIC: Okay.

1813   MR. COPE: I would have thought our backstop for assets, whatever we're going to own, would be viewed as incredibly generous. Then even the question, the concept of expecting something further up, I find it mind boggling.

1814   COMMISSIONER DUNCAN: Maybe I made myself --

1815   MR. COPE: Quite frankly, I don't understand why if it got delayed -- the fact that BCE has said if someone pays less we're going to pretend the company got sold for a different amount.

1816   THE CHAIRPERSON: The alternative is we take all the benefits now. So you've asked us to delay and split it up and Commissioner Duncan is asking, there is a cost to that money over time and are you ready to take out the difference?

1817   COMMISSIONER DUNCAN: That's it.

1818   MR. COPE: But I don't -- I don't understand, why would we take out the difference? We're already --

1819   THE CHAIRPERSON: I think I've been clear.

1820   MR. COPE: We're stepping --

1821   THE CHAIRPERSON: I think the question was put very clearly. I can see that you disagree with it.

1822   MR. COPE: Well, we never contemplated a concept, in fairness, because we thought already that the idea that we would backstop this gap on a transaction of assets we're not allowed to purchase would have seemed to be a great bridge to say let's, you know, move forward.

1823   THE CHAIRPERSON: To be consistent with past practices where you would pay right away the benefits and take it later.

1824   MR. COPE: Oh, that's a misunderstanding on our part then.

1825   THE CHAIRPERSON: Which we've done with recently with Cogeco.

1826   MR. GOLDSTEIN: I think if I could just add just a couple of points and maybe I could add. If that's not sufficient I think we can take it away, but there is two points.

1827   I think the first one is that, I think if you actually look at the Cogeco decision, the Cogeco decision actually was a situation where Cogeco offered to actually pay up on a certain amount. Then what the Commission actually indicated was that it would accept the amount it was paying, but it couldn't make actually a determination as to whether it would charge benefits on the future divestitures to those parties, which it ultimately did not because they were money-losing operations.

1828   The issue before Cogeco, the methodology actually that we've proposed actually without a backstop, was what was used in the CTV CHUM transaction and then other transactions before that.

1829   I think in terms of a delay, and we can comment more on it in an undertaking, is that our hope is that these assets will be divested actually very, very quickly. So that it then becomes incumbent on the purchasers to actually file their applications and the applications to get processed.

1830   But we're talking in a matter of months, in fact a short number of months. Ultimately, the benefit expenditures occur within a 12-month period occurring after that time.

1831   So if we just work at, if something happens and we get everything approved out of the Commission and everything closed by early this fall, there actually isn't necessarily a delay of anything because they may actually not be paying anything into benefits until August 31st of 2014. So there is actually no delay necessarily.

1832   MR. COPE: But yeah, in fairness, let us take that away. I did not understand the Cogeco issue that you referred to that we've taken. So let's see. This should be a small item. We should take it away and we'll sort something.

Engagement

1833   THE CHAIRPERSON: That's probably good. But I do recall instances, going back to the late transaction which I think it took two years before we got divestiture of those assets, there is a cost of money.

1834   COMMISSIONER DUNCAN: (Off mic) Oh, sorry. The last question deals with investigation. Again, I'll read the question:

1835   The Commission has consistently considered that un-launched Category B services do not have value. At the day of the transaction investigation was on hold with no distribution or programming agreements. The Commission's practice is to determine the value of the transaction as the date of that transaction.

1836   Why do you think it would be appropriate in this case that the Commission consider an un-launched Category B service to have value even though, as I understand from your comment April 16th, that it's based on the value at that time or the information available at the time of the valuation report?

1837   MR. GOODWIN: Well, just by way of a bit of a background, at the time of the first application you're right. The station had received its Category B licence. It didn't have carriage. It didn't have programming agreements and there was no plan to launch it.

1838   So when we prepared the first valuation we said, okay, well, if you don't have anything ready to roll and there is no plans to launch and no agreements are in place, it can't be worth much. So we didn't value it. What's different this time, as BCE has indicated as part of its application, it's going to launch the service.

1839   So taking that into account, we said in the spirit of what BCE intends to do, we will include it in the valuation. That had the effect of increasing the value of the regulated assets and that flows into the benefits pool so it's actually, you know, a good thing.

1840   COMMISSIONER DUNCAN: So the next question then flows from that, because I believe you only included the first few projection years in the discounted cash flow. It could be considered that in order to appropriately value it, you'd have to consider every year until maturity like you did with the other assets.

1841   MR. GOODWIN: Well, actually, Commissioner Duncan, we did do that. So you're right that the forecast horizon for Astral's strategic plan is only three years. But our model goes out an extra couple of years.

1842   So we worked with Astral management to come up with some assumptions that would effectively get the station to, you know, the best estimate of what that steady state might look like and then whatever the revenues and the cash flows were they were carried into the terminal value calculation. So we're not cutting off the value prematurely.

1843   COMMISSIONER DUNCAN: Maybe we don't have that whole calculation, if you could include that?

Engagement

1844   MR. GOODWIN: I suspect that it's subsumed into one of the categories of French specialty TV but, sure, we'll show you where the -- we'll tell you where the detail is.

1845   COMMISSIONER DUNCAN: Okay. All right. That would be good.

1846   So the other question, I guess, was just on the types of revenues associated with the service given that it's probably at least two years before it launches.

1847   MR. GOODWIN: I may not be the best person to answer what it's going to be all about.

1848   COMMISSIONER DUNCAN: I guess we know from the application what the description of the service is.

1849   MS MOFFAT: Sorry, Commissioner Duncan, are you referring to what specific revenues are attached to that licence in the model? It would be primarily subscription revenue in the early years.

1850   COMMISSIONER DUNCAN: Just subscription revenue?

1851   MS MOFFAT: Primarily in the early years.

1852   COMMISSIONER DUNCAN: Okay, that's fine. Those are my questions. Thank you very much for your patience in giving us the added information.

1853   MR. GOODWIN: Thank you very much.

1854   THE CHAIRPERSON: We'll be taking a break in a second, but the Vice-Chair has one question on the subject matter.

1855   COMMISSIONER PENTEFOUNTAS: Thank you.

1856   Just to get back to this, Mr. Goodwin, did I understand you correctly, do the multiplatform opportunities offset in whole or in part some of the OTT risk factors for the Astral pay TV properties?

1857   MR. GOODWIN: Yeah, that's effectively where we got to. So we would have said, you know, there is a threat from OTT, Netflix in particular, but because there is an opportunity to pursue a multiplatform strategy it offsets some of those risks.

1858   So you're right. There are factors that increase risk and that's a factor that decreases it.

1859   COMMISSIONER PENTEFOUNTAS: Thank you.

1860   COMMISSIONER DUNCAN: Oh, excuse me a second. If I can, Mr. Chair?

1861   THE CHAIRPERSON: Sure.

1862   COMMISSIONER DUNCAN: This is one of the undertakings that I asked you for. I asked for an unprotected spreadsheet and you offered one in a PDF, but staff would like to have the individual SVOD calculations.

Engagement

1863   MR. GOODWIN: Okay.

1864   COMMISSIONER DUNCAN: Is that all right?

1865   MR. GOODWIN: Yeah, just so that staff knows they are going to get basically just different copies of the same model so the email is going to fill up. But that's fine.

1866   COMMISSIONER DUNCAN: Okay, thank you. Yeah, thanks.

1867   THE CHAIRPERSON: Thank you.

1868   So why don't we take an oxygen break for the next 10 minutes and come back at five to 5:00? Thank you.

--- Suspension à 1646

--- Reprise à 1657

1869   THE CHAIRPERSON: Donc. À l'ordre, s'il vous plaît. Order, please.

1870   Mr. Menzies, s'il vous plaît.

1871   COMMISSIONER MENZIES: Thank you. I have actually a number of questions which you probably didn't want to hear. But it's late and I know everybody is hungry and I want to avoid everybody getting grumpy.

1872   I'll be straightforward with some questions and some of them will fall into the area of dotting i's and crossing t's, but I'm sure you appreciate that just as you conduct your work with due diligence we have to with ours.

1873   But it is late so if you feel like you've answered a question, feel free to stop talking and I'll ask the next one.

--- Rires

1874   COMMISSIONER MENZIES: And then we'll all get to supper.

1875   First of all, just a point of clarity on an earlier discussion. I wanted to clarify, am I understanding when it came to when you're replying to questions about diversity of voices regarding radio that -- and your divestitures elsewhere in the country, you weren't necessarily keeping all the highest performers and weren't necessarily selling the low performers that you had different criteria.

1876   I wanted to make sure I understood that correctly, because when we talked about Montreal we were talking about it didn't make any sense to hang onto a low performer and get rid of the high performer. I'm just trying to understand whether that was all part of the same strategy or whether I misunderstood or whether you wanted to clarify on that.

1877   MR. CRULL: Commissioner Menzies, there were multiple factors that went into the decision and financial performance is probably one of the top three, but the frequency class of the station and its footprint, the brand, the format and the key contracts that that station might have for syndication or other content; the financial performance.

1878   And then for sure some of the hard assets -- do we rent versus own? Some of the real estate and things of that sort, it created some situations like you heard in Montreal. In other markets, in fact, in Vancouver and Toronto we're winding up keeping stations that are by listening share much smaller than the stations that we're selling.

1879   COMMISSIONER MENZIES: So a more strategic discussion rather than a pure financial discussion?

1880   MR. CRULL: Yes.

1881   COMMISSIONER MENZIES: Okay, thank you.

1882   And keeping on radio for a couple of minutes, there were some interveners who were concerned that your tangible benefits package -- this is tangible benefits for radio -- did not take the music industry associations into account, and in your reply you pointed out that your proposal was consistent with the focus of the services and the Commission's policies and objectives.

1883   What we would like to have a bit more on is some detail about how you selected your tangible benefits initiatives. Can you elaborate on your selection process just a little bit?

1884   MR. BIBIC: This is specifically on radio?

1885   COMMISSIONER MENZIES: Yes.

1886   MR. GORDON: Well, I think when we looked at the benefits and some of the things that go into supporting Canadian music, obviously, the emerging artist piece was very important.

1887   Sorry, are we talking about intangible or tangible?

1888   COMMISSIONER MENZIES: Tangible.

1889   MR. GORDON: Tangible?

1890   COMMISSIONER MENZIES: Yes.

1891   MR. GORDON: Obviously, the emerging artist was very important.

1892   We also have two other pieces that are involved with music education, MusiCounts. As most people know, education in schools for music is something that is not very prevalent in most schools, so we wanted to provide some kind of support for MusiCounts, which is directly in that area.

1893   We're also working with Coalition Management, who operates an educational and assisting function for new artists and new bands. They would come to a seminar in Toronto and take a 10-week seminar talking about all aspects of the music business, not just the actual music itself but the business part of music.

1894   We also wanted to support emerging artists with another initiative we have, which is Mega Music Canada, and how that works is that it's twofold. It provides promotion for emerging artists and it also provides financial aid.

1895   So when we looked at a combination of potential benefits, we really wanted to focus on emerging artists and financial and promotional aid for them.

1896   COMMISSIONER MENZIES: Thank you.

1897   The Top-Musique app as a tangible benefit of radio, you state here that ADISQ will own the app. Just to clarify, they're covering 34 percent of the project's cost.

1898   Can you sort of clarify the structure of the ownership of the app because it reads as if they're putting up 34 percent of the money and having 100 percent ownership; is that the case?

1899   MME LAFLAMME : Je ne suis pas sure que j'ai bien compris la question. Sorry. I'm not sure I understood the question. Would you repeat it, please?

1900   COMMISSIONER MENZIES: Okay. Our understanding is that ADISQ would be -- in terms of the Top-Musique app, ADISQ would be the owner, developer and producer of the initiative --

1901   MS LAFLAMME: Yes.

1902   COMMISSIONER MENZIES: -- and would cover 34 percent of the project's cost or $386,000?

1903   MS LAFLAMME: Yes.

1904   COMMISSIONER MENZIES: Is ADISQ the 100-percent owner?

1905   MS LAFLAMME: Yes.

1906   COMMISSIONER MENZIES: Okay. But they only have to put up 34 percent of the cost?

1907   MS LAFLAMME: We put a percentage and they will find the funding for the rest of the project.

1908   COMMISSIONER MENZIES: Okay. Thank you.

1909   MS LAFLAMME: Okay.

1910   COMMISSIONER MENZIES: So they fund the funding for the rest of the project?

1911   MS LAFLAMME: Well, they have the -- they will fund the rest of the project, the remainder of the project.

1912   COMMISSIONER MENZIES: That's the 34 percent?

1913   MS LAFLAMME: Yes, exactly.

1914   COMMISSIONER MENZIES: Right. And you have the rest covered?

1915   MS LAFLAMME: Yes.

1916   COMMISSIONER MENZIES: Okay. Good. Just to make sure we have the record clear on that.

1917   And can you give us a little background on how you developed the budget for the Top-Musique app?

1918   MME LAFLAMME : Oui. Alors, nous avons discuté avec l'ADISQ. En fait, l'ADISQ souhaitait... est venue nous présenter leur projet, souhaitait développer un outil moderne de promotion collective de la musique développé pour le marché québécois, conçu donc par l'ADISQ.

1919   Il s'agit d'une vitrine mobile dynamique à l'industrie musicale québécoise afin de permettre au public d'ici d'être au fait de la scène musicale, de faire des découvertes et des achats.

1920   Puis le consommateur pourra y découvrir des artistes émergents et les dernières tendances, en plus d'accéder à une somme importante de contenus crédibles et riches sur l'univers de la musique au Québec et de partager ses découvertes avec ses amis par l'entremise de médias sociaux.

1921   Donc, c'est un outil promotionnel qui servira l'industrie de la musique et les consommateurs et qui répond aux objectifs de la politique de la radio commerciale en matière de CCD.

1922   MR. BIBIC: Commissioner Menzies, if I could just add very quickly.

1923   So when the transaction was announced and when the industry recognized that there will be tangible benefits payments on the TV and radio side, we received really a lot of requests to form part of our package.

1924   COMMISSIONER MENZIES: Right.

1925   MR. BIBIC: We looked at this one and, as Claude said, it was a multiplatform, in other words, an app to showcase Quebec music. We thought, okay, well, that fits into kind of the broader vision we have, it's multiplatform, it supports Quebec artists.

1926   And they made a proposal and they had a funding proposal and how much they would contribute and how much they would ask us to fund, and that's where those numbers come from, from the proposal they made to us, which we thought would be a nice fit with the vision that we had for the transaction, so we put it forward.

1927   COMMISSIONER MENZIES: Okay. Thank you for that.

1928   MME LAFLAMME : Si je peux me permettre d'ajouter, ça complémente l'offre d'avantages tangibles. Les autres initiatives sont, par exemple, les bourses en journalisme et les festivals de musique qui promouvoient les artiste émergents, puis l'application Top-Musique, donc, qui fait la promotion de la musique francophone au Québec.

1929   COMMISSIONER MENZIES: Okay. Merci.

1930   Would BCE customers have exclusive access to this app or would it be offered to all Canadians on equal terms regardless of their mobile provider?

1931   MR. BIBIC: It will be ADISQ's app. It will be accessible to all. There's no aspect of exclusivity to BCE.

1932   COMMISSIONER MENZIES: Thank you.

1933   Is this going to be in terms of its nature a complex or high-end app in terms of its development? It's important for staff to try to understand that in terms of giving it a value.

1934   I mean how does it compare -- to give you an example, how does it compare to the CTV app or the Virgin Radio app in terms of its complexity and cost and development features, functions, et cetera?

1935   MME LAFLAMME : Écoutez, je n'ai pas participé à la conception du projet, mais ce que l'ADISQ nous dit, c'est que ça sera une application qui sera user-friendly, donc, facile d'approche.

1936   Et je vous inviterais à en discuter davantage avec l'ADISQ, qui pourra vous donner le menu détail de la façon dont sera développée l'application.

1937   COMMISSIONER MENZIES: Yes, it will be. Yes. Thank you.

1938   MR. BIBIC: I just -- because ultimately it is our application, we put it forward as a proposal, so we're happy to have a discussion with ADISQ and respond to you ourselves in writing or --

1939   COMMISSIONER MENZIES: Yes. No, that's fine. I think we can cherry-pick with ADISQ --

1940   MR. BIBIC: Okay, that's good.

1941   COMMISSIONER MENZIES: -- because I'm sure they're working on it already.

1942   MR. BIBIC: Okay, thank you.

1943   COMMISSIONER MENZIES: And if they aren't, I'm sure you'll call them and tell them to.

1944   So do you know or should I leave it with ADISQ how soon the project will launch or get under way? Because we can defer that question too. We just need to know at some point.

1945   MME LAFLAMME : En fait, madame Solange est dans la salle. Il lui fera plaisir, je crois, d'y répondre.

1946   MR. BIBIC: We'll leave it to ADISQ.

1947   COMMISSIONER MENZIES: We'll talk to her about it later. Thanks. And actually we'll just leave that at that.

1948   The consumer education initiative, that's $2.73 million. Which consumer groups have you contacted so far and what has been their response and who do they represent?

1949   MR. BIBIC: We contacted PIAC and Option consommateurs and had a couple of discussions with each of them about --

1950   Well, what we wanted to do is come forward and say, okay, let's allocate an amount of money that could be used to increase consumer awareness about their broadcasting system. It could be on multiple levels. You know, it could be about cost, it could be about flexibility, it could be about navigating your way through the multiple choices available to you.

1951   I mean there are a whole bunch of options or different things that could be identified and worked on in order to increase consumer awareness about their broadcasting system.

1952   So that's kind of a high-level vision. I know it's not very specific but it's a high-level vision.

1953   We filed the application. We reached out to PIAC and to the French-language group to say, okay, what do you think about working with us to put some meat on the bones of this concept?

1954   And in both cases they thought about it, came back and said, well, we would rather not engage in those discussions because our position is going to be to oppose the transaction entirely.

1955   So they didn't feel it was appropriate for them to engage in the discussions with us about putting more specificity around the consumer education program and the money we wanted to allocate there. Anyway, that's what we tried to get at in the reply.

1956   We would be happy to -- Commissioner, you know, in full openness, we would be happy to re-engage with them, if the transaction is approved, after the approval. We would be happy to re-engage there or happy to reconsider going in another direction -- or not another direction, still allocating the money to consumer awareness initiatives but do it another way.

1957   We could have a fund just like we have with the Canadian Broadcasting Participation Fund. You have a fund, you have independent governance, you have clear criteria as to the kinds of initiatives that would be supported, and then people come forward.

1958   It could be MediaSmarts, for example. They came forward recently and said, hey, we have an idea, it would fit in nicely with this program. So, you know, somebody like MediaSmarts or another group could come forward and say, here's our idea, it meets the criteria. The independent governance addresses the proposal, funds it. That's another way of doing it.

1959   COMMISSIONER MENZIES: Right. Well, PIAC made that suggestion, I think, to create a new stream for the Broadcast Participation Fund. What are your thoughts on that?

1960   MR. BIBIC: Well, let me park the mechanics for a second, but the principle or the idea, as I understand it, behind PIAC's suggestion, I don't support, unless I misunderstand it. But as I understand it, I don't really support.

1961   We've already -- the $2.7 million we were proposing to allocate to his wasn't designed to be advocacy-based. The Broadcasting Participation Fund is a fund designed to assist consumer groups in participating in CRTC hearings. That was created as a result of the BCE/CTV transaction. We're proposing to supplement that fund with this transaction. So I think we've taken care of that.

1962   We don't believe that this $2.7 million allocation should be designed to be advocacy-based. So that would be my answer on the principle.

1963   On the mechanics, you know, the answer I gave a week ago in another direction and have a separate fund for this, I suppose from a governance perspective you could fold it into the Broadcasting Participation Fund organization and structure but make sure that it's not about advocacy, it's really about consumer awareness and education.

1964   COMMISSIONER MENZIES: Okay. So just so I'm clear, where did the transport aspect come in, participation come in?

1965   MR. BIBIC: So the Broadcast --

1966   COMMISSIONER MENZIES: You don't want to fund advocacy but you're willing to --

1967   MR. BIBIC: No. We're willing to fund --

1968   COMMISSIONER MENZIES: -- fund transport advocates?

1969   MR. BIBIC: No. We're willing to fund both. I just want to make sure I have the right numbers here.

1970   So we're proposing $2 million to the Broadcasting Participation Fund on top of what's already there, so an additional $2 million that would be to fund the advocacy work of the consumer groups in CRTC hearings.

1971   COMMISSIONER MENZIES: I've got it now.

1972   MR. BIBIC: Okay.

1973   COMMISSIONER MENZIES: They're two separate streams.

1974   MR. BIBIC: They're two separate streams.

1975   COMMISSIONER MENZIES: Yes.

1976   So the main concern here -- and I can ask some specific questions, but I don't think you can answer them -- in other words, in terms of have you been -- well, I should ask.

1977   Have you been contacted directly by any consumer groups? The broad concern here is not whether it's a good idea or not but whether you end up trying to dance without a partner in terms of this and what your alternatives would be in terms of if you can't find a partner.

1978   If PIAC or other groups just say, we would just as soon not be partnering with you, that might be disappointing to you but it's still important -- it might be important to us that the participation of consumers be funded.

1979   What would be your alternatives? What sort of assurances can you give us that this contribution would have value even if you're dancing on your own?

1980   MR. BIBIC: Well, I think what we would be doing is -- and it is unfortunate that they wouldn't dance, but it is what it is. That's why I made the other suggestion, which is we don't intend for this money to be used by Bell for Bell-related purposes.

1981   So what we will be quite prepared to do, it's $2.73 million allocated to a fund. So the money is already is a fund. It's independent of Bell. It's got its own governance with, as I said, clear criteria to say these are the types of programs that this money can fund and it really has to be related to consumer education and awareness, and then let groups come forward and ask for funding.

1982   And the reason I raised MediaSmarts is just last week they wrote me a letter and they said, well, you know, Bell knows MediaSmarts, you've funded them before, which we have. It's a great organization. We're all about improving digital literacy, supporting parents as they help their children navigate their way through the Internet. It increases consumer confidence. It addresses content issues in an unregulated digital media environment.

1983   So, you know, you look at that proposal, and I looked at it and I said, well, this fits exactly with the kind of thing we would want to do.

1984   So if we created the funding stream, nothing to do with Bell, the money is now in the fund. MediaSmarts comes forward and says, here's our idea, can we have X amount of dollars out of it? Those who administer the fund can say, great idea, here's some funding, go do your great work.

1985   COMMISSIONER MENZIES: So who decides the criteria for the funding? I understood that commitment on independence and that sort of stuff, but if you're giving the money and prescribing the criteria, that could be viewed as restrictive by some people saying, well, Bell's willing to fund consumer activity but what they really don't want is to fund somebody who might not like Bell.

1986   MR. BIBIC: Oh, I understand the concern. So we would not have anything to do with it. It's not unlike actually the process we use for the Broadcasting Participation Fund.

1987   When we made a proposal to acquire CTV in 2011 and it was approved, the Commission decided that there should be some monies allocated to the Broadcasting Participation Fund. But the fund didn't exist and so as a condition of approval we were asked to submit to the Commission a proposal on how the governance structure would work.

1988   We worked in this case with PIAC. And after the approval of CTV/BCE, we worked with PIAC, we came up with a board structure, a governance structure, a funding structure. We filed it with the Commission. The Commission went through a process. People had an opportunity to comment. Then it was approved, the monies went in and now it's operating.

1989   COMMISSIONER MENZIES: So that would be the sort of model that you would be willing to undertake as a condition of approval?

1990   MR. BIBIC: Correct. So if you ask me now what will be the selection criteria, I don't really have the answer, but what we would undertake to do is work with whomever is interested and make it all subject to the Commission's approval on what the selection criteria would be, and once that's all approved, then the fund is set up and the monies are in and we're out.

1991   COMMISSIONER MENZIES: Okay. Thank you.

1992   The support for festivals and associations, now, most of those festivals appear at least to be anyway -- and you can dispossess us of this notion if you wish -- supported by the proposed benefits or already sponsored by BCE.

1993   I just want to know, how can we be assured that the initiatives will go beyond your current past practices in cost of doing business or sponsorships that you're engaged with these groups at and that we can be assured that these are truly incremental?

1994   MR. BIBIC: Yes, so some of these film festivals, you are correct, we're already supporting. We're either supporting commercially as part of a commercial sponsorship or we're supporting as part of previous benefits packages.

1995   So in either case we can establish well, here's the amount we've committed to fund already commercially or through previous benefits packages, and this money would be incremental over and above that. So that's all verifiable.

1996   I think the good part about this is it is an element of providing further exposure and promotion of film and Canadian film, which is an important element of our transaction overall.

1997   And what benefits funding does for these festivals that commercial sponsorships don't do is they provide a stable level of multiyear funding because a commercial sponsorship is here today, it may be gone tomorrow when the sponsorship expires. It's a function of our kind of branding exigencies at any particular point in time, whereas benefits funding is stable and it's multiyear.

1998   And going back to really the nub of your question, we can verify that it is over and above.

1999   COMMISSIONER MENZIES: Sure.

2000   I mean part of the concern would be that it would enhance the festival but not necessarily heighten Bell's profile, add it, if you get what I mean, because otherwise it becomes an expansion of a marketing arrangement as opposed to an expansion of funding of the festival.

2001   MR. BIBIC: Well, ultimately --

2002   COMMISSIONER MENZIES: So, if you spend, you know, another $50,000 or $100,000 or whatever it is with X Festival, that doesn't mean that there's more Bell branding in another, you know --

2003   MR. BIBIC: I'm not sure, I think if there's an extra $100,000, the festival does get $100,000 to do its great work. So that's what counts.

2004   COMMISSIONER MENZIES: Right, and Bell's presence isn't necessarily any greater. You know what I mean?

2005   MR. BIBIC: No. No.

2006   COMMISSIONER MENZIES: You're not getting a billboard out of the extra?

2007   MR. BIBIC: Well, they get the money whether or not they provide the billboard. So the funding would be committed as a result of the benefits package in the Commission's decision.

2008   COMMISSIONER MENZIES: Yes. That's what we need to be reassured on. Okay.

2009   So, why did you come to the decision to stick primarily with prior associations? Did you think about spreading the wealth a little bit to -- and this is not to be critical of these associations, but were there any discussions about the idea of making some new friends?

2010   MR. BIBIC: I'm just looking for my list of festivals. Do you mean festivals or broadly speaking?

2011   COMMISSIONER MENZIES: Just festivals actually. In terms of regional festivals, why you picked the ones you did and whether you considered choosing some new ones.

2012   MR. BIBIC: Well, I mean there's a number of factors.

2013   There's a regional element to it, francophone and an English split. That factored into it. There's an element of a regional -- there's a regional dimension to it, whether it's -- you know, there's the Atlantic Film Festival, Québec Cinéma, les Rendez-vous du cinéma québécois. So we try to do that. We try to address documentaries with Hot Docs.

2014   So I mean that's the kind of thing that went into it. There's a lot of potentials that could be funded. We just thought that this was the right mix.

2015   COMMISSIONER MENZIES: We noticed that most of the festivals have to do with film and you have an enhanced interest in film going forward and we just wanted to know your views on any possible reallocation of tangible benefits money to other kinds of initiatives that might not be as directly related to film and your growing interest in that area, not that either of those things are bad.

2016   MR. BIBIC: No, no, I understand the point and it was difficult because literally you receive, when you're a proponent of a transaction like this, literally hundreds of suggestions, proposals and requests and then you have to make judgment calls.

2017   I think at the highest level what we tried to do is respect the 85 percent-15 percent split on screen and social. We tried to do that. We tried to respect a split of English and French in accordance with the valuation 31 percent English-69 percent French.

2018   And then of course we got down to the content, which is film was near the top of the list given the nature of the services we're acquiring, both French and English, Super Écran, TMN, TMN Encore, which is not exclusively film but has a significant film dimension. We tried to focus on youth programming in VRAC-TV, for example, and of course, there's the element of PNI, programming of national interest.

2019   So I mean it doesn't give you a very, very precise, specific answer, but I wanted to share kind of the broad philosophy that we tried to adopt to this.

2020   So film is a big component. It's not just on the film festivals. It's on film distribution and promotion. There's the production of film.

2021   COMMISSIONER MENZIES: I take it you're open to -- if the Commission were to decide that reallocation would be appropriate, that's not a hill for you to die on?

2022   MR. BIBIC: No, that would be fine.

2023   COMMISSIONER MENZIES: Yes. Thanks.

2024   The Television Format Development initiative, that is $4 million over seven years.

2025   Try to be precise, can you confirm for the record that no more than 10 percent of this is dedicated to online or multiplatform content as per the Commission's approach?

2026   MR. BIBIC: That would be -- we didn't specify that, but that has been the recent norm, certainly transactions I have been involved with, and I think it was the norm in the Shaw/Canwest transaction, so yes.

2027   COMMISSIONER MENZIES: Thank you.

2028   Can you be specific about how this initiative -- now, just to give you some context, people would assume that broadcast companies are in the ideas and content creation business and you have spoken quite passionately about your interest in ideas and content creation today, so the question arises: How is this initiative above and beyond what would be the regular cost of doing business?

2029   MR. BIBIC: Okay. On that I think it would probably be far better for those who are on the ground operating the business to answer.

2030   MS BROSSEAU: Commissioner Menzies, I will do the introduction in English and I will allow you to put the thing on because I am a little tired and I don't think that my English is up to par.

2031   COMMISSIONER MENZIES: Please, feel free. You don't need to do the introduction in English.

2032   MME BROSSEAU : Essentiellement, on s'est beaucoup interrogé sur la tendance lourde qu'il y a dans la télévision québécoise à utiliser et à adapter des formats étrangers, beaucoup de formats américains et des formats européens, et on croit qu'il y a suffisamment de talents au Québec pour investir dans la conception de formats qui pourraient éventuellement être vendus à l'étranger.

2033   Alors, c'est vraiment une réaction d'une tendance qu'on a constatée depuis cinq ans, où la majorité des radiodiffuseurs ont des formats à leur antenne, incluant même la télévision publique, et on s'est dit qu'il y avait un besoin là. C'est coûteux à faire, et on pense que ça vaut la peine d'y investir puisqu'il y aura éventuellement un retour sur l'investissement pour tout le monde concerné.

2034   COMMISSIONER MENZIES: But that is not something that you would normally have done, to respond to this import trend, if we want, and try to create export product?

2035   MME BROSSEAU : C'est vraiment très coûteux à faire. La preuve, les grandes télévisions généralistes ne le font pas beaucoup.

2036   Donc, dans l'univers des chaînes spécialisées, où les moyens de production ou, en fait, les budgets de programmation sont plus limités, ce n'est pas une chose qu'on aurait faite sur une base régulière.

2037   On l'a cependant fait. Il y a une série qui a été diffusée à Séries+, une série dramatique qui s'appelle « François en série », et dont le concept était tellement innovateur qu'elle a été vendue à l'étranger.

2038   Mais pas systématiquement, pour répondre à votre question.

2039   COMMISSIONER MENZIES: Okay. I'm still just trying to get -- it's a good initiative, I'm just still trying to get some sense of confirmation that this something that you wouldn't normally do in the regular course of business in order to compete with international Francophone product.

2040   MME BROSSEAU : La conception de format se fait entre... c'est d'abord au niveau des producteurs et se fait de concert avec le diffuseur, mais c'est d'abord le producteur qui initie l'idée d'un format, et, encore une fois, je pense que, relativement parlant, c'est très coûteux, et donc, on est ravi de savoir que ces dollars-là vont être appliqués dans les formats, je dirais, dans tous les genres de télévision, qu'on pense au documentaire, qu'on pense à la sitcom jeunesse, dans tous les formats.

2041   COMMISSIONER MENZIES: Okay. Like I said, I don't doubt that it's money well spent, but I'm still struggling. I will leave it there, but I am still struggling a little bit with how it wouldn't be the nature of the business to be engaged in that.

2042   You may wish to think about that and get back on it, but we will just leave it there for now. I do need to know some other details though.

2043   How was the administration of these funds designed?

2044   MS LAFLAMME: Are you saying who?

2045   COMMISSIONER MENZIES: How?

2046   MS LAFLAMME: How is the administration of this fund --

2047   COMMISSIONER MENZIES: Who will be the administrator of the fund?

2048   MS LAFLAMME: ADISQ.

2049   MR. GOLDSTEIN: No, no, no.

2050   MS LAFLAMME: I'm sorry, I thought it was ADISQ.

2051   COMMISSIONER MENZIES: No, no. No, the format development.

2052   MS LAFLAMME: Sorry.

2053   COMMISSIONER MENZIES: That's okay.

2054   MR. GOLDSTEIN: Like the other television programming, other than the Harold Greenberg Fund and Telefilm, we would -- independent producers would come to us.

2055   In the case of ADISQ, because it's a French-language initiative, they would go to the French-language development people, the French-language champion we spoke of earlier, present requests to develop these things and we would fund them that way.

2056   COMMISSIONER MENZIES: It's funded directly --

2057   MR. GOLDSTEIN: Yes.

2058   COMMISSIONER MENZIES: -- through Astral's Montreal?

2059   MR. GOLDSTEIN: Yes.

2060   COMMISSIONER MENZIES: Okay. Thank you.

2061   And do you have set criteria for allocating those funds or is it on a pitch-by-pitch basis? Obviously language is one of the criteria.

2062   MR. GOLDSTEIN: I think it would be on a pitch-by-pitch basis, mainly because I think the amounts required for the particular formats would vary.

2063   COMMISSIONER MENZIES: Okay. Given that, we would be looking for some sort of safeguards to ensure that the funds would be independently administered and consistent of incremental support for the system as a whole, not simply for your product.

2064   MR. CRULL: Commissioner Menzies, I do apologize and I'm not trying to drag this out, but I might bring some clarity for our team.

2065   COMMISSIONER MENZIES: Sure.

2066   MR. CRULL: If I can understand, our onscreen benefits are spent with independent producers who bring us ideas for programming and there is typically a lot of scripted programming that falls into the PNI category. This is a different genre of programming, I believe, that is more adapted from formats, which may be reality-type formats and things of that sort that would be independently produced, aired on the channels for which the benefits are associated with. But I think I'm struggling to see the difference between the administration and the efficacy, if you will, of other PNI --

2067   COMMISSIONER MENZIES: I think what I'm trying to get to -- I will just pause, I'm trying to get it right.

2068   We want to make sure that you simply aren't funding your own operations, that this is a benefit to the system, in this case the Francophone broadcasting system as a whole, from which anyone may benefit, not just you, because otherwise it's only a tangible benefit to you.

2069   And the independent producers, I get all that, right, but it helps you improve your place in the market and it's hard to -- I have to differentiate between Astral and the system and the market in that sense.

2070   GOLDSTEIN: If I could perhaps add some clarity to this?

2071   COMMISSIONER MENZIES: I mean, I have the sense that that's what you're trying to do, but I'm just not -- or maybe you're not. We should talk about that.

2072   MR. GOLDSTEIN: These funds, as we indicated in our application -- and this actually flows from a statement by the Commission that occurred at TVA's license renewal in '09 about how it's difficult to develop formats of particular programming for the French market, like Star Academy and things like that, and so what we are proposing is to devote certain resources for independent producers and directors and writers that come to us and say, "Okay, we want to actually try to develop -- we have this idea, we want to try to develop this format and bring it to the pilot stage and we need funding. We need funding to do that."

2073   It's tangible and incremental in that it doesn't count against any of our existing regulated CPE spend or PNI spend, it's over and above that, so it's incremental to the system in that it's dollars not being spent.

2074   Ultimately we would envisage that hopefully the pilot would air on our properties, but ultimately that's where the dollars are going, they are sort of to take it from the development stage to that initial production and then where it goes from there would be independent and separate from these funds.

2075   COMMISSIONER MENZIES: So you fund the idea creation and then they are free to take the idea anywhere they want?

2076   MR. GOLDSTEIN: we fund the idea creation and the pilot, we would hope that the pilot would fit our properties and then if anything emerged out of that afterward, that would be subject to us arranging a licensing arrangement with them, just as they could arrange a licensing arrangement with someone else.

2077   COMMISSIONER MENZIES: Okay. I understand what you are trying to do.

2078   Yes. So you will administer them. Your proposal is that you will administer them and you will take the pitches and ideally the pilots will be shown -- you will have first refusal on the product?

2079   MR. GOLDSTEIN: That's our hope, yes.

2080   COMMISSIONER MENZIES: Thank you.

2081   Just hang on a second.

2082   Yes, regarding Telefilm as a recipient of benefits, there are a few interveners who have taken issue with that.

2083   Why did you choose that rather than allocating part or all of the money to support other types of programming rather than feature films only, for example through the Harold Greenberg Fund?

2084   MS COE: I believe some of the consideration was that Telefilm's new Talent Fund was twofold, it had two elements in it that kind of enhanced the support that the Harold Greenberg Fund already provides to filmmakers, so it slightly broadens the range of types of projects that might get supported.

2085   With Telefilm Fund, they are supporting emerging talent, so someone's first real film and the production of that, and it also has another strand within there that supports promotion of films from more experienced of seasoned filmmakers, which is a component that adds onto that kind of support which is provided from the Harold Greenberg Fund.

2086   So it was more a chance to just diversity a bit and hopefully provide funding to a broader variety of filmmakers basically.

2087   COMMISSIONER MENZIES: Okay. Thank you.

2088   MR. BIBIC: Commissioner Menzies, if I could just add quickly.

2089   COMMISSIONER MENZIES: Sure.

2090   MR. BIBIC: Again the philosophy was film, let's allocate funds towards development, towards production, towards promotion, towards exhibition, so that there is the promotional element to Telefilm, the promotional stream that Corrie talked about, there's also the production stream, Harold Greenberg Fund is about development, and there is the CAFTI initiative that kind of tried to address exhibition. So we tried to hit all four of those, development, production, promotion, exhibition.

2091   The funds could, back to kind of the spirit behind another question you asked me 10 or 15 minutes ago, would we have a huge issue if that went into the Harold Greenberg Fund, that would be fine, too. The philosophy, though, was the one I just expressed.

2092   COMMISSIONER MENZIES: Understood. Thank you.

2093   A couple of points on PNI and CPE.

2094   Now, generally your PNI initiatives have been well received, I think Doc suggested $15 million go into documentaries and the Writer's Guild wanted 15 percent to go to script and content development.

2095   To just help us fully grasp the PNI, is it possible -- and I understand that it may not be, but conceptually without giving away State secrets or the equivalent, can you give us some for instances on the types of programming you are thinking of, or is a suitable answer stuff that people want to watch?

2096   MS COE: Definitely stuff that people want to watch for sure.

2097   For the English PNI, because those programs will be ones that air first on TMN they will obviously be scripted dramas, scripted comedies that suit that particular service. So we would be looking for that edgier content. We would be looking for more "Less Than Kind" or "Call Me Fitz", sort of those kind of more special types of scripted shows. I'm trying to think of ones that I'm not sure what they have on the development list right now or whether they are hoping to enlarge --

2098   COMMISSIONER MENZIES: Sure. So you mentioned TMN specifically, were there any other specific services that were the most likely to be carrying this programming?

2099   MR. BIBIC: There has been -- go ahead.

2100   MR. GOLDSTEIN: I was just going to say, Corrie commented on the English language side and because the only English-language assets we are acquiring are the TMN services and, if I'm not mistaken, I believe TMN Encore the programming has to be at least five years old, so anything new would have to -- and because we have committed that it would first air and it would be on the Astral services we are acquiring, the English-language PNI benefits, the only place they can go is TMN --

2101   COMMISSIONER MENZIES: Okay. Thank you.

2102   MR. GOLDSTEIN: -- at least in first instance.

2103   Perhaps I will toss it to Judith to talk about where it's going to happen with the French language.

2104   COMMISSIONER MENZIES: Right. So this is going to be directly -- because some interveners raised that, this PNI will be directed solely to the services being acquired from Astral?

2105   MR. BIBIC: For the first airing.

2106   COMMISSIONER MENZIES: For the first airing.

2107   MR. BIBIC: Now, there may be opportunities -- that's kind of a topic we discussed earlier with the Chair --

2108   COMMISSIONER MENZIES: Yes.

2109   MR. BIBIC: -- in terms of keeping kind of the sanctity of the genre, but there are some cases where you could see the programming moving over in other windows.

2110   COMMISSIONER MENZIES: right. Okay.

2111   We will deal with CPE.

2112   Now, Astral was renewed last year under the group licensing with the group CPE of 30 percent, so all those assets have a 30 percent condition of license, right, which can be measured over the group.

2113   Now, if we assume -- just a second while I get this right. It will make it shorter in the long run if I do.

2114   So the 30 percent and the minimum PNI of 16 percent. So your divestitures will change the composition of the group, right. So why should -- do you have any detailed calculations that would support maintenance of the 30 percent status quo for the assets that remain intact?

2115   MR. GOLDSTEIN: Maybe I will try to answer that.

2116   I think it's important to note that if you actually look at when the Commission set that 30 percent level it didn't set it necessarily on the basis of Astral's historical spending or current spending on those services, it said it on the basis of the average spending by Pay and specialty services across the industry and that's how the Commission -- at least that's what it indicates in the decision from last year, indicated that the 30 percent that Astral actually advanced was reasonable given the circumstances.

2117   I think it's also important to highlight that by actually removing services from the group we are actually foregoing a level of flexibility that Astral had, because the more services you have in the group, the greater spending flexibility you have to move money around and devote into particular areas.

2118   To get to the nub of your question, which was do we have any date, the spending is largely consistent in terms of what it was if you actually go back and look at the time that those were set between the ones being divested and the ones not.

2119   The information actually I believe was filed in the context of Astral's group license renewal.

2120   COMMISSIONER MENZIES: What I'm trying to get to is that once there is -- kind of is will this transaction result in less CPE, because whoever buys one of the divested assets will want -- likely, it would be anticipated that they would want a change in those current conditions of license which call for 30 percent because there is a very good chance that functionally they may be operating below that at this time and whether -- and it's of concern to us whether they are actually economically sustainable at a 30 percent level, the ones that are being sold, or they are performing over that right now and the ones you have left are performing under it and you will want changes in those conditions of license.

2121   So that's the bigger picture of what we are trying to look for, is some reassurance that if this goes ahead and it all works out that because this is in the public interest and has to show a net benefit, that there won't be a net loss that we have to calculate on the CPE side.

2122   MR. GOLDSTEIN: Well, just to speak to our situation, we have not applied to amend the COLs to reduce the spending.

2123   COMMISSIONER MENZIES: Yes, I know you have not.

2124   MR. GOLDSTEIN: In fact I think -- I think the spending is actually marginally above 30 percent, but it's in the range.

2125   COMMISSIONER MENZIES: Yes. I know. But what I'm looking for is some assurance.

2126   I know you have not right now and I know that people do those things honestly right now, but as we have seen over the years, business circumstances change and so what is not necessary today may be necessary tomorrow.

2127   So what we are looking at is because this is a major deal, what we want to make sure of is -- if we can, or at least be able to consider on its merits one way or the other, whether we are willing to absorb the risk of lower CPE that would be a net outcome from the arrangements that follow or whether there is some assurance that you can consider that the net result of this transaction wouldn't be a lowering in Canadian programming expenditures and the assets involved.

2128   MR. BIBIC: So we hear you, Commissioner Menzies, so from our point of view, as Kevin said, we have not applied to amend, nor will we. When the license term comes up there will be the discussion and the Commission will have the opportunity to extend that based on whatever terms we may or may not request or the Commission judges to be in the public interest at that time in the context of the license renewal.

2129   COMMISSIONER MENZIES: Right. So it would be simple enough for us to anticipate based on probabilities that at some point we would get an application for a change in ownership that would be contingent upon new CPE and PNI levels, right, and then we would have to weigh that at our merits on its merits and then of course it would be us who have decided to lower CPE and PNI and really it isn't us, it's the transaction that has created that situation.

2130   MR. BIBIC: Okay. On our side with respect to the assets we are retaining that won't happen and we will have the discussion when it's license renewal time some years down the road.

2131   I'm not saying I foresee us asking for any relief, it's just par for the course, just like on our existing assets.

2132   COMMISSIONER MENZIES: Okay. Think about what sort of commitment you might want to make on that.

2133   MR. BIBIC: Okay.

--- Pause

2134   COMMISSIONER MENZIES: Actually, I think we covered all that.

2135   The CAFTI Fund, what would become of that fund after five years?

2136   MR. GOLDSTEIN: That's the extent of our commitment to it.

2137   COMMISSIONER MENZIES: Okay.

2138   MR. GOLDSTEIN: I don't know whether or not other applicants may come forward in further transactions and deem it to be an appropriate place to propose to put benefits funding --

2139   COMMISSIONER MENZIES: Okay.

2140   MR. GOLDSTEIN: -- or if CAFTI will find other ways of adding funds to that fund.

2141   Our commitment is limited to the five years.

2142   COMMISSIONER MENZIES: Sure.

2143   MR. GOLDSTEIN: I anticipate that CAFTI will probably fully expense the -- fully distribute the funds during that period they fund.

2144   COMMISSIONER MENZIES: Well, that's the concern because it's a new fund, right, and I want to kind of know if it's a new fund but it's only going to be a fund that lasts five years, why did you choose to do that rather that rather than just direct the money to another fund or open up a new stream within an existing fund rather than just create a new fund which has a best before date of sometime in 20 --

2145   MR. BIBIC: Sorry, John.

2146   Well, we directed it here for back to the element of supporting exhibition of film, but whether or not it would -- there is $4.37 million here over 7 years were to go into -- sorry, I'm looking at the wrong thing, $3 million over five years --

2147   COMMISSIONER MENZIES: Right.

2148   MR. BIBIC: -- whether we put it to CAFTI or something else, it will still be $3 million over a period of time, it could be 7 years or in this case we propose 5 years. The typical tangible benefits expenditure is over a 7-year period, so I guess the point is it could go somewhere else for sure, but it will still be time limited in the context of 5 to 7 years.

2149   COMMISSIONER MENZIES: Yes, I understand that, I was struggling with the idea of creating a new fund that had a time limit rather than just enhancing the existing fund.

2150   MR. BIBIC: Oh, I see.

2151   MR. GOLDSTEIN: So if I could just add to Mr. Bibic's comment, you know, when we discussed this with CAFTI one of the things that they actually indicated was that really the only other place right now where they can source -- where distributors of theatrical leased Canadian films can source funds for promotion is through telephone and there are certain criteria around those funds and distributors do access those funds, but what they were envisioning with this is that these funds would actually top that up and go to elements that maybe those funds wouldn't necessarily support.

2152   COMMISSIONERS MENZIES: Are you able to provide us with some details on the administrative structure of the fund and the criteria that would be used to determine which films get funded?

2153   MR. GOLDSTEIN: Yes, we can file it by Wednesday morning.

2154   COMMISSIONERS MENZIES: Because again, as with the other things, there's -- we need to be -- we need assurance that these things are truly incremental and not self-serving in terms of that.

2155   And I need confirmation too on this one that no more than 10 percent of the allocation proposed will be dedicated to online or multi-platform content.

2156   MR. BIBIC: We could do that.

2157   COMMISSIONERS MENZIES: Thank you.

Engagement

2158   COMMISSIONERS MENZIES: In terms of social benefits between French and English markets, I mean the value of the TV assets is divided between French and English, 68.6-something, 31.4 almost English. So French 68.6, English 31.4 we'll call it. That's based on the numbers -- that's from page 39 of your application if you want to check. How would this proportion be reflected in social benefits such as promotion in a multi-platform world and responding to consumer initiatives?

2159   MR. BIBIC: So we tried to hit, you know, the 31, roughly 31 percent, 69 percent split at a high level. We found that trying to hit that split proportionately over -- across each social benefit initiative was going to get unworkable and probably wouldn't maximize the impact of the initiative. So to give you an example, the consumer education initiative, the 2.73, we kind of did the split 67 percent English, 33 percent split. We just kind of had a broad notion of number of consumers, English versus French. Same thing with the broadcasting participation fund. So what we tried to do is we tried to allocate the social benefits within each bucket in a way that kind of made sense for that initiative, rather than try to stick to that hard valuation split on each --

2160   COMMISSIONERS MENZIES: Okay. Is there an overall sense of proportion in this? I mean --

2161   MR. BIBIC: Oh, I don't -- I don't have off the top of my head in the notes how we split the overall $18.69 million English versus French. Maybe we could do that.

2162   COMMISSIONERS MENZIES: It would be helpful to have a peek at that.

2163   MR. BIBIC: Yeah, that would be easy to do. I just don't have it.

2164   COMMISSIONERS MENZIES: Right.

2165   MR. BIBIC: Okay.

2166   COMMISSIONERS MENZIES: Because we want to make sure that that's in proportion to the way the assets are allocated.

2167   MR. BIBIC: Understood.

Engagement

2168   COMMISSIONERS MENZIES: Okay. Sorry. Yes, we're making progress here.

2169   The expenditure period, this has been touched on a little bit before, but you're proposing, because there's an influx of money into the English language market at the time that you put that off to 2017. So I need your comment on other possibilities such as, a. reallocation of these funds to French language programming given that there's been a larger influx of money into the English language system due to transactions and benefits in recent years than there has been to the French system, or b. revaluing the benefits in 2017 dollars, if you wish, to begin to spend then. Obviously 2013 dollars would buy you less than 2017 in terms of that. Anyway, either of those two I'd just like some comment on.

2170   MR. GOLDSTEIN: Are you specifically -- just so I understand the question, are you specifically referring to the fact that we've sought to start the spending on the other PNI portion for English at a later point in time?

2171   COMMISSIONERS MENZIES: Yes.

2172   MR. GOLDSTEIN: The reason we did that was simply because of the -- that we felt there were going to be benefits packages expiring. I think we also indicated in our application that we would be more than happy to start them at the same time.

2173   COMMISSIONERS MENZIES: Right. Those are perfectly rational things to say. I'm suggesting that it's rational to say why not -- rather than overspend, because you've indicated that that would represent an overspend in the English market, why not spend some of it in the French market?

2174   MR. GOLDSTEIN: Then -- that is one way of looking at it. Unfortunately then we run into a situation where the value we're spending is going to be -- is not going to track to the value of the transaction. So we'll be spending more in the French market, less in the English market. Essentially it's one of these catch-22 situations that we run into, as you can see from the interventions. If you spend more in the French market, the English language production community gets upset. If you spend more in the English market, the French language production community gets upset. That's why we took the approach to do it based on the --

2175   COMMISSIONERS MENZIES: We know.

2176   MR. GOLDSTEIN: -- value of the transaction.

--- Rires

2177   MR. GOLDSTEIN: On the value of the transaction. So we're happy to begin the spend on English and French at the same time or we're happy to do it in the way in which we originally proposed, but I'm not sure it necessarily makes sense to actually then reallocate to the French side of it.

2178   COMMISSIONERS MENZIES: Okay. I understand your position, but was there any thought given to if it was -- if the spend were to happen in 2017, that you would be open to a recalculation so that that spend in 2017 represented the same value as it would be in 2013?

2179   MR. GOLDSTEIN: We didn't think about that, no.

2180   COMMISSIONERS MENZIES: Okay. I understand your answer.

2181   Yes. Because there's a little history in terms of the spending of benefits in a timely fashion, going back 13 years to the BCE/CTV benefits payment, then in terms of that what measures do you propose to ensure that the benefits, all the benefits related to this transaction, tangible at least, will be paid in a timely fashion, as opposed to the situation that occurred before?

2182   MS COE: If I may, I'd like to speak to this one. The BCE/CTV benefits package that you're referring to from 2001 was -- you may remember the monies were put into -- or apportioned by strand. So there were a variety of dramatic strands. There was one documentary strand. And the strands had sort of descriptive characterizations wrapped around each one. So there was, for instance, documentary events, there was ground breaker, there was -- in particular the heroes, champions and villains MOW strand wherein the money was to be spent only on television movies related to Canadian hero, Canadian champion, Canadian villain.

2183   So as we went through those benefits, unfortunately the market for television movies fell away. Particularly it fell away --

2184   COMMISSIONERS MENZIES: I understand.

2185   MS COE: -- internationally.

2186   COMMISSIONERS MENZIES: Okay. Thank you.

2187   MS COE: So that trying to finance these television movies was -- became increasingly difficult. And I think the last bit of the money in that actual strand, there were no less than four occasions where we ordered a movie and tried to get it off the ground and were ultimately unable to despite the producer's best efforts and ours. And so that's the -- probably the one area where those monies remained unspent.

2188   Out of the actual overall commitment of $230 million, which was the total benefits package, we actually spent into the production community, according to the total, you know, priorities and designations required, a full $230 million within the eight year period due to the recoupments that we had made that we reinvested into fresh programming. That one little bit for the HCV hung on and we have since allocated that and spent it. So I think we're finally cleared there.

2189   Similarly, you know, it's been a relief with more recent benefits under the new PNI system that you've set up because without those narrow descriptors instead it's just related to the eligible types of programming. It's much easier to find programming and to actually spend it on time and on the same --

2190   COMMISSIONERS MENZIES: Right. And that's -- you're sort of -- I'm understanding your explanation, but it's kind of also illustrating one of the potential issues here is because, as you've pointed out and I think we generally accept, there's a lot of money in the system right now.

2191   MS COE: M'hmm.

2192   COMMISSIONERS MENZIES: And if you put more money in the system... I mean, I'm trying to get my head around, well, if we put this much more money in the system now, do we really need that -- do we really need to spend that much, right? And aren't you going to actually run into a problem, you know, just ring the bell and say here's some money, take it, in essence, and we're not going to actually be adding any real value to the system. We might be spending your money, but I'm not sure that we're really adding any value to the system, right? We're making some people's lives better and we're making more product, but I don't know that that necessarily translates because --

2193   MS COE: I --

2194   COMMISSIONERS MENZIES: -- we do spend a lot of money in the system in terms of that. So would you run into it to make that -- would you run into a situation where you have too much money to spend and can't possibly spend it because there aren't enough people around to make all those shows?

2195   MS COE: Well, it's a good point. I mean, it's definitely, particularly with all the broadcasters taking advantage of the opportunities that Canadian programming affords and really getting more involved in it in recent years, you're right, that our industry is working solidly and working hard and that's great. The one factor I would put forward for consideration is that on the English side the total PNI benefits are around $24 million over the seven years or five as some have put forward, and that actually doesn't trend -- you know, when you stretch it out over a period of time, it ends up being around 3 to 4 million a year --

2196   COMMISSIONERS MENZIES: Yeah.

2197   MS COE: -- which is around one series.

2198   COMMISSIONERS MENZIES: And that's manageable for you?

2199   MS COE: Yeah, it is manageable, yes.

2200   COMMISSIONERS MENZIES: Okay. Thank you. Good.

2201   Okay. I guess the question though was what measures do you propose, right? I think we understand the issue. Is there any measure or understanding that you -- you don't have to answer right now. You may think about it, but I'm looking for an answer to what measures do you propose so that we can make sure that these issues don't happen.

2202   MR. GOLDSTEIN: I think if I could just add to what Corrie was saying. I think the BCE/CTV benefits package was a very unique circumstance. And in fact, as she indicated, the $230 million actually got expensed relatively on time. It was an issue relating to the specificity attached to the benefits package. In terms of the other benefits package and which we administer, they have much broader definitions in terms of the programming. In fact, we had a --

2203   COMMISSIONERS MENZIES: I understand. Your answer then is --

2204   MR. GOLDSTEIN: So --

2205   COMMISSIONERS MENZIES: -- that you don't believe any measures are required.

2206   MR. GOLDSTEIN: Well, we file -- we do file annual -- we file annual reports that track our spending and, you know, we take the commitment seriously and --

2207   COMMISSIONERS MENZIES: I can't put words in your mouth. It's okay to say you don't think any measures are required or it's okay to here's an idea on measures. I just need an answer.

2208   MR. GOLDSTEIN: It's -- we believe --

2209   COMMISSIONERS MENZIES: And if you wish to consult before giving the answer --

2210   MR. GOLDSTEIN: -- that the current structure works as it without any additional measures.

2211   COMMISSIONERS MENZIES: Thank you very much.

2212   I need your response to the Québec English producers have asked that a portion of onscreen initiatives be reserved for productions from English language independent producers in Québec. What are your thoughts on that?

2213   MS COE: I'd like to jump in here too, if I may. I think from our perspective, and I know that you may feel you've heard this from most broadcasters, but what we try to do each time is look for the best projects, the best talent, the best story, what's going to strike the most with our audiences, and that to us feels like it not only benefits us but it benefits the audience as well. We are commissioning things that they want to watch. That's getting Canadian programming out to a greater number of people and that's a benefit.

2214   I think in terms of the production levels that happen in any particular region in any particular time, they come and go in waves. It varies year to year. I think our level of production within Québec and I know that we've provided information both to the Association themselves but also to you in the past have demonstrated that our levels are appropriate to the presence that we have in the region. Right now in fact we've ordered a drama last December of a new dramatic series, straight to series that's going to launch in the fall on CTV from a Québec-based production company, which is a co-production with a Toronto-based company. We also have --

2215   COMMISSIONERS MENZIES: Is it an English language?

2216   MS COE: Yes. English language, yes, called Played. I'm excited about it.

2217   COMMISSIONERS MENZIES: So your answer is that you do that when it works?

2218   MS COE: Yeah. Yeah. We also have two English language --

2219   COMMISSIONERS MENZIES: And that no set number is required?

2220   MS COE: Yes.

2221   COMMISSIONERS MENZIES: Okay. We'll talk to them about that.

--- Rires

2222   COMMISSIONERS MENZIES: Intangible, you've touched on this a little bit with the Chairman, so I don't want to waste much time with it, but I -- and if you provided it and I missed it in translation, my apologies, but I just wanted to know the number of positions that would be working in the French language market at your headquarters in Montréal and in Québec in general and how that compares with today. You don't need to answer that right away. Tomorrow is a busy day and that shouldn't be too difficult to come up with.

2223   MR. BIBIC: We'll have to come back to you on that.

2224   COMMISSIONERS MENZIES: Yes.

Engagement

2225   COMMISSIONERS MENZIES: And again, this might have been touched on. The responsibilities were discussed, I know, but would there be any staff in Montréal involved in the English language market?

2226   MR. BIBIC: There would. There would be, although there's, of course, CTV Montréal.

2227   COMMISSIONERS MENZIES: Right. But not under the Astral? Would they be all reporting to the same person?

2228   MR. GREENBERG: Presently -- sorry.

2229   COMMISSIONERS MENZIES: Sorry.

2230   MR. GREENBERG: At present all our programming in Québec is in the French language, so, therefore, everything English is done in Toronto.

2231   COMMISSIONERS MENZIES: Okay. Thank you.

2232   We're getting there, sorry. The -- you stated that as an intangible benefit, that you commit to keep all of Astrals in B.C. as local television stations open through the end of their licence terms, I think it's 2016 and 2017 respectively, and maintain current levels. This is going to be a little blunt, but it would strike some people that how does it represent a tangible benefit to buy something and then promise not to kill it?

--- Rires

2233   MR. BIBIC: Well, it's an intangible benefit.

2234   COMMISSIONERS MENZIES: Or sorry, intangible benefit.

2235   MR. BIBIC: Yeah.

2236   COMMISSIONERS MENZIES: Yes.

2237   MR. BIBIC: And we --

2238   COMMISSIONERS MENZIES: I misspoke.

2239   MR. BIBIC: -- when we acquire CTV, we, of course, acquire conventional stations and we acquired radio, and we acquired specialty services. So we acquired the entire mix. The conventional stations, as you appreciate, are stations that struggle, particularly in smaller communities, and we've had these debates several times. And then LPIF came in to help support them, and then LPIF is going to be phased out. So these stations tend to be, you know, at risk, and what we're saying is we will step up and guarantee that they will not be shut erred in any of the communities in which we operate them and we'll add the two Astral stations to that commitment. So it is a very big intangible commitment, in our view, particularly --

2240   COMMISSIONERS MENZIES: Okay. It does lead me -- it does lead one to the conclusion, intended or otherwise, that come 2016 and 2017 some difficult decisions are planned. And that --

2241   MR. COPE: No, I wouldn't infer that.

2242   COMMISSIONERS MENZIES: -- these are mature assets and you don't see a long-term future.

2243   MR. COPE: We wouldn't infer that at all. We're just trying to get additional commitment and comfort for this transaction. We just have to pick those time frames that are -- these are -- these intangible benefits were not there before, they are now.

2244   COMMISSIONERS MENZIES: So we'll --

2245   MR. COPE: It's just adding to help the transaction to Bell's commitment to the marketplace.

2246   COMMISSIONERS MENZIES: So do you intend -- I mean, in addition to meeting the --

2247   MR. COPE: I don't know the answer to that.

2248   COMMISSIONERS MENZIES: -- regulatory requirements and is it in your business plans right now, for instance, continually investing in sort of Evergreen capital projects and that sort of stuff and --

2249   MR. COPE: Yeah, without a doubt we have $6 billion in --

2250   COMMISSIONERS MENZIES: -- people get new carpet when they need and that sort of thing?

2251   MR. COPE: We have $6 billion in the media industry. No one is more committed at trying to keep these assets working than we are in Canada.

2252   COMMISSIONERS MENZIES: Thank you.

2253   Programming champions we touched on. Regional offices were touched on a little bit. I would -- I do have a question on that. In terms of those regional production offices, particularly the ones in Vancouver and the ones in Halifax, and I don't want to overreact, but, Mr. Coe, you mentioned that Canada is a small country and I think we can all agree it's a relatively small market. But for those of us who take four or five hour plane rides on a regular basis, it's a pretty big country and that's a real challenge for people trying to pitch ideas, whether they're from Winnipeg, Saskatoon, Edmonton, whatever, and they might be asking where they go and I need to know how to answer that question. And why you've got one regional office in Halifax that's -- which is -- I'm not saying these are bad ideas, but which supports 2.3 million people in the Atlantic to have access and then you've got one office in Vancouver, which is it intended to be the go-to place for everybody west of the Ontario border? Because that's about 9.8 million people now, right? And I'm trying to see how that's -- how that works equally and in terms of access and where to direct those people if they wish to... Because they are not unknown to us and will ask such questions and I need to know how to answer that.

2254   MS COE: And it's totally fair to ask those questions. So the plan is for the Vancouver person, as we did in previous years too when we had a Vancouver development office, to spend some of their time making sure that they're travelling regularly to Calgary, Edmonton, Regina, Saskatoon, Winnipeg, to try and make sure that those have --

2255   COMMISSIONERS MENZIES: You know it's a shorter flight from Winnipeg to Toronto than it is from -- to Vancouver.

2256   MS COE: It is. Well, there's more.

2257   COMMISSIONERS MENZIES: Okay.

2258   MS COE: There's more. There's also those of us in Toronto and we do try and travel as much as we can and we need to because this isn't going to be just a regional where there's one or two regional people who -- you know, the development officers and the regional situation is theirs alone to consider or keep top of mind. This is something that all of us do. And so we meet regularly with producers from across Canada. Sometimes we travel out, sometimes they happen to be in town. Other times we meet them at places like Prime Time or at Banff, or at Hot Docs or at Yorkton, or at the Vancouver Film Festival. So we do what we can to try and make sure that we're getting out there. These two extra people will be a chance for us to get even deeper into those areas and see if there's some new talent or new people, or emerging producers or established producers that we just haven't either met yet or developed --

2259   COMMISSIONERS MENZIES: Okay. I'm still kind of just trying to get a sense of detail on that because in part, and this -- I'm not saying you're not saying that you do everything you can, but they want you to do more, and they -- or I mean having a Vancouver office for people from Calgary or Edmonton, for instance, I mean you can go out in the morning and you can have your meeting and you can fly back the same evening. It's done very frequently by business people there and it -- because it's cost efficient it's far more efficient for people to be able to do so and they would enjoy that, so ...

2260   MR. CRULL: Commissioner Menzies, I think that, you know, first of all we have to balance. We have a principle that our focus is to spend money on screen, in air --

2261   COMMISSIONERS MENZIES: Yeah.

2262   MR. CRULL: -- and to put money into content, and so there's a little bit of balance here. This is an incremental addition to what we do today. We had this discussion three years ago in the CTV acquisition and we felt at that time that our outreach program, in addition to the electronic means of communicating today, gave us the reach. In the intervening period we've listened and we've said, okay, we -- this is an incremental add of those two offices. I think it'll be a great improvement, but I also think that our track record of working with 174 different independent producers says that we're accessible and we're looking for the best ideas no matter where they come from.

2263   COMMISSIONERS MENZIES: Okay. I understand that. I mean, there is -- that that's your position on it at least and that's what I need in this process is to understand what your position is. Thank you.

2264   Okay. I think we're near the end. Many interveners have expressed concern and asked that the Commission impose more strict reporting requirements, and this would be the chart that you were given earlier today. So should the Commission impose a condition of license relating to the filing of a thorough annual report on your tangible benefits spending? If not, why not, and please comment on the possibility of including information, I think it's on the chart but it's such as genre, region, language, service on which the program was broadcast, information about the producer, OLMC production and having the report signed off by an officer of the corporation. I need your comment on that, please.

2265   MR. BIBIC: Commissioner Menzies, is this one where it's possible to respond in writing?

2266   COMMISSIONERS MENZIES: Yes.

2267   MR. BIBIC: I -- and we did received it earlier today. I haven't had the opportunity to look this one over and I would like to before we respond.

2268   COMMISSIONERS MENZIES: Yes, of course. I leave the date setting to the Chairman.

--- Rires

2269   COMMISSIONERS MENZIES: But let's be original and talk about the second on Wednesday morning. Yeah, that's good.

2270   MR. BIBIC: Thank you.

Engagement

2271   COMMISSIONERS MENZIES: Yeah.

--- Rires

2272   COMMISSIONERS MENZIES: Thank you very much. That's all my questions.

2273   THE CHAIRPERSON: Well, other than you going away with a lot of homework for the beginning of the day on Wednesday, I think those are our questions for today, so thank you very much. I know it's been a long day, but we really wanted to finish Phase I of the hearing so that we're adjourned until 9 o'clock tomorrow morning so that we can attack Phase II.

2274   Thank you very much.

--- L'audience est ajournée à 1812 pour reprendre le mardi 7 mai 2013 à 0900

STÉNOGRAPHES

Kristin Johansson

Monique Mahoney

Jean Desaulniers

Sue Villeneuve

Date de modification :

2013-05-07