CANADIAN RADIO-TELEVISION AND

TELECOMMUNICATIONS COMMISSION

 

CONSEIL DE LA RADIODIFFUSION

ET DES TELECOMMUNICATIONS CANADIENNES

 

Public Hearing/Audience publique

 

Call for applications for a broadcasting licence to carry on a television programming undertaking to serve all or any one of Toronto, Hamilton and Kitchener, Ontario/Appel de demandes de licence de radiodiffusion visant l'exploitation d'une entreprise de programmation de télévision pour desservir chacune des villes Toronto, Hamilton et Kitchener (Ontario) ou l'une d'entre elles

 

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                              VOLUME 3 

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HELD AT:            TENUE A:

 

Hamilton Convention      Centre de conférence

Centre              d'Hamilton

 

 

Hamilton, Ontario          Hamilton, Ontario

 

December 5, 2001             5 décembre 2001

 

 

BEFORE/DEVANT:

 

A. Wylie            Chairperson/Président

M. Wilson           Commissioner/Conseiller

B. Cram             Commissioner/Conseiller

J. Pennefather                  Commissioner/Conseiller

S. Langford            Commissioner/Conseiller

                  _ _ _

 

D. Rhéaume             Legal Counsel/

                    Conseiller juridique

 

M. Amodeo           Hearing Leader/Hearing chef

 

P. Cussons             Hearing Manager/Gérant

                    Secretary/Secretaire
DISCLAIMER

 

 

 

 

TRANSCRIPTS

 

 

 

In order to meet the requirements of the Official Languages Act, transcripts of proceedings before the Commission will be bilingual as to their covers, the listing of the CRTC members and staff attending the public hearings, and the Table of Contents.

However, the aforementioned publication is the recorded verbatim transcript and, as such, is taped and transcribed in either of the official languages, depending on the language spoken by the participant at the public hearing.

 

 

 

TRANSCRIPTION

 

 

 

 

Afin de rencontrer les exigences de la Loi sur les langues officielles, les procès-verbaux pour le Conseil seront bilingues en ce qui a trait à la page couverture, la liste des membres et du personnel du CRTC participant à l'audience publique ainsi que la table des matières.

Toutefois, la publication susmentionnée est un compte rendu textuel des délibérations et, en tant que tel, est enregistrée et transcrite dans l'une ou l'autre des deux langues officielles, compte tenu de la langue utilisée par le participant à l'audience publique.

 

 

 

Canadian Radio-television and Telecommunications Commission

 

Conseil de la radiodiffusion et des télécommunications canadiennes

 

Transcript/Transcription

 

Public Hearing/Audience publique

Index of Proceedings/Index de la séance

 

                                                                                                                                                                          Paragraph

 

 

Opening remarks by Ms. A. Wylie/                        1760-1761

Remarques d'ouverture par Mme A. Wylie

 

 

Presentation by Torstar Corp./                    1762-1796

Présentation par Torstar Corp

 

Questions from the Panel/                                          1797-2345             

Questions du Panel

 

Questions from Mr. Rheaume/                                          2346-2365

Questions du M. Rheaume

 

Comment by Mr. Prichard/                                                   2366-2372

Commentaires par M. Prichard

 

Comments by Mr. Cussons/                                                    2373-2383                           

Commentaires par M. Cussons

 

 

Presentation by CFMT TV                                                        2384-2409

Présentation par CFMT TV

 

Questions from the Panel/                         2410-2753

Questions du Panel

 

 

Intervention by Global Communications/                        2754-2772

Intervention par Global Communications

 

Intervention by Alliance Atlantis Broadcasting/          2773-2782

Intervention par Alliance Atlantis Broadcasting

 

Intervention by Craig Broadcast Systems Inc./          2783-2807

Intervention par Craig Broadcast Systems Inc.

 

Intervention by Torstar Corp./                                  2808-2818

Intervention par Torstar Corp.

 

Intervention by CFMT/                                                       2819-2852

Intervention par CFMT

 

Closing remarks by Ms. A. Wylie/                                  2853               

Remarques de commo par Mme A. Wylie  

 

--- Upon commencing at 0834/L'audience débute à 0834

              1760 THE CHAIRPERSON:  What an orderly crowd.  Good morning and welcome back to our hearing.  I don't even have to call you back to order anymore.  Mr. Secretary?

              1761 MR. CUSSONS:  Thank you, Madam Chairperson.  We will now hear applications by TDNG Incorporated, Torstar, for licences to operate English language television stations in Toronto, Hamilton and Kitchener.  The new stations would operate on channel 52 with an effective radiated power of 14,700 watts for Toronto, channel 16 with an effective rated power of 3,200 watts for Hamilton and channel 39 with an effective radiated power of 59,000 watts for Kitchener.  At least 80 per cent of the programming aired by the stations would be Canadian, each station would broadcast a minimum of 32-and-a-half hours per week directed to the communities in its coverage area.  Local and regional programs would make up all but eight hours of the station's services.  The Commission notes that Torstar is involved in the newspaper business, namely with the Torstar daily news group, including The Toronto Star, The Hamilton Spectator and The Kitchener-Waterloo Record.  The Commission may examine, among other things, the potential impact of cross-media ownership on diversity of voices in the markets that Torstar serves.  We have Mr. Galloway and his team.  Mr. Galloway, welcome.

PRESENTATION BY DAVID GALLOWAY, TORSTAR CORP./

PRÉSENTATION PAR DAVID GALLOWAY, TORSTAR CORP.:

              1762 MR. GALLOWAY:  Madam Chair, members of the Commission.  My name is David Galloway and I am chief executive officer of Torstar Corporation.  We are really pleased to have initiated this proceedings with the filings last December for licences to operate local television undertakings in Kitchener, Hamilton and Toronto.  We are proud of our vision for Hometown Television.  As a company with a significant presence in Kitchener-Waterloo, Hamilton and Toronto, and as residents of these communities ourselves, we are fully committed to these applications.  We believe they merit a decision by you to grant us the first new local television licences for the general population here in almost 30 years.

              1763 May I now present the members of our team, those who have been active in laying the groundwork for Hometown Television and who will be speaking today, as well as a number of those who are present here in the audience.  First, I would like to introduce Rob Prichard, president of Torstar Media Group, chief operating officer of Torstar, and my designated successor as chief executive officer of Torstar Corporation.  As I will be passing the reins to Rob before the channel launches, he will be leading our presentation today.  I might add, Madam Chair, according to The Globe and Mail, Rob may be leaving with me.

              1764 THE CHAIRPERSON:  Obviously a poor newspaper.

              1765 MR. GALLOWAY:  To Rob's left, and your right, is Eric Rothschild, our long-time consultant whom you know well.  Eric has been a senior executive with Maclean Hunter Ltd., and  Maclean-Hunter Broadcasting and Newsradio.  He is past president of Radio and Television News Directors' Association of Canada.  We are delighted to announce that Eric has agreed to join Torstar as a senior executive if we are successful in obtaining the licences we are seeking.  To Rob's immediate right, and to your left, is Don Shafer, vice-president and general manager of Torstar Media Group for TMG TV.  Don is a veteran broadcaster with more than 30 years' experience, and a past president of the Ontario Association of Broadcasters.

              1766 Next to Don is Rekha Shah, who has been involved in children's television as a performer, then as a producer, since she was 11 years old.  She is now director of program development at TMG TV.  To Rob's far right, and to your left, is Donna Skelly, president of News4Hamilton, our successful, interactive local news service with streaming video capability.  She is a former news anchor at CHCH-TV, with 21 years' experience in broadcasting in Ontario and Quebec.  Donna is advising us on program development for Hometown Television, Hamilton, St. Catharines, and Niagara. To Rob's far right - I'm sorry, to Rob's far left and to your far right is Jennifer Lynn, president of Lynn Communications, a diversity and community specialist and chair of the United Way of Greater Toronto.  A native of Kitchener-Waterloo and a former television executive, Jennifer is leading our outreach and feedback activities in the community and will be helping us to organize our community awareness forums.

               1767 To my left is Nancy Brown-Dacko, director of sales for TMG TV and vice-president of the Ontario Association of Broadcasters.  Nancy has managed broadcast sales for southern Ontario for more than twenty years.  She will be responsible for selling advertising on Hometown Television.

               1768 Next to her are Rob Young, partner in HYPN, one of Canada's largest media buying houses, and Jeff Vidler, partner in Solutions Research Group.  As vice president, media, at Ipsos-Reid, Jeff oversaw the viewer research file with our applications.  To my immediate right is Gord Haines, an experienced media executive who has served as chief operating officer of Alliance Communications as well as director of news and information programming in the early days of CITY-TV.  Beside Gord is Paul Osborn, president of Electric Entertainment, a respected independent production house which has provided successful programming to several networks over the past decade.  Paul has been a producer at CFTO, a news producer for CITY-TV and a broadcast executive for CFMT and CHCH with responsibility for commissioning programs.

              1769 At the side table are a number of very capable members of our team who are available to you in case you have questions in their areas of expertise.  We have filed a seating chart with you as well as a list of their names and titles.  They will be more formally introduced as they are called upon.  We are very pleased today to have in the audience the publishers of our daily newspapers, John Honderich, publisher of the Toronto Star, Yogoda Pike, publisher of the Hamilton Spectator, Fred Kuntz, president of the Kitchener-Waterloo Record, and Andrew Go, president of Torstar Business Ventures and publisher of Sing Tao, our Chinese-language daily.  Also with us today is Dr. John Evans, chair of the board who is no stranger to Hamilton.  We are also delighted to have Ruth Anne Winter, a director of Torstar Corporation and a member of our Voting trust here with us today.  Madam Chair, that is our team. I will now ask Rob Prichard to begin presenting our applications.

              1770 MR. PRICHARD:  Madam Chair, members of the Commission, we come before you today with great pride and anticipation.  We are presenting what we believe are groundbreaking applications in Canadian broadcasting, a return to the roots of local television.  We call it Hometown Television.  These are our applications for three new conventional television stations.  But they're also our application for admission to the family of Canadian broadcasting.  So let me begin by telling you a little bit about our company, Torstar Corporation.

              1771 Torstar is a private sector business with a very strong public service mandate and tradition.  We are a multimedia company with a major presence in newspapers, electronic media and publishing.  We have a history that stretches back more than a century.  We have over 7,000 employees.  We have a strong balance sheet and the financial resources necessary to make significant long-term commitments, and we are ready to make those commitments to the Canadian broadcasting system.

              1772 The Toronto Star, our flag-ship newspaper, is Canada's largest daily newspaper.  As a legacy of our founder, Joseph E. Atkinson, it stands for a proud and independent Canada, for social justice, individual rights and for strong communities, values that resonate with those  that underlie the Broadcasting Act.  Early in the 20^th century, under Mr. Atkinson's leadership, we took the lead on public health, integrity in government, and dignity and safety in the workplace.  We have fully embraced the broad, ethnocultural diversity that makes our communities such cosmopolitan and dynamic places to live, and would be leaders in interpreting and celebrating this new reality.  We're very proud that our editorial journalistic practice reflect the realities of the communities we serve.  Toronto is one of the most diverse cities in the world and, similarly Hamilton and Kitchener-Waterloo, draw great strength and vibrancy from their diversity.  In all three of these communities we have moved beyond notion of minorities at the margins to full engagement of all citizens as equal participants who enrich us as one community.

              1773 At Torstar, we believe deeply that us means all of us.  Hometown Television can make a profound difference by bringing this belief and this reality to the television screen.  Our application brings forward a new concept of local television that does not currently exist on the Canadian media landscape.  We will build three new full service television stations and some 300 jobs in Kitchener-Waterloo, Hamilton and Toronto.  We will create major new opportunities for independent producers and stimulate new economic activity.  We will add an important new element and voice to Canadian broadcasting and diversify the television dial.  We bring to these applications an unmatched depth of knowledge and relationships in these communities, born over a century of service to them.

              1774 Torstar's daily newspapers in Toronto, Hamilton, Kitchener, Guelph and Cambridge are rich public resources.  Our newspapers generate pictures and vast amounts of information analysis and entertainment every day.  Our archives and our web sites are the living history of our time, but television is the missing link.  Torstar's vision is to be the premiere source of local and regional news, information and entertainment in southern Ontario regardless of the medium people choose to use.  And drawing on our own resources, and on the best of the independent production community and Canada we will offer the deepest, broadest, and most Canadian local and regional television service that the Canadian broadcasting system has ever seen.

              1775 In our convergent strategy, Hometown Television will work alongside our newspapers to leverage our content and promote our programming.  Our 40 existing web sites are thriving.  They rank among Canada's most successful.  Thestar.com alone enjoys over 200 million page views a year.  Meeting on the web, Hometown Television and our newspapers will offer users much more than the sum of their individual parts.  Video will enrich their web experience and, in turn, expanded information from our newspapers will bring depth to the video.  Users can start with video, and then drill down into the newspapers to learn more about a particular subject or issue.  From there they can move to chat rooms, the share opinions on an issue, to vote in on-line polling or to gather additional information through hyperlinks

              1776 We are, Madam Chair, delighted with the team we have begun to assemble and confident they will be able to turn our plans for television into a reality.  But before I turn to my colleagues, I wish to address two issues that have arisen in the discussion leading up to this hearing.  Some have argued that the markets we wish to serve cannot absorb a new television station, in part as a result of the tragic events of September 11^th.  We do not agree.  Toronto television revenues are up 7.2 per cent in 2001.  Sources ranging from the Bank of Canada, the Bank of Montreal, RBC Dominion Securities to the Retail Council of Canada and the International Monetary Fund are all predicting that the softening of the economy that we are currently experiencing will not last.  They disagree only on whether the upturn will come in the latter half of 2002 or early in 2003.  Growth in 2003, when we would be launches our stations, is expected to average 4.1 per cent in Canada and 3.9 per cent in the United States.

              1777 Furthermore, the Golden Horseshoe, in which we sit today, is one of the largest, most prosperous and fastest-growing urban areas in all of North America.  According to our studies, in the past decade, only the Los Angeles area grew faster than the Golden Horseshoe.  Every projection we know shows that the Golden Horseshoe will experience vigorous and substantial economic growth over the next decade.

              1778 In its intervention the Association of Canadian advertisers stated clearly that its members will support new conventional stations in this market.  And the evidence shows that the Golden Horseshoe can readily absorb new local television licences and that our original growth assumptions are realistic and achievable.

              1779 The second issue I want to address is the suggestion that Canadians won't watch programming about themselves in prime time.  Again, we simply disagree.  We have conducted extensive market research on our programming schedule.  We have tested it, we've retested it and we're absolutely confident that people will watch.  Compelling Canadian stories and local reflection have been the foundation of our success in our newspapers for over a century.  And we believe that they will work just as well in television.  And we believe it will work in prime and peak viewing times.  Our business model is built on modest shares of tuning, but it is a robust financial model.  It's been tested both internally and externally.  The evidence shows both deep and broad appeal for Hometown Television version of local television which translates into a very sound business.  People want to see themselves and their communities on television.  We will use the unparalleled capacity of our daily newspapers and web sites in Toronto, Hamilton and Kitchener-Waterloo to promote our television schedules so that our communities will know that they can see themselves, and so informed, we believe they'll watch.  We can and we will deliver all of this and we look forward to showing you how we plan to do it.  Eric?

              1780 MR. ROTHSCHILD:  Thanks, Rob.  As Rob said, what we propose is a return to the roots of television, full-service television for the whole family.  The kind of local television programming that has disappeared from our screens.  It goes way beyond local news.  Here's what I'm talking about.  Alanis Morrissette got her start on CJOH's Homegrown Café.  The polka king, Walter Ostanek, might never have come to light if not for CKCO's Polka show.  And CHCH's Tiny Talent Time launched artists as diverse as Frank Augustyn and Deborah Cox.  A young Sheila Copps appeared on the show as well.  These programs were the training grounds for our national talent pool.  But they have disappeared. It certainty wasn't for lack of interest.  Homegrown Cafe was still attracted viewers in Ottawa when it was cancelled in the late 1990s.  We need training grounds to nurture future stars.  Our Star Search will do that.  We will also work with schools to revive the Reach for the Top tradition.  And we will provide a safe haven, commercial-free block of children's programming every morning.  It's a broad and full schedule, the likes of which we haven't seen for years.

              1781 Our research found great demand for our approach.  We crafted a schedule for Hometown Television which married our vision of community with the demand we found in the research.  We tested these program concepts with an unusually large sample, 2,800 people.  The results were overwhelming and consistently positive.  87 per cent of respondents said they would watch the kind of television we are proposing if it were available.  More than 800 letters of intervention backed up the research, many right down to specific program titles.  A large number of interveners also expressed trust in the Torstar brand, our track record in the community, and confidence that we would offer truly meaningful local programs.  The demand is clearly there.  We promise an unprecedented level of local and regional programs throughout the schedule, including prime time.  We will be overwhelming Canadian:  a minimum of 80 per cent at all times.  Our schedule contains 32-and-a-half hours of local programs and 85 and a half hours a week of regional programs that will be aired on all three stations. This sets a new standard for Canadian television.

              1782 Our schedule is grounded in news and information programming, each station will offer 16 hours a week of local news, with 16 and a half hours a week of local, non-news programming.  These non-news shows include a daily Canadian entertainment magazine which we call What's On.  It's a local cultural and social bulletin board.  And My Town, our daily roundup of issues and concerns in each community.  These local programs will be supplemented with regional programs:  Day's End, an evening news and public affairs show, Talk Time, a hot seat show that will focus on issues of the day, and a nightly documentary, Monday to Friday, in prime time.

              1783 In Kitchener-Waterloo and Hamilton, Hometown Television will be a new, local alternative.  People tell us it's long overdue and while Toronto has many stations, virtually every one has gone regional.  It's time for an alternative.  Rekha?

              1784 MS. SHAH:  Thanks, Eric.  I started working in exactly the kind of local television that Eric has just evoked:  CJOH in Ottawa, 16 years ago, in its heyday as a local station.  It was great.  I responded to an ad in the Ottawa Citizen and found myself working on local shows and children's shows like Nickelodeon's Fifteen and You Can't Do That on Television.  I have been with Torstar Media Group for just under three years, nearly since the beginning of the division's existence.  Throughout that time, I have been encouraged to develop my own production ideas.  It's because I had all these opportunities that I was able to become an independent producer with a successful series under my belt in both French and English by the time I was 26.  You haven't lived until you have applied for the tax credits, the funds, maxed out your credit cards and struggled to find a distributor for your project.  So I had some understanding of what it takes to work with independent producers.  This experience from the ground up has helped me enormously in developing programming for Torstar, building bridges, devising creative, distinct and marketable content with a shelf life and adding value through promotions, communications and advertising.  All this takes time, but the response is beginning.  For example, we're developing shows with Christopher Hume, the Star's art and architecture critic and resident pop culture guru. 

              1785 Our challenge will be to develop compelling programs that people want to watch and advertisers want to buy, much of it through the creative efforts of independent producers.  In fact, our program schedule will rely on the small and medium-sized independent producers.  Over the course of the licence term, we will spend 86 million dollars to commission regional programs.  We will offer shows for preschoolers, teens, 'tweens and seniors and all of our shows will offer information and entertainment that is meaningful right here.  Food you can find in local grocery stores.  Plants that are hardy in our climate and issues that are relevant our kids and our schools.  Don?

              1786 MR. SHAFER:  Thanks, Rekha.  The idea of having something new for everyone may be an old one, but the time has come to breathe new life into it.  As others have regionalized across the province, they've abandoned this full service approach to programming.  We see this as a tremendous new opportunity.  Viewers are wanting more and more intensely local television.

              1787 Advertising and media buyers also want and need more local air time.  My colleague, Nancy Brown-Dacko, meets clients on a regular basis.  Many of them have told her they can't buy air time that is just for Hamilton, just for Kitchener-Waterloo or just for Toronto.  What local retail group wants to pay for access for an audience too far away to serve?   Why pay for Sudbury and Ottawa if you only want Toronto?  We can offer them advertising that is cost effective and reaches the target markets they really want to reach.  That is a valuable missing piece in the system.

               1788 As we were preparing for these hearings, we made presentations and met personally with many of the elected representatives,  more than 150 of them at the federal, provincial and municipal levels.  We also met with many communities groups.  This confirmed for us that Hometown Television is truly different.  Our presentations were well received; they stimulated meaningful discussion and enthusiastic support for various ideas.  Twenty-two of our letters of support came from municipal councillors, mayors, cities or regional councils, MPPs and MPs. I also experienced firsthand the enthusiasm for our programming proposals from people in community meetings and on the streets in Kitchener-Waterloo, Hamilton and Toronto.

              1789 Jennifer Lynn helped us reach out to ethnocultural communities in our region.  She and I attended the annual meetings of the Kitchener-Waterloo Multicultural Centre which represents about 50 ethnocultural organizations in the area.  We talked about our application, about our ideas, and about how we could help each other by creating better programming that told their stories both on and off the air.  Many provided terrific unput and ideas and many provided strong letters of support.  Jennifer?

              1790 MS. LYNN: Thank you, John.  My home town is Kitchener.  This community, with its region, has changed dramatically over the years, and today is a vibrant and special place with extraordinary community spirit and diversity.  It is home to two universities, Waterloo and Wilfrid Laurier, and Conestoga College, where I'm vice-chair of the broadcasting courses program advisory committee.  It's also home to an extraordinary high tech community.  The RIM Blackberry, currently the world's hottest communications device, and probably the favourite among many in this room, is one this region's well-known exports.  And in fact, the founder of RIM, Jim Balsillie, has provided strong support for our application.  I am especially proud of the 1997 Caring Communities Award given to my home town.  Why?  The rate of volunteerism in Kitchener-Waterloo is higher than anywhere else in Canada.  One in three citizens of Kitchener-Waterloo is a highly engaged and active volunteer.  That's bound to make a difference in building community and improving the quality of life, and it does.  The reason why so many of my friends at the Kitchener-Waterloo Multicultural Centre support Hometown Television is simple:  They feel it is time for an approach that embraces our multicultural reality.  They want to be included.  And they have so much to contribute.

              1791 I have been working with Torstar to develop realistic and effective outreach and follow-up mechanisms.  Hometown Television's community awareness forums will guide and shape our policies, program content and practices.  As a community advisory mechanism and reality check, they are designed to be the lens of community and an instrument for proactive engagement.  As our communities evolve, so will Hometown Television.  The community awareness forums will be an integral part of all that our organization does, to ensure inclusivity, balance and local reflectiveness through constant feedback.  Station management will compile this feedback with issues raised by the community awareness forums and through programs like My Town, Day's End and Talk Time.  Twice a year, based on all this input, we will host a community town hall to delve into these issues of concern.  The town halls will be telecast and webcast, encouraging the broadest possible participation.  Our commitment to our true diversity will bear out in our recruitment and hiring policies and practices, on-air representation and in a whole range of rich and often untold stories.

              1792 I am thinking about the woman from Bosnia who survived the atrocities of war and built a new life in Kitchener by establishing an inspirational support group for young women who bear the scars of similar, unthinkable situations.  And I am thinking of Eleanor Rodney, one of 30 teachers recruited from the Caribbean 40 to 50 years ago to remedy the shortage of teachers in Hamilton schools.  They taught in classrooms where there were virtually no children and students of colour.  And I am thinks of Jamiesons of Six Nations, who count among their family an astonishing number of super achievers.  These are the home town stories just waiting to be told.  As Don mentioned, we met with many community organizations and individuals representing the microcosm of communities Hometown will reflect.  They are excited, as I am, about the concrete plan behind our promises and the proactive role the communities will play.  Donna?

              1793  MS. SKELLY:  Thank you, Jennifer.  My home town is right here in Hamilton.  It's a unique city and we're very proud of it.  As you know, Hamilton is a strong industrial town based on the steel industry with a solid intellectual and cultural component.  And we have inherited KW's first place for volunteerism.  Our university, McMaster, is known for many great achievements.  Under the founding dean of its medical school, Dr. John Evans, it developed the case-based method of medical education later adopted by Harvard University and now the standard for leading medical schools around the world.  Our opera and our theatre groups are perhaps the best-kept secrets in southern Ontario.  And of course the Niagara region with its award-winning wine industry has become a national treasure.  Do we see ourselves on television?  Well not nearly as much as we'd like to.  And that's why I started news4hamilton.com.  If Hamilton wasn't located next to Toronto, I am sure we would have had a second local television station here years ago.  When I first read the Hometown Television application two things jumped out at me.  First, as a mother, I absolutely loved the idea of the 10 hours a week of commercial-free kids programming.  But secondly, as a Hamilton news anchor and producer, I was pleased to see that the orientation of the local programming was not towards Toronto, but rather towards St. Catharine's and Niagara.  You have to remember that the Niagara region has a population of 400,000 people and is greatly underserved at this time.  Hometown Television will address this by opening a St. Catharines bureau to be the station's eyes and ears there.  That means our assignment desk in Hamilton will follow developing events throughout Niagara, deploying resources as needed.  This is one of the reasons we receive such tremendous support from the Niagara region.

              1794  Many independent producers in Hamilton also supported us.  They are encouraged by Hometown Television's plan to commission programs from independent producers.  In my experience as an anchor, a mother and as a resident of Hamilton, and the owner of the only independent local news web site in the city, I believe this is a very strong application and just what my home town needs.  Rob?

1795  MR. PRICHARD:  Madam Chair, before we conclude our presentation, we want to present a short video produced by my colleague, Rekha Shah.  We hope it will convey the programming excitement we feel about our proposed new television stations.

Video presentation / Présentation video

1796           MR. PRICHARD:  In closing, Madam Chair and Commissioners, we have put before you applications which we believe will set a new high-water mark for Canadian television.  We offer local and regional service that meets the needs of viewers, advertisers, and a Canadian broadcasting system, powered by the promotional tools, the editorial resources, the financial stength and the unequivocal commitment of a great Canadian multimedia enterprise.  Torstar's roots lie in The Toronto Star which was founded as the paper for the people.  In that tradition, Hometown Television will be television for the people.  Hometown Television offers an opportunity:  an opportunity to broaden and diversify the television dial, an opportunity to take television back to its roots.  An opportunity to demonstrate that Canadian content and Canadian stories can deliver compelling and financially successful television.  An opportunity to attract a new generation of Canadian talent to television production.  An opportunity to set new standards of commitment to the central goals of Canadian broadcasting.  And an opportunity to strengthen and broaden the Canadian broadcasting system by adding a strong, stable, respected and trusted new voice.  We thank you very much for your attention and the privilege of appearing, and we await your questions.

1797          THE CHAIRPERSON:  Good morning, Mr. Galloway, Mr. Prichard and your colleagues.  Before we proceed, we want to thank you for your patience for accomodating the change in our agenda.  I suppose, in the vernacular, one advantage is, now you know where we're coming from.  Or more elegantly, our questions will have a familiar ring.  If you have no objection, I will refer to you, the applicant, as Torstar which is easier for me than TDNG Inc., if that's okay because it's a shorter word, and more easy, or Hometown, of course.

QUESTIONS FROM THE PANEL/Questions du Panel:

1798           Before we -- before I ask you more pointed questions of clarifications to increase our understanding of your application or clarify areas where we may not be entirely sure we understand what you have are proposing, I would like to ask you a few questions, as I did on Monday morning with the first applicant before us, about your strategy and you actually use somewhere in your -- in your supplementary brief the word vision or your approach.  And under that section of your supplementary brief which is at page 3, under vision, you call your proposal a new kind of  of local service.  And similarly, in schedule C which is attached to part two of your application, you talk of, I quote, "a new, truly local community-based television, TV service."  And this morning, again, in your opening remarks Mr. Rothschild referred to the kind of local television programming that has disappeared from our screen.  Would it be fair to say, then, that you have characterized your proposal as a departure from a conventional over-the-air TV station as we know them now?

1799          MR. PRICHARD:  We have characterized it as a return to the roots of local television.  Roots in the following sense:  That it will be local; second, that it will be comprehensive; that is it will have a comprehensive schedule from children to grandparents and everyone in between, and that it will be over the air.  We have also characterized it, because it's local and because of the special nature of our communities, the extraordinary diversity of our communities, that it will reflect the reality of those communities that's emerged over the past half-century in Toronto, Hamilton and Kitchener-Waterloo.  And that while returning to our roots, we will be reflecting that new reality.

1800          THE CHAIRPERSON:  Mr. Prichard, I don't think you would have given your students an A for this answer.  My question was, would it be fair to say that it is something other than, or departure from, conventional over-the-air television stations?

1801          MR. PRICHARD:  I will ask Mr. Rothschild is a better student.

1802          THE CHAIRPERSON:  I know you're anxious to tell us what your proposal is, but my focus right now is to ask, is it your view, considering the considerable positions that have been taken, that there is no need for a conventional station, I want to know if it's your view that this is not such an animal?

1803          MR. ROTHSCHILD:  Commissioners, when we say that we believe this is a new local service and a departure and a new vision, what we're talking about is the type of schedule that you see in front of you which is 80 per cent, minimum 80 per cent Canadian at all time.  Where we're talking about programming being seen through a local and regional links, the overwhelmingly through our local and regional links, that is a departure from a the traditional model: in the sense that the traditional model has a preponderance of American programming in evening prime time.  What we keep hearing that is that the model is driven by -- by acquired programmed, acquired foreign programming and that Canadian programming is something that is done and is done, but is not a money maker.

1804          Well this is a departure, this is very different we are saying that we believe we can develop compelling programming, compelling Canadian programming, that will attract an audience and that that can be the engine that drives our television stations.  So in that sense it's a conventional station but a very non-traditional model.

1805          THE CHAIRPERSON:  Mr. Prichard, you mentioned earlier that in your presentation that you don't accept the notion that the economy is on a downturn that will not recover in a relatively short term, and that you are more optimistic that it would, at the end of 2002 or the beginning of 2003.  So is one of the -- do you share the view that -- that at the moment, given the uncertainties that some parties express, that a conventional television station would not be in the economic interest of other licensees, for economic reasons?

1806          MR. PRICHARD:  To the extent that we are successful in attracting revenue that would otherwise have gone to existing stations, in that sense I agree.  Our application is unwelcome from their perspective.  That said, however, we believe that this market, these markets, the Golden Horseshoe in total, can readily support an additional -- these additional licences, in that the growth we anticipate over the next seven years in this area can support not only the existing licensees but these additional three licences that we propose.

1807          THE CHAIRPERSON:  So would it be fair to say, then, that the reason why an over-the-air conventional station or traditional station should not be licensed, your position would be more because it's not needed.  There is no demand for it, therefore it's not in the public interest to license one.

1808          MR. PRICHARD:  I am not sure I understand the question.

1809          THE CHAIRPERSON:  Well, there are -- there could be one reason that there would be undue -- undue competition and therefore a significant impact on the existing licensees to perform, is one idea put forward.  The other is that there is enough of conventional television and -- and the broadcasting system needs something else.  Would that be of more your position as to why you don't think a conventional station should be licensed?

1810          MR. PRICHARD:  Our position is twofold.  First, that the markets as an economic matter because of their growth, will sustain the additional licensees without undue disruption of the existing licensees.  That's on the economic side.  On the content side, yes, exactly.  We believe that there is a case for a distinctive new offering which we put forward for Hometown Television which will complement and supplement the existing offerings available in these three communities.

1811          THE CHAIRPERSON:  I would like to address now briefly, and in a general way, what you see as the distinctive characteristics of your proposal which makes it other than a conventional station.  Mr. Rothschild raised a few minutes ago the no-reliance on American programming and we can discuss that later.  What in your view are the other characterics of your proposal that distinguishes it and makes it a new kind of television?

1812          MR. PRICHARD:  In addition, as you say, up to the commitment to being Canadian and setting a new high-water mark in that respect, the second distinguishing feature of our application is the emphasis on local.  We are proposing three separate, full-service stations.  One -- one in each of the three communities for which we seek a licence.  And each of those stations will have a minimum of 32-and-a-half hours of local programming.  In a province and in an area where programming has moved from the local to the regional to the provincial, we believe this is the opposite.  We believe by grounding our stations locally with a minimum of 32-and-a-half hours in each of those communities, that is in addition to this area, the Golden Horseshoe, of 97 and a half hours of local television, we believe that is a very distinctive contribution.

1813          Second, and in addition to that, the thesis of these stations is that they will focus on and reflect constantly the local area and the region.  We believe the business case is not only to be Canadian content, but to be Canadian content about these communities, about the people in these communities, about the history of these communities to reflect the locale and the region through our programming because we think that is what's going to attract the audiences to what is unconventional in the sense they're so heavily Canadian.  So the central thesis that we put forward is that by reflecting the communities and the reality of those communities, the diversity of those communities, the richness of these communities, by reflecting that back not just through the local programming, but through all the programming, that that will be successful in attracting the audiences that we project in our application.

1814          THE CHAIRPERSON:  Would it follow from Torstar's position as expressed that there is a need in this particular licensing process to use regulatory or licensing mechanism to ensure that what we license as a non-conventional over-the-air television station is and remains a non-conventional television station as described?

1815          MR. PRICHARD:  We -- we believe we should and we welcome the conditions of licence that will ensure that what we say today is what we will do, and if we are back here seven years later, what we will have done.

1816          THE CHAIRPERSON:  Now [inaudible]

1817          MR. PRICHARD:  I'm grateful for your confidence, Madam Chair.

1818          THE CHAIRPERSON:  We can't ignore your past, Mr. Prichard, talk in terms you understand.  So we will proceed, then, with the particulars of your application and perhaps keeping in the back of your mind this little discussion as we go forward.  Now, of course Mr. Rothschild will have to be brought up for Mr. Shafer to scratch, since you supplied us with an application on our old application form.  So I hope your newspaper doesn't dare call us dinosaurs.  Of course we already revised it and you didn't take the opportunity.

1819          The reason I bring that up is that there is an important -- an important difference at part 2 of your application, which in the old days was called promise of performance.  In this round it will be required performance, not promise.  So at part 2, at five four, the commission used to ask licensees to provide what is their station's highest schedule, viewing time, viewing audience period and you have identified at 7:30 to 10:30.  As you know, in the policy we have defined peak for the purpose of imposing requirements during peak as 8:00 to 11:00.  So it's important as we speak to know what your commitments are when you talk about peak.  Is it 8:00 to 11:00 or is it 7:30 to 10:30?

1820          MR. PRICHARD:  Eric?

1821          THE CHAIRPERSON:  Because you use the words peak often.  I can't recall seeing you using prime, but peak is -- I would like to know so that we're not talking at cross purposes.

1822          MR. ROTHSCHILD:  We have taken it as the Commission's definition.

1823          THE CHAIRPERSON:  I am sorry, it's 7:00 to 11:00.  I was just testing to see if you were listening.

1824          MR. ROTHSCHILD:  We have taken the Commission's definition of peak viewing time as 7:00 to 11:00.

1825          THE CHAIRPERSON:  Your application, your schedule, your commitments are based on 8:00 to 11:00 -- 7:00 to 11:00, when you say peak.

1826          MR. ROTHSCHILD:  Commissioner, when you talk to us about our commitments in peak viewing time we're talking 7:00 to 11:00 as defined in the policy.

1827          THE CHAIRPERSON:  Okay.  Now, with regard to priority programming, there could -- I would like to make sure we understand.  Your commitment in your supplementary brief and in a variety , quite a number of places in your application, is eight hours at peak time but a commitment especially in your supplementary brief, I guess, where there is a part at page 2 there is a very easy-to-follow summary of your commitments, and you speak of 10.5.  So can you clarify for me the difference between eight hours in peak and 10.5, and when would that be, and whether they are both commitments you would be prepared to abide by?

1828          MR. PRICHARD:  Madam Chair, the difference between the two is the hours of priority programming within peak, eight, and outside of peak, two and a half.  The particular program, Eric?

1829           MR. ROTHSCHILD:  Commissioner, we have a Canadian entertainment magazine we call What's On which is scheduled during the day, in the morning and to air again in the afternoon.  And so that falls outside of the peak viewing time.

1830          THE CHAIRPERSON:  So the 10.5 would be over the broadcast day basically?

1831          MR. ROTHSCHILD:  Yes, Commissioner.

1832           THE CHAIRPERSON:  So you would be prepared to live with a commitment, even a condition of licence of 10.5 during the broadcast day, and eight hours during peak?

1833          MR. ROTHSCHILD:  We would.

1834          THE CHAIRPERSON:  And so if that entertainment magazine didn't work out you would have something else that would replace it somewhere in the schedule.

1835          Foreign programming is another -- another issue that -- it can be confusing.  In a deficiency letter of March the 9th, and there are two, so I am speaking of the one in answer to the Commission's question of January 30.  At page 10, you say that your schedule does not include foreign programming and that discussion, again, is in another deficiency response, that one of September 12, we are at page 1, you say your schedule does not include foreign programming.  However, once we get to September 18, 2001, which is the last response to a Commission question, you do discuss that you could do some foreign programming.  I understand that your Canadian content, your Canadian content commitment is 80 per cent, that you don't have any foreign programming in your schedule but of course the schedule is certainly not something that will live for seven years; it may not live for three months.  So we can't really rely on that.  This will sound like one of Ms. Cram's old questions.  If you did have foreign programming what would it be?  I guess the old joke is 'If you beat your wife, will you do it on Saturday?'

1836          MR. PRICHARD:  I think I will give this one to Eric, in light of that comment.  Let me be clear.

1837           THE CHAIRPERSON:  We will not do foreign programming but maybe we will, so if so, what would it be, what type, from where, where would it be scheduled?

1838           MR. PRICHARD:  I will clarify our position, and Eric will answer the very specific question.  With respect to our position, our proposal to you is that the condition of licence be 80 per cent Canadian at all times including prime time.  That, as you know, means even in peak time we will have to be at least 70 per cent Canadian.  So that's our proposal to you: 80 per cent Canadian at all times, including prime time, which translates because of the mathematics, to at least 70 per cent even in peak time.  Our schedule that we filed, our draft schedule, as you know, imagines all of our programming being Canadian.  And the difference then is between the 101 hours represented by 80 per cent and the 118 hours of schedule that we put in front of you.  And on that, our current plan and our intention is for that to be Canadian as well, but because of the very essence of conditions of licence, because of our unwillingness to be here ever other than in a complete compliance with our licence terms if you grant us the privilege of proceeding, we thought it prudent to leave ourselves that margin of flexibility between 101 hours and 118 hours.  And it's that to which there is the possibility that some of that could be filled with foreign programming.  We have not made budgetary provision for it.  That is, our budgets are based on doing all our programming, Canadian.  We don't see ourselves as a participant in the major buying of -- of foreign product because we haven't provided for it in our budgets.

1839          What we see is the possibility that there will occasions on which, whether because of interest in our regions of a particular subject matter, a matching of something in our area, to something that's being produced about another outside Canada that's comparable, we could imagine at the edge, at the margin in that degree of flexibility between the 101 hours and the 118 hours the possibility that we would run a non-Canadian program at that time.  In terms of purchasing it, Eric?

1840          MR. ROTHSCHILD:  Commissioner, first of all the 80 per cent we actually did include in the promise of performance, part 2, from the outset and we said that was our commitment as a going in -- a going into the regulatory process.  We are pleased to do 80 per cent.  We think that's what does make us very different from anybody else.  We wanted the 20 per cent to be able to apply our programming, as Rob says, that's relevant to audience and that could be added to our schedule.  Our schedule, as you see in front of you, is grounded in research that we did.  These are programs that people told us they would watch, but those needs and tastes will evolve over time and we're looking for some flexibility to do that.

1841          We see buying -- that you could see on Hometown Television relevant documentaries from A&E or BBC.  Broadcasters have approached us already to see if there is -- if they have additional programming, might we be interested in buying it from them. There are independent distributors who we have spoken to who have said they have product that could be relevant and in keeping with our approach to trying to be reflective of communities from outside the country.  So that's the type of programming we're thinking of.

1842          THE CHAIRPERSON:  Mr. Prichard, you mentioned you want to be prudent.  So do we.  And you have mentioned 118 hours of local regional programming.  That's how you're pitching the proposal; that's how it's different.  On 126 hours of regulated broadcast hours, I forgot my calculator, but I believe that's 93 per cent.  I don't have to use if anyways.  Ninety-three per cent of the programming which is more than 80 per cent Canadian.  So if we were to take you at your word and say that, two of the distinguishing factors that you raised this morning for your proposal was no American and very local.  So, very local.  And then I asked you, well, would it be a good idea, perhaps out of prudence, for the Commission to keep you to this.  If we did keep you to the local, you would have 93 per cent Canadian, not 80.

1843           MR. PRICHARD:  I may have misunderstood the arithmetic.

1844          THE CHAIRPERSON:  Well the arithmetic of 80 per cent Canadian means a possibility of 20 per cent non-Canadian which is I believe about 25 hours of programming.

1845          MR. PRICHARD:  That's the 126 down to the 101, which is what I said was the minimum Canadian that we are proposing.

1846          THE CHAIRPERSON:  Yes, that's Canadian, but you are proposing local/regional and 118 hours and that amounts to 93 per cent of the programming.  If the Commission found that, as you put -- put forward this morning, that one of the distinguishing factors or distinguishing -- yes, factors in your application, is the amount of local/regional and you said 118, there you are.  That's 93 per cent of the 126 hours.  Which leaves you no room to say you're not going to do 80 per cent Canadian.

1847          MR. PRICHARD:  Madam Chair, our proposal is as follows:  That the conditions of licence be the 80 per cent Canadian at all times, including prime time; and second, that the local be a minimum of 32.5 hours in each of the three stations for a minimum of 97 and a half hours of local.  We are not proposing as a condition of licence the 118 hour commitment.

1848          THE CHAIRPERSON:  What if I were?

1849           MR. PRICHARD:  Would I --

1850          THE CHAIRPERSON:  Yes, I was taking the 118 hours as a combination of local/regional which, I believe, not only the very local makes you a distinctive station and so -- what I'm trying to explore with you is, as we get into the discussion of local/regional, it is interlocked with your position on foreign and Canadian content because there is just so many regulated hours.

1851          But perhaps we will wait and discuss local regional.  Are you saying now that only the local proportion of your programming schedule makes you distinctive?  Or I was tying it local/regional.

1852          MR. PRICHARD:  We believe what makes our application distinctive is both the local and the regional reflection and the commitments we're making in that regard.  It's the entire commitment to local and regional.  I'm simply trying to be specific on the conditions of licence.  Because the one thing that is being drilled most definitively to me since I joined Torstar, is that conditions of licence are absolutely binding.  And because of Torstar's reputation, and the nature of its commitments, if we commit to a conditional licence we are absolutely, unequivocally committed to making it.  We believe that the 80 per cent threshold would be a new high-water mark commitment for Canadian content, all the time, that will be a very large commitment to local and regional.

1853          Our current plan, the expectation we are creating with our schedule is that it will be the 118 hours, but when you ask me the question of condition of licence, so that there is no possibility of our ever being before you or colleagues seeking relief or seeking to excuse otherselves, we believe that the 80 per cent Canadian all the time, including prime time, is the position we should propose to you.  We're very pleased to discuss the entire schedule and what we have set out.  But on your specific question of condition of licence, what you have said over the last three days, I want to be precise as to what we're proposing.

1854          THE CHAIRPERSON:  Yes, and I am putting on the table the possibility that the Commission would bind you to 118 hours of local/regional programming, which then would have to -- to be merged in a per centage way with the Canadian content to make sense.  It's -- it's not -- in other words, you don't mind being bound by the Canadian content at 80 per cent, but you are reluctant to be bound by 118 hours of local/regional, despite the fact that both of these -- both of these issues or factors were raised as distinguishing factors for your proposal.  So I understand your position, but you see where I am coming from?

1855          MR. PRICHARD:  We -- I may not -- I may be missing but I wanted --

1856          THE CHAIRPERSON:  Yes, perhaps I will clarify.  Mr. Prichard, your proposal is you are not going to be like the other stations.  You are going to be a local/ regional station and I am prepared to use those with a slash in between.  And that is right through your application, it's is 118 hours.  There is in fact a lot more about that than about the Canadian content.  So if one were to say, we will keep this applicant to its word and it will be a local/regional station, it will be very different from what's there and therefore that's what has to be done, as a -- a condition of accepting your proposal as a different one that warrants adding to the system, then you would have to -- to amend your view on Canadian programming considering that at the end of the day there won't be enough hours.  I understand your position, you will understand what I am saying.

1857          MR. PRICHARD:  We expect that the vast majority of what we broadcast will be local and regional.  And as such, the vast majority of what we broadcast will be Canadian.  It will be Canadian because we're producing it ourselves or because we're commissioning with the independent production community and will, I am sure, go through the commitments we have made with respect to the levels of expenditure for new programming, new production, by ourselves and by independent producers that will be local and regional.  So that is the overwhelming vast majority.  It is both Canadian and local and regional.  That's the entire thesis of how we believe we will attract audiences, is to reflect these communities, these localities, this area.  So we're not reluctant to have a description that this must be regional, that is as you say, central to our proposition.  The only place I was resisting, Madam Chair, in the interest of being prudent and not making commitment we might not be able to honour was stopping at 80 per cent Canadian as opposed to saying the condition of licence should be a hundred per cent.  I'm saying a -- we are proposing the condition of licence -- we welcome that it be regional and local, because that, that is the essence of all that we are going to produce and commission, is regional and local.  That's how we believe we can make a distinctive contribution and it's how we believe we can attract an audience by being distinctive.

1858          THE CHAIRPERSON:  And even the 93 per cent is too high?

1859          THE CHAIRPERSON:  My -- our view is that we should set a figure, a level, that we're absolutely certain to exceed, that that is how Torstar should present itself to you, that we should be certain when we come back it will have been exceeded.

1860          You may well, at a subsequent --  if you give us the privilege, and we come back in front of you seven years later, you may well decide to raise the level at that point, when we have a demonstrated track record of delivering on it.  But we want to set a level which will be  genuinely new, that is a new high-water mark, but not at a level where there is a risk in our mind of any kind that we wouldn't be able to honour the commitment in full to the Commission in making it.  We thought the balance between expectation and certainty was found at 80 per cent which is why we propose the 80 per cent figure.

1861           THE CHAIRPERSON:  It was mentioned by one of you that there was no -- nothing in your business plan, financial statements, or projections, rather, that focused on foreign programming.  So I am curious.  Under the -- I am looking at the Toronto nine plus one pro forma statement of revenue and expenses, and there is a line of -- that is relatively high, of 1.7 million in year one rising to 2.2 in year seven.  Under sales, syndication of non-Canadian programming, what is -- what does that represent in terms of revenue?

1862          MR. PRICHARD:  Madam Chair --

1863          THE CHAIRPERSON:  What is it?

1864           MR. PRICHARD:  That refers to revenues we expect to earn through our participation in the success of independent productions which we helped finance.  And that is, as we help finance them, we plan to do two things:  First, we have provided for paying for licence fees in order to show those shows on our three stations over a fixed period of time, fixed number of opportunities.

1865          In addition in our budget, we propose to have additional funds to, in effect, invest in the independent production community.  Above and beyond the licence fees, we have made provision for investment, investment as a partner, as a co-venturer, investment in a form of whatever financing would give the greatest leverage to the independent producers.  So when they create a show it's not only for us, but they have the opportunity then to try to sell it to others both at home and abroad.  We believe that will be successful in generating revenue.  And that revenue is the line that we report there.  So we have an expense equal to it, and we expect revenue over the life of the licence and we projected it as equal to the expenditure we make above and beyond the licence fee costs that are in our budget.  So this is, if you will, investment revenue from our investments in the independent production community are participating in the success of their work in the event they are successful in selling their product to other broadcasters at home and abroad.

1866          THE CHAIRPERSON:  So the distinction here between syndication Canadian and non-Canadian is with regard to the -- the site or the venue of the distribution, rather than to the content of the programming.  It will all be Canadian programming, some of it distributed with some revenue flowing from it outside Canada and some inside?

1867          MR. PRICHARD:  That's exactly correct.

1868          THE CHAIRPERSON:  Your independent production commitment is - again, we can see it at supplementary brief at page 2 at number 9, as an average of 36 hours per week and, as we will discuss later, sometimes our calculations from other sources in your application give us 34 hours, but an average of 36 hours a week for 1,230 hours a year of programming.  And that is going to be at a cost to you of $10.6-million in year one, rising to 14.2- million in year seven.

1869          And if we calculate it from your Schedule B, which is your program description, et cetera, or in other areas, it's about 60 hours of original plus repeats a week for about 49.6 per cent of the hours of broadcasting.  And amounts over time, as was mentioned this morning, over the seven-year licence term, to over $86-million over the seven years.

1870          Now, this is intended for the local and regional independent production sector?  Or the independent production sector?  Like, do you foresee that this money will stay in the southern Ontario area so that -- or will it be broadly dispersed?

1871          MR. PRICHARD:  The opportunity to participate will be extended to all Canadian independent producers.  The subject matter that we will wish to pursue is principally local and regional reflection, and that's likely to attract, that may attract disproportionate interest from persons living and working and producing in these communities because they may be most likely to identify the opportunities to make the story proposal, to make proposals.  But there is no restriction on participation by someone from outside the region who would qualify as part of the Canadian independent production community, but we do wish to -- we both -- we both want to reflect local and regional, and we want to develop the talent pool locally and regionly, but we don't want to be exclusive, we don't want to say someone from somewhere else can't do this or can't participate.  But we think there should be, there will be the greatest interest from producers working locally and regionly because of their knowledge of the area, of the stories, of the ability to work using our facilities to the extent they need to use our facilities.  We believe this will -- this will likely work out that way, but as I say, we don't want to create a sense that just because a producer is working in Halifax that they can't participate.

1872          We have provisions for putting on the web how to access us.  We have been approached, of course, by many people since we made our announcement.  We have on the web site our how to approach us, what the process of qualification will be and the like, to make sure it's open and transparent.  But yes, at the end of the day we believe the predominance of it will come from talent, new talent, young talent, here in broadly the areas that we will be serving.

1873          THE CHAIRPERSON:  In one of your deficiency responses you define what for you is local and regional as -- it's in a letter dated March the 9th, the one that responds to the February 22^nd, at page 8, the February 22nd Commission letter.  You say local programs will be produced by the station which broadcasts the programs, and it will unique to that station.  And regional programs will refer to a programs that are broadcast on all three stations.  Is local -- local is going to be station produced, so that is simple then to follow the distinction.  When you get to regional it's a little more difficult.  I understand, Mr. Prichard, that if it's open to any -- to any producer, but it is to be regional in the sense that you have made this very important to your proposal, that you will have to have someone, somewhere, governing these funds and ensuring that what comes back is regional.  You mentioned somebody doing it in Halifax.  Somehow or other there would have to be some control over the product you get back.  Who will do that, and where will that be done?  Will that -- I think I understand from your application that this money is going to be administered from Toronto.  Will you have someone who will make sure that what you have just described is achieved, that what ends up on the screen is regional, no matter which Canadian producer produced it?

1874          MR. PRICHARD:  To be clear, the regional consists of two components.  One is regional programming produced ourselves in-house, which will be done from the Toronto studio.  And second, as you say, work we commission for the independent production community.  With respect to the management of that process, Eric?

1875          MR. ROTHSCHILD:  Commissioner, the vice-president of programming will be located in Toronto, will be responsible for dealing with the independent producers and commissioning and overseeing the production and delivery of the required programming from independent producers.  And if a producer in Halifax or a producer in Edmonton or in Vancouver or Regina wants to submit a proposal and say to us, well, they can do a production for us and that it will be relevant, I mean, our criteria of wanting it to be regional and have a regional focus and regional relevance, that's their challenge.

1876          And I come back to what Rob said before.  We think that the vast majority of the productions will be done by producers located in Hamilton, Kitchener-Waterloo and the Toronto area, but we don't want to say that they're not eligible.  If you say to us you don't think that's inappropriate, that they shouldn't be eligible if they're in Regina or Halifax, we can live with that.  We know there's an awful lot of producers in southern Ontario region.  But we didn't want to be exclusive arbitrarily.  The key and the acid test will be can they come up with an idea that is relevant.  And our vice-president of programming will be working with them through concept development, through scripting, through production, to make sure that they are delivering the type of programming that we are looking for.

1877           THE CHAIRPERSON:  Although it's doing a bit of a side bar, the program development fund will also be managed from Toronto?  Script and concept, what we call script and concept development?

1878          MR. ROTHSCHILD:  Yes, it will.

1879          THE CHAIRPERSON:  In your application, you have a sum of about $102,000 in year one, rising to 136 in --- hmmm, is it year two or is it year seven?

1880           MR. ROTHSCHILD:  It rises, I think, by five per cent a year, Madam Commissioner, so over the course of the seven years it is about $830,000.  We can talk about how we envision spending that, if you like.

1881          THE CHAIRPERSON:  This will be, well we  can -- at the moment, I just want to also ascertain that this will be managed from Toronto and the same responsibility will be exercised, that the projects are aimed at reaching your goal of regional reflection right from the start?

1882          MR. ROTHSCHILD:  That's absolutely correct.

1883          THE CHAIRPERSON:  Now, what we're not clear about is, what will be your relationship with the independent production sector, what this money will go to.  In your program description, which I usually refer to as Schedule B, but you know the description that is usually attached to the block schedule.  Those programs are identified as, that under source, as co-production.  So we would like more explanation of what your responsibility will be, what your relationship will be, where the money will go to and for what.  I am talking here about -- is it going to be licence fees?  Who is going to hold the licensing rights?  Who is going to hold the rebroadcasting rights?  Is it intended to cover production costs?  How will the expenditures be funded?  The programming budget, et cetera.

1884          I will tell you where I am going, is -- you also have told us how many millions would be assigned under that independent production initiative to children's programming, to documentaries and to variety and human interest programming.  And then if I take that amount of money and the hours and I divide it by the hours of the episodes how best I can, I end up with a certain sum.  And we ask ourselves: What is this sum going to?  What does it represent?  Is it just a licensing fee? Is it the beginning of funding?  If not, is it sufficient to have programming that is atractive in southern Ontario where there is - well, most Canadians now, I guess, get a lot of sophisticated programming as well, and yes, they want to see themselves reflected, but will it be competitive?

1885          So maybe we will take a break and discuss that.  So your relationship -- we will discuss that when we come back so there is no interruption.  And then, with a view to going at the value for your money that your likely to get, et cetera.

1886          We will be back in 15 minutes.

--- Recess taken at 0959/Suspension à 0959

--- On resuming at 1021/Reprise à 1021

1887          THE CHAIRPERSON:  Order, please.  Before we proceed to the details that we were talking about earlier, there is one other thing I wanted to pursue and did not about the expectation of -- of syndicated reward, or financial reward from syndication.  And it raises, of course, the question of if this is truly regional program it go that reflects and speaks to the residents of southern Ontario, is -- is that not contrary to the ability to raise this amount of money from distribution not only in Canada, but outside of Canada?  Would it have an impact on how regional it is?  Because even the Commission in its regulatory niceties has difficulty defining exactly what a regional program is by content.  But it certainly can foresee that the desire to distribute may in fact lead one to have programming that is more generic than it should be,  according to the proposal put forward.

1888          MR. PRICHARD:  Thank you, Madam Chair, I will answer that question, I hope we will for a moment also return to your earlier question-

1889          THE CHAIRPERSON:  You have to smile, Mr. Prichard.

1890          MR. PRICHARD:  I love this.

1891          THE CHAIRPERSON:  Oh, you do?  It's not obvious yet.

1892          MR. PRICHARD:  If we could then, after that, return to the earlier questions you were asking about regional, because I had an opportunity to consult with my colleagues during the break.

1893          On this question we don't imagine that all of the work that we commission from independent producers will be of interest beyond our region.  And therefore is -- we don't assume that all of it is likely to attract additional revenue from syndication that would flow to us.  We expect, in many cases, that we will simply pay a licence fee.  We will not make an additional investment and, in terms of our participation, that will be the end of it.  And, as you say, because the material reflecting just our region, that it may not have significant attraction beyond our region.

1894          That said, we think there are also many stories about our communities and about our region, that are of great interest to the region but should also be of great interest to the world.  We actually think think we undersell ourselves as a part of the planet if we don't think our stories, well told, well-produced can't attract audiences elsewhere.  This part of Canada, as are many other parts of Canada, we believe, is intensely interesting.  We believe there are things happening in these communities and that have happened that are of interest to the world, and not just to ourselves.

1895          So we think it's -- we think it's too narrow a vision of local and regional to imagine it's only of interest to people in that locale in that region.  We believe our success will come in telling great stories about our region and about our locale.  But we think those stories will succeed, in some cases, in attracting audiences well beyond it.  Astonishing things have happened, and will happen in our community, in this part of Canada, that are of relevance, as I say, not only to ourselves but of relevance to the world and we want to tell those stories and contribute those stories adding to the -- the body of Canadian movies, Canadian stories, Canadian documentaries, Canadian material which is of interest to the rest of world.  So we think it's only a portion of what we will commission.  We'll have this interest but we do think there is a market for first-class material that we can produce in this area and that's why we have the syndication revenues.  They're very modest in the budget.  They're very modest.  They reflect the level of investment we're making, but we do think there is an opportunity there.

1896          And we come to that view not just on our own, but we come that view after speaking with the independent production community.  In our consultations in preparing this, it was clear to us this they would wish us to make investment, in some cases, in financing above and beyond the licence fee, and that they themselves believe they can take those stories and sell them to other parts of Canada and sell them to the world.  And we want to support them in doing that.

1897          THE CHAIRPERSON:  This amounts to as I said earlier, 1.7-million and then almost a million for syndication in Canada.  How were these figures arrived at?  Like, on the basis of hours, or...?  How did you arrive at this projection?  What does it represent in terms of hours of programming that would actually lead to return?

1898          MR. PRICHARD:  Eric?

1899          MR. ROTHSCHILD:  Commissioner, it is laid out, program by program, not our by hour, in schedule 27 or 9.5 of the application.  We actually go through every show by title and tell you how many hours do we anticipate producing, which ones do see we having syndicatability, that could be of interest outside the region.  And we can take you through that.  And -- but that's one piece that is a good guide to walk through, as we have this discussion, Commissioner, you might want to find that if you don't it in front of you.

1900          THE CHAIRPERSON: Yes, that was revised quite late in the process.  It's attached -- the revision of the schedule 27 is attached to the September 18 letter?

1901          MR. ROTHSCHILD:  That's correct.  Now, that takes you through and says well, out of the shows that we anticipate commissioning from independent producers, there are eight which we identified early on that we thought had an opportunity for syndication, and it ranges from our documentaries to our gardening and cooking shows, to our home improvement show, our [dance] show, School's Out.

1902          And we -- we approached that in two different ways, Commissioner.  We -- one was in a sense a top-down, that was when Gord Haines, and I will ask him to add to this, when we were preparing the program budgets and the program formats, we looked at, well, which one might have this ability to be syndicated?

1903          We also did what I would call more of a bottom-up reality check against that, by going out and talking to distributors and saying okay, here are program concepts.  What do you think the distributability would be of these programs?  And we checked some of our programs and got reconfirmation or a reality check that yes, there was an export market.  There was a market in Canada, there is an export market beyond Canada.  We -- the explosion of new channels, we are seeing not just in Canada, but globally, that there is a huge market out there for product and -- and it's all those individual licence fees that you can see coming back from the export market or the domestic market and into what we're talking about.

1904          And of course these shows, I mean why wouldn't people be interested in Canadian stories?  Why wouldn't people be interested in our documentaries about this -- about events in this region or people in this region?  You know, we watch an awful lot of gardening shows from New Mexico or from the southern United States but we watch them here in Canada.  Why couldn't a gardening show that talks about what grows in a northern climate be of interest?  Or our cooking shows.  Emeril, which is a huge hit on cable in the States and here; the Galloping Gourmet was a huge export show, if you old enough to remember it as I was, that came out of Ottawa.  So I guess for us -

1905          THE CHAIRPERSON:  The food I can handle, but the flowers from Mexico I had no success with.

1906          MR. ROTHSCHILD:  Commissioner, so that was sort of the general setting.  If you would like us to take you through that, I would be happy to.

1907          THE CHAIRPERSON:  I understand that your list of programs, on 9.5, which is the list of programs on schedule 27 would be either evergreen programming, which works also out of jurisdiction, and programs that you feel would being regional but nevertheless of interest.  So it's been attended to in that fashion in -- in projecting revenues that come from it.

1908            Now, back to where we were before the break it was -

1909          MR. PRICHARD:  Could I go to the regional point, Madam Chair --

1910          THE CHAIRPERSON:  Absolutely.

1911          MR. PRICHARD:  -- that you raised earlier?

1912          THE CHAIRPERSON:  You can go anywhere until I stop you.

1913          MR. PRICHARD:  You're very kind.  We're lucky, thank you.  Your question was I believe --

1914          THE CHAIRPERSON:  He is smiling.

1915          MR. PRICHARD:  Your question, I believe, was what was the commitment in terms of condition of licence that we could give you, and how could that ensure for the Commission that our programming would truly be local and regional, and stay to local and regional reflecting the essence of our application?  I think that was your question.  And my answer which I think was not satisfying you, was the 80 -

1916          THE CHAIRPERSON:  It is your application, Mr. Prichard.

1917          MR. PRICHARD:  Exactly and we are trying to translate the application into conditions of licence binding and, in our view, simply totally binding on Torstar -- that is, in that sense of which, we will never come forward so seek modification over the life of the licence from you. So I was trying to be, set conditions of licence.  And you recall I said 80 per cent Canadian at all time including prime time, and 32-and-a-half hours minimum on each of the three stations local.  And you sat back, but that doesn't necessarily mean it's regional as opposed to Canadian.  That we have Canadian and then we have regional, which is a subset of Canadian.  My answer to you was, that is the essence of what we plan to do, but you are then saying well put it -- put it in writing, if you will.  Is there a way to capture it?  And what I wanted to say to you is we're happy to capture that, in both an expectation that we are creating and, indeed, a condition if we can come to a shared definition of what constitutes regional.  And as you have said in your introductory comments just a few minutes ago, there is not at present for the Commission, we believe, a clear definition of regional in the sense of reflection of the region that -- of which we're speaking, and in terms of producers from that.  We have a tentative definition of regional for those purposes and we're prepared to commit to it as a condition of licence.  Our proposal to you would be to say that 80 per cent, 80 per cent of the guaranteed content -- so the 101 hours, which is guaranteed Canadian -- that 80 per cent of that would be local and regional as a condition of licence, subject only to having a shared definition of regional.  We believe regional can be interpreted from two directions: one, it's a reflection of the region, or it's produced from within the region from producers within the region.  That is, it's either the subject matter or it's the people producing it.  And those two together would be the foundations of regional.

1918          But if you wish to go to a condition of licence that includes the regional commitment, which, as you said permeates the entire application, we're prepared to go there with you subject to only getting that definition -- one that's workable for you and makes sense to us so that we can be -- live with it and be certain it could never be said that we failed to live to it.

1919          In the alternative, we're very happy to have this recorded, the entire commitment recorded, as an expectation because that is the essence of how we plan to proceed and we plan to proceed that way because we believe it's the only way we'll succeed.  That is the essence of how we believe we can attract audience is to have that local and regional focus.  But on the precise you were asking me for, yes, we are prepared to commit to a condition of licence if that would be constructive in this.

1920          THE CHAIRPERSON:  Yes, and it is obviously difficult.  I think you do raise in your application the fact that regional as defined for the purpose of priority programming wouldn't work in this area because it is defined expressly as having been produced a number of commiters from the big cities including Toronto in Canada.

1921          So it's your application, it's your view of what regional means, I take your point that as a condition of licence the definition is difficult, but I leave it to you to show us that what indeed you propose will be what you propose and not a conventional television station.  So we can get back to that as to how commitment could be -- could be framed.

1922          MR. PRICHARD:  Perhaps, Madam Chair, we could give to your Counsel or to the Secretary, a proposed definition for you to consider with respect to this.  We did approach previously about this question of definition and we're happy to put forward a definition because it is the essence of what we'll do.  So if that will be helpful for to the process.

1923          THE CHAIRPERSON: Another way of course is to ensure that the level of Canadian content aside is the level of the promise of -- of local/regional.

1924          MR. PRICHARD: That wouldn't --

1925          THE CHAIRPERSON: -- which is something you are shying away from.  Well, it gets us somewhere, because 20 per cent foreign is 25 hours a week possibly of U.S./foreign programming.

1926          MR. PRICHARD:  What we were trying to do with these remarks was what I thought was your concern: was there was a difference between Canadian, and regional and local - you want us to be regional, and find a way of expressing that.

1927          THE CHAIRPERSON:  Yes, but now you are telling me that it's difficult and I agree with you.  It's difficult to write down what will in fact fit a regional program.  But you sure know when it's not Canadian.

1928          MR. PRICHARD:  I didn't mean to say it's terribly difficult; I simply meant to say at present you don't have such a definition, and if we were to commit to a condition of licence on the understanding that we can never be in violation of it we don't think it's difficult and we're prepared to table a definition, if that would be helpful.

1929          THE CHAIRPERSON:  But, Mr. Prichard, another way of being different is not having foreign programming and -- or having a level that is very low.  So that then you don't have to get into an argument either about the programming is regional, or perhaps has gone beyond regional, which is more difficult.  It's much easier to define what is Canadian and what is U.S. than the other way around. 

1930          So that is another distinctive factor as well, which could be helpful. Local is easy to define as produced by the station, regional is more difficult; Canadian is very easy.

1931          Before the break we were getting into the independent production question and what we want to know is number one, do you have any agreements or anywhere near agreements or discussions with producers, and what will be the plan?  What will this money accomplish or go to, and what will be the result in terms of programming rights, the right to rebroadcast, et cetera, of the hours, 1,230 a year, in three types, children's, long form documentaries and life and human interest?  We want to know more about how this works, and I told you earlier that I have made a calculation and ended up with a certain sum per hour.  And that of course raises questions as to what it will accomplish and what the quality will be.

1932          MR. PRICHARD:  This of course is a central feature of our application.  I'm going to ask Eric to respond first, but we also have with us to assist on this, Gord Haines behind me, Paul Osborn from the independent production community, and my colleague Rekha Shah as well.  But Eric is going to first.

1933          THE CHAIRPERSON:  Perhaps to make this manageable, if it's going to be the same plan for all three types of programming, you could discuss it together; if not, specify whether there will be some difference from the treatment for children's, documentary, overriding human interest.

1934          MR. PRICHARD:  Eric?

1935          MR. ROTHSCHILD:  Commissioner, the overriding plan is the same for all types of programming that we'd commission from independent producers and I - again, if I can suggest that we follow along on schedule 9.5 as a starting point and I will try and give some background and ask Gord to fill in.

1936          What you're seeing on schedule 27 is a listing of different programs that we anticipate commissioning from independent producers and/or several which we are looking at providing, in addition to the licence fee, supplemental financing as either a distribution advance or equity investment so that it helped top up the funding available to the producer.

1937          So what you see when we look at the total cost per hour of the programming we're commissioning, is 10.583, $10.6-million, and of that 7.9-million in year one is licence fees, $2.6-million is this supplemental financing.  And that's what you see going in our budget as both the expense of syndication and the revenue for syndication, is that payout and recovery of a supplemental financing.

1938          Now, how did we come up with those numbers?  Which I think speaks to the heart of your question, if I understood it correctly.  We started with our research in terms of deciding what kind of programs these communities would watch, that people into these communities felt were missing.  And we started with focus groups and from the guidance we got from the focus groups we went to our telephone survey.  Out of that we got a confirmation of a range of programs, many of which appear on this list in front of you, as shows that we will commission from independent producers.  We looked at the list of -- the programs that we wanted for our schedule, we looked at it and said, certain ones make more sense to do in-house and certain ones make more sense to do from independent producers.  We took the concepts that we had tested -- and there is where I will ask Gord to talk about it -- we took those concepts and said okay, what could be we format from each one of these programs on this list and any of the programs we have on our schedule?  And from developing the format for the program we developed a budget for the program.  Some budgets we developed ourselves, some we went to independent producers on and asked them to quote to us what it would cost to do the programs.  And that's generally how we came up with what you are seeing there and in our overall programming budget for our in-house productions as well.  Gord?

1939          MR. HAINES:  Yeah, once we knew which program concepts had survived the rigours of the research, we then went directly with the formats for those shows.  These are rough formats, because obviously the producer at the end of the day is going to have creative control over these projects but we wanted to give them a flavour for what we were looking for in terms of a general impact of the program so we took those to the independent production community and asked them, within certain parameters, to tell us what it would cost them to produce this program.  And it's important to understand those parameters because the commitment that we were making to the independent producer was more than just cash, there is a cash component, and that's what you see before you, but we also said to them, consider that you are going to get no-cost, in this process, access to the massive archives of Torstar Corporation.  There is in fact an organization within Torstar that -- that provides that kind of material now to producers, at a fee.  We will let you have access to that at no cost.  We will make sure that you have research support in culling the information from those archives and you will have full access to the photo library.  So if you are doing a documentary, this represents a significant portion of your production cost, and is a real benefit to the producer. 

1940          In some of the shows, and the documentary was one of them, we said, also consider that one of your significant above the line costs being the program host we will supply.  So those costs, you don't need to worry about it at this stage of the budgeting process. Please give us as much detail as you can.  What we got back in many instances were full production budgets, and the numbers that were in those budgets are the numbers you see reflected before you.

1941          THE CHAIRPERSON:  So if I for example take children's programming, and I look at schedule E of part 2, I think I have it -- from Toronto but that's probably helpful perhaps for our discussion.  And you see that in here, one, children's programming will be $5.4-million, correct?

1942          MR. ROTHSCHILD:  That's correct.

1943          THE CHAIRPERSON:  And then if I use the number of episodes that I take from your part B description, Schedule B, the program description, and I -- even though it doesn't have your afternoon, -- part B has only two of your children's shows there.

1944          MR. ROTHSCHILD:  Commissioner, if we go back to schedule 9.5 we actually outline for you right there the cost per episode.

1945          THE CHAIRPERSON:  Yes, but I want to see -- you also have at schedule E, 5.4-million per year for children's programming and if I take the number of hours in your part B, which is 400, although there is 600 hours of children's programming, and I divide per episode I get 13,400 or per hour at 600 hours of children's programming, 8,993. 

1946          Now, I want to know whether what you explain to me covers what you perceive to be the entire cost.  I understand that there will be some -- the entire money that will be required to produce an hour of children's programming and taking into consideration what you have mentioned about access to Torstar library, et cetera, et cetera.

1947          To keep it simple, is this the entire cost of getting that hour of children's programming on the air in money?

1948          MR. ROTHSCHILD:  Commissioner, it -- I guess the answer is to say it could be.  The producer of course -- the producer may go out and find other investors and that's the producer's right because we're just licencing the program.

1949          THE CHAIRPERSON:  So it's a licence.

1950          MR. ROTHSCHILD:  Absolutely.

1951          THE CHAIRPERSON:  At the end of the day, the producer will own the program --

1952          MR. ROTHSCHILD: The producer will own the program and the copyright.

1953          THE CHAIRPERSON: --and rebroadcast rights, et cetera.  And that -- and so, what programming is it that you will have the distribution rights to?

1954          MR. ROTHSCHILD:  We don't anticipate having the distribution rights to any of the programming.

1955          THE CHAIRPERSON:  But how will you get revenue from syndication.

1956          MR. ROTHSCHILD:  What we anticipate is that in some of the programs, and again if I look at 9.5 there is eight different programs that we have looked at where we think there might be an opportunity that those could be distributed outside of the market.  And those programs we would provide both a licence fee and additional supplementary funding for which we would either have an equity position or it could be take the form of a loan or it could take the form of a guarantee against distribution revenues.  All of it would be at risk, but it would be in addition to the licence fee and of course the choice of the producer.

1957          THE CHAIRPERSON:  So if I look at Kids Morning, I cannot do the same calculation I did and say they're proposing to spend $8,993 per hour of children's programming is what you are saying.  The simple calculation I was doing doesn't yield the answer I say it does, which, you expect that on average that would be -- the money you will have to expend to get an hour of watchable, good quality children's programming, correct?  That is not the end of the story.

1958          MR. ROTHSCHILD:  No, Commissioner, it's not.  But on the other hand if the producer decides that they don't want to go out and find additional money, then that could be the actual cost per hour, but it -- you know, you look at it on a cost per hour, Commissioner, and obviously that's an measure we have to look at it by.  And if you look at it and say well, one hour of programming is this amount of money, is -- and you say, can you really do a quality program for that type of dollars?

1959          I think one has to look at it within the overall context that with if one says to producer -- and I am going ask Paul Osborne to talk about this as well -- if you look at it and say to a producer I am going to commission from you, 400 hours of children's programming and I am prepared to sign a licence fee with you for $3.2-million that is a very different order from saying, I want one hour of programming at this type of price.  When you say to a producer, I am prepared to sign a contract like this, so they can hire a staff establish the infrastructure and have a guaranteed licence fee of $3.2-million a year for that show, and they own the show and they can go out and market the show to other countries and to other broadcasters within Canada, that's the measure by which I think you have the -- or the context in which you have to look at this.  It's not in terms of saying simply it's one hour.  It's once you have set up the infrastructure and you set up the machine, you can produce programming very cost effectively.  Paul, is there anything you would like to add to that?

1960          MR. OSBORN:  No, I think it's fair -- fair to comment here that there are many independent producers that come to table in these negotiations with various degrees of infrastructure and capability, each of whom have a different approach to tackling the sheer volume of work that's proposed here.  An undertaking of -- in the case of the - the biography series, for instance of 130 original episodes, is a substantial one, so it demands that you develop a strategic plan to execute those and still meet the -- the obligations that are expected from -- from Hometown Television that the program reflects the audience that we intend to serve here and the production standards that are going to be expected in the television series.

1961           Each of those producers who come to the table in these negotiations will have varying degrees of infrastructure or different attitudes towards a strategic plan to execute them.  But beyond that as Eric points out quite rightly, the wonderful opportunity for any independent producer to have full control of that copyright and then to go beyond the proximity of this license to be able to sell in second window, perhaps even third window in Canada and then beyond to the world.  So I am really confident that my colleagues in the independent production community, once they understand the process and the opportunity, they will be very excited about what this can be.

1962          MR. ROTHSCHILD:  Commissioner, if it could help also, Rekha Shah, who has a career that began in children's programming, could describe to you what a children's program like this could look like and what you can do with $3.2-million a year if it would be useful to you.

1963          THE CHAIRPERSON:  Can you confirm me that in the section 9.2 of your application which is a pro forma programming and production expenses, that that -- that independent production initiative is included in there?

1964          MR. ROTHSCHILD:  I can confirm that and -

1965          THE CHAIRPERSON:  And so is your script and concept development money, I see it's quite clear.

1966          MR. ROTHSCHILD:  The -- the licence fee component, Commissioner, is included in the categories other information and if I am looking -- other information, music and variety, game shows and human interest, that's where the licence fee, the $7.9-million component is included.  And then the supplemental financing is -- is included under syndication monies down below at the bottom of 9.2.1.

1967          THE CHAIRPERSON:  You say the money going to licence fees -- did I misunderstand that in some cases it in fact could be the entire cost of the program that would be covered?

1968          MR. ROTHSCHILD:  Commissioner, what you're seeing in our schedule -- schedule 9.5 and in the monies in 9.2.1 as they're translated into the form, those are licence fees that we will pay to independent producers.  The independent producer will have at his or her discretion the choice, since they own the show, to go and decide whether they want to find additional investors.  Our concern here was to make sure that what we put on the table there, if that was all they had, could they produce a quality program.  That was our starting point.  And what we found in our analysis was yes, they could.  Could they go out and get additional monies and make it an even better program or invest more money in it?  Yes, they can, but our concern was to make sure we didn't put this money on the table and say that will work great but they have a got to go and find this other money from the funds or they've got to go find other investors.  This money is sufficient to produce each of these programs as we're envisioning it.  They can go out and find additional money if they want to, that's -- that is what a producer does, --

1969          THE CHAIRPERSON:  And it is sufficient if you could have a requirement for a number of local regional programs to have all those on the air?

1970          MR. ROTHSCHILD:  I'm sorry?

1971          THE CHAIRPERSON:  I said and the monies that I see there in 9.2 would be sufficient to meet your proposal at this stage of 118 hours of local/regional, of a quality that would allow you to sell advertising and realize your revenues?

1972          MR. ROTHSCHILD:  Commissioner, that's what we -- when we built our schedule and we built our budgets that was what we saw.  And so what we have said to the Commission is that the unequivocal commitment is that we're going to spend the 10.6-million year one and ramping up over each year.

1973          THE CHAIRPERSON:  Yes.  I think you would agree with me that it is somewhat of a cornerstone of your business plan.

1974          MR. PRICHARD:  It is central to our business plan.  It's why, in one sense, our commitment is so large, it's why -- it's because of the desire to support that entire schedule that we are at a $10.6-million a year.  The other side of that, as you say, is it does mean the programming has to be economical, it has to be efficient, and it has to be structured in such a way that if the producer wishes to go further, they are able to do so and that's why we provide in our budgets, not just for the licence fees, but for the supplementary funding as well.

1975          But yes, it is our proposition that we can put on air, quality programming that, properly promoted, will attract the audience that is we predict and that these budgets are sufficient to do that.  Might I ask my colleague, Ms. Shah, to say a word?

1976          MS. SHAH:  Thanks, Eric.  I would like to talk to you a little bit about the vision for children's programming that you brought up earlier.  When I worked for TVOntario as a host and helping develop content for their first hosted kid's morning block, one of the things that we tried to do, or I tried to do as a host was really connect with one viewer at home.  The result of that was simply when I walked on the street, when I met children and parents, they actually felt like I was a part of their family.  That's the same sense, that's the same essence that we're trying to bring to our children's programming.  That when people turn on Hometown Television that they too will feel like they're coming home.  The parents will feel safe in leaving their kids in front of the TV or watching television with their children.

1977          The kid's morning block from 7:00 to 9:00 in the morning targeted to preschoolers 3 to 5 years old, very much is a get ready to learn type of feeling, focusing on the basics: ABCs, colours, numbers, big and small, opposite.  But in addition to that there is the things of sharing, families, addressing different types of family, values as well as relationships.  The program itself is a studio based program.  That's what we're envisioning, with a series of modules attached to it that would be met in every single show.  Paul can talk a little bit about the budgets and how he perceives they will be broken down by an independent producer.  But our vision is strong, and will help us bring children a very familiar, comfortable place to come home to in the mornings.

1978           THE CHAIRPERSON:  Mr. Prichard you say your commitment is -- is substantial, but so is 118 hours of programming supplied in -- in southern Ontario from which you expect to have revenues of a significant -- a significant size.  So I am just attempting to relate one to the other.  Just one small question about the children's programming.  One of the afternoon programs made me curious, was related to the school curriculum.  Can you tell me what that's about?

1979          MS. SHAH:  The way we're imagining School's Out that will be produced, it's an an hour-long after-school program that will air from 4:30 to 5:30.  With respect to the curriculum component, the School's Out is very much -- it's about being -- doing what children do, what teens do, after school: movies, music, fashion, friends.  But in addition to that there is a component that really does reflect the curriculum.  What my hope is that it reflects it with respect to a new segment: taking children to local/international and news stories but putting them in a context that they will understand.  In addition to that the web and interactivity plays a large part right now in a child's education, and I would very much like to see interactivity become a very large part of the School's Out block.  Not necessarily information about the web that is time sensitive, but more timeless.  Navigating the web, how to use it to best serve a child when they're doing their homework.  Trends, dos and don'ts on the web, educating children how to use it to their advantage.

1980          THE CHAIRPERSON:  And I think one of your properties is related to educational publishing, isn't it?

1981          MR. PRICHARD:  We were in the children's education field but that's a business that Torstar sold over the past year.

1982          THE CHAIRPERSON:  You are not anymore?

1983          MR. PRICHARD:  We have a very small piece called Learning Adventures but in the scheme of Torstar it's modest.  It's learning experiences for children but --

1984          THE CHAIRPERSON:  It's not related.

1985          MR. PRICHARD: -- it's not -- it's not -- it's not part of the proposition here.

1986          THE CHAIRPERSON:  Now, local and regional programming.  It's in most -- most places in your -- in your application you speak of 32.5 hours of -- of local programming, and certainly do in your supplementary brief.  But if we look at the program schedule, the block schedule which is of course not the last word but in the program description we find 30.5 hours only.  Is the commitment to children -- to local, 32.5 of the 118?

1987          MR. PRICHARD:  Yes. It's 32.5. Eric will reconcile for you.

1988          THE CHAIRPERSON:  In your supplementary brief it is 32.5 in a number of places.

1989          MR. ROTHSCHILD:  It is 32.5.

1990          THE CHAIRPERSON:  It gets somehow confused  when you look at Schedule B or the block schedule.  Okay.  32.5.  With regard to the children's programming, is that a commitment that you would be comfortable to make in a very regulatory way?

1991          MR. PRICHARD:  We -- we would invite you to make that an expectation with respect to Torstar's application.

1992          THE CHAIRPERSON:  Mr. Prichard already knows all these buzzwords.  I hope you are impressed with our vocabulary.

1993          MR. PRICHARD:  I love it.

1994          THE CHAIRPERSON:  We will send you a CRTC dictionary.  Ms. Cram wants to send you the telecom one.

1995          MR. PRICHARD:  We're not going there, Ms. Cram.

1996          THE CHAIRPERSON:  You are already doing well with TDMG Inc.  It sounds very much like telecom.

1997           Now, in -- so we are back to of course which -- with the 118 hours.  We know that it's 32.5 local.  And that you would be comfortable committing to, as an expectation, but not -- even though that's quite easily defined because that would be produced by the station itself.  We wouldn't get into difficult wording to identify local as we would for regional.

1998          MR. PRICHARD:  I misspoke myself.  We invite you to make the 32.5 local at each of the three stations a condition of licence.  My answer with respect -

1999          THE CHAIRPERSON:  Perhaps I misunderstood.

2000          MR. PRICHARD:  My answer with respect to expectation was with respect to the children component of 15 hours.

2001          THE CHAIRPERSON:  Yes, it probably was the way I put the question.  But would local/regional then, local you're comfortable to committing to the condition of licence to 32.5 a week?

2002          MR. PRICHARD:  Yes, we are, at the three stations.

2003          THE CHAIRPERSON:  What each station would use would be the definition that you propose, of what local is.

2004          MR. PRICHARD:  Correct.

2005          THE CHAIRPERSON:  The programming -- the program development fund, we already discussed, would be handled by Toronto with sensitivity to local reflection or regional reflection no matter where the producer comes from?

2006          MR. ROTHSCHILD:  That's correct.

2007          THE CHAIRPERSON:  And you have already thought of how this would be accomplished?  You spoke about that this morning,  Mr. Rothschild.  So you would not have for example any preconceived allocation that would go to the Kitchener London area, or this amount in Toronto and this amount maybe outside of Toronto?  Or wherever you can get proposalals and whichever producer can promise to deliver programming that would be regional?

2008          MR. PRICHARD:  That's correct.  We don't believe quotas, subdividing it are correct -- would be wise.  We believe it should be based on talent.  But it has to be talent who are going to reflect our locales and our regions and we're confident that with the talent pool spread throughout this area that it will be well distributed through the area and, indeed, the stories and the proposals that will come will reflect the different parts of the region and the different communities within the region and the producers who are throughout, we have educational institutions, as you know, throughout this region with programs in broadcasting and television and film.  That talent base will respond extremely affirmatively to this opportunity of the $10.6-million a year of new funds.

2009          THE CHAIRPERSON:  Now, with regard to the program development fund, which is what I am looking at right now, it would be administered in a similar fashion.  Would there be a cap on any amount of the 102,000 in year one, let's say, would there be a cap on one program development?  How much money one development pro -- project would get?

2010          MR. ROTHSCHILD:  Commissioner, we had looked at that 102,000 for script and concept development as a range of the number.  We want that to be the seed money to let people come and go and develop great different scripts and we would like to have more, not less.  In other words, we hadn't ever thought of it as that, that chunk would be for one person or one company.  We thought of it more in tranches of 5 or 10,000 in order to stimulate as many ideas as possible.  This is to go off for script and concept development, it's not for production and we think we can stimulate an awful lot of -- a lot of development work with it.

2011          THE CHAIRPERSON:  And have you tried to guess how many of these development projects would then reach the next level and get some of your production money?

2012          MR. ROTHSCHILD:  We don't have a firm estimate on that, Commissioner.

2013          THE CHAIRPERSON:  But that would be your hope, would it?

2014          MR. ROTHSCHILD:  Yes, you are investing the money hoping that new, even better ideas than we have going in, that we have presented to you here today will come forward and that the -- our schedule as it will be evolving because of those ideas that we are helping to nurture and develop.

2015          MR. PRICHARD:  Madam Chair, Rekha Shah will be responsible for this.  Perhaps, Rekha, you'd like to comment on this.

2016          MS. SHAH:  Simply put, as an independent producer and an emerging producer when I started my career, there are funds like this available but I think this only adds to what is out there right now.  For someone who doesn't have a track record this is probably one of the best way ways to prove your case and prove yourself to a company and I think the process that we have established really shows how you can move from step one to step two and eventually to producing your own series.

2017          THE CHAIRPERSON:  Now, I would like to look a bit at how your three stations will operate together.  You have given us three sets of financial projections.  It is clear however, I gather, that the majority of the regional programming will be produced in Toronto in the Toronto facility; would that be correct?

2018          MR. PRICHARD:  That's correct.

2019          MR. ROTHSCHILD:  That's correct, yes.

2020          THE CHAIRPERSON:  And what -- how did you allocate the programming expenses between the three stations?  Does it go beyond local, is there allocation or or an apportionment of some of the costs to regional programming that will be aired on all three that is allocated to the Hamilton or Kitchener?

2021          MR. PRICHARD:  Eric?

2022          MR. ROTHSCHILD: Commissioner, each station in their budgets, you see all of the cost for their local programming.  The regional in-house programming is produced in Toronto and the cost of that is assigned to Toronto.  The acquired programs from the independent producers, the 10.6- million of which we have been speaking about, 96 per cent of that expense is assigned to Toronto and two per cent is assigned to Hamilton, and two per cent is assigned to Kitchener and that reflects the fact that Toronto can afford the -- the revenues in Toronto can afford to sustain that level of investment, while the business plans for Hamilton and Kitchener could not.  And so that's why they have a very small portion of the 10.6-million but they pay for all of their locally-produced programming.  It primarily comes out of their news department and programming that builds on the news department infrastructure, programs like My Town and What's On, those are the ones they're producing non-news, locally.

2023          THE CHAIRPERSON:  And how did you go about allocating the revenues from national advertising.

2024          MR. ROTHSCHILD:  Commissioner, the national -- how did we come up with the revenue budgets for each of the stations?  Is that what you're asking me?

2025          THE CHAIRPERSON:  Well, revenue projections of national sales show up in all of them.

2026          MR. ROTHSCHILD: Yes.  Well, we have national we have regional and we have local.

2027          THE CHAIRPERSON:  The local I suppose is not too difficult, regional.  But national, how do you allocate -- how did you allocate in the financial projections the revenues from national, how did you --?

2028          MR. ROTHSCHILD:  We're talking national advertising revenues here Commissioner.

2029          THE CHAIRPERSON:  Yes.

2030          MR. ROTHSCHILD:  Those revenues, and I may ask Rob Young to talk about it, but those revenues you are seeing for -- all the air time revenues are a function of the projected share of tuning that we anticipate for each of the stations in a given markets.

2031          THE CHAIRPERSON:  But that wouldn't be to the local, would it, would local be then whatever that station sells in totally local air?

2032          MR. ROTHSCHILD:  The active revenue, local, regional and national is a function of their share of tuning and then the national portion of each station was built up by looking at where we projected the revenues coming from for each station in terms of national buyers and agency buys based on demand for each of the particular markets.

2033          THE CHAIRPERSON:  And the programming expenses?

2034          MR. ROTHSCHILD:  The programming expenses for each market are -- are what you are seeing in there is the -- the local programming is assigned a hundred per cent to each of the stations.  If you are asking me about the two per cent of -

2035          THE CHAIRPERSON:  96, two and two.

2036          MR. ROTHSCHILD:  The two per cent of the $10.6-million is a reflection of what we believe the business model in Hamilton and the business model in Kitchener can sustain. So we looked at it and said how much can we allocate to each of those stations and still have a viable, sustainable business in each of those markets.

2037          THE CHAIRPERSON:  In your financial you have a line for contra.  And contra revenue -- and you do speak at 10.3.3 of the -- of part one of the application of pursuing contra opportunities where appropriate and allocated four per cent of the inventory to these purposes, and to a value of half a million dollars in year one.  But it does rise in the same growth.  Although lower, at 10.3.4, you say the station has not scheduled any paid programming opportunities.  So what do you mean by contra, we all have a different understandings.  Sometimes contra is paid programming; sometimes it's advertising for -- and getting plane tickets in return.  What is it intended here?

2038          MR. SHAFER:  Madam Chair, the contra budgets that we propose are primarily for marketing promotion of the stations.

2039          THE CHAIRPERSON:  I see.  So it has nothing to do with contra in the sense that is used sometimes in radio, for example.

2040          MR. PRICHARD: Not in the sense contra was used a couple of days ago in the hearing.

2041          THE CHAIRPERSON: Or in programming, okay.

2042          Now, you have arrived at a definition of what is a regional advertiser in your supplement brief at page 22.  Can you expand on that?  What is the difference between the local and regional advertiser?  What you say there is, a retail advertiser who has a number of locations in the various central market areas.  So what would -- where would the line be drawn between regional and the national advertiser?

2043          MR. ROTHSCHILD:  I am going to start on this and then if we need some additional help on this I may ask Nancy Brown-Dacko to -- to en -- give us -- share with us, enlighten us with her experience in actually selling it.  Every company in this area creates its own definitions.  We look at national as being a brand to purchase nationally.  We see regional as being multioutlet and multimarket, examples that I can think of in this region would be Future Shop, Leons, Tim Hortons, so that's how we're defining regional.  And regional for us will be sold locally by a specialist in each of the local stations as opposed to the way it's often done which is sold by the national rep house.  Nancy, is there anything you can share with us on that?

2044          MS. BROWN-DACKO:  I think you have covered most of it, Eric.  I would like to add that the regional accounts that we're talking about today would definitely be serviced in each market and that's why we do with the local business, the local stations for Kitchener, Hamilton and for Toronto.

2045          MR. PRICHARD:  We plan the local advertising locally, we plan to have, sell the regional advertisers in a co-ordinated effort with people located in each of the three stations,  and we use plan to use a national rep house to bring us the national revenue, at least in the first instance, as we launch.

2046          THE CHAIRPERSON:  Now, one of the important aspects of this hearing brought on by interveners and by various applicants as well is the demand for the -- for their proposal which the Commission asks -- which the Commission asks the prospective applicants to look at.  And of course the flip side is a bit the impact on existing advertisers, on existing licensees, rather.

2047          You have in schedule 6, if -- I think I am correct, that 22.5 per cent of your revenues would come from local, 22.5 from regional, and 55 from national.  And you make quite a -- a case that the majority of your revenues would come from selective TV, from selective buys, I see that at -- in -- in your -- in part 1 under the revenue projections.  And we also see there at 10.3.2 the sources of the funds and 45 per cent would come from existing off-air television stations.  Reconcile for me the idea, the two, that there is an appetite now for selective buys, because the people have difficulty getting buys because of the regionization of the Toronto and area based stations but yet -- so that would be to me, or could I not conclude from that that there is no selective buying around here?  Because there is no vehicle for it and therefore these advertisers are spending their money on billboards or radio or something else.  How come 45 per cent of your revenues will come from existing television stations, if the majority of your revenues will come from selective buys, for which you say there was no vehicle for at moment?

2048          MR. PRICHARD:  I will ask Eric to answer that question.

2049          THE CHAIRPERSON:  Do I get a D for that question?

2050          MR. PRICHARD:  No, you get an A for that question, You get an A plus for every question, I assure you.

2051          THE CHAIRPERSON:  Do you understand, Mr. Rothschild.  I am going to get a PhD by the end of this session if I don't quit soon.

2052          MR. PRICHARD:  You're doing a great job.

2053          THE CHAIRPERSON: I don't respond to that.

2054          MR. PRICHARD:  The -- just -- Mr. Rothschild will answer the question.  With respect to the breakdown of national, local and regional, we have actually filed a different number for each of the three stations.  You gave the Toronto numbers, but as you know we have for Hamilton and Kitchener a somewhat different mix, but Eric will be more specific on the chairman's question.

2055          MR. ROTHSCHILD:  Commissioner you are asking me about our year one revenues.  Why is it 45 per cent?

2056          THE CHAIRPERSON:  Yes, and of course the question will be, where is it that there is likely to be, at the moment, selective sales?  Would there be some in Kitchener?  Would there be some in Hamilton?  And if there aren't any, then that going to be the majority of your funds, because you are going create a new vehicle for advertisers why do you expect to to take 45 per cent of your revenues from existing stations?  Is that not a a bit contradictory?

2057          MR. ROTHSCHILD:  It is and it isn't.

2058          THE CHAIRPERSON:  So I at least have tried.

2059          MR. ROTHSCHILD:  What you are seeing there and I think we have said in the assumptions, Commissioner, is that's what we expect to happen in year one.  Year one is a very different year for a television station.  We are launching, we're selling without numbers, we are selling without a history in the marketplace.  And so we sit there and we have talked to media buyers, we've talked to our advertising managers in our newspapers, Nancy Brown-Dacko drew on her own personal experience and we said, what do you think reasonably we can expect to draw in year one, if we have to go out and sell without numbers?  And we came up with our ratio of sources of news sources and moving from existing sources including television.  And we also looked at, in looking at precedent in terms of what happened in other markets.  It's an art, it's not a science and -- but I think what we have also seen is our projections is pretty well in line with other applicants' before you in this process.  And those are our best estimates in year one when we're coming out of the block and not having raised and we're trying to sell on is concept.

2060          THE CHAIRPERSON:  You say that your projections are similar to others, but the point I was trying to make is you emphasize that you are going to almost create a niche for yourself, where you will be the vehicle in which selective buying can be done.  And I am trying to figure out you know, where -- who is going to get the brunt of that competition and how high is it going - is the source of revenue taken from other stations be if they don't offer the opportunity for selective at the moment, which is one of your arguments.

2061          MR. PRICHARD: As you know, Madam Chair, we imagine that we offer a very focused buy, Toronto, Hamilton, Kitchener or any combination of those and that will attract some advertisers who previously are unable to get as selective a buy and will -- and are buying more broadly, but don't wish to and will also attract some buys from people who at present don't come on to the air because they can't get that selected buy.  Rob Young is our principal buyer expert and perhaps, Rob you could supplement what Eric and I have said.

2062          MR. YOUNG:  The question relates to you know, whether there is some problem in logic to limiting the source of revenue to existing stations while at the same time suggesting that there is a lack of local inventory available for advertisers and it would be --

2063          THE CHAIRPERSON: -- Excuse me but also national selective probably.

2064          MR. YOUNG: All advertisers.

2065          THE CHAIRPERSON:  -- is what I was focusing on.

2066          MR. YOUNG:  Right, all advertisers.  And it would be our -- our point of view that it's not an illogical kind of a notion because there are -- there are some advertisers who have vacated the medium as the TV stations in the Toronto/Hamilton market have moved to full provincial coverage.  But there are a number of advertisers who have stuck with the television medium because -- because it's the medium of preference, and have, if you will, they bit the bullet, they have accepted the higher costs of reaching into markets that they don't really want.

2067          So in a way, two types of advertisers here.  The ones who have said you know, we don't want to be in the television medium any more because it's become too inefficient for us so they step back from the medium, and other advertisers who have said we will take what is being given to us, we don't particularly like it, but we are prepared to pay the premiums to -- in order to stay in the medium.  And that goes very much to how the source of revenues have been proportioned between 45 per cent existing television stations and the balance, 55 per cent, which is principally going towards those advertisers who we would be bringing back into the TV medium as a result of providing coverage in markets that they really want.

2068          THE CHAIRPERSON:  That would be the 50 per cent, 30 per cent new non-TV and radio, right?

2069          MR. YOUNG:  Correct.

2070          THE CHAIRPERSON:  Money that is spent on other forms of advertising, maybe The Toronto Star.

2071          MR. ROTHSCHILD: We wish you hadn't mentioned that with the publishers in the room, but yes.

2072          THE CHAIRPERSON:  And then new TV and radio, new refers to new advertising funds going to Hometown that were not going to TV before.

2073          MR. PRICHARD:  Correct.

2074          THE CHAIRPERSON:  Correct.  You have -- it probably the same gentleman, I'll never find you on this sheet --

2075          MR. PRICHARD:  Rob Young.

2076          THE CHAIRPERSON:  --can explain to perhaps to us how the - Ipsos Reid market research was used to convert your projected audience share figures, which then of course has something to do with your projected revenues.

2077          MR. PRICHARD:  We have Jeff Vidler and Rob Young sitting side by side and they can do the hand off between them on this question.

2078          THE CHAIRPERSON: Because it's my understanding that you use that research as the basis--

2079          MR. PRICHARD:  Absolutely.

2080          THE CHAIRPERSON:  --for -- for your projected market share and revenues and then added the growth of four or five per cent over time.

2081          MR. ROTHSCHILD:  We used the Ipsos Reid audience research to determine interest levels and determine a potential share and then that was used by [Harrison Young] [inaudible], Rob Young behind us to develop a revenue model.  So why don't we start with Jeff Vidler to explain how we came up with it and if you want additional details on how the revenue model built from there, we can go back to Mr. Young would you like us to?

2082          THE CHAIRPERSON:  Yes, I don't need market 101, market survey 101, but it was explained to us yesterday by the applicant how this was done so -- in a -- if I don't get the whole benefit of your response, staff will.

2083          MR. VIDLER:  I will be happy to lead through the process for the purpose of staff and others interested.  The objective of this was a by-product of the effect of the demand research and the objective was to arrive at a realistic audience estimate that would be rooted in actual viewer demand and would reflect in effect the sensitivity of demand in each of the markets and by various demographics.  What we did, fundamentally, was apply a series of filters to the overall demand that was expressed for the channel.  We looked only at those viewers who said they were very likely to tune the channel and who indicated in a follow-up question that they expected to view it more than once a week.

2084          We took that pool of viewers, that small pool of what we considered core and secondary viewers and reviewed how much time they said they expected to spend with the station on a weekly basis -- and this is after sort of setting a frame of reference in terms of how much time they spend with their favourite TV station.  Took that figure, that tuning figure the estimate of tuning per week and then cut that in half to account for some respondent overstatement, which is typical in this kind of a setting where you're talking about hypothetical, in fact in this case, a wholly new concept of television.  Cut that figure in half and then took that adjusted figure; divided into the overall pie of tuning and then came up from that with an adjusted -- with a projected share of tuning for each of the three markets and that was then passed on to Rob Young at HYPN, who took those demand inputs and built that into the HYPN share of revenue model.

2085          MR. YOUNG:  So then Jeff gave me those numbers and those, for the purposes of staff following this, would be on page 460 of the application.  These shares of tuning were given to us for each of Toronto, Hamilton and -- and Kitchener, London.  What we did is we merged Toronto/Hamilton into one share of tuning number and we -- so we were left with basically two shares of tuning numbers: one for Toronto/Hamilton and one for Kitchener/London.  And this represents for us the potential share of tuning that Hometown Television is going to be able to achieve eventually. 

2086          These numbers are very useful for the purposes of predicting revenue for the station because there is a -- a strong relationship, a strong proxy between share of tuning and share of revenue.  And in a third -- or an additional step following this is we took those shares of tuning and re-expressed them as a share of tuning just for the television stations that advertisers can actually buy commercials on in the Toronto/Hamilton market and in the Kitchener market.  So we have to -- we have to re-express share of tuning, if you will, a share of buyable tuning, a share of tuning just expressed against stations that don't include the specialties, that don't include tuning to Atlanta, that don't include TVO.  Just looking at the stations that advertisers can buy time on in Toronto and Hamilton.  This gives us a share of revenue, a sense of share of revenue for the station.

2087          But again that's -- it's potential, we had to factor down these potentials to reflect the launch of a new station in year one.  These were factors which we looked to, recently launched stations in Calgary, Edmonton and Vancouver, to see how they built their shares of tuning over time.  And these factors were applied against those potential revenue numbers. 

2088          The only other part of the equation that we needed to deal with was an evaluation of the total television marketplace for Toronto/Hamilton and for Kitchener/London and that was the final stage in our analysis.  We -- we turn to Stats Canada reports for that information, which are in turn based on CRTC financial releases.  We looked amount the Stats Canada numbers for the Toronto/Hamilton, for the stations in Toronto/Hamilton and we looked at the Stats Canada numbers for south-central Ontario to be reflective of London and Kitchener.  We had to add CBC in there.  We had to make sure specialty channels were out of there and then we had to kind of move those dollars figures up in time three years to get to our first year of operation, and make one additional adjustment which was to take out revenues for those stations that are spilling into other -- that might be -- might be used by advertisers to reach other markets in Ontario.  That was, in essence, the exercise that was gone through to created the market valuation.

2089          So we have a value of the market, we have a share of revenue, we have that share of revenue building up over a seven-year time frame.  Just do the multiplication and that produces our annual revenue estimates for Hometown Television in each of the seven years.

2090          THE CHAIRPERSON:  The -- the exercise, using our numbers and statistics, et cetera, is to establish the entire revenues in the Toronto/Hamilton and Kitchener/London areas, correct?

2091          MR. YOUNG:  That's correct.

2092          THE CHAIRPERSON:  And then you use these steps to come to on the basis of Ipsos Reid, to come to a proportion or per centage of that large number that Hometown can expect?

2093          MR. YOUNG:  That's correct.

2094          THE CHAIRPERSON:  Now, I am really going on a limb here, would I be right that the result of that is a prediction that in the Toronto/Hamilton area that per centage would be three per cent in year one, growing to 9 per cent in year 7?

2095          MR. YOUNG:  That's correct.

2096          THE CHAIRPERSON:  Of the expected mass of revenues in those areas.  And the methodology you explained will be found in the HYPN, the four step --

2097          MR.YOUNG: I think that's correct.

2098          THE CHAIRPERSON:  -- methodology.  Well, I haven't failed yet, Mr. Prichard. 

2099          The severability of -- oh, no, before, we have asked everybody to opine on how much money goes out from this market to Buffalo.

2100          MR. PRICHARD:  Mr. Young will respond for us as our expert on this, you will find our estimates are the same range that others have put before you this week.

2101          THE CHAIRPERSON:  So 20 to 25 million range?

2102          MR. PRICHARD:  Rob?

2103          MR. YOUNG:  Yes, we are in agreement with the -- with the numbers that you have heard, which you heard yesterday.

2104          THE CHAIRPERSON:  Without specifying any particular station sometimes it's confusing because they seem to focus on the FOX station, but that would be the -- the range of money that presumably would -- would be available if one is -- were to succeed in being repatriated.

2105          The severability of your proposals.  You address that in the deficiency letter at page 8 and 9, the one dated 12 September.  And am I right in gathering that without Toronto this is not viable and also in concluding that your position is that this is a -- this is a proposal that, in arguing that it would be in the public interest or the interest of southern Ontario, and perhaps to the system to license, you would want all three antennas?

2106          MR. PRICHARD:  Yes.  This application, we cannot proceed without Toronto, your first point.  Second, yes, it's our position that the best -- the best way to advance the public interest would be to grant the three licences: Hamilton, Kitchener and Toronto.  We can accept Toronto alone, we can accept Toronto and Kitchener or Toronto and Hamilton or Toronto, Kitchener, Hamilton. What we can't do is Hamilton alone or Kitchener alone or Kitchener and Hamilton together because none of those can support, as you noted earlier, the commitment to independent production, which we have allocated principally by way of cost, 96 per cent of it to the Toronto station.  So I believe that's consistent with the answers -- response to our deficiencies.

2107          THE CHAIRPERSON:  Now if I put on the one hand that your view is it's of the public interest to implement all three, but on the other hand that Toronto would be viable alone, would you have a problem with a requirement that all three, if you were -- if they were approved, all three would be implemented?

2108          MR. PRICHARD:  We would welcome such a requirement; that is our first preference.

2109          THE CHAIRPERSON:  To see that as in the public interest, that you wouldn't just implement Toronto, even if you were given all three stations. 

2110          Now, cable distribution you address at some length as an appendix I think attachment A to a letter dated March 9^th, the one in response to the Commission's letter of January 30th.  And I think also in a later question you were asked whether you had had discussions with the cable companies because your first response to that was that no, your proposal was confidential.  Have you had further discussions with the cable companies with regard to carriage?

2111          MR. PRICHARD:  No, we have advised each of the relevant cable carriers of our plans after our applications were made public, but we have not had discussions with them.  We're confident we would reach mutually-agreeable arrangement with them and have a good relationship at present with Rogers with respect to TSTV.

2112          THE CHAIRPERSON:  Now, as in the other cases, there would be I think a possibility of overlap. Mr. Rothschild is smiling.

2113          MR. PRICHARD:  I think he's smiling because we hope you will ask Mr. Stacey some questions because we love him as a member of our team.

2114          THE CHAIRPERSON:  First for you as an applicant, what is your view about the possibility of overlap and having two of these stations, albeit separate stations, available in the same market?  I understand there will be some programming, it will station over the transmitter, but do you have a position as to what rights you would expect from cable companies?

2115          MR. PRICHARD:  We would seek carriage of only one signal in each of the markets.

2116          THE CHAIRPERSON:  Despite the fact that technically it's a different station.  And so you would be willing to say that publicly --

2117          MR. PRICHARD:  We will say publicly we would waive our right for the second or third signal.

2118          THE CHAIRPERSON:  -- you would be ready to.  Mr. Stacey maybe can answer the question as to what I put forward as a possibility or an understanding, which may stand to be corrected, that in the Toronto area we now have interconnecteded systems that make it difficult once you carry it by a cable company to limit the signal to a -- a particular area, but that you are into all the systems that are interconnected to that infrastructure.

2119          MR. STACEY:  Well, Madam Chair, as you know in the Toronto area and other metropolitan areas, cable  companies that are adjacent often carry a common lineup and sometimes it's convenient for the table operators to trunk around those common signals from one head-end to the next.  And I think I understood your question, I believe what you're asking is, is it a problem for a cable company in an adjacent area to remove perhaps one signal from a number that are being trunked around, and insofar as they go through individual head-ends, I can't really see any reason why signals cannot be added, deleted or changed.

2120           And just as an example, I did look at what occurs with the Rogers system, for instance, between the Toronto Rogers cable territory and their Whitby/Oshawa territory.  Basically it's the same lineup, the same number of signals and the same signals are being carried but they do have a number of different placements of the same signals.  So there are at least five or six channels that are carried on different placements in Toronto and in Oshawa.  So that tells us that the cable company is able to make those kinds of changes if and when it's appropriate.

2121          THE CHAIRPERSON:  By placement you mean on the band?  For example, a signal that has to be on the lower end of the band is there where it has to be, but it's carried somewhere else higher on the band, is that what you mean by placement?

2122          MR. STACEY:  What I am saying is that it's possible for the cable companies when signals pass head-ends to make changes and if it is no longer appropriate to carry a particular signal in an adjacent area because it's not a priority under your cable regulations, then the cable company does have the power to be able to remove it.

2123          THE CHAIRPERSON:  To remove it altogether.

2124          MR. STACEY:  Yes.

2125          THE CHAIRPERSON:  But you didn't just mean by placing it somewhere else.  But anyway, you are on the record as to your position on cable distribution, and I will now deliver you to Commissioner Pennefather.

2126          MS. PENNEFATHER:  Thank you, Madam Chair, good morning.  I would like to go through the area of synergies, cross-media ownership, bringing us to diversity of voices and editorial independence.  But the starting point for the discussion I would propose is your supplementary brief at page 15, which I think goes back to the starting point that Madam Chair laid out, and that is your vision why this is happening, and then move from there into the effects of that in terms of synergies and then perhaps the concerns we may have in terms of -- others may have in terms of diversity and editorial independence.

2127           And the paragraph I am focusing on, that I found very interesting, is the second paragraph on page 15, that your strategy is to consolidate its position as the premier source of local and regional news, information and entertainment in southern Ontario, regardless of the medium people choose to use.

2128          So would it be fair to describe this strategy as one of Torstar expanding its reach and its voice in this market?

2129          MR. PRICHARD:  Yes, it would be extending the reach of our voice in a sense of a presence in relating to the citizens of southern Ontario in these multiple media.

2130          MS. PENNEFATHER:  In so doing then, and I will come back to that statement, because to me it brings out some of the positive elements and perhaps some concerns because it would appear then to be one - if you follow me - one voice but through different media.  And we will see where that takes us.

2131          One of the places it is takes us, according to your supplementary brief, is synergies.  Could you expand a little more on these synergies?  I should say also that there is considerable discussion on the record on these points.  What I am trying to do now is expand and clarify on certain key areas.  Could you tell us, then, more about these synergies, what they are, some examples, and are you able to give us any sense of the kind of savings or efficiencies specifically that this convergence, or your convergence game plan would offer?

2132          MR. PRICHARD:  There are two directions to this.  One is content, and the other is promotion.  Let me deal with each of them because in our minds they are both part of what works here.  In terms of content, and our capacity to reflect local reflection, knowledge of the communities, the region, we believe our roots in these communities which are deep and long, each of the daily newspapers is over a hundred years old in these communities, we believe that gives us a knowledge and a connectedness to these communities which will greatly assist us in producing television, commissioning television, that will be response to these communities.  These papers have succeeded because of their capacity to reflect their community; it's the essence of their success.  So we think whether it's the archives that are available, the image archives of the newspapers, the photo libraries of newspapers, the talent  in the newspaper, Ms. Shah referred to Christopher Hume, the architectural critic, he being a person who knows the architecture of our region, our cities particularly well, using him as a host of a show.  There are all kinds of ways of in which the content, the written content, the archival content, the human talent can be used to give us a running start at producing television which is equally responsive to the interests and the needs of these communities.  That's the content side.

2133          The promotion side is also very important here because we think it is a key to our ability to bring audiences to the content we're proposing.  It has not been easy for Canadian broadcasters to attract substantial audiences in prime time to Canadian content.  We believe we can use the promotional power of our daily newspapers which have an extraordinary reach in terms of reaching people in southern Ontario -- two and a half people million people a week read one of our newspapers, so an extraordinary reach in these communities and we think we can use their promotional capacity to let people know what will be on Hometown Television so that people will know they will see themselves there and we believe, so informed, they will watch.

2134          There is a real difference between newspapers and television with respect to promotion.  In television, if a minute is used for proposal purposes, it's not a minute that can be sold to an advertiser.  Newspapers are different.  In newspapers, if we wish to promote our television station, as we plan to regularly in our daily newspapers, we do it not by excluding an advertiser but by printing another page. The cost of that promotion to a newspaper is only the cost of paper and Ink.  And that, we think, is the way is the way we will be able to make sure everyone in these communities knows about Hometown Television, about the schedule, drawing attention, who will be the guest on television that night on Talk TV,  Who will be there that night.  What will be on this week.  We can do that in a way that we believe is unprecedented for Canadian content, for promoting Canadian content, local content, and regional content.

2135          Let me give you an example of a the power of this.  It's enormously powerful what these newspapers can do.  Workopolis, which as you know is a career Internet-based business, but for careers, it was begun by the Globe and Mail, Globe Careers, it was put on the internet and it was getting five million page views a month.  We then formed a partnership between BellGlobemedia and Torstar to put our two - our career advertising together with theirs as a joint -- as a shared career site, and as part of that, both The Globe & Mail and The Toronto start promote the site in the way I'm describing we would for Hometown Television. 

2136          In the two months following, adding The Toronto Star's promotional power to The Globe & Mail, the page views went from five million a month to 25 million a month on Workopolis.  As you probably know, Workopolis is the one career company around the developed countries of the world where monster.com the American company, has not prevailed.  And in fact we have a home-grown, Canadian dominant player which is Workopolis and we would submit it's because of the promotional power.

2137          So our sense of synergy is that we could use the promotional power of the newspapers to drive audience to know what's there.  And then, we believe, when they see themselves they will become loyal viewers.  And on the first side, the content using the resources of the newspapers, their knowledge of these communities, the archival resource, the human resource, we believe that will give us a big head start on content, development and reflection of these communities.

2138          MS. PENNEFATHER:  I think it's on the very last few words that I am most interested. I understand totally your points about promotion and you do mention it in your supplementary brief. 

2139          I think what's important to understand here in this discussion obviously, and I know you see that too, is -- our concern is the broadcasting component of this convergence game plan, to use your phrase, and what advantages to that broadcasting component does this bring, and does it go beyond the promotion to what we're actually seeing on the screen.  How will this convergence game plan offer new diversity to the viewing public?  You have, and rightly so, in the video and just now, brought us back to the history of the newspaper and brought it forward into the present and your interest now in a new medium.

2140          One could make the argument that it is in the sense the same voice moving forward into new medium, as opposed to offering something new.  And you have indeed in other documents on file in the deficiencies, March 9 for example, in response to our January 30th letter, you make the point of a new voice.  But that new voice, in and of itself, already exists.  What is it that you will do which will offer diversity to the viewing public?  I'm talking about the effect on the public now.

2141          MR. PRICHARD:  First, I will try to answer but I welcome comments from my colleagues on this.  I want to correct, perhaps, a misimpression that Torstar has a single newspaper or editorial voice.  We don't.  Each of our newspapers has its own voice and its own editorial policy independent of each other, and proudly so.  This is a newspaper company which owns multiple newspapers, but, for example, in the last provincial election the Toronto Star supported one candidate for Premier, and the Hamilton Spectator supported the -- supported a competing candidate for Premier.  The Hamilton Spectator being on the [inaudible] side and the -- but my point is not about which side side was the right side, my point is complete independence of voice from of each of our newspapers, not a single voice.  So when I speak of us as a new voice, it is a new voice in the sense of a new participant in Canadian broadcasting which will -- in the same way that our newspapers have separate editorial voices.  As you know from our filings, we'll have a separate news gathering capacity, separate assignment capacity, separate news judgment being made at each of the stations. 

2142          So you don't want to have a single-voice image of us because it simply doesn't reflect the reality of what we are.  What's new, what we believe is new here is that because of our groups in the -- in the cities, in the communities, in the regions, we will, using the three hundred people, using the independent production community, we will put on air content that is not there at present for the viewing public. 

2143          It's in that sense that we are a new voice, that we will complement and supplement what's already available in part by drawing on our knowledge and roots in these communities and the resources we can command in our newspapers and in these communities, because we know them so well -- I mean, to create new content, to create new programming, to create an intensity of programming that reflects or cities and reflects our regions and we believe these are very distinctive, very interesting, very vibrant, dynamic communities.  They are communities which are quite extraordinary not just by Canadian terms, but by world terms.  The diversity, for example, of Toronto is not a matter of just Canadian interest, it's a matter of world wide interest, the extraordinary diversity. 

2144          We believe, in the very same way, our newspaper in Toronto has been a leader in reflecting that, interpreting that, and celebrating that.  A commitment like we are making to television in the same community can do the same -- with its voice, with its editorial judgments on its own, but using that knowledge of community, connectedness to community, rootedness in community, we believe we can do a uniquely good job.

2145          And then it's the other side, which is making sure people know it's there because we believe one of the reasons that Canadian content has not been as successful as it deserves to be, is not watched as much as it deserves to be, is it's relatively underpromoted.  We're swamped with the promotion of American product because of all of the ways in which we experience that in our daily lives and the Canadian product gets underpromoted in relative terms.  And we think by bringing the promotional power of the newspapers to bear we can put Canadian content on the same basis in front of people knowing it's there and we think that will really help with audience.

2146          MS. PENNEFATHER:  Thank you, Mr. Prichard.  You won't get any argument from me on the importance of promoting Canadian content, nor its value but I think we could focus our discussion, again, to what's on air.  And it's fair to focus on what's on the news and information programming and let's go a little further on that point.  You do say in your supplementary brief again on page 15, you describe that relationship as a positive component, you have already demonstrated that.  You say here that Torstar expects Hometown Television to work closely with Toronto Star's daily newspapers in Kitchener, Hamilton and Toronto.  "We expect reporters from the newspaper will appear as guests on programs such as Day's End.  We expect to draw the archives of the newspapers.  We expect that What's On, the daily Hometown Television entertainment magazine, will regularly feature similar material and stories as the entertainment sectors of our daily newspapers and finally, we expect a close working relationships with our daily newspapers."

2147          Not putting aside, too short a shrift the value of the interchange one would also read from that a combined approach to newsgathering, to news presentation, to news perspectives.  How would you address that concern?

2148          MR. PRICHARD:  I am going to ask my colleague Mr. Rothschild specifically to speak to the organization of the news function.

2149          MR. ROTHSCHILD: Commissioner, first and foremost what we have proposed in the application is that there would be no sharing of editorial staff.  There would be no sharing of management level so there is a separateness in terms of the organization and that's what we have proposed as part of the application.  So we have separate management, we have separate news gathering, we have separate editorial policy, there is a structural separateness of the two organizations.

2150          MS. PENNEFATHER: That's clear in the deficiencies as well so you would call that your operational separation?

2151          MR. ROTHSCHILD:  That's right.  So at the operational level that's what we have.  A separateness.  In terms of how we were talking about working together in the sharing relationship, what -- how do we see the working relationship working?

2152          You can see the editorial committee at the -- at the television station, the assignment editor, the producer sitting down each morning to figure out the daily lineup.  What are they covering. It's natural to sit down each morning and figure out the day and again at the end of the afternoon to see how are things unfolding.  And it's natural to think that at the stations you can see a conference call happening of what are we doing in Kitchener, what are we doing in Hamilton, what are we doing in Toronto.  And you can also see that that type of information would be shared with the desk at the newspapers to find out where they -- what are they covering and to see if there is anything the television station isn't aware of that the newspaper might be aware of.

2153          But at the end of the day, the television station has to go out and ensure that it provides coverage that that's relevant to its community and is, in and of itself, a terrific editorial source for that community.  I mean if your news isn't relevant, if you don't cover the stories of the day, you won't have an audience.

2154          We see an opportunity to draw on the expertise, the columnists, the experts of the newspapers to draw -- to invite them on to shows like Prime Time or Day's End and have them clearly identified as Antonia Zerbasias, the television expert from the Toronto Star being on one or our shows or Jim Kensey on wheels talking.  That will their choice, whether they choose to come on those shows and certainly no one is going to require them to do that.  But we see that there is a real opportunity to do that just as we're seeing reporters for the Globe and Mail regularly appearing CTV, and as we see reporters for the National Post regularly appearing on the CanWest Global stations.  We can see that happening with us as well

2155          MS. PENNEFATHER:  Thank you for that and I would like to reiterate that you yourselves have approached this whole question with considerable -- considerable length in both your brief and particularly the deficiencies and have proposed separation of operations.  But I think it's fair to say again that what we're talking about here is, if licensed, we are looking at a broadcasting undertaking and how that broadcasting undertaking, particularly in terms of its news and information and perhaps other programming as well, will really have the independence it should have in terms of where it sits.  And that, to use your own words, is within and under a corporate umbrella, and those terms I take from our own supplementary brief.  So that your separation of operations is your proposal as one step towards maintaining that editorial independence, and the diversity of voices that ensues from that.  Is that correct?

2156          MR. PRICHARD:  That is correct, and it is a diversity of editorial voices within, as well as for, the broadcasting division.  We see the television licences, the three stations forming a division of Torstar, a business unit of Torstar headed by a president, reporting to the chief executive of Torstar Corporation.  Comparable to the way the newspapers or the publishing company reports as a separate business unit.  So operationally separate, at the level that Eric has described, and operationally separate all the way up, but taking advantage of the positives that I have tried to set out as well.  Because we don't think it's easy to reflect community, to know community and to reflect community as we -- we believe it's a significant advantage that we bring to the application, when we say we're going to do local reflection and know these communities.  We think drawing on those resources to help us do that is very positive because we think we can be measured by the depth of resource we have and the record we have.  We have chosen as a company to reflect community, that's been our choice.  We're not a national newspaper with the Toronto Star in the way that the Globe and Mail or the National Post is.  Our distinctive franchise, our distinctive contribution, our distinctive voice in Toronto is that we reflect communities broadly of greater Toronto. 

2157          So we think it's an advantage, but we see all the risks.  We're extremely comfortable with all that you say in your CTV decision and the conditions applicable in separation.  That language resonates, I hope, on your reading with the language that we have previously filed.  We believe the two sit comfortably side by side. We're very comfortable with the Commission's position on that, and want to live to the letter and the spirit of what's your in your policy decision.

2158          MS. PENNEFATHER:  With that said then, let's go through a couple of other clarifications.  One of the responses to this issue you tabled in response to the Commission's February 22nd deficiency and your March 9th response.  And you attach a copy of a policy manual.  First of all, it says draft, is there a final version?  Or can I assume this is the correct version?

2159          MR. ROTHSCHILD:  It's still in draft form, Commissioner, and I expect it will remain in draft form until such time as we were successful in being licensed, at which time we will ensure everything remains appropriate.  And I think what you are seeing is the vast majority is locked down, but we will refine it right up until the time that we have a licence.

2160          MS. PENNEFATHER:  That's why I think it's important to ask you a couple of questions about the policy manual.  It's a very thorough presentation.  I am not a journalist, of the journalist profession.  I have had the privilege of working in an organization such as the National Film Board, but I would never presume to assess this from a journalistic principles point of view.  But it's very thorough in that regard.  What my question is is that I -- as I read it, it doesn't specifically address, or does it, this issue of the independence of the broadcast newsroom and the independence of the newspaper newsroom.  Basically, as I read this document, you have taken these principles and applied them to Hometown Television.  But within the text, or within the interpretation of the text, you see it also as a guarantee of the very independence, over and above the operational separation, of the attitude of the spirit of the intention of your proposal for independence of newsroom with a broadcast undertaking.

2161          MR. ROTHSCHILD:  We see this as a -- the policy manual is based on the policy manual that we use at the Toronto Star.  And it is a statement of principles and trying to -- and put some flesh around those principles is how we will expect that our people to govern themselves and how we expect them to operate on a day-to-day basis.  So it's in that vein that it's put forward as a policy manual.

2162           MR. PRICHARD:  I think you're right though, Commissioner, that in the text of it it doesn't address directly this issue that you have been asking about.  We wrote this as a manual for the television stations.  We have also made the commitments about independence.  We would have no reservation about embedding right into the manual, by way of preface or the first part, that statement of principles which are embedded in your policy and in our submissions and which are the operational commitments we're making.  So if the present draft doesn't, if that would be constructive to do so, again it's our intention, it's the spirit of our intention not just the letter of our intention and we would be happy to do that.

2163          MS. PENNEFATHER:  That's an interesting suggestion.  It would also be possible to -- and would you agree that we would attach this policy manual to the licence, and also that your commitment to separation of operations would appear in your licence, and as a condition of licence?

2164          MR. PRICHARD:  Yes, in each respect.  And that we -- I believe in our response to deficiency we also indicate that if we change the policy manual we would seek your approval.  As it evolves over seven years of being a new organization, to think we have written a policy manual perfectly a year before we even go to air, I think with a policy manual, with that level of detail I think it would be important to be able to have it reflect as we learn and as we develop.  But we would accept that would be with your approval rather than something we could do unilaterally.

2165          MS. PENNEFATHER:  And keeping things as simple as possible; the terminology.  It's called a code of conduct at one point to which you say you agree to a condition of licence.  So we are talking this document, we are talking about, as well, including separation in an operational sense of the newsrooms. 

2166          There is one other piece --

2167          MR. PRICHARD:  Both of those, the answer yes.

2168          MS. PENNEFATHER:  Okay.  There is one other piece to this approach that you yourself mentioned in terms of other decisions the Commission has put forward, and that is what's called a monitoring committee.  We noted in your application, it's noted in what's called schedule D that there will be an internal station committee to deal with issues arising from the codes.  Now, the codes here are the CAB voluntary code on violence, ethics and so on.  To respond to any concerns which might from time to time be raised by viewers.  This committee, does it have any relationship to the matter of editorial independence?

2169          MR. ROTHSCHILD:  Commissioner, we have three different committees under Hometown Television.  First of all there is the programming committee which we have -which ay we have filed the draft resolution from the Board to establish a programming committee to ensure the editorial independence of Hometown Television from Torstar.  The second is that we have an internal editorial committee which is -- which is a working committee that I was describing to you earlier, that is the senior management deciding on stories of the day.  The third is issues or complaints committee which you are describing right now, which is again an internal committee which would include the vice-president of programming, the news directors, to be dealing with any issues or complaints that arise from the public.  And so those are the three committees that we have.

2170          And then we have a fourth component in this and that's our community awareness forum.

2171          MS. PENNEFATHER:  If you don't mind, I would like to get to that in the next session.  But my question was specifically, was I right in assuming that one of the roles the of the internal committee, the last of the three you mentioned, would be to receive complaints, concerns, comments on this issue of editorial independence and diversity of voices?

2172          MR. ROTHSCHILD:  Yes, it would be.

2173          MS. PENNEFATHER:  It would. And this committee I think you described its composition right now and in the deficiencies.  One last question on this particular committee and its particular role in relation to what we are discussing was, in the same deficiency, March 9, response to February 22, you discuss this committee and the internal station committee which is why I raised it as potentially the committee of interest here.  And in the end you say we see no benefit enshrining an obligation to have an internal committee or the mechanisms or guidelines under which it would operate under as a condition of licence.  Can you explain what you took that position regarding the role of this committee?  Because it is raised in this response in terms of our discussion of editorial independence.  What is your reason for not also having a condition of licence in this respect?

2174          MR. ROTHSCHILD:  Commissioner, what we felt was we had put forward a range of safeguards and commitments to ensure the editorial independence of the television stations and we -- and so it was -- it was our opinion that we put -- that we wrote there, that it was -- there was no need to codify it as a condition of licence.  If the Commission in its wisdom feels it would be better to have it as a condition of licence it wouldn't be an issue for us.  We can live with that. 

2175          What we were saying is we thought we had put through a range of safeguards already and we didn't see the additional benefit of having this one.  But if in your wisdom you think that that would provide better assurance, or better tools to ensure that we fulfill this, it wouldn't be an issue.

2176          MS. PENNEFATHER:  Thank you, Mr. Rothschild.

2177           I think now go to the issue of cultural diversity and ask you again to clarify your overall approach.  Again, I am using the supplementary brief and also what's called schedule C which is section 7.1 of the application which is the program policies, programming policies. 

2178          In several places in your supplementary brief and today you talk about how Hometown will reflect the community it serves.  And you say you will reflect this in terms of programming.  And I have been listening careful you to the discussion around the programming, the programming choices.  You also clearly put on file your employment equity approach and say well that your approach on diversity includes your work force and your program content.  It's the program content that I would like to discuss.  The employment equity plan seems quite clear although I will come back to that at the end. 

2179          In discussing these programming proposals, inclusive of the independent production approach it's not clear to me how you intend, very practically -- the words are there, but how do you see in fact managing to assure, as you have said, that all your programming and all acquired programming reflects the cultural diversity of the communities that you -- you will be serving should you be licensed?  And there is the component of the forums, fora, which I would like it hear more about, but my first question really is on the choice of programming.  How will that be assured?

2180          MR. PRICHARD:  Madam Chair, could I ask for 120 second break?  One member of my team is not feeling well and I would like to be able to remedy that and be back to you in literally two minutes.

2181          THE CHAIRPERSON:  We could take our lunch break.  All my colleagues I believe have questions for you.  So if Commissioner Pennefather will indulge me, we will complete the questions she has and hopefully we will have a healthy panel back.

2182          MR. PRICHARD:  Thank you for your indulgence.

2183          THE CHAIRPERSON:  We will take a relatively short break though, 1:30.

2184          MR. PRICHARD:  Thank you very much.

--- Recess taken at 1216/Suspension à 1216

--- On resuming at 1334/Reprise à 1334

2185          THE CHAIRPERSON:  Order please.  I don't know if Mr. Noble is in the room, but if he is, I hope his phone has been turned off, and if not and you see him, tell him.  I also want to remind participants that we will hear Rogers this afternoon and we will hear you, the applicants, in reply.  So if there is any need for Gatorade, you have to get it at the break.  Are you all set to continue?  I hope you have resolved your difficulties.

2186          MR. PRICHARD:  We are.  One of your colleagues said if he feels the need to leave he should do so without interruption.  He will just slide out, if he can't stick with us.

2187          THE CHAIRPERSON:  Absolutely. Commissioner Pennefather?

2188          MS. PENNEFATHER:  Thank you Madam Chair.

2189          We were beginning our discussion on cultural diversity and indeed I was going to quote from your comments this morning where Ms. Lynn said we are excited about the concrete plans behind the promises; that's exactly where I'm at.  And what I wanted to hear more about is how you would keep to your promises that acquired and in-house programming would reflect the diverse cultural communities from Toronto, Hamilton, and Kitchener/Waterloo, and specifically -- if we take an example of the independent production funds and how you will consider this matter when choosing programming, and any other comments you wish to make on how, as specifically as possible, you see this working.

2190          MR. PRICHARD:  Thank you for that.  I am going to ask Don Shafer and to begin and then in turn Rekha Shah will comment, and Jennifer Lynn, on the two sides of our two mechanisms, but specifically.

2191          MS. PENNEFATHER:  If you wanted to go from the programming right to the advisory forum that's exactly where I was going to go.  So please feel free to do that.

2192          MR. SHAFER:  Commission Pennefather, this has been a long journey, Eric and I started this two-and-a-half to three years ago with many of the people you see before you.  When we wanted to figure out how we could do something different in television and came up with this model, the first meetings we had, we started with about 150 different ideas which have been distilled to many of the programs that you see before you today.  And the ideas are founded in research, they are founded in the history of our company.  And by being able to take the best things that we can borrow from the past and by building for the future we have a terrific opportunity.  The diversity of the programs that we see being put on the air are reflected in all of the different policies and plans and ideas that we have been working for the past two-and-a-half years.  I would like to have Rekha discuss some of the objectives of the programming policies and also talk to the various mechanisms to make sure that diversity and inclusiveness is part of everything that we do.

2193          MS. SHAH: When we begin establishing relationships with independent producers that we will be commissioning programming from, there will be a standard selection process, and in the case of Hometown Television the process will be formally established by the VP of programming.  There will also be a defined structure of producer guidelines that are available independent producers seeking to submit proposals to Hometown Television, ensuring that they meet the values and expectations set out by Hometown Television.

2194          One of the ways we hope and we know we will get programming suggestions are from the community advisory forum and Jennifer will speak to that a little bit later.  I would like to tell you about our selection criteria for producers, but before I do that I would like to you know that we have had many discussions, preliminary discussions with various producers of ethnocultural backgrounds, John Kim Bell from the aboriginal community, as well as Chuck Sian from the Chinese community, as well a Tania Lee Williams if the African-Caribbean community.  They have all expressed excitement for the opportunity to produce English language programming for our region.

2195          With respect to the selection criteria, it refers to both relationships with independent producers as well as our own programming in-house.  Content and concept is key.  Is the concept unique?  Is it something our viewers haven't seen before?  Does it fit within our own programming philosophies and does it reflect the diversity of our community as well as serve, and is it relevant to, the viewers that we serve?  How viable is the project?  What is the production financing for it and the projected financing for it?  What is the production schedule as well as an analysis of the budget?  We will also take a look at who the producer is, what their track record is, and what relationships they already have the industry.  We hope to provide some mentoring assistance to the producers, whether if be an introduction to distributors, assistance with the parent tax credits, that sort of thing, if they need that guidance.  And finally, interactivity.  Is there a component to any project that a producer brings that would enable an extension of that content, bringing it alive on-line.  Jennifer?

2196          MS. LYNN:  Thank you, Rekha.  I am going to address the community awareness forums.  As I mentioned in my earlier comments, the mandate of the community awareness forum is to be an advisory mechanism, and it is going to guide and shape not only principles but the program content and the practices of Hometown Television.  It's going to be inclusive and locally reflective in terms of its composition.  We see two streams in terms of the selection process for the community awareness forums.  One will be to establish representation from organizations that have the pulse of the community at the very core of their business and their existence.  That may be organizations like the Kiwanis, or the United Way.  It could be business organizations like the ICCC, the Indo-Canadian Chamber of Commerce.  All are organizations that are committed to diversity in the community.

2197          Then we will have another stream which is or open call to the community for interested citizens of each of our communities, because there will be forums in each one of these communities.  There will be an open call for individuals who are multifaceted and a committed to a harmonious Canada to come forward and submit their interest in being part of these community awareness forum.  They will meet once a month for about 90 minutes and they will talk about issues and trends out in the community.  They will be our eyes and our ears.  They will form the two-way communication bond which we feel is vital to ensuring that Hometown Television delivers on its promise of being inclusive and reflective.  But it won't stop there.  The issues and trends and the information that comes forward to us to will be delivered throughout the organization, it will be pervasive across the organization.  Briefing notes from these meetings will go to the president of Hometown Television, line management will be responsible with being familiar with the content of what is discussed at these community awareness forums.  And also there will be station management executives represented on the forums as well.

2198          And then we will produce two town hall meetings every year in which we can delve deeply into the issues of concern that have been raised by the community awareness forums.  So this is one the ways in which we are definitely going to be proving that we will deliver on our promises.

2199          Let me take it that step further, if I may.  In terms of the intelligence and knowledge that we expect exists with the community awareness forums, we have had some consultations with individuals to hear what were their concerns, and what might Hometown Television do that is different.  And if I may share with you some of the stories that they felt were yet untold, or individuals who were underprofiled in terms of their expertise.

2200          So when you talk about the financial sector as an example, perhaps Bay Street and Toronto is not the only place where we have financial experts.  Perhaps it's Michael Chin who is one of Canada's 50 richest people who is the founder of AIC Mutual Funds, right here in the Niagara region, would be a spokesperson.  He happens to be of Chinese origin.  Or maybe it's Harry Pandit of HSBC Bank, who could also talk the about financial sector.  Or if someone is concerned about issues of gridlock, perhaps we could speak to one of the largest transportation companies in the country, and speak to A.J. [inaudible]. 

2201          But let me talk about a little bit of lighter fair and the kinds of stories that is have not yet been told.  Pat Oak, is a Mohawk, an iron worker, a woman and a foreman that led of the construction teams in the building of the Skydome.  Or how about Raymond Louis, one of our Canadian Olympians from this very city who was the first African-Caribbean individual of -- from Canada who won the 100 yard sprint.  Or how about the Sharma family from Kitchener/Waterloo who are police officers on the K-W route Waterloo regional forest, and hold the distinction -- the one brother holds the distinction as the first ethnic officer in middle management in that region, and he speaks three languages.  The stories are endless as you can hear.  And these are the kind of stories that we are already building a databank on and which will continue to flow through the community awareness forums to help shape and guide programming content.

2202          MS. PENNEFATHER:  Thank you, Ms. Lynn, Ms. Shah, very complete answers.  Your are enthusiasm brings me to ask you though, in the final analysis, who will be deciding what gets on air, the advisory councils or the programming?

2203          MR. PRICHARD:  Vice-president of programming, in the end, has to be accountable for the programming -- taking advice, taking inputs to the process by the end of the day will be holding the licence and that's the responsibility.  But this responsibility, this person simply can't do her job or his job unless they do it in this highly collaborative, highly iterative way or it won't work.  It's not just it won't work up against our policies, we don't think it will work in terms of reflecting the communities and providing the compelling programming which will attract the advertisers and make it work.  So we think there is an imperative -- there is a moral imperative here, there is a community imperative, there is a business imperative.  And they all drive in the same direction to make sure we're deeply rooted in and a reflection of the community.

2204          This isn't a new idea for Torstar, take the Toronto Star.  The Toronto Star created a community advisory counsel for the newspaper.  Because, with the face of Toronto changing, it was a reaching out by the managing editor to have an advisory council.  It's been terrific.  It's made a powerful difference in the newspaper.  Some members have even appeared in the newspaper writing themselves on the editorial page.  So we know it makes a difference, we know it works and we know it works for us as well as for the community.

2205          We have one other I think real advantage here.  Which -- which is fortuitous but real, which is because we're new, because we have only the core of the team here that we're going to build, as we hire 300 people in these three stations to build our television stations, we have a chance now from the ground up, following our employment equity commitments, to actually build into the men and women of the stations of Hometown Television the reality and the diversity of the communities we're going to serve.  We can be inclusive at this stage, as we draw upon talent that is embedded here and it will be there from the ground up instead of trying to change directions for -- for an organization that had -- already has its work force.  Because we are in a position to go out and hire our work force, we can build this in from the ground up.

2206          MS. PENNEFATHER:  Thank you.  One final point on this subject.  As you know from previous decisions the Commission is interested in this area, in fact has included the requirement for a corporate plan which would bring together all the elements of your diversity program.  Are you willing to commit to do the same to present to us a corporate rate plan in a short period of time which would bring together all these elements so we could really see how your promises would remain concrete over the licence term?

2207          MR. PRICHARD:  We would welcome the opportunity to do that, thank you, very much so.

2208          MS. PENNEFATHER:  Thank you.  Closed captioning now, a clarification.  We note your commitment to close-caption 90 per cent of all programming broadcast on Hometown.  The question is the following:  Does this include captioning 100 per cent of news programming as is now generally expected of all over-the-air conventional television stations?

2209          MR. PRICHARD: Eric?

2210          MR. ROTHSCHILD:  It will be 90 per cent of all programming, 100 per cent of all news programming.

2211          MS. PENNEFATHER:  As of day one?

2212          MR. ROTHSCHILD:  As of sign-on.

2213          MS. PENNEFATHER: Thank you. Described video service?  A clarification.  You have committed to provide a minimum of two hours per week described programming in year one, and we have that on file in your application.  Can you confirm this as a commitment?

2214          MR. PRICHARD:  Yes.