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TRANSCRIPT OF PROCEEDINGS
FOR THE CANADIAN RADIO-TELEVISION AND
TRANSCRIPTION DES AUDIENCES DU
CONSEIL DE LA RADIODIFFUSION
ET DES TÉLÉCOMMUNICATIONS CANADIENNES
SUBJECT / SUJET:
VARIOUS APPLICATIONS FOR BROADCASTING LICENCES
TO CARRY ON A TELEVISION PROGRAMMING UNDERTAKING
TO SERVE ALL OR ANY ONE OF EDMONTON, CALGARY,
AND RED DEER, ALBERTA /
PLUSIEURS DEMANDES DE LICENCE DE RADIODIFFUSION
VISANT L'EXPLOITATION D'UNE ENTREPRISE DE
PROGRAMMATION DE TÉLÉVISION POUR DESSERVIR LES OU
L'UNE OU L'AUTRE DES VILLES D'EDMONTON, DE CALGARY
ET DE RED DEER (ALBERTA)
HELD AT: TENUE À:
Shaw Conference Centre Shaw Conference Centre
Salon 8 Salon 8
9797 Jasper Avenue 9797, avenue Jasper
Edmonton, Alberta Edmonton (Alberta)
June 16, 2003 Le 16 juin 2003
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
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.
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
Conseil de la radiodiffusion et des
Transcript / Transcription
VARIOUS BROADCASTING APPLICATIONS /
PLUSIEURS DEMANDES EN RADIODIFFUSION
BEFORE / DEVANT:
Charles Dalfen Chairperson / Président
Andrée Wylie Commissioner / Conseillère
Ronald Williams Commissioner / Conseiller
Andrew Cardozo Commissioner / Conseiller
Stuart Langford Commissioner / Conseiller
ALSO PRESENT / AUSSI PRÉSENTS:
Peter McCallum Legal Counsel /
Mike Amodeo Hearing Coordinator /
Coordonnateur de l'audience
Pierre LeBel Secretary / Secrétaire
HELD AT: TENUE À:
Shaw Conference Centre Shaw Conference Centre
Salon 8 Salon 8
9797 Jasper Avenue 9797, avenue Jasper
Edmonton, Alberta Edmonton (Alberta)
June 16, 2003 Le 16 juin 2003
TABLE OF CONTENTS / TABLE DES MATIÈRES
PAGE / PARA
PRESENTATION BY / PRÉSENTATION PAR:
CHUM Limited 6 / 32
Global Communications Limited 199 / 1064
Edmonton, Alberta / Edmonton (Alberta)
--- Upon commencing on Monday, June 16, 2003 at 0930 /
L'audience débute le lundi 16 juin 2003 à 0930
1 THE CHAIRPERSON: Good morning, ladies and gentlemen, and welcome to this public hearing.
2 My name is Charles Dalfen, and I am the Chairman of the CRTC. I will be chairing this hearing, and will be joined by my colleagues, Andrée Wylie, Vice-Chairperson, Broadcasting; Ronald Williams, Regional Commissioner for Alberta and Northwest Territories Regions, and National Commissioners Andrew Cardozo and Stuart Langford.
3 Commission staff assisting us during this hearing include: Mike Amodeo, Hearing Team Leader; Peter McCallum, Legal Counsel; and Pierre LeBel, Hearing Secretary. Please do not hesitate to speak to one of them if you have any questions with regard to hearing procedures.
4 During this hearing we will be examining proposals by CHUM Limited for a new television service for the Edmonton, Red Deer and Calgary markets. We are also examining applications by Global Communications Limited to amend the licences of television stations CKRD-TV and CITY-TV-1 -- CITY-TV-1, that can't be right.
--- Laughter / Rires
5 THE CHAIRPERSON: Whatever the call letters are in Red Deer.
--- Laughter / Rires
6 THE CHAIRPERSON: CHUM Limited. We will begin by hearing from CHUM Limited representatives regarding applications by CHUM for licenses to operate a new English-language television station in Edmonton, a rebroadcasting transmitter in Red Deer, and a new English-language television station in Calgary.
7 Each station would broadcast at least 20 hours per week of local programming.
8 CHUM has also identified an emphasis on English-language multicultural and cross-cultural programming.
9 Then we will be hearing from representatives of Global Communications Limited with respect to an application to amend the licence of television station CKRD-TV Red Deer by disaffiliating from the CBC network, adding transmitters in Edmonton and Calgary, and deleting the service of the transmitter in Coronation.
10 In this application, Global proposes programming to reflect the Alberta Aboriginal peoples and ethnic programming to serve the entire coverage area.
11 The balance of the schedule will be comprised of local programming and Canadian and foreign programming similar to that offered on CHCH-TV Hamilton and CHEK-TV Victoria.
12 In addition we will hear from Global representatives regarding television station -- here it is -- CITV-TV-1 Red Deer. This application, as well as Global's application regarding the CKRD licence amendments, has been filed in conjunction with an application by the Canadian Broadcasting Corporation.
13 The approval of these applications would, among other things, permit the CBC to extend its full English television network service to residents in the Coronation and Red Deer areas.
14 The CBC application is on the agenda of this hearing as a non-appearing item.
15 The hearing should take today and tomorrow to complete. We will adjourn this evening around 6:00 and begin again tomorrow morning at 9:30 and sit until this hearing is concluded.
16 My colleague Andrée Wylie will chair a panel to review radio applications on Wednesday, June 18th, beginning at 9:00 a.m.
17 Please keep your cellphones and beepers turned off while you are in the hearing room. The sound of this equipment tends to be an unwanted distraction for both participants and panel members. We are counting on your cooperation in this regard.
18 I now call upon the secretary, Mr. Pierre LeBel, to explain the hearing procedures to you.
19 MR. LEBEL: Thank you, Mr. Chairman.
20 Before we begin, just a few housekeeping matters.
21 First, I would like to indicate that the Commission's examination room is located in Salon 5 down the hall from the hearing room. Public files of the applications being considered at this hearing can be examined there.
22 Secondly, there is a verbatim transcript of this hearing being taken a court reporter at the table to my left in the centre. If you have any questions about how to obtain all or parts of this transcript, please approach the court report during a break for information.
23 Finally, if you want to have messages taken, we will be happy to post them outside the public examination room. The phone number in our public exam room is (780) 428-7656, and if you have any further questions, don't hesitate to contact me or the examination room officer. We will be more than pleased to assist you where we can.
24 Now, Mr. Chairman, we will proceed with items 1 and 2 on the agenda. These applications are competing and we will proceed as follows:
25 First, we will hear each applicant in the agenda order and each applicant will be granted 20 minutes to make his presentation. Questions from the Commission will follow each presentation.
26 In Phase II, the applicants reappear in the same order as they presented their application to intervene against the other applicant. Ten minutes are allowed for this purpose. Questions from the Commission may follow each intervention.
27 In Phase III, other parties will appear in the order set out in the agenda to present their intervention. Again, questions from the Commission may follow.
28 Phase IV provides an opportunity for each applicant to reply to all the interventions submitted to their application. Applicants appear in reverse order. Ten minutes are allowed for this reply and again questions may follow.
29 Now, Mr. Chairman, we will proceed with Item No. 1 on the agenda which is an application by CHUM Limited for a licence to operate an English-language television station in Edmonton, with a rebroadcasting transmitter at Red Deer, and an English-language television station in Calgary.
30 Appearing for the applicant, Mr. Jay Switzer. I will ask him to introduce his colleagues.
31 You have 20 minutes to make your presentation.
PRESENTATION / PRÉSENTATION
32 MR. SWITZER: Thank you very much.
33 Good morning, Mr. Chair, Madam Vice-Chair, Commissioners, Commission staff, colleagues, friends and supporters here with us in the audience today. My name is Jay Switzer. I am the President and CEO of CHUM Limited.
34 Before we begin our presentation and before introducing my colleagues, let me just say how personally delighted I am to be here today to discuss these applications for two new television stations to serve the people of my home province.
35 I was born in Calgary, raised in Lethbridge and have a large extended family here in Alberta.
36 I would also like to acknowledge the presence of three members of the CHUM Limited Board of Directors here with us today: Mr. Jim Waters, Mr. Ron Waters and Fred Sherratt.
37 To introduce our panel today, to my immediate right is Peter Miller, Vice-President, Planning and Regulatory Affairs. To Peter's right, Diane Boehme, Director of Independent Production for CHUM Television. On the end seated beside Diane is Stephen Tapp, Executive Vice-President of our Television Division. To my left, your right, is Marcia Martin, Vice-President, Production for CHUM Television. To Marcia's left, Sarah Crawford, Public Affairs for Radio and Television.
38 In the back row, beginning on the far right, your left, from our sales team, David Kirkwood, Executive Vice-President, Sales and Marketing. To his left, David Caporicci, Director, Sales Administration for CHUM Television. Next to David, Prem Gill, who is Director of Multicultural Programming and Public Affairs at our Vancouver station and also hosts one of our popular local programs "Diversity".
39 Beside Prem is Richard Gray, Director of Information programming and Manager of Human Resources at our Ottawa television station the New RO. Beside Richard, are seated two of our community organizers, Priti Obhrai-Martin who worked on community relations in Calgary and on the end, Tanya Kappo who worked with the community here in Edmonton.
40 At the side table with us, at the farthest end to your left, Peter Palframan, Vice-President, Finance and Administration. Next to Peter, Hans Jansen, a partner with the Bay Consulting Group who helped us with the economic projections in our applications. Beside Hans is Rick Davies, Director, Special Projects. To Rick's left are David Balcon of TeleResearch and Ani Dheer of Cook & Dheer who did our market research.
41 Finally, seated next to Bani on the end is Paul Gratton, who runs Bravo! and Space and who most recently served on the Board of the Canadian Television Fund.
42 Now, with that done, let us begin our presentation.
43 Mr. Chair, Madam Vice-Chair, members of the Commission. Over the years you have heard us talk about two principles to which we are committed as a local broadcaster: "Local Reflection" and "Inclusiveness and Diversity".
44 We are a mainstream broadcaster for whom diversity is the mainstream.
45 As you know, we are no strangers to Alberta. We have successfully operated the Provincial Educational Authority, ACCESS, since 1995, ensuring a future for educational broadcasting in this province.
46 We are here today to build on this history, with applications to bring new local commercial television stations to Calgary and Edmonton.
47 In this hearing, we expect that you will seek answers to three key questions:
48 1) Will approval of these applications benefit Alberta?
49 2) Can these applications be approved without unduly impacting incumbent broadcasters in the province?
50 3) Will approval of these applications benefit the broadcasting system as a whole?
51 We believe the answer to each of these questions is a resounding "Yes".
52 MS MARTIN: Question 1: Will approval of these applications benefit Alberta?
53 These applications are the result of extensive consultation with the people of Edmonton, Calgary, Red Deer and other communities in the Corridor.
54 Prior to the first word being put on paper, we were in the community talking to community groups, business leaders and individuals. We asked them what they liked about television as well as what they didn't like. We asked what was missing and what they wanted to see.
55 We came to the clear determination that there is definitely a place and a need for local CHUM stations in Alberta.
56 Our demand research backed up what Albertans told us. Over 85 per cent of respondents to our opinion survey said they were likely to watch our proposed stations.
57 CHUM TV Calgary and Edmonton will reflect the youth, diversity and optimism of this great province.
58 Each week, each station will deliver at least 27 hours of Alberta programming -- 20 hours of which will be local to each station.
59 Out of that 27 hours, a minimum of 14 hours per week will be non-news programming, focusing on business and entertainment, the youth and culture scene, agriculture and recreation.
60 In terms of news programming, CHUM will bring its own unique and inclusive style to the province, showcasing the richness of Alberta's diverse communities and giving voice to their unique stories and perspectives.
61 We will include all communities -- not just the major events, major groups or major centres.
62 Building on our experiences, most recently in Nanaimo, a permanent storefront studio in Red Deer will ensure that our stations include news and events from Central Alberta -- home to 250,000 Albertans.
63 But rather than just talk about it, we would like to give you a small flavour of what people have told us they want to see and what we have in mind for the province.
--- Video Presentation / Présentation vidéo
64 MS CRAWFORD: Calgary and Edmonton have some of the highest populations of Aboriginal peoples in Canada, and are the fourth and fifth most popular destinations for newcomers. Visible minorities will soon account for 20 per cent of Calgary and Edmonton's populace.
65 We commit to a full reflection of the diversity of these communities in all local and regional programming. We have designed programming specifically for, and in consultation with, young Albertans from culturally and racially diverse, and Aboriginal communities.
66 We will schedule at least 10 hours a week of relevant, quality, local and regional cross-cultural/multicultural and Aboriginal programming that is distinct from anything currently in Alberta, plus another five hours from other parts of Canada.
67 It is clear that the kind of English-language cross-cultural programming we are proposing holds great appeal for visible minority and Aboriginal people. Our research shows that many young people play a kind of "cultural hopscotch" as they engage in redefining what it means to be mainstream Canadian as well as a member of a second culture. There is strong interest in stories that reflect both worlds rather than highlight divisions between cultures.
68 Our unique approach to cross-cultural and multicultural programming builds from successful programs created at Citytv Vancouver.
69 Albertans view this unique kind of programming positively, as it does not divide viewers into cultural categories, but instead builds bridges of understanding and shared experience.
70 MS OBHRAI-MARTIN: Albertans have voiced their support for CHUM TV Edmonton and Calgary with over 1,000 individually written letters, including letters from multicultural community groups and municipal bodies representing hundreds of thousands of people.
71 These letters demonstrate an astounding level of support for the kind of inclusive, reflective local television that CHUM has built its business on, and it proposes for Alberta.
72 In the words of Charlene Hay of The Northern Alliance on Race Relations, and I quote:
"We need a station that is committed to equitable representation of Edmonton's culturally and racially diverse people and the issues that affect them."
73 Given the large, vibrant and complex population of Aboriginal people in these communities, we paid specific attention to how best to reflect their experience and reality, to enhance their lives, as a local broadcaster should.
74 MS KAPPA: I was a member of a focus group that CHUM convened to learn more about what Aboriginal people in the area hope for, and expect from, television.
75 I was initially pretty sceptical, but I became impressed with CHUM's heartfelt and serious commitment to reflect and include Aboriginal people in these proposed new television stations. So I joined the local CHUM team to provide as much support to these applications as I could.
76 There is a simple reason why many in the Aboriginal community strongly support these license applications: We need more opportunities to be part of mainstream media, and we want and deserve opportunities for fair, accurate and non-stereotypical portrayal of our people and our stories.
77 In the words of Lewis Cardinal, Chair of the Edmonton Urban Aboriginal Affairs Committee:
"We believe that CHUM has a proven commitment to make local television more accessible and functional for the Aboriginal community."
78 MR. GRAY: CHUM TV Alberta will ensure strong reflection and participation of Aboriginal peoples through a number of initiatives:
1. Balanced presentation and reporting.
79 An Aboriginal community affairs specialist as well as Aboriginal people in other capacities will act as a bridge to the community and a resource for non-Aboriginal reporters.
80 On staff and within programming, behind and in front of the camera. Aboriginals will also be an integral part of cross-cultural programming
3. A minimum of two specific half-hour weekly Aboriginal shows.
81 Programming covering Aboriginal issues and designed to reach the broadest possible audience.
82 These initiatives are among the most unique proposals targeted towards Aboriginals by any local station in the country.
83 MS BOEHME: Our community consultations included many meetings with people in the local production communities, and our independent production initiatives reflect local needs.
84 As enthusiastically noted by AMPIA and the CFTPA, we are offering significant support to local independent producers in the form of a $15 million Indie Initiative which includes:
The establishment of a development office in the province with an experienced development staff empowered to make decisions.
$2.1 million in script and concept funding to assist Albertans to get their stories on paper.
$12.5 million in national license tees for Alberta independent producers to get those stories from paper to television screens across the country.
Of this development and licensing $250,000 per year is specifically targeted to cross-cultural and Aboriginal programming designed to appeal to a broad audience.
$55,000 per year for what we believe to be a first of its kind: the Cultural Diversity Internships Program.
85 And, this last financing initiative -- another first, and a direct
response to needs expressed by Alberta producers:
$500,000 in revolving bridge financing designed to help Alberta producers get on to their next project.
86 Our emphasis will be on priority programming projects that can air across the country.
87 And, further to recommendations from the Directors Guild and Writers Guild, we will also ensure that the majority of license fees and development monies go to drama.
88 MR. MILLER: To conclude on question 1, we believe approval of these applications will bring tremendous benefits to Alberta in terms of local reflection, inclusiveness and diversity, and independent production.
89 Now onto question 2: Can these applications be approved without unduly impacting the incumbent broadcasters in the province?
90 We strongly believe the answer is yes.
91 The Calgary/Edmonton Corridor is by far the fastest growing area in Canada with the most robust local economy in the country.
92 The TD Bank, in its Economics Special Report, issued April 22, states, and I quote:
"[...] real GDP growth in the Corridor is projected to expand at a brisk clip of 4.0 per cent this year and 4.3 per cent in the 2004-05 period. At the same time, job creation should remain healthy, at 3 per cent per year, setting the stage for nation-leading annual gains in real per capita incomes of 2.5 per cent."
93 The Conference Board of Canada predicts that Alberta GDP will grow 5.5 per cent this year and 4.9 per cent in 2004 outpacing growth in all other provinces. GDP growth in Calgary and Edmonton over the 2004 to 2007 period is estimated by the Conference Board to average 3.5 per cent, and retail sales growth to average 5.2 per cent.
94 Our financial analysis demonstrates that the market can absorb our proposed stations based on the conservative assumption of a 3,3 per cent average growth rate for the local TV market. That's a rate lower than Conference Board projections and equal to the growth experienced by incumbent broadcasters from 1997 to 2002.
95 Conventional television revenue growth in the corridor over that 1997 to 2002 period years was two to three times higher than the rest of Canada. Stations in Alberta have historically had higher PBIT margins than the rest of Canada, and this historic differentiation has now returned.
96 During the first five years following the introduction of the Craig stations, the average annual sales attributable to the corridor were roughly $181 million.
97 During the first five years following the introduction of the proposed CHUM stations, the average annual sales will be roughly $231 million. That's a $50 million difference. Of this average figure of $50 annually, CHUM would take an average of only $27 million.
98 In other words, CHUM would get $27 million on average during the first five years, while the incumbents would get $23 million more than the previous five years average of $181 million, or in total $204 million.
99 Mr. Chair, Madam Vice-Chair, members of the Commission, we believe the facts strongly demonstrate that our impact on the economic health of incumbent stations will be minimal.
100 MR. SWITZER: Question 3: Will approval of these applications benefit the broadcasting system as a whole?
101 We realize now more than ever that as our competitors grow and consolidate, our growth strategy is logical and necessary in order to benefit not only our company, but the broadcasting system as a whole.
102 Alberta is the next logical step for CHUM, given our expertise, proven ability, commitment, and track record. And it is a logical step for the system overall.
103 With approval of these applications, CHUM will continue its evolution to become a large multi-station group.
104 As contemplated by your TV Policy, the resulting efficiencies and synergies will provide CHUM with increased capacity to create appealing and popular programming for Canadian audiences. This evolution brings with it additional obligations, but it won't change our core values and principles.
105 We are committed to remain locally focused and distinctly different.
106 With the launch of the Alberta stations, CHUM will assume the obligations of a larger broadcast group. That is, we will carry eight hours per week of priority programming on all our stations.
107 As a larger multi-station group, CHUM will have the critical mass necessary to make a difference in series drama. In fact, we commit to go beyond the minimum priority programming obligations of the other larger groups, and step up with significant new commitments:
We will be the first broadcast group to guarantee shelf space by committing a minimum of four out of the eight hours of priority programming per week to Canadian drama on our stations in Alberta, Toronto and Vancouver;
Second, we will trigger the creation of a minimum of two new culturally diverse, full budget, one hour, dramatic series -- again to be aired on our stations in Alberta, Toronto and Vancouver; and
Third, we will bring significant new financial resources to bear to increase the budgets and quality of our drama projects, expected to be at least $12 million in new license tees and development over the next seven years.
108 Up until now, CHUM's major contribution to Canadian drama has been as Canada's premier broadcast supporter of long form feature film. These applications represent our evolution into series drama.
109 Mr. Chair, Madam Vice-Chair and Commissioners, you have challenged broadcasters to find ways to create Canadian drama that Canadians will watch. We believe we can make a difference in this area.
110 Our strengths --in feature film, in cultural diversity , and as an innovator -- are our competitive edge in Canadian drama. In fact, our features can become our pilots.
111 For example, just recently, our support for Deepa Mehta's "Bollywood/Hollywood" translated into support for the development of a possible spin-off series.
112 While no one can predict audiences, what we all share is a desire to have more Canadians watch Canadian drama. With approval of these applications, we will commit significant creative and financial resources to that goal.
113 We began today with the crucial questions:
Will we enhance broadcasting in Alberta?
Will we enhance the Broadcasting System?
Will we do these things without undue harm to the incumbents in the province?
114 In all three cases, we sincerely believe the answer is "Yes".
115 We are truly excited about the prospect of these new stations, truly excited about the potential of making an even greater contribution to the Canadian broadcasting system in our own unique way.
116 We are making significant commitments to the people of Alberta and the Canadian Broadcasting System. We will not let them down.
117 We welcome your questions.
118 THE CHAIRPERSON: Thank you very much, Mr. Switzer, ladies and gentlemen.
119 Let's begin with some numbers. I am going to be referring to your financial projections as well as to the appendix in your reply, which I think was Exhibit 1 which I think was of May 30, 2003. I think it was done by Bay Consulting.
120 I am trying to begin by scoping out the size of the Alberta market with you. I noticed that your 2002 total market figure on that exhibit is $196.3 million.
121 So I am going to ask you first of all tell me how you derived that number exactly, what went into to getting that number, the total market for 2002.
122 MR. MILLER: Mr. Chairman, I am going to ask Hans Jansen to speak to that, but we have recognized and acknowledged that our estimate of that number is now higher than what we know to be the case. So we have prepared revised financials which we can file with you which have slightly lower 2002 projections. But the good news is the 2003 growth projections that we are hearing about are very, very strong, in the order of 6 to 7 per cent and also we are looking at very strong projections in 2004.
123 So over the long term, we think these projections are reasonable but there have been some anomalies in the earlier years which Mr. Jansen can speak to.
124 THE CHAIRPERSON: Well, I think probably you could file them because we are going to be at cross-purposes if we are talking about two documents.
125 When do you think you can get those in?
126 MR. MILLER: We could file at the next break. Just to be clear, it changes the 2002-2003 years, but it doesn't change beyond 2005.
127 THE CHAIRPERSON: I think we better have a look at them. It's going to be confusing enough without it. So I will wait until the break and any questions that are referable to those revised projections I will just save and pick up after. That's probably the most efficient way of proceeding.
128 My next question is: In your own reply you filed the figures that -- this is page 4 of your reply -- are contained in the Armstrong study that is filed with CTV in their intervention. You just incorporate that same graph.
129 MR. MILLER: Yes. For the purpose of reply we thought it was appropriate just to comment on those numbers, that's correct.
130 THE CHAIRPERSON: Right. And I understand you are going to be filing new local and national totals for the two combined markets, but I am not sure I understand what you mean when you say "file them for purpose of reply." They are different, of course, from the figures that you yourselves -- for example, the 2002 figure is quite different from the figure that you filed.
131 Does your new list contain the 2002 figure that is the same as the Armstrong number, $1 080 000?
132 MR. JANSEN: That's correct, Mr. Chairman.
133 THE CHAIRPERSON: So you are --
134 MR. JANSEN: I'm glad you asked the question because there is no need to change the projections for the period 2005 through 2011 at all.
135 THE CHAIRPERSON: Right, but that's not my question.
136 MR. JANSEN: No, I just would like to --
137 THE CHAIRPERSON: Then these figures by Armstrong you are prepared to accept as the figures going back through to 1997.
138 MR. JANSEN: That's correct.
139 THE CHAIRPERSON: And then you are projecting forward on the basis of numbers that you are going to give me later. Thank you.
140 Now, the growth assumption. You mentioned you used a conservative -- I think you called it 3.3 and in your statement today you, I think, provided some support for that figure in terms of the Conference Board predictions, and so on.
141 What struck me though was that in the growth -- and I have the combined totals in your own exhibit here, but I noted that in the city-by-city ones they varied as well. They average to 3.3, but they are numbers that are strange for projections in that they go from a high of 4.4 in 2007 to a low of 1.1 in 2005.
142 What do you know, Mr. Jansen, that the rest of us don't know?
--- Laughter / Rires
143 MR. JANSEN: Mr. Chair, when we do our forecasts we try to develop as accurate a picture of the first five years following the sign on of a new station.
144 For instance, for the period 1998 through 2002, the last time we were here we forecast that annual sales would be approximately $185 million on average. This was seven years ago.
145 On the basis of the actuals that you have as well now that the real results are in, we are finding that the actuals came in at about $186-$187 million.
146 So we tried to get an understanding and as solid an estimate as possible of the absorption capacity of the market, of the capability of the market to generate advertising sales. We have done the same again for 2005 through, in this case, 2001, a seven-year period, but the focus is on the first five years. We tried to get as good an estimate of the total sales that the market can generate for that period.
147 We know that the individual estimates year by year will not be as accurate as the average. So the focus is on the average and trying to get as correct as possible. The reality is that events happen -- 9/11 happened. All these kinds of events have an impact on the year-by-year basis that is hard to predict. But if you study the absorption capacity of the market, you can get very close to what is likely to happen. I think the past demonstrated that. We estimated that a realistic target for the industry would be $185 million and that target was reached within 2 per cent.
148 We reviewed the five-year estimate for the period 2005 through 2009 to see if the most recent information would lead us to update the estimate. In fact, this was not necessary.
149 THE CHAIRPERSON: Excuse me, Mr. Jansen, I don't mean to interrupt you, but we will get this through a lot more efficiently if you answer my question and if you don't have an answer for it, that's fine.
150 MR. JANSEN: No, Mr. Chairman, I do have the answer. The growth in 2005 on the basis of our estimate is 1.2 per cent; in 2006, 4.3.
151 THE CHAIRPERSON: I know that. My question is why? How do you know? How can be as precise going out three, four years to say it's going to be 1.1 and then the next year it's going to go to 4.3 and then two years later it will be down to 3.2? How can you predict --
152 MR. JANSEN: We can't, we can't. What we can do, however, is take into account the most recent information that is available. For instance for Vancouver, where we know that the first year is difficult and the real growth takes place in the second year. It's that kind of information that we incorporate in the estimates that we --
153 THE CHAIRPERSON: So are you saying that this pattern is the pattern taken from another market and that if I looked at the growth in another market, I could confirm that this was the pattern?
154 MR. JANSEN: No, Mr. Chairman. What we do is we take all the information that we have into account in updating information. As new information becomes available, we update it.
155 THE CHAIRPERSON: Right. So what is the answer to my question? How were you able to pick a number like 1.1 for 2005 after a year of 2.9 -- those may vary slightly and I know you are going to refile them -- and then two years later the growth is four times as high and then two years after that it's 50 per cent or lower?
156 I am trying to look for a reason for that pattern that you are showing.
157 MR. JANSEN: No, there is some empirical evidence that in year --
158 THE CHAIRPERSON: I am sorry?
159 MR. JANSEN: There is some empirical evidence that in year one, following the station's sign on, that growth is lower than in the second year. And that's all we are doing. We are reflecting that reality, that knowledge of markets.
160 THE CHAIRPERSON: It's not helping me, but I guess we will leave it at that.
161 MR. JANSEN: Mr. Chairman, maybe I can roughly estimate the total for the five-year period. In this case that is 1.15 billion and then we allocate that amount to the various years and we factor the growth rates that we believe are realistic. It is an opinion, but --
162 THE CHAIRPERSON: It's a pretty precise opinion going six or seven years out, but I think we can --
163 MR. JANSEN: I think there is maybe too much focus on the percentage increase. We look at the total market dollars and the percentage number simply falls out.
164 THE CHAIRPERSON: But how do you derive the total market dollars?
165 MR. JANSEN: The same way we did the last time we were here. We look at all the information that is available about the market -- past growth --
166 THE CHAIRPERSON: No. Whatever you may have looked at, if you can't explain it, then we are not going to go very far with this. I am sure you took into account a whole series of factors, but unless you can lay them out in a way that spits out these numbers I don't have an answer to my question.
167 Whether you want to go on the percentages or the total market dollars, either way, but I just don't have an underpinning other than what I am hearing is your best guess based on a variety of factors and these are the numbers that are spit out.
168 MR. JANSEN: There is a time series available which is 3.3 per cent for Alberta as a whole.
169 THE CHAIRPERSON: Right.
170 MR. JANSEN: We believe after studying the market that that time series over the seven-year period was correct, that it was as good an estimate, the 3.3, on the basis of historical information.
171 Subsequently, more information became available. The first piece of information was the most recent market performance in the market where there was a new market introduction, and the second piece of information was the update for 2002. We reflected both of these pieces of information and then the 1.2 figure simply fell out because the third judgement that we made was that there was no need to change the forecast for the period 2005 through 2011. So that 1.2 just fell out. It was a mathematical calculation.
172 THE CHAIRPERSON: Did you do this exhibit that we are looking at?
173 MR. JANSEN: You are looking at the exhibit called "The Size of the Alberta Market"?
174 MR. MILLER: You are looking at Exhibit 1 to the reply. If I could conclude on this general discussion. We asked Mr. Jansen to prepare the most conservative projections he could based on a 3.3 per cent annual average growth.
175 What we have seen, as Mr. Jansen alluded to, is in certain markets in launch the first year, the growth doesn't happen in that first year. It happens in the second year and so really those fluctuations are hard to predict.
176 What we are confident with is the 3.3 per cent average annual growth over the seven years. I think that is perhaps the more relevant number for your purpose.
177 THE CHAIRPERSON: Moving to another question. In your projections, Appendix 3A.1 -- more accurately Section 4.1 of your applications for Edmonton and Calgary -- I am combining, and I think these numbers track the total numbers of the exhibit again. So we might as well stay with the exhibit since it's easier.
178 The 17.0 to 38.6, total proposed CHUM stations, how were these numbers derived? What is the basis for those numbers?
179 MR. SWITZER: Mr. Chair, perhaps I can begin because there is a lot of work gone into those. These are the final building blocks of our application and I guess I would start by saying there are three broad things we did.
180 First of all, we looked, to the best of our ability, internally history, practice, experience, what we knew about market size, what we knew about the likelihood of success. We internally did a bottom-up show by show, category by category, date part by date part, estimate of what draft schedules would do given everything we know about history, similar programs in the market, and our experience of looking at practice.
181 We then compared that and separately asked Mr. Jansen to look at a top-down approach without any specifics or knowledge of detail assumptions on our part, to kind of get a separate confirmation that from a top-down market share point of view he would come up with comparables and they turned out to be very close.
182 Finally then the other driver in the formula is the rate of growth that we assume over the year. So we start with estimates, we do bottom up, we compare it to top down, and then we look at the comfort that we have in the important 3.3 per cent per year driver and believe that it is, based on everything internal and external, from Conference Board to the TD Bank, absolutely sound and achievable in terms of growth over the years.
183 If you put those three elements together, you end up with continuing focus numbers that end up with the projections that you see before you and any of the people on our team would be happy to provide detailed bottom up or top down.
184 THE CHAIRPERSON: The next column is CHUM's dollars share, that those numbers represent the 17 in 2005 all the way to 38.6, representing 14.7. How did you build those up and how do they relate to viewing shares in the market?
185 MR. SWITZER: I would like to ask David Kirkwood to take you through that because they do compare to individual ratings estimates, ratings delivery, costs per point assumptions, share of tuning and share of advertising.
187 MR. KIRKWOOD: Thank you.
188 Are you referring to the share of audience?
189 THE CHAIRPERSON: I am referring to how you derive the dollar share of the market numbers that are in the sixth and seventh column on that Exhibit 1.
190 MR. KIRKWOOD: The dollars don't always follow audience share. Obviously a share point on a lower rated station is not as great as it is for a higher rated station.
191 The value of the share points is very close to what the A channels estimate was, about 2.3 million per share point. That would, based on this, give us 3.8, or a four share would be worth about the revenue we are projecting.
192 MR. SWITZER: Mr. Chair, there is lots of precision in the dollar amounts in the actual revenues and on what we know about the market size. The actual percentage of that is just a calculation that follows.
193 In other words, the construction was done to the dollar. The percentage of what that means to the market is a calculation from that.
194 THE CHAIRPERSON: I see. So you are saying that column is just arithmetic taking your dollar share over the total market.
195 MR. SWITZER: Yes.
196 THE CHAIRPERSON: So then, can you help me with -- I look at the viewing the shares that you filed with your application ranging from 3.8 in year one, going up in uneven increments to 5.3 in year seven.
197 Can you relate those to the dollar numbers for me?
198 MR. SWITZER: I will begin and Mr. Kirkwood can take it from there.
199 Clearly our share of tuning, not all the stations that have tuning in the market sell in the market, and that's fundamentally the difference between your share of tuning and share of advertising dollars.
200 Secondly, of course, there is a lag between getting ratings, getting viewers and converting them into dollars.
201 But if David could give some more precision on the level of comfort with the total advertising dollars that would be helpful.
202 MR. KIRKWOOD: Thanks, Jay.
203 I think that actually answers that question. I wanted to be more specific about the other one.
204 Our average rating, we took all the ratings and it came out to 0.6 rating and if that is the case then the market is about an average 15 total ratings, 0.6 over 15 gives you a four share and based on comparable stations in the province, that sort of share point would deliver that sort of revenue.
205 I think the CTV intervention agrees with our essential share estimates, both on the revenue and audience size.
206 THE CHAIRPERSON: Do you want to incorporate the rest of the CTV intervention or just that --
--- Laughter / Rires
207 THE CHAIRPERSON: Clearly you can't do a straight arithmetical multiplier of 2.3 million per share point and multiply those and get your numbers. It's obviously a more complex process than that.
208 MR. SWITZER: It's an individual show by show, day part by day part, weighting assumptions, sell out ratios, cost per point, discounts for off-season, and so on.
209 MR. KIRKWOOD: In fact, obviously some daytime programs don't offer the same return on their rating points as a prime time show does, different seasonal sell outs. Cost per rating vary seasonally and also actually by market between Edmonton and Calgary there is about a 15 per cent differential.
210 THE CHAIRPERSON: We may wish to come back to that, but for the moment we won't go down that path just yet.
211 In your viewing share calculations, do you include DTH carriage? I know that you did say in your letter of March 27th that you were assuming that Edmonton would be carried on DTH either at launch or within a reasonable timeframe and you mentioned that DTH penetration in Edmonton is 27 per cent of households, but you didn't know what your share would be like without it. You estimate the impact as significant, between 20 to 25 per cent of revenues in later years.
212 Now, what portion of the dollars in the market would you say would be attributable? This is Edmonton that I was referring to. I assume the same applies to Calgary.
213 MR. SWITZER: Mr. Chair, the Calgary DTH penetration numbers are considerably lower. They are large, but they are perhaps 15 or 16 per cent I think.
214 We did a lot of work on building up the revenues according to the schedule and did assume carriage, particularly in Edmonton where it's a more important issue.
215 We have not done any special analysis as to what would happen if we didn't have DTH because we are, first of all, confident that the DTH operators for their own reasons will want to keep their customers happy and these are going to be strong local stations. Clearly they want to remain competitive and as we have done elsewhere in Canada, almost all of our stations, and soon all of our stations, will be carried by DTH operators because it's good for their business. This has happened absent regulation.
216 So first off, we are absolutely convinced that the operators, for their own business reasons, will be driven to carry stations, particularly Edmonton where the penetration is larger, perhaps not at launch, but we believe soon after. But because we are not in any way making any of our commitments or obligations contingent on that, our obligations and promises in this application are unequivocal. They stand regardless of the timing of any DTH carriage.
217 It wasn't a line of analysis that we had to bother with because we are here and we are going to get the job done regardless of the times.
218 THE CHAIRPERSON: But is it right to say that you are assuming Edmonton carriage in due course but not Calgary carriage?
219 MR. SWITZER: We believe Calgary eventually. It's just not --
220 THE CHAIRPERSON: I am just talking about for purposes of your projections, not that you are not going to try and get up on satellite.
221 MR. SWITZER: I think for purposes of projections we assumed both. There is clearly less a factor in Calgary and it's probably realistic to expect that Calgary would take longer.
222 THE CHAIRPERSON: Right, but there isn't a chuck that you have added in that you could remove that represents DTH households, failing which you would have to curtail those projections. You simply haven't done that exercise.
223 MR. SWITZER: We haven't done there exercise because we are not flexing our promises based on --
224 THE CHAIRPERSON: I understand that part, but simply in terms of your market impact. You are assuming that somehow along the line satellite carriage, at least in Edmonton, will kick in and the --
225 MR. SWITZER: We believe it is for many reasons and it's not a wild assumption. Our relationship with the DTH operators is excellent. We are a large operator with lots of business between us and the DTH operators. They are happy with us. Excellent track record with other stations. We have no reason to believe we wouldn't enjoy similar success here in Alberta.
226 THE CHAIRPERSON: Okay. I think I have that.
227 In terms of your impact on the market, you provided in Appendix 5B of your application the impact on a variety of services, including off-air television services.
228 Have you got that?
229 MR. SWITZER: Yes, of course. Just give us a second to flip it open.
230 MR. SWITZER: Please continue.
231 THE CHAIRPERSON: So 50 per cent you suggest will come from existing off-air television services. A number of the intervenors, of course, said that your numbers would be a lot higher than that. I think Global said 75 and CTV said closer to over 90.
232 You don't accept that in your intervention reply. Is that correct?
233 MR. SWITZER: That is correct. We absolutely don't accept some of the comments the intervenors have raised, particularly in light of just a few months ago one of the intervenors, the Craigs proposing that their effect in Toronto was only going to be 35 per cent. But we have done a lot of thinking and a lot of analysis and we would be happy to expand on why we believe, for many reasons, our 50 per cent impact number is reasonable and sound.
234 THE CHAIRPERSON: Before you do that, when I listened to you this morning, on page 10 of your oral presentation you provided a cut which I am still trying to get my head around fully, but you did say here that you thought that there would be a $49.5 million difference between average annual sales in the coming five years and average annual sales in the previous five years and that CHUM would take an average of only 27 of that 49.5.
235 Now, even my arithmetic tells me that that in itself is more than 50 per cent as a number: 27 times two is 54. You are taking 27 of 49.5. So it's 55, or whatever other number you want to give that is higher than that.
236 MR. SWITZER: Well, there are several factors at work. One is the natural growth in the market and then there is the stimulative effect that we will have by our entry here.
237 Perhaps Mr. Miller could expand.
238 MR. MILLER: There are obviously different ways of looking at this. That set of numbers we gave in the opening statement is one way, using averages. Another way we looked at was the period from prior to the launch of the previous A channels for the seven-year period up to 2004, and we looked at that estimate. So if you start in 1997 -- they launched in broadcast year 1998. If you start in 1997, the year before, you do that projection forward and we actually did an analysis to compare the growth of the Alberta market over that period with the growth of the market in Canada.
239 The differential roughly over that period, if you would like to call it the excess growth over the Canadian average, which one could attribute perhaps to the launch of the A channel stations, was roughly 50 per cent.
240 So it is obviously a rough number, but that 50 per cent appears to accord with the history in this market after the launch of A channels. It accords -- I think the Commission commented in the Toronto licensing decision to the average of the applicants in that proceeding. It was an average of 47 per cent, and it accords to basically our sense of where we can get new business given how high the cost of points are in the market.
241 It's very interesting, for example, in the Global intervention there was a lot of comments about the growth of specialty and the decline of conventional. There were numbers in that intervention from 1996 to 2002. Well in that period, conventional viewing to Alberta stations declined by 27 cent, but interestingly revenue went up by 27 per cent.
242 So when we start to look at those kinds of experiences in this market in the last seven years, and we look at what we think we will face in the next seven years with an even stronger economy and with much less impact from specialty, all these things start to add up and paint a picture that seems reasonable to us.
243 THE CHAIRPERSON: I am going to let the intervenors make their point on that, and then probably discuss this again with you at the reply stage, once we have heard them develop that point.
244 I wanted to explore with you at this stage the issue of repatriation which you refer to because I assume that that is part -- you say in your application that "there is an opportunity for direct repatriation of audiences and advertising dollars." I guess I would like you to elaborate on that.
245 Which stations do you see repatriating viewers from and the quantities and, thirdly, where do you see that in the impact statement that we just mentioned from Appendix 5B of your application?
246 MR. MILLER: I am going to start and Mr. Kirkwood may want to add.
247 What is evident in this market is that tuning to U.S. specialty, U.S. conventional is slightly higher than the national average. So there is an opportunity to recreate tuning. Obviously, many of these stations don't directly draw revenue from the market, but the high cost for points and the low supply in this market gives an opportunity to grow revenues commensurate or at the same time as one repatriates tuning.
248 But Mr. Kirkwood can speak more to that because it speaks to the strength of the market and how the demand is much higher than supply at this time.
249 MR. KIRKWOOD: Thank you, Peter.
250 This also speaks to your previous point about the 50 per cent. It's a lot easier to not take more than 50 per cent from existing sources when there is so much rich new opportunity, and we see that in a number of areas.
251 Alberta has distinguished itself in a number of ways. As Peter, I think, mentioned, actually revenue growth of conventional television has been higher, a lot higher in Alberta, than it is in the rest of Canada and the loss that Peter spoke of of tuning to Canadian conventional channels is actually lower. They have lost less audience, but they have gained more revenues than the rest of Canada.
252 It's also interesting to note what they spend in newspapers versus television. Alberta actually invests a larger percentage of their advertising dollars to newspaper than any other provinces, and the least amount to television. In fact, the market is probably the same as B.C. and B.C. is 41 per cent and Alberta is 51 per cent. It has been 41 per cent since 1997 versus the national average of 21.
253 With that sort of restricted supply in increased demand, they can raise the rates without broadening the scope of advertisers. There is not an incentive to actually broaden that. We have a history of developing local very richly in each of our markets and we would do that here. Local advertisement, I think it's quite well known, is fairly unavailable at this point in this market because of the rates and because of the availability of advertising times.
254 We have it from important national advertising media directors, like OMD in Toronto buys more media, Sherry O'Neill does, than anyone else in Canada. She now buys Alberta first so that she will be assured of getting availability. We have local testimony from advertisers and clients here that say they can't get in.
255 So that is sort of local developments, but on top of that they have some good stuff here.
--- Laughter / Rires
256 THE CHAIRPERSON: I am waiting to get the answer --
--- Laughter / Rires
257 MR. MILLER: Am I doing that too?
258 The new business development team that creates a lot of actual national business as 7 per cent of Citytv's business is new business on a national level. They could add to this as well.
259 What was the question?
260 THE CHAIRPERSON: The question was --you talk about repatriation and its potential and I am asking you: What are you going to repatriate? Where are the numbers and where are they shown on your chart of impacts?
261 MR. MILLER: The repatriation of audience is possible, I think, in the sense that the erosion of American signals has largely been due to the introduction of a lot more Canadian specialties, stuff like that. That's where a lot of assuming has come from as well. But most importantly I can see repatriating advertising dollars and what I was speaking of was the possibilities with newspaper. If we return newspaper in Alberta to its national average, there would be 53 million dollars more, advertising dollars, in the Alberta province.
262 If we took our share of that, 8 per cent let's say, we would have the 26 per cent that we speak of here, 23 I believe of new business.
263 THE CHAIRPERSON: But you could when U.S. stations focus on -- you are talking about major U.S. networks repatriating viewers.
264 MR. SWITZER: Mr. Chair, perhaps I can add, and part of it has to do with the ability to increase simulcasting.
265 For example, we own national rights to approximately 12 hours per week this coming fall, next fall, of U.S. network simulcastable programming that has not been licensed and was not chosen by our historical client here, the Craigs. That example alone, if we were able to play that and simulcast out the American signal, it would certainly increase our tuning and in that sense it's a repatriation of viewers back to our system and therefore increased --
266 THE CHAIRPERSON: Right, and that is basically the answer to the question on what you were going to repatriate which is --
267 MR. SWITZER: The repatriation of the viewers. We have not in any of our models, as you have seen, had any significant repatriation of dollars to border stations. That is not a significant factor in this market and we have never suggested it was.
268 THE CHAIRPERSON: I understand that. So you are going to repatriate the viewers who are currently watching foreign programming on foreign signals in the market that you would now simulcast and repatriate.
269 Have you quantified that in terms of dollars to you and impact in your sources analysis?
270 MR. SWITZER: We have in that it has formed part of the ratings estimates of the show-by-show, line-by-line assumptions we made as part of our bottom-up revenue analysis.
271 THE CHAIRPERSON: But it didn't come out as a separate category here.
272 MR. SWITZER: No. It would be included in the final two categories: New revenue not currently broadcasting and new revenues increased --
273 Because we are not repatriating direct American border dollars, we didn't think it appropriate to create it as a category.
274 THE CHAIRPERSON: But I would have thought -- I mean, it's your table, but it's neither not currently broadcasting nor is it increased spending. It's really new revenues not currently obtained in the market --
275 MR. SWITZER: Yes. It's part of our overall ratings and revenue assumptions as opposed to it being shipped from one thing to another.
276 THE CHAIRPERSON: Now, again I am going to let the intervenors speak for themselves, but on that point, if you look at the CTV intervention at paragraph 21, they note that you mentioned a cost per rating point and you also mentioned repatriation. They challenge both of those based on your own experience in Victoria where they say that during the following year after launch revenue per rating point fell by 16 per cent in the adult 25 to 54 demographic, and so forth, and they said that there was no repatriation of revenue.
277 Now, it's true that in this case there were border stations we were talking about which we are not talking about here. But what is your comment on the revenue per rating point?
278 MR. SWITZER: I will let Mr. Kirkwood comment on the specifics of the revenue per rating point assumption and its validity and soundness, but I do want to speak to the British Columbia launch which you just referred to and we will discuss it more fully perhaps later in the process.
279 We launched our station during a very difficult year where there was a downturn in the local economy, in the local market, and in the local television -- and those budgets were mostly set the previous year. So we had the misfortune of having launch costs and launching a station at a time where we inherited budgets that were significantly lower than the previous year and we, frankly, suffered the consequences that year and it has risen and gained significantly.
280 We have repatriated tuning in British Columbia, primarily from KVOS, exactly as we said we would. KVOS' tuning share is down significantly compared to before we launched, and I am approximating, but my guess is their overall shares is down by a third, perhaps 40 per cent, and their revenues are down significantly to match that tuning loss.
281 So while the launch year was indeed a market anomaly over the course of the last two or three years, we have significantly repatriated tuning and dollars.
282 THE CHAIRPERSON: Thank you.
283 Another way of measuring impact on the market is, of course, through PBIT numbers and it has been pointed out by a number of intervenors -- again, I think CTV notably -- that when previously the Commission chose to license additional stations in the market it was in an environment where PBITs were high teens, low 20s.
284 We are looking at a market now where the PBIT is very much lower than that. I think the figure in your own reply was 11.2, 8.8 the previous year.
285 Is this a market into which a new station should be launched -- two new stations, one in each market when PBITs are at those levels?
286 MR. SWITZER: I will begin. We absolutely believe this market is strong enough and can sustain the launch of a new station. Of course, in a market with such few competitors, this market really with only three stations, or three and a bit if you include Red Deer, compared to most large Canadian markets with eight or seven or certainly six competing commercial stations, you get the anomaly where when a third station launches and it has difficult early years, as do most launches, including ours, it lowers the average significantly.
287 THE CHAIRPERSON: Right.
288 MR. SWITZER: We saw that in Alberta here with the early years of the Craigs, and we certainly saw it in Vancouver with our own typical years. That's just the way launches are.
289 In a sea of eight or nine stations, the effect of one station having early losses isn't that big a deal. With only three stations, if one of them has losses early on, it does lower averages. Things have gotten better and the margins here remain higher, we believe, by at least two full points higher than the national average.
291 THE CHAIRPERSON: Just before you speak, higher than the national average to be sure, but well below the levels at which new stations have been licensed in markets.
292 MR. MILLER: Obviously there are very many different measures the Commission can take -- revenue measures, and whatnot. Yes, it is true that if you do the mathematical calculation of average, the average here is lower than the national average.
293 THE CHAIRPERSON: I don't think --
294 MR. MILLER: Starting average, I am sorry, in other markets.
295 The other thing that the Commission has to look at though is the size of the market relative to the rest of the country and whether or not licensing in this market would have as big an effect on the other broadcasters given their system holdings across Canada.
296 Certainly, in respect of the revenue percentage of the market, our percentage of the market and revenue basis would be about 10 per cent going to 15, which is actually analogous to the projections of the two licensees licensed in Toronto in the most recent round.
297 Second, I would also point that it's a little problematic looking at these PBIT margins because, of course, they are dependent on cost allocations of group expenses. So the PBIT margins for CTV or Global are as much a function of how program costs are allocated as anything else.
298 THE CHAIRPERSON: Mr. Miller, the problem with that is that we need to believe in some bedrock here and these are figures that are filed in good faith. I think if we start challenging the assumptions under which filings are made and cost allocations, I think we all lose out, and I think, frankly, it's an exercise that one indulges in with risk, with great risk if for no other reason than looking at yourselves and Craigs in this hearing compared to Toronto, you have shifted your positions each 180 degrees.
299 You have to be very careful that the figures you use are going to be usable for you in all circumstances.
300 You can carry on, but I think these are your figures, these PBIT numbers. I think we rely on them, you rely on them. What we are seeing is that from 1998 through to 2001 the PBITs in Alberta were lower than the national average, as low as 40 per cent of the national average in 1999, climbing slowly up. In 2002 you are slightly ahead, but even so at levels that are well below the levels at which new stations are going to be introduced into the market.
301 I am trying to get from you why you think it would be appropriate in this market to license your station at this time.
302 MR. MILLER: And again not to belabour the point, but the fact that they have returned to historically higher than average margins is appropriate, the fact that it's now two points higher which is what it was when the new licensees were introduced into the market previously is a relevant factor.
303 Not to belabour the point on allocations, but there's a market test and there's a system test. We think in addition to looking at the market it is appropriate for the Commission to look at the impact on the system and that allows you to look at a barometer set of numbers.
304 THE CHAIRPERSON: No, I wasn't pre-empting what you had planned at that point. I was only thinking of challenging the figures on the basis of allocations, you know. Everybody does the best they can. We have figures in the industry that the industry goes by.
305 It seems to me that those figures are probably a lot better than the figures you used to establish ratings on which methodologies on which, when you establish ratings, on which billions of dollars turn every year. We prefer what we can.
306 MR. SWITZER: Mr. Chair, we hear you and understand.
307 THE CHAIRPERSON: Yes.
308 MR. SWITZER: And market size and impact, the Toronto analogy of the two players licensed as starting off at perhaps 10 per cent of the market size and their business plans going to 15 gives us additional comfort as well as the overall health of the players here in Alberta.
309 THE CHAIRPERSON: Okay. I think I have your answer on that.
310 Let me just ask you. On market share, again in your Vancouver station, I guess your results -- would you call them disappointing? Were you satisfied with the results? The numbers we have for fall 2002 BDMs are 2.5 for Vancouver and 2.3 for Victoria. Are those accurate for your market shares?
311 MR. SWITZER: I would have to look at --
312 THE CHAIRPERSON: The number was not in them.
313 MR. SWITZER: They sound about right.
314 THE CHAIRPERSON: Yes.
315 MR. SWITZER: Of course, the launch of the Vancouver station as a Citytv just happened this past July, so it would have been just a few weeks or a couple of months after launch.
316 We are pleased with the early start, with the response by viewers in the community and things continue to grow there, of course.
317 THE CHAIRPERSON: And Victoria, when did you launch Victoria?
318 MR. SWITZER: We launched it in October of 2001.
319 THE CHAIRPERSON: You have $2.3 million for Victoria. Is that right?
320 MR. SWITZER: That would sound about right.
321 THE CHAIRPERSON: And what are you projecting -- I had those figures somewhere, but I can't put my hands on them now.
322 Your market share projections for the first years for these new stations.
323 MR. SWITZER: They begin at 3.8 per cent, Mr. Chair, and rise to slightly over 5 per cent I believe by the end of the term.
324 THE CHAIRPERSON: Right, so 3.8 is considerably higher than the numbers we have just been speaking of in your B.C. experience. Why do you think you will be more successful in achieving those numbers?
325 MR. SWITZER: Two reasons, Mr. Chair. One, fewer stations, clearly fewer stations, and a much less competitive environment.
326 Secondly, the stations here would be able to draw upon the best of programming that's on both the Victoria and the Vancouver station in addition to, of course, the main reason which would be why we think they need air for, the new local news and non-news programming than we have seen anywhere before.
327 The need for news and non-news locally, the smaller size of the market and the ability to draw on the best of what is on Vancouver and Victoria in one station here.
328 THE CHAIRPERSON: I guess most of your competitors, potential competitors in these markets are not concerned that you will achieve those shares. They are concerned that you will achieve more than those shares. I suppose that's the flank that you have to protect most carefully.
329 MR. SWITZER: We wish to have that problem, sir.
330 THE CHAIRPERSON: In terms of your impact on Craig, again I will leave the questioning for the interventions and reply, but I did want to ask you about audience targeting. You do go back and forth on that in terms of whether or not you will be targeting the same audiences.
331 How would you characterize your stations in this market compared to the Craig stations and the demographics that you will be focusing on?
332 MR. SWITZER: Well, that's a key question and it's kind of hard to do in less than five minutes.
333 We worry about -- well, we don't worry. We plan and operate and execute our stations according to what we think the market needs, what we hear, what we have learned in consultation and, frankly, what's in our heart. It hasn't changed or varied, that model, in terms of being responsive to the community.
334 In this market there's a clear need for accessible, reflective, inclusive programming that speaks to primarily young Albertans. We understand that the Craigs began with a movie format and generally targeting younger --
335 We were here seven years ago supporting them and helped them very early on in the process in the first year. We represented perhaps 50 per cent of their schedule overall.
336 They have changed. They have grown and needs have changed. They have decided to -- I remember hearing Mr. Craig talk with the press about moving away from City and more towards perhaps half way to what a CTV or a Global might be.
337 Those are his choices and his business and his own connections with his viewers. What we want to do is connect with viewers here in Alberta. Along the way we have learned today we only represent, based on the fall schedule and the business has all been done, the Craigs have purchased from us just seven or eight hours.
338 We represent now only about 6 per cent of their schedule, so there is a huge opportunity to continue to what we do with consistency and innovation. We will worry about our modern young Albertan viewers and Drew's clearly driven to do his own thing and is clearly changing his approach to follow his own business needs.
339 Does that help a little?
340 THE CHAIRPERSON: Well, it helps. How would you differentiate, if you had to summarize your station, differentiate it from the Craig stations in these markets?
341 MR. SWITZER: I would say here more local stories, intensely local volume of new stories, more local non-news, programming where people in these communities see themselves more on the air every day, with particular attention to younger members of the visible minority community.
342 We believe this top to bottom. Two thirds of the visible minority community here in Alberta is under 35 years old. We think there's a particular emergency in terms of reflection and inclusiveness that's not now seen or served on the screens in Alberta.
343 There is no non-news original local programming in the heart of prime on any of the three existing stations. That will be a point of differentiation.
344 Many of the people on this panel could talk to you passionately about the approach and rhythm and cadence and inclusiveness and just sheer accessibility and reflection of what these communities are.
345 There are huge gaps that we think need filling and that, frankly, we have a passion to fill.
346 THE CHAIRPERSON: Maybe that -- do you want to add something
347 MR. KIRKWOOD: Sorry. It's on the business perspective, the concern about approaching the same demographic I think is not a dire emergency. Most of our business, most of any broadcaster's business, is based on 25 to 54. If there were an age demographic that is underserved, it would probably be 18 to 49.
348 If you index all those cohorts, age cohorts across the graph, you would see a vast over-index, which is 55 plus, and under-indexing on the 18 to 49 groupings.
349 So two stations, even if they were two stations in Alberta attempting to attract more 18 to 49, it certainly wouldn't be overkill, it might even be very good for the system.
350 This fall the big foreign networks in the U.S. all preached about how they were the number one, in some way, for 18 to 49 because those are the people that the advertisers want and they do not watch high volume television as other people.
351 THE CHAIRPERSON: Okay, perhaps that's a segue into the demands -- that is, I have one or two questions on those, the market studies that were carried out for you and I was wondering about the juxtaposition of these two sets of figures that apparently 57 per cent of Edmontonians and 54 per cent of Calgarians indicated that they saw aspects of their city reflected on local television quite often. Then roughly, in similar numbers, they spoke about there being a paucity of programming about their community or neighbourhood or their city and so forth.
352 So, I'm wondering how those figures, balanced against each other, show demand for the station. There seems to be a fairly high degree of satisfaction in roughly similar numbers who say they would like to see more of their community.
353 MR. MILLER: I'll ask Mr. Balcon to go into some of the detail, but what we did which research is somewhat unprecedented, in that we had the time to do two sets of opinions, research in the field, plus multiple focus groups. What that allowed us to do is to go initially in the field, last summer, testing certain program concepts, getting a sense where interest might be without having defined our station concept precisely.
354 We took the results of that research and took subsequent discussions with many Albertans to really focus what we did in the study. And, ultimately, what was very interesting is when we did sort of get a nice description of what we had in mind for the station and put that question into the second research, we got an interest rate of 85 per cent, which actually is higher than the numbers you saw in Toronto, for example, and the last hearing there.
355 So, those earlier numbers -- David can speak to them, but they are interesting because it shows that when you come at things from different directions you get slightly different perspectives. But they do show strong levels of interest for certain program concepts and ultimately the research shows a very strong level of interest for the station as we defined it.
356 MR. BALCON: Mr. Chairman, to address the change or the shift of perception from those types of questions from the original was a top of mind awareness where you pose the question and people with little reflection will give you their first opinion about what they think they have seen or what they have seen. Then we moved to probe a couple of more specific points, did you see your neighbourhood, did you see news about you community, did you see...? So, as we went down those levels there was less and less that they were seeing.
357 Now, the shift was within a 10 percentage point range as we went through and identified those sub-sectors. But when you are dealing with television programming, we are not really dealing with, as in election polling, first-past-the-post, we are really dealing with a situation where if you are finding there are significant constituencies that are not seeing themselves reflected then, as Peter was saying, we can take that research and we can move to another level of probing in some of the programming concepts that we did later on in our survey work.
358 We are really refining an overall perception in the community, as well as the fact that during this period any one resident in Edmonton over the last two years has seen a re-positioning of the major TV stations here from being very very local, CFRN, ITV, to being CTV and Global in the marketplace. That, in itself, reflects a perception that we were trying to track to see if it proved itself out in the responses we were getting.
359 Then when you look at the subsets of demographics in terms of age groups and the types of people who were saying they saw less of what they are liking to see in their communities, then that gives to the programming people a little bit more market or audience to begin to address programming concepts towards. So, again as I say, it is top of mind and then focus, focus, focus.
360 THE CHAIRPERSON: Do you see those two sets of numbers as resulting in a demand for the station when something over half say that they do see the aspects or their city reflected on local television quite often and then the same small majority say, but there is paucity of programming about their community? I am just not sure how to --
361 MR. BALCON: Well again I guess, Mr. Chairman, it comes back to people designing programs and seeing that yes perhaps half or more see themselves, but when you look at the parts that don't see themselves quite as often as they would like to, then when you are going after a share in your community of four or five per cent, that gives you almost 10 times that base to begin to design programming that is addressing that.
362 Then, as well, in scheduling that programming at a point in time, we asked about the similarity of TV stations in the markets as well in both cities and came out to I think it was about 80 per cent felt or 72 per cent found the stations looked all alike. Well, one of the design concepts in the city programming schedule is to move some of this under-served category of programming into a prime-time period to offer an alternative exposure and to draw an alternative audience that's not watching television.
363 I am always fascinated by ratings which say that two million people watched a show or the cumulative ratings are several million people, but they don't say that the other side -- there are 30 million people in Canada, if two million people are watching a certain show that means 28 million are not. That gives a programmer, who is looking for a niche development strategy in a market considerable opportunity to build with those numbers. So, yes they are not overwhelming majorities, but they are enough to work with when you begin to see who those people are and which communities the represent.
364 THE CHAIRPERSON: I wish I could follow that, I am not sure I can, because you don't need a demand study to know that the highest ratings you are going to get are about a million or two and therefore the rest of the people aren't watching TV, lets find what they want to watch and provide it to them. You don't need a demand study for that I guess.
365 I am wondering what comes out of this study for you? I mean, you have for example 20 per cent of people indicate that they see themselves or people like them on TV seldom or never, that is overall as I understand it. When you move into very ethnics demographics that goes up slightly. So, for example the aboriginal member is 23 per cent, Latin American 23 per cent. Well, is that different from the 20 per cent overall who say they didn't see themselves that often?
366 MR. BALCON: Well it is, Mr. Chairman, because when we are focusing on that particular constituency and that community, it means that they are seeing themselves less than the average. As someone was explaining about the PBIT responses, when you have one group that is a minority that brings down the average for the majority, that means that the larger communities are seeing themselves more so and therefore the minority communities are seeing themselves less so.
367 But in this particular instance what it allowed us to do again is to go back to the programming people and, in a way, support the thesis of what the city concept has been, which is a much more inclusive reflection of the community. Therefore, although these groups are relatively small in some respects, they are important and as a composite they can deliver to a station an image of a city that is much more reflective by focusing on the strategies that city people are trying to do in their local programming.
368 When almost all of the local programming is addressing a certain category of individual in the community, then those who are not included begin to amass a significant audience that you can begin to address with your programming.
369 THE CHAIRPERSON: When you compare -- give me feedback if you don't think this is an appropriate analogy, but when you compare a poll taken for a leadership race or an election where the question is basically a choice between three or four different people or parties and they do the survey of whatever it is, 1,004 people, and they say this is going to be 95 per cent correct 19 out of 20 times or whatever it is, and that is a very simple thing.
370 Here, you seem to be putting an awful lot of weight on some very small numbers relating to an extremely complex issue of choice in programming that, even if you provide it, might not satisfy the audience because, although it was about then, it wasn't good from their point of view, they didn't like it. So, you are dealing with so many more qualitative variables and my point is that you seem to be putting a awful lot of weight on very small numerical differentials to derive a great deal of guidance. Maybe that is an incorrect perception, but perhaps you could comment on that.
371 MR. BALCON: The numbers are small, but they are larger numbers within smaller communities. So in a community of about 3,000 people, a sample of 30 people is a large sample amongst that group.
372 When we built the samples for the survey, we were sampling in this case in Edmonton twice as many people as were sampled in the Toronto surveys three years ago. So we attempted to build a sample size which was consistent with the work we have done -- and we have been doing research in the Edmonton- Calgary, Alberta markets for a decade now -- samples that we knew were going to give us a reliability when we got down to communities this small and our test was that when we brought our gross numbers in, our results paralleled the statistical presence of those people in the communities which gave us our reliability number.
373 Granted, when you go to smaller samples your reliability begins to break down, but when we looked at the program's specific questions amongst each of those communities we didn't find that the numbers aired from a norm that you would expect. We didn't find that urban people of a certain community who had no affinity to agriculture would say they watched agricultural programs.
374 They watched the cluster of programs we would think that people from the focus groups were telling us they would like to see on a channel and we tried to parallel the development of those programming questions to reflect what we were hearing from the focus groups and then with those small samples try and at least confirm because this was a two-stage survey work that we did and my understanding would be that the programming is developed -- the commitment to research is to build larger samples amongst the groups that you are focusing on.
375 Our exercise in this particular case was to get an immediate snapshot which included a reliable enough sample of the smaller groups in order to confirm assumptions that focus groups were telling us to give a reasonable measure that there was indeed an interest in certain types of programming and then to be able to design further research from that which would only look at those groups, that that wasn't part of the demand right now. It was really to provide you with a snapshot and one that was reliable.
376 That sample of that cluster of perhaps 80 or 90 people that we did in each city is more than the sample you may read in the national polls. Every other day we get a 1,200-person national poll. Well, 80 people is about all they sampled in Alberta. So for the two cities, you have 40 or 50 out of Edmonton and 40 or 50 out of Calgary. When you start to bring it down, you talked about Edmontonians, and so on -- we are trying to at least build a reliable factor in our data in that respect.
377 MR. KIRKWOOD: Mr. Chair, can I just add --
378 THE CHAIRPERSON: Just before, Mr. Balcon, I gather your sample size was what? 427 in Calgary and 485 in Edmonton?
379 MR. BALCON: In the second round.
380 THE CHAIRPERSON: The second study, in January.
381 MR. BALCON: The second study and they were slightly larger, 20 per cent larger in the first survey. So the survey you were addressing was the larger sample.
382 THE CHAIRPERSON: Right, 653 and 668, right? The August 2002. Is that right?
383 MR. BALCON: That's right.
384 THE CHAIRPERSON: That would be right. I was drawing from that larger study.
385 Mr. Switzer, I will give you the mike, but it's interesting in the study à propos of the role of DTH. The study seemed to say -- and this is in the second study again, whereas 15 per cent in Edmonton said they received their television by satellite; the number was 13 in Calgary, showing the relative closeness of those two numbers à propos of our earlier discussion.
386 MR. SWITZER: Yes, it shows Edmonton is still larger. Actually, we have been spending some time in the last week trying to understand those numbers.
387 I think you hit on a very important point in that we wanted to over sample. The first total sample in Alberta was I think approximately 1,200 people. The second sample approximately 800 people, provincial-wide. This was a very important issue for us so that we could -- and that is considerably larger than most samples would be used -- drill down into some subgroups, have some reliability and some understanding because for us this was more iterative than any other application process where research was used to fine tune, improve and shape our promises.
388 We added to the demand research focus groups and then one-on-one personal meetings and interviews and discussions with many people present. Of course, you need numbers to look at, but it's one part of an extremely iterative process. From our point of view, the most research, the most interactive learning experience over the past year that we have ever participated in.
389 MS CRAWFORD: Mr. Chair, if I may? Aside from looking at specific things in terms of demand and what the research covered, I think it's really important to know that 85 per cent of the respondents in both Calgary, Edmonton and Red Deer said that they never see people like themselves reflected on local television -- ever.
390 Twenty per cent almost of the local populations of these areas are people of visible minorities. Taken together, Calgary, Edmonton and Red Deer, have the largest Aboriginal population as any metropolitan area in the country. I think it's significant to look at that overall statistic in terms of what it is saying about what CHUM is bringing and can bring and wants to bring to these local markets.
391 THE CHAIRPERSON: I didn't get that number from the figures, but again I could certainly stand tutoring in reading demand studies.
392 MS CRAWFORD: I am sorry, I couldn't hear you.
393 THE CHAIRPERSON: I didn't see the number. The numbers that I have for people not seeing themselves were in the low 20s.
394 MS CRAWFORD: Mr. Balcon can correct me if I have it wrong, but 85 per cent of the people in Calgary, Red Deer and Edmonton feel they seldom or never see themselves reflected on local television.
395 THE CHAIRPERSON: That's a big gap, Mr. Balcon.
396 MR. BALCON: Actually, is the joining of the "occasional" and then the "seldom" or "never", assuming "occasional" is very sporadic, but not the heavy "regular".
397 THE CHAIRPERSON: Thank you.
398 MR. BALCON: I think it's also important to note the 186 people we talked to in Red Deer because that community is seldom, if ever, caught in any research of this nature.
399 THE CHAIRPERSON: Mr. Balcon, do you have in your methodology a kind of smell test factor that you -- I mean, who, when they are asked whether they wouldn't like to see a new television station reflecting them, would at prima facie not be favourably inclined?
400 So do you have a method for accounting for that in terms of the accuracy, unless you disagree with my assumption.
401 MR. BALCON: I have been through series and series of this type -- not this type of research, but similar types of research. I go back to the pay TV days where we were told that 40-50 per cent was going to subscribe to pay TV. I objected to those numbers and left the Commission, but that's another story.
--- Laughter / Rires
402 THE CHAIRPERSON: The union representative is here, I believe.
--- Laughter / Rires
403 MR. BALCON: I mean, you are correct in saying that, yes, we would all like to see something new, especially if it doesn't cost us anything.
404 When we asked that question actually, I think it was only 74 per cent in Edmonton, around that -- about 25 per cent said they really weren't interested which says to me that is maybe your smell test, that when we described the concept behind CITY and if it wasn't on people's minds like it was on the young woman who had visited Toronto -- and a lot of that generation know about it -- that type of programming we described in the previous five or six minutes of the survey was just not going to be interesting.
405 So I think it did get that smell test to the degree that a quarter of people weren't going to be interested.
406 THE CHAIRPERSON: Of course, you could interpret that 25 per cent as a measure of the satisfaction with existing --
407 MR. BALCON: True, and that gives you an enormous breadth, even more than I was saying about the 40-odd per cent. But, yes, we do have a sort of innate --
408 THE CHAIRPERSON: Discount factor.
409 MR. BALCON: -- ability to know when our surveys go off in tangents and that is why I come back to your original questions about those smaller samples. We did not see when we looked at the microdata there that any of those numbers were skewing or otherwise giving us spurious data or results.
410 THE CHAIRPERSON: But here is another one. The market studies indicate, and you will correct me if I am wrong, but I am reading that 75 per cent of respondents watch local television news regularly. You also state that a high percentage of people in those markets perceive local news and entertainment programs to be very much alike and that they would watch local programming more often if it offered the types of programming that interested them.
411 Could you explain what type of programming that would incite viewers to watch more television than they are actually watching?
412 MR. BALCON: I would like to pass that on to the programmers who are the ones who are interpreting and coming up with concepts that would attract a new audience.
413 I think again, though, from the overall demographic information, we know that the target audience that the station would be addressing is not watching current news programming because of the contents. We did ask a bit of that: Why are not watching, and we have a set of numbers which range from the newscaster is just too depressing, the news isn't of interest, and also this age group tends to do a lot of other things that take to eight, or whatever hour. So there is a lot of competition there.
414 In answering your specific question, that has to go the programmers and there are a lot --
415 THE CHAIRPERSON: Wouldn't you take 75 per cent as a pretty high number of people who are watching local television news regularly when you think about it?
416 MR. BALCON: The way we phrase the question is: Within the past week, for what period of time have you watched it, and cumulatively, yes, it is a big reach. When you then look at those numbers with BBM and Nielsen and you see that that represents on a day-to-day or quarter hour on particular dates that only 30 per cent are actually watching the news, then it opens it up for more types of questions like why aren't or consistency or are people coming back every other day. These are questions and issues that I don't feel just because I am not a programmer, but --
417 THE CHAIRPERSON: Well, that is a very good segue to our break and we will resume in 15 minutes with questions on programming.
418 Nous reprendrons dans 15 minutes.
--- Upon recessing at 1116 / Suspension à 1116
--- Upon resuming at 1137 / Reprise à 1137
419 THE CHAIRPERSON: Mr. Secretary.
420 MR. LEBEL: Thank you, Mr. Chairman.
421 Just for the record, I would like to indicate that the revised projections were filed by CHUM and I have provided copies to the intervenors and a copy is already available on the public file in the public examination room.
422 Thank you, Mr. Chairman.
423 THE CHAIRPERSON: Thank you.
424 Before we go on, I will just briefly discuss the changes here with you. I noticed that the three numbers on your new revised projections, the three numbers that are different are for the total market, and revised projections for the three years '02, '03 and '04. Is that right?
425 MR. SWITZER: That's correct.
426 THE CHAIRPERSON: Everything else basically remains the way it was.
427 Could you explain why you made the changes to these three years and how they were derived?
428 MR. MILLER: Again, I will ask Mr. Kirkwood to speak to it.
429 Again, when we initially developed our projections was back in December and earlier. So we didn't have an accurate take on what 2002 was. We got a better estimate of that, and we also got a better estimate now of what 2003 will do and 2004 and we made those changes accordingly.
430 David can speak to those numbers.
431 MR. KIRKWOOD: As Peter said, 2002 did not turn out as high as we imagined, but 2003 these are based on the current time sales survey report from the Television Bureau. So we are up 7.81 per cent for 2003.
432 THE CHAIRPERSON: How much did you say? I just didn't get your number.
433 MR. KIRKWOOD: 7.81 per cent so far this year, 2003, and most of the industry projections for 2004 were somewhere in between 5 and 6 per cent market increase.
434 THE CHAIRPERSON: So your 2002 change was to accord with the actuals; 2003, you are comfortable with a lead from 3.9 to 6 per cent increase because you are tracking at this stage after how many months of the year?
435 MR. KIRKWOOD: To the end of March. So it would be from September to March.
436 THE CHAIRPERSON: That gives you the confidence to say that you will achieve 6 per cent over the year. How did you double the number for the increase in market growth for '04 over '03?
437 MR. KIRKWOOD: The projections for the coming year that we can imagine are here -- I'm very sorry for this -- it's in this area of 5 to 6 per cent.
438 I also have a clear perhaps reason why growth in our first year of operation would be small and why it would grow in the second year. It might clarify some of the questions you were asking earlier.
439 THE CHAIRPERSON: By all means.
440 MR. KIRKWOOD: In the first year, typically --
441 THE CHAIRPERSON: Just before we get to this. The answer to the '04 number being double what it was before is that you are essentially basing it on that same trend this year. You don't see why it should change dramatically down.
442 I mean if you had left it at two ten zero instead of what -- it's basically there. The situation there is the same as your original projection.
443 MR. CAPORICCI: Yes. You are referring to what we had originally filed, which was 3 per cent for the year '04, and you are asking why we have doubled it.
444 THE CHAIRPERSON: 2.9. It now goes -- to get to the level which you essentially had before in 2004, you need to go up, given the realities of 2002 and the projections for '03, you need to double the grip market growth increase.
445 MR. CAPORICCI: That's correct, based on what we have experienced and the '02-'03 broadcast year.
446 Yes. And everything that's in the U.S. market we anticipate strong growth in.
447 THE CHAIRPERSON: Okay. Fine. Go ahead. You can explain the 2.2 and so forth.
448 MR. KIRKWOOD: Typically we believe the first year in a market, sometimes there's some market chaos as stations and shares readjust and the stimulation of spending isn't as grand.
449 Also, because we are planning to do 25 per cent of our business as local retail, that typically doesn't start off right from the starting blocks on September '04. Retailers typically, local advertisers especially, are reluctant to buy in confidently to selling estimates. They want to see a history.
450 By year two you have established that history and the stimulation in the market is happening. That does reflect too on the Vancouver situation. There's a number of factors involved there.
451 We came off a GDP growth year of 5 per cent, launched in a year where there was no GDP growth and the media directors in Vancouver were telling broadcasters "Lower your rates, we are looking at alternatives, there's 20 to 30 per cent less revenue in the marketplace" and it was depressed that year.
452 I'm happy to report, and we can't take all the credit for this either, but the market has been restimulated and it's up 15 per cent to date this year, which is higher than the rest of Canada and actually raises the Canadian average of 5.5.
453 THE CHAIRPERSON: All right. So you are assuming that the addition of a new station in these markets will in effect have a downward effect on rating point value.
454 MR. KIRKWOOD: I think it will be a stabilization. I think what's happened in this province, and I think it's discouraged some advertising, is rapid rate increase. I imagine that the strong -- the juggernauts of broadcast will continue very much as they have.
455 I think it's even possible that the presence of us in the marketplace with the A channel will provide advertisers with an alternative, I think, both locally and nationally.
456 THE CHAIRPERSON: So, with the drop of 16 per cent in the Vancouver market, the company -- the entry of your new station -- you don't see that happening here.
457 MR. KIRKWOOD: It didn't what?
458 THE CHAIRPERSON: You don't see happening here, that drop in the --
459 MR. KIRKWOOD: No, because there were other factors at play there. The economic forecast for this corridor is a lot healthier than what happened that year in Vancouver.
460 THE CHAIRPERSON: I mean simple supply and demand would suggest that one more player in each market going after the advertising dollars would have a downward impact on the cost per rating point.
461 What is your estimate of your decline or increase or stability in going into that first year?
462 MR. KIRKWOOD: Our estimates were actually based on this past year's trading prices of .165 and .55, which I think were used by other applicants as well, so we were basing it on what exists today.
463 THE CHAIRPERSON: If no decline you are saying?
464 MR. KIRKWOOD: No, we didn't base it on a decline. It may stem from the side of rapid expansion, but I think not all players. It will increase and supply and stimulate the market in a more important way than a negative impact with lower costs.
465 MR. MILLER: Mr. Chair, if I could just add rather one other comment about the numbers. What's interesting is that given the forecast for the next two years growth, our projections relying on today's cost per point and looking at very conservatively only a modest growth in the first year still leave the incumbents with the same revenue levels almost as what they will achieve this year.
466 Because of that huge growth the revenue for the incumbent doesn't go down very significantly with the entry of their station, and that's the number, the second line bold number you have there with incumbent stations.
467 THE CHAIRPERSON: All right. I follow that.
468 Thank you. Moving to programming now. I guess one of the things I would like to get clear is -- you spoke of it today as well, but let me start with my questions and we will probably get there.
469 Okay. This is your ten point plan. So you are going to be doing in each of Calgary and Edmonton a weekly minimum of 9.5 hours of local news, original local news, and a weekly level of 10.5 hours of regional local non-news.
470 MR. MILLER: That is the way our program schedule came out. In terms of the commitments on the ten point plan, we looked at it slightly differently. We said we would have a minimum of 20 hours of local of which at least seven would be not news.
471 THE CHAIRPERSON: I see. So, of the 27 hours of what you are calling Alberta programming per week, 20 will be local to each of the stations of which seven will be regional -- I said and will be regional. Of that 20 hours of local you are saying seven hours will be news.
472 MR. MILLER: Sorry. A minimum of seven would be non-news.
473 THE CHAIRPERSON: Seven would be non-news.
474 MR. MILLER: So effectively while the program schedule has nine and a half hours of news based on the ten point plan, the absolute maximum would be 13.
475 THE CHAIRPERSON: I see. So I should change my 9.5 to 13 and my 10.5 to 7.
476 MR. MILLER: If you want the breakdown of minimums, yes.
477 THE CHAIRPERSON: Okay. Now, of the 14 hours of non-music you spoke about this morning -- oh, that's the seven plus seven. Is that it?
478 MR. MILLER: That's correct.
479 THE CHAIRPERSON: Okay. I think I follow that. On page 4 you say you will schedule at least ten hours a week of relevant quality local and regional cross-cultural. How does that fit into the numbers we have been talking about so we don't double count.
480 MR. MILLER: So, of those seven hours of non-news at each station, a minimum of five would be cross-cultural or multicultural or aboriginal local non-news on those stations.
481 THE CHAIRPERSON: So a minimum of those. Okay. Plus another five hours from other parts of Canada which gives you the 27 because it's not Alberta.
482 MR. MILLER: Precisely.
483 THE CHAIRPERSON: I follow that. Then page 6, in Richard Gray's words you talk about .3, a minimum of two half hour aboriginal news shows. Where does that fit in?
484 MR. MILLER: That would be part of the multicultural, cross-cultural programming on --
485 THE CHAIRPERSON: So that would be part of the five.
486 MR. SWITZER: That's correct.
487 THE CHAIRPERSON: Okay. Now, let's go to the dollars. Fifteen million on the initiative and you broke that out in your financial projections. I take it this is your other programming expenses, lines 15 through 18 of your programming expenses submission. That's where we find it.
488 MR. SWITZER: Yes. On 17 on the form I have in "other". Yes.
489 THE CHAIRPERSON: Okay. Well, 15 million over seven years of which 12.516 is licensing, which you refer to as the drama initiative there. That brings me to the question about the -- on page 8 you say that -- this is of your oral presentation today:
"Following the recommendations from the Directors Guild and Writers Guild, you will ensure that the majority of licence fees and development moneys go to drama." (As read)
490 Page 12 you say:
"At least $12 million in new licence fees and development..." (As read)
491 I'm just wondering if we are talking about the same -- the licensee development included under script and concept development, if I am not reading it incorrectly.
492 MR. MILLER: That's correct, so that the $12 million figure is 50 per cent of the 12.5 in licence fees, 50 per cent of the 1.1 in script and concept development, plus the drama expenditure we had in our business plans.
493 THE CHAIRPERSON: So give me the numbers, those three numbers, in dollars.
494 MR. MILLER: Those three numbers are 50 per cent of the $12.5 million in licence fees, 50 per cent of the $1.1 million in script and concept development, plus drama expenditure expectations contained in each of the business plans.
495 MR. SWITZER: He was reading -- just to clarify the script and concept development for both stations is $2.1 million.
496 THE CHAIRPERSON: Right.
497 MR. SWITZER: I think that was just a misread. To clarify, half of the $12.5 million in licensing, half of the $2.1 million in script and concept, plus the $4 million and change that shows up in the normal ongoing expenditures of the station for its normal business towards drama.
498 THE CHAIRPERSON: I see. So that totals $12 million that you are speaking of.
499 MR. SWITZER: Yes, that's correct.
500 THE CHAIRPERSON: So, to get that number, looking at your financials, I would take half the script and concept development of 2.1 which would be 1.05 and half of the 12.56 which would be about what, 6. --
501 MR. SWITZER: Plus half of the line 5.
502 THE CHAIRPERSON: Half of line 5.
503 MR. SWITZER: Traditional growing expenditures.
504 THE CHAIRPERSON: Yes. That's about 2.3.
505 MR. SWITZER: I'm sorry, not half of the final number. The final number is all drama clearly.
506 THE CHAIRPERSON: So it's 4.6.
507 MR. SWITZER: Yes.
508 THE CHAIRPERSON: Or 4.7 roughly.
509 MR. SWITZER: Yes.
510 THE CHAIRPERSON: That adds up. Okay. That's where we get it. Okay. That clarifies that. Thank you.
511 Now, for the 12.5 million, and I guess before I ask that, since you have now given me this additional information, how much will be going to the so-called Alberta indie initiative -- the Alberta independent producers, or does that simply get melded in a way that you just described? You have $12 million on drama of which 1.05 will be script and concept development and the balance will essentially be licence fees?
512 MR. SWITZER: No, I'll try to make it as clear and easy as possible. If the total pool is approximately $15 million, the 15 that we are talking about, 12 and a half in license fees, 2.1 in script and concept, the first point is all of that is the Alberta Indie --
513 THE CHAIRPERSON: I understand that.
514 MR. SWITZER: -- Project. It all goes to Alberta independent producers.
515 THE CHAIRPERSON: Okay.
516 MR. SWITZER: Of that $15 million at least half will go to drama with Alberta independent producers.
517 THE CHAIRPERSON: Right, and what about the 4.7 that --?
518 MR. SWITZER: That is the ongoing dramatic expenditure needs that the stations will use for their ongoing support of other initiatives across the country.
519 THE CHAIRPERSON: So, independent producers can count on, essentially, six and a quarter million in license fees under the initiative, plus whatever may come out of your normal expenditures?
520 MR. SWITZER: You didn't preface that with drama, so the Alberta independent producers could call on the full 15 million of which roughly 7.5 more or less is drama.
521 THE CHAIRPERSON: No, I had meant to say drama and I am reading that -- Okay, so in making those decisions, are you going to be treating that as a different trackable category the way you show in your projections?
522 MR. SWITZER: Absolutely, Mr. Chair, this is an incremental new commitment that we will provide complete transparency and visibility.
523 THE CHAIRPERSON: Okay, now how do you evaluate proposals for those license fees?
524 MR. SWITZER: Many on your team would like to add, and I would ask Diane Boehme, our director of independent production, to comment on specifics of how it would work, but I will just begin by saying like with -- in the same way we work with other stations across the country, there will be an empowered local development officer in Alberta to be the front lines, to deal with the weekly meetings and to make those decisions and also communicate with Diane for the larger projects that are seeking national exposure. Diane, if you could add to that.
525 MS BOEHME: Thank you. In the same way that we evaluate all the projects that come to any of our services, it is a matter of first and foremost determining whether or not the project that is being assessed is going to be suitable for our audience, depending on who our audience is at the time, how does it meet our mandate, how is it going to attract our audience, how successful of a team are they bringing to the table?
526 In some cases, there is not a formula that happens to go with that, it would be an awful lot easier if there was. That is essentially what, in many cases, the development stage is all about. They come to us with a great idea, we think it needs a little bit of tweaking and we either put them together with somebody who we think could help them or we help them during their creative phase to have the proposal that we think is going to make the best --
527 THE CHAIRPERSON: So basically, your answer is any broadcaster represented sitting -- you are saying you would answer the question the same way, in the normal course for --
528 MS BOEHME: Yes, normal course.
529 THE CHAIRPERSON: -- programs that work for us -- Okay. How about original first run Canadian programming? I am not only including drama, but across the initiative, how many hours do you expect to have of that or how much of your dollars will be going -- devoted to that?
530 MR. SWITZER: Well, certainly all of the dollars will go to local initiatives. Since we have discussed at least half going to drama, it will be a function of the ideas and the proposals that come to us from producers. We have our own ideas as to, from a format point of view, the kinds of things we would like and what might work.
531 Diane might give you two or three examples of things we have learned from our work in the feature film area that we think will now expand to the series area and maybe it will add a little bit in terms of the non-drama portion of the $15 million that may include some documentaries and other programs.
532 MS BOEHME: Thank you. Just to use the "Bollywood Hollywood" example, it was a feature film that we supported from the development stage and which we had a great deal of success with it. It was a very good collaborative relationship that we developed with the film-maker and when the original idea was proposed, obviously it was a question of sitting down and deciding was it sustainable over a number of episodes and hopefully over a number of seasons and, Deepa being as inventive and creative as she was, absolutely we determined that it was.
533 So, it is the kind of thing that we would like to use as a model because it is culturally diverse, it is fun, it is lighthearted, it has an ability to target audiences and it was one of the great successes of the Canadian box office in the year past. This very small Canadian movie made $1.7 million at the box office and shipped 30,000 DVD units in the country and they are selling very brusquely. So, we know that there is a market for it and it is a question of us being able to find a way to tap into that and we are the right broadcaster to be able to reach that demographic.
534 THE CHAIRPERSON: This is Alberta, right? Half of the money will go to Alberta independent producers?
535 MS BOEHME: Yes, we have another project in development. I think if you saw the tape you noticed there was a movie that we developed with Gary Burns called Way Downtown, which we had in development with him as a television series very specifically targeted to a young urban hip demographic and set in Calgary.
536 MR. SWITZER: Mr. Chair, there is two parts to the initiative that we haven't talked about that are quite unique here in the province, one is specifically putting aside some monies for some cultural diversity internships and it is intended to help finance three interns, aboriginal or visible minority, and that is an important part of the independent production community that we have been told needs extra help and support and we completely agree.
537 We have also reserved a portion of the script from concept development funds and the pre-licensing funds, a minimum of $250,000 per year out of these monies that we have been talking about, to support cross-cultural and First Nations programming specifically because that is an important part of what we can add in terms of value and viewer interest. Of course, everything we do is set against a context of what are we doing differently, how can we make a difference, what can we contribute? Certainly, everything that we commission, both drama and non-drama, will clearly be sensitive to what we are trying to do, which is a new inclusive, more reflective approach to television in this province.
538 THE CHAIRPERSON: How much of license fees will be spent on programs that will be aired for the first time on your Alberta stations?
539 MR. SWITZER: Mr. Chair, 100 per cent. This $15 million, that 12.5 are license fees, the 2.1 for script and concept development, is completely to support independent new first round Alberta independent production.
540 THE CHAIRPERSON: Okay. The two half hour programs directed towards aboriginals that we spoke about, will that be part if this?
541 MR. SWITZER: It could be either, but I believe our assumptions were based on a model drawn on doing those shows in-house. We're not trying to preclude bridges being built with local producers, but that's how we have --
542 THE CHAIRPERSON: Okay. So this is incremental to that you say, this money is?
543 MR. SWITZER: Yes, absolutely.
544 THE CHAIRPERSON: In terms of the non-Alberta money -- I guess if you are committing half to Alberta Independent Producers and half presumably to independent producers outside of Alberta?
545 MR. SWITZER: We don't think it is constructive to breakdown that final four million dollars, that is normal baseline business of these channels. We have made very clear and specific promises on the $15 million.
546 THE CHAIRPERSON: No, I wasn't referring to that. I probably didn't ask the question right.
547 MR. SWITZER: Sorry, Mr. Chairman.
548 THE CHAIRPERSON: Your $6.25 million in license fees to Alberta Independent Producers that is for drama alone?
549 MR. SWITZER: Yes, for drama alone. The other six million and change potentially for non-drama, completely to commission new first run programming from independents, but may not be drama, at least half --
550 THE CHAIRPERSON: In Alberta as well?
551 MR. SWITZER: In Alberta, yes.
552 THE CHAIRPERSON: So, the entire $12 million is? That was my question --
553 MR. SWITZER: One hundred per cent.
554 THE CHAIRPERSON: -- is being spent in Alberta. And you don't think that the two half hours will come out of that budget because you are going to produce them in-house.
555 Okay, now could you summarize for me the exhibition rights that will be retained by the independent program producers in regard to those programs that we have just been speaking of?
556 MR. SWITZER: Yes, Mr. Chair, the independent producers will of course retain ownership, will retain copyright, we will not be their partner or participate in any way and we will be licensing traditional, national telecast rights for a small number of years exactly along the lines we operate today with producers from coast to coast and believe that it is important to be quite public about that. We remain quite positive and aggressive towards working to open terms of trade so that there is absolutely no confusion about that whatsoever.
557 THE CHAIRPERSON: Would you anticipate these programs being shown on other CHUM properties?
558 MR. SWITZER: Yes, we would expect the best of it and, in fact, as a system advantage what Alberta producers get is not only license fees and help and support and prime-time telecast in Alberta, but access through Diane to the heart of prime on many of your other stations.
559 THE CHAIRPERSON: Okay, so you would in effect then anticipate as parts of the rights that you acquired, the rights for CHUM related services in the market that you serve?
560 MR. SWITZER: Yes.
561 THE CHAIRPERSON: I see, okay. Okay, I think that covers that area. I think you have answered some of the questions I had on the breakdown. Oh yes, 12 per cent, you have identified in your application as being ethnic programming each week. Is that correct?
562 MR. MILLER: Again, what we were trying to do is, using the Commission's standard form, give some indication of how it could breakdown. As we have indicated before, most of our cross-cultural and aboriginal programming will be English language, so we are not sure that it conforms to the precise definitions the Commission now has for ethnic programming. But the intent is that 15 hours, which represents 12 per cent of the schedule.
563 MR. SWITZER: Mr. Chair, with your permission I would like to sort of just touch on this notion of cross-cultural programming, perhaps with just some short input from Marcia or others because it is so fundamental to our approach to programming in this market and it doesn't easily fall into any of the existing Commission definitions.
564 MS CRAWFORD: Thanks, Jay. Our approach to cross-cultural programming is based on what we have heard through not only our research and our focus groups, but also a lot of consultation with people in the market and team that we have here, some of whom live in the market can speak a little more precisely to it. But essentially, we are looking at a focus on youth, a focus on the youth cohort who might be visible minority youth or aboriginal youth but who find that they have multiple identities that are not currently being reflected in more traditional ethnic programming that might be offered in the system.
565 It builds on an approach we have started in Vancouver with our cross-cultural programming there which has served us very well and our research really told us that some of these youths want to see programming that straddles their multiple identities, that builds the bridges of understanding between cultures but that also emphasizes the bonds that exist of commonality amongst cultures as well.
566 The aboriginal programming specifically, which I would like my colleague Richard Gray to touch a little bit about, is yet a different model and a very new and unique approach for aboriginal programming by a mainstream broadcaster. It does have a youth focus, it focuses on aboriginal youth in a modern context and perhaps Richard could just speak a little bit about that.
567 MR. GRAY: Thank you, Sarah. We have created a special place for Alberta's indigenous populations on these stations to address the huge need. Edmonton and Calgary combined, as Sarah said a little earlier, are home to one of the highest urban concentrations of aboriginal people in Canada. Many told us in our focus groups that they are not happy with their current portrayal on local television. I want to review a couple of the concerns that were expressed to us. These are three separate comments that come from different First Nation males from the city of Edmonton.
568 The first one, the coverage on mainstream news is very one-sided, the First Nation's perspective is totally missing. Comment number two, we need this news on mainstream news, not just aboriginal stations otherwise it is just Indians watching it. Finally, take the LRT attack where some natives beat up some white kids in Edmonton, it was all over every news channel on TV and every headline. Today, they had a retraction in the back of the paper where no one could see it, that the attack wasn't racially motivated. Again, three separate comments from three separate First Nation males in Edmonton who participated in our focus group.
569 I think what we have included in our applications will certainly change these points of view and I am not just saying that as a CHUM local television station director of information responsible for ensuring fair, accurate, balanced portrayal and reporting. I am also saying that because I am an aboriginal male myself.
570 By devoting two separate half hour programs a week to aboriginal reflection and issues, what we are doing is providing twice as much aboriginal specific programming than is provided on any other local television station in Canada. Those are primarily two programs, NATV, which we have scheduled on Saturday nights at 8:30, which is a celebration of aboriginal art, culture and achievement. The second program is a program called Who's Land is it Anyway, which is an in-depth discussion and examination of issues of relevance to aboriginal people in this province.
571 The kinds of issues that we are talking about are issues such as tree rights, tax exemptions and land claims. I guess the key thing to remember about these two programs is where on the schedule they fall? Falling on 8:30 on Saturday night and Sunday at 5:30, where we have scheduled Who's Land is it Anyway, will not only allow these programs to be viewed by the very large aboriginal population that exists in this province and specifically Edmonton and Calgary, but will also open up viewing to these issues, to these shows, to a wider audience, again because of the time of the day that they are on at.
572 In addition to those two specific programs, we also plan on ensuring that aboriginal issues, aboriginal perspectives are featured prominently in a number of other programs in our planned multi-cultural and cross-cultural programming, programs like Diversity, What's on Your Mind and The Reporter and in our news every day.
573 As I mentioned in the opening statement, our newsroom staff at each station is going to include an aboriginal community affairs specialist and aboriginal people who will work in the newsroom and other capacities both behind and in front of the camera.
574 THE CHAIRPERSON: Thank you for that. I want to clear up some confusion that I have in my own mind and it is not easy to do this in this area. We have you listed as doing 12 per cent ethnic programming. You spoke of the fifteen hours and we spoke of "cross-cultural/multi-cultural". Then thirdly, two new full budget "culturally diverse" one hour dramatic series. I am trying to figure out what the overlaps in these are, if any.
575 MR. SWITZER: Maybe I can begin, Mr. Chair, because there are overlaps, lots of overlaps and we see that as a very good thing. The first thing we work on is that everything we produce in news and non-news is, according to our definition, cross-cultural. The news programming and all of the other information and entertainment, community business culture, are -- it isn't just about the two programs targeted and about the aboriginal community that are intended to reach the widest audience or about the 10 hours or 15 hours of multi-cultural programming.
576 It is woven seamlessly through everything we do and produce. It is hard to define and doesn't need a category, you have to look at what we are doing on air to understand what we are planning. So, that is the first thing. The second thing or the specific category by category programs you mentioned, dollars going to and things that are accountable.
577 The third thing you mentioned was these new, what we consider, system benefits, these larger promises the two new culturally diverse dramatic series that we feel are important to commit to as part of an obligation of becoming a larger broadcaster and that is a system benefit. Those series are not in these financial projections. Those may or may not be produced in Alberta, we hope they are, they may not be. Those are national new dramatic series, above and beyond everything else that we have talked about locally.
578 THE CHAIRPERSON: Okay. The third category that I mentioned, the two new full budget culture, the diverse one hour dramatic series are not part of the 10 point plan that we are speaking of here?
579 MR. SWITZER: They are part of the 10 point plan, they are a formal --
580 THE CHAIRPERSON: Sorry, they are part of the 10 point plan, but not part of your dollar commitment to the indie initiative that we looked at before in your financials? I think that is what I heard you say, but I could be wrong.
581 MS MARTIN: Maybe I could just explain this a little bit better. The two series for aboriginal people are part of the 15 hours of cross-cultural programming that the channel will produce, it is not part of the independent dollars that are on the table.
582 MR. SWITZER: The national benefits, the two new series that we are talking about, CHUM will pay for and are incremental above and beyond everything else we are doing or have discussed.
583 The Alberta portion of those would be showing up in the normal business expenditure that we have listed in the dramatic line in terms of normal licensing and acquisition.
584 It is a super benefit that we are bringing to the table.
585 THE CHAIRPERSON: A lot greater than fifteen. Correct?
586 MR. MILLER: That is correct.
587 If I could clear up the hour commitment, those two culturally diverse dramatic series are not part of the 15 hours of cross-cultural/multicultural programming.
588 Again, as I alluded to earlier, we used your traditional ethnic chart to give some idea. But as you are well aware, for example, aboriginal programming doesn't count under the definition of ethnic programming.
589 So we noted that we were providing this information just to give a potential breakdown of how it would fall down.
590 THE CHAIRPERSON: I think I understand that.
591 The 12 per cent ethnic, then, would presumably include -- would the cross-cultural, in your view, the 15 hours, be included as part of the 12 per cent ethnic?
592 MR. MILLER: The 12 per cent ethnic is the same as the 15 hours of multicultural/cross-cultural, which includes the aboriginal. So strictly speaking, it isn't 12 per cent ethnic, because ethnic is defined to exclude aboriginal.
593 THE CHAIRPERSON: Is the aboriginal the two half-hour shows that you are speaking of?
594 MR. MILLER: Yes.
595 THE CHAIRPERSON: That is the one subtraction there. I think I have done it, but don't ask me to repeat it.
596 I think I do have it.
597 Some of my colleagues may want to follow up with that, but I think I have your point based on the categories we set out in the definition.
598 On the two incremental added bonus culturally diverse one-hour programs, Mr. Switzer, who will be the target audience for these programs?
599 MR. SWITZER: These are intended to be of interest to the broadest, largest possible audience across Canada. It will generally be a little bit younger. It will certainly be reflective and inclusive. But these are not intended to be narrow niche or in any way experimental projects. They are very large, very viewer generating series.
600 THE CHAIRPERSON: They are meant to be series. When you say "series", what are you thinking of in terms of number of episodes?
601 MR. SWITZER: At least 13 episodes on each of two series.
602 THE CHAIRPERSON: Thirteen original episodes on each of two series.
603 When would you expect that these would be scheduled?
604 MR. SWITZER: They would be scheduled in the heart of prime across our system. It would certainly take a year or two to look for the development and get them to air. Of course, we would hope they would continue.
605 Our commitment is to get at least two of them off the ground in as quick and creative a fashion as we possibly can.
606 THE CHAIRPERSON: I think, as you said, at least one of which will be independently produced. That means you are envisaging the possibility of producing the other one in-house?
607 MR. SWITZER: Yes, we are reserving that right.
608 THE CHAIRPERSON: I think you have answered this, but let me ask you just in case, and I will get you to corroborate it.
609 Outside of the English language multicultural, cross-cultural programming, what will be the monthly level, in terms of hours, of traditional ethnic and third language programming that will be broadcast?
610 MR. MILLER: We have not committed to a particular level. We have estimated that it might be around 2 per cent of that 12 per cent.
611 Just to give you an indication of why we have looked at it this way, we have had very fruitful discussions with both ethnic radio station CKER here in Edmonton and Fairchild in Calgary about doing stuff together; about focusing on some of those communities where third language programming might be appropriate.
612 We already have an agreement with Fairchild on a preliminary basis to do at least a half hour Cantonese program and we are looking at the possibility of South Asian: i.e., Punjabi, Vietnamese and possibly Filipino programming.
613 We have not made any final decisions on that, because we want to find out, if we are successful, what would be the best way to serve those communities and whether indeed a certain amount of third language programming makes sense or whether our emphasis on English language is inappropriate for them as well.
614 THE CHAIRPERSON: Thank you. I take it these are not commitments; these are estimates.
615 MR. MILLER: That is correct.
616 THE CHAIRPERSON: Your producers will be people like Fairchild and other ethnic broadcasters. Is that what you envision?
617 MR. MILLER: Again, there are potential models. We have had discussions already with local ethnic producers who are very interested in doing programming. We could be working with those broadcasters. We could be doing it ourselves. We are looking at all possible models.
618 THE CHAIRPERSON: I think I have that.
619 Turning to another area, which is editorial independence, you are applying for a radio station as well. You are aware of the conditions which were imposed on Global when they were licensed for a new Winnipeg FM.
620 MR. MILLER: Yes.
621 THE CHAIRPERSON: Could you outline for us the mechanisms that you would put in place to ensure that editorial independence was maintained between your proposed new ethnic radio and TV stations, should you be successful in getting both?
622 MR. SWITZER: Should we be so privileged, Mr. Chair, we would absolutely respect and maintain complete independence, as we do elsewhere across our system. In a few places where we have radio and television overlapping, there are separate news directors, separate news departments, separate voices. Part of the advantage of these applications, of course, is the addition of another voice and diversity in the system.
623 There is no question: traditional complete news independence.
624 THE CHAIRPERSON: In terms of the non news side -- because your learning and skills television operation doesn't do news, I gather -- what measures would you put in place to ensure that the non news programming was separate?
625 MR. SWITZER: Again, we will continue to operate the stations separately, separate management, separate practices, perhaps except for a small amount of back office technology or administration or accounting. From a content and programming point of view, a commitment to completely separate and independent operations.
626 THE CHAIRPERSON: With respect to your priority programming, are you prepared to accept the standard industry expectation of 75 per cent of priority programming being from independent producers; that is, non affiliated defined by the 30 per cent threshold?
627 MR. SWITZER: Yes.
628 THE CHAIRPERSON: Long form features, you are basing these applications on the Citytv model. As you know, in the 2002 licence renewals, conditions were imposed requiring the broadcast of a minimum of 100 hours per broadcast year long form Canadian features during peak viewing hours.
629 What are your plans for these stations in that regard?
630 MR. SWITZER: Mr. Chair, we do plan to run Canadian movies. We have not built into our structure that particular promise. We believe the extra commitment of four hours of the eight hours of priority programming, being drama, will certainly cover that.
631 We are not trying to in any way be evasive. It is just that super promise we thought was great comfort. There was a serious commitment to drama within the policy that allows flexibility with priority programming.
632 THE CHAIRPERSON: Would you be prepared to accept a condition of licence similar to the Citytv condition of 100 hours?
633 MR. SWITZER: Yes, because we plan to run at least one Canadian movie. So that traditional 100 hours would not cause us a problem.
634 Subject to our making sure that we have not made a mistake about that, because it is new, I don't see a problem with our committing to that as part of every other commitment we have made.
635 THE CHAIRPERSON: You can let us know if your answer changes.
636 In described video, are you prepared to accept the standard of conditions of licence which are also in place at your Citytv stations, of all described video being Canadian and a minimum of 50 per cent of the required hours being original?
637 MR. SWITZER: Yes.
638 THE CHAIRPERSON: And 75 per cent of the described video being priority?
639 MR. MILLER: I can't remember our specific requirement on City. But if that is the one, then yes, we would accept the same requirement.
640 THE CHAIRPERSON: Thank you.
641 You talk in your application of plans to provide audio description with programming. What would your plans be in that area: voice-over text, graphic designs?
642 MR. MILLER: We are referring to just the general practice in our news programming to provide voice-overs where appropriate. That is something we do across the system. These stations would be no different in that regard.
643 THE CHAIRPERSON: I'm sorry. Go ahead.
644 MR. MILLER: What we are referring to there is our standard practice of using voice-overs where appropriate. We do that particularly in news programming on all of our stations. That practice would of course be appropriate for these stations as well.
645 THE CHAIRPERSON: That is what you do on the Citytv stations as well?
646 MR. MILLER: That is correct.
647 THE CHAIRPERSON: I take it that your eight hours of priority, at least four of which will be Canadian, will extend to your other Citytv stations in Toronto and Vancouver. Is that right?
648 MR. MILLER: That is our expectation.
649 THE CHAIRPERSON: Right. So you will presumably be filing amendments to those stations' conditions of licence if you were licensed here?
650 MR. MILLER: In effect, it would only be Citytv Toronto we would need to file for.
651 THE CHAIRPERSON: Referring to Citytv Toronto, how will the increased eight hours of priority of Citytv Toronto impact on the amount of original Canadian magazine programming currently aired during the evening broadcast period?
652 MR. SWITZER: That is an excellent question, Mr. Chair. We had some opportunity to discuss with the Commission at our renewal how to balance the economics of getting as much as we possibly can from our schedules and stations set against the desire to produce what is fantastic local magazine programming in the area of music and fashion and arts.
653 Marcia Martin here not only is Vice-President of Production for our system but is personally supervising the production of six or seven of those magazines. Some of them qualify under the priority programming policy in terms of being about Canadian entertainment stars and quality; some do not. So it will be difficult.
654 By that I mean this is a significant contribution and step-up for us to be able to now find room for those in prime, the best of them, make them as competitive as possible while still meeting the dramatic promises that we are making here today.
655 It will be a challenge, and again we argue that that is a good thing and a constructive thing for our system and for our viewers. There is no easy answer. We have begun working towards the best way of ensuring that those magazines continue to find a home in prime and reach viewers.
656 That is the flexibility and freedom that your policy allows us to work around.
657 THE CHAIRPERSON: Thank you.
658 I think those are my questions for the moment. Thank you for your answers.
659 I believe other Commissioners have questions.
660 Vice-Chair Wylie.
661 COMMISSIONER WYLIE: I have just one question.
662 I understand that you explain that your blend is to be cross-cultural. We also have very definite definitions in the ethnic policy of what ethnic programming is, including, I think, at paragraph 10, if I recall: programming in the English language that is ethnic because it is clearly directed to a particular group.
663 At this hearing in both applications we talk about cross-cultural programming. It is put forward as a benefit of getting these licences, to better serve the Alberta market.
664 Is it possible to define what those are?
665 If it is put forward as one of the benefits of the privilege of getting these licences, the Commission may well want to bind you to it. To do that, one would have to have a definition.
666 Is it possible, since you have a lot of experience -- and probably we will ask the same thing of the next applicant, so that in a few years when we look back as to whether the promises were indeed fulfilled, we have some type of reference point to look at it.
667 In both cases we talk about Schedule 18, if I recall, where you say how many ethnic programs -- that doesn't fit -- including the paragraph 10 English language ethnic.
668 Is that something that you could come back to us with: a definition that would be an honest to goodness reference point to see whether that was indeed accomplished?
669 Even though your brand is, you say, cross-cultural inclusive, not every program you are going to air, especially the simulcast ones, will fit within that. So if one wanted to go back to the ten-point plan and see whether your promises have been met, what would one use?
670 MR. SWITZER: Madam Vice-Chair, perhaps I can begin.
671 There is no intent to demand any kind of change in current definitions, current reg and current policy. We will --
672 COMMISSIONER WYLIE: No. I'm just asking on the fly for a new one.
673 MR. SWITZER: Without question we will meet the current definitions as they apply to the ten hours plus the five, the fifteen hours that we have been talking about. No hesitation or reservation about that.
674 What we are talking about -- and perhaps we would be happy to file an additional definition -- is some of the other non news programming and news programming that we believe should be given some credit in terms of its cross-cultural role, not to take away from the fifteen hours that are going to meet current definitions.
675 COMMISSIONER WYLIE: I would put the news programming in your branding. We either believe it or we don't that your brand will be more inclusive than another broadcaster.
676 Then there is the very specific third language ethnic, more difficult English language ethnic. But then you have some very specific hours of cross-cultural.
677 If you were me in three years, looking back to see if that happened, what do you think you would need if you were in my shoes to test it?
678 What I am saying is: Is there a possibility of getting -- this is a new benefit, and it is proposed by the other applicant as well.
679 How does one go back and see whether that part of your ten-point plan --
680 MR. SWITZER: Madam Vice-Chair, we believe you should be able to measure it. That is a good thing. We would be happy to file our definition as to what we intend.
681 COMMISSIONER WYLIE: Thank you.
682 THE CHAIRPERSON: Thank you.
683 Commissioner Cardozo.
684 COMMISSIONER CARDOZO: Thank you, Mr. Chair.
685 Perhaps on that last point that you just discussed with the Vice-Chair, some of the indices I suppose could be things like story line, actors, producers, a sense of what makes something cross-cultural or multicultural as opposed to not.
686 That would be a new definition because the ethnic usually refers to a language or who it is targeted to.
687 A couple of other questions first on programming issues and then a couple of quick questions on the business case. I just want to make sure I understood your discussions with the Chair.
688 On the issue of minorities not seeing themselves, you were talking about the numbers of people and the Chair pointed out once you get down to the numbers of people of a specific ethnic group who don't see themselves as quite small, I am wondering if there is a new generation of stuff happening where people just want to see their total reality. So it is not just a person of Chinese origin wants to see themselves, but they want to see their total reality.
689 You see this more and more, but perhaps if you have been following the series in the Globe and Mail on the new Canada, it struck me as I was reading that that we really at last have what one might call the Trudeau generation of people who recognize ethnicity but are quite comfortable with it and comfortable with each other's ethnicity.
690 Really, it's not just specific ethnic groups who are looking to see themselves as part of it. They also want to see each other just as white folk want to see each other and everybody in the way it plays out in their workplace or in school or whatever, do you have any way of -- do you have any research on that as to whether that is what people want to seek?
691 What you talked to us so far about is more people haven't seen themselves, like an aboriginal youth hasn't seen himself or herself.
692 MS MARTIN: I will just give you a bit of an overview and then throw it to Bani and Sarah.
693 We did have extensive consultation with members of the community and do research. What we found was that they felt that the programming now on existing channels doesn't reflect youth oriented which will mean multicultural at the same time.
694 Jay had pointed out earlier two out of three visible minority Albertans under the age of 34. Our research did support all of that. That's why we created a schedule that reflected what the people of Alberta wanted to see and especially in prime time programming.
695 Specific research findings, maybe Sarah can talk a little bit about that and then throw it to Bani.
696 MS CRAWFORD: Yes. There's actually a number of people who could speak directly to this point. As regards the research, I will throw it to Bani Dheer.
697 I will just start by saying that all the conversations we had, all the community consultations we had at every level for a period of time, not only in this market but other markets too because this is a common issue to other urban centres in Canada, we enforced this desire for people from -- these are the cultural groups who have multiple identities.
698 They don't only want to see programming that is germane to one specific cultural or racial group that is directed to them as a specific cultural or racial person. They want to see interaction with mainstream Canadian society.
699 Aboriginal people in particular talked about the importance of seeing themselves as aboriginal people and wanting programs that address that specific reality, but also wanting programming that emphasized the commonality, the shared experience.
700 This is specifically relevant to the young generation, the new generation, who we as industry people have to realize as well are somewhat disenfranchised from television generally and part of that has to do with technologies in the Internet, but we believe that part of that also has to do with just relevancy.
701 If you don't see yourself on TV, and getting back to that stat before, yes, it includes seldom and never and yes, it includes occasionally, but isn't that a matter of concern that people are only occasionally seeing themselves, people like themselves, on television?
702 I would like to ask my colleague Bani to discuss this further and perhaps Prem Gill who is producing this kind of cross-cultural programming right now at Citytv in Vancouver. He can share some thoughts as well.
703 MS DHEER: Thanks, Sarah.
704 In my mind one of the key things to come out of the research that I have been doing not just on television but also for Heritage Canada in the past few years speaks to the point that you just raised.
705 That is that not only do young people under the age of 35, visible minority, aboriginal and mainstream want to see themselves more reflective on television, they want to see stories about how people from different cultures negotiate the transition between their dual cultural reality, if you will.
706 These people are defining themselves in very fluid terms. They are not just Canadian, they are not just Chinese, they are sort of the hyphen in the middle, the "and" and the "both".
707 Unless they see stories that show these people, flipping back and forth, playing the kind of cultural hop-scotch between east and west in Calgary, in other parts of Canada, it's difficult for them to feel part of this society.
708 Just quickly to say that one of the things we heard in this research was that story lines -- you mentioned the story lines in programs, the characters are an important means of communicating this kind of reality. They want these kinds of story lines without making the person's race an essential element of the story line all the time and they wanted to have stories that explained the struggle of integrating into mainstream society, things like "Bollywood-Hollywood", "My Big Fat Greek Wedding", "Monsoon Wedding".
709 Those are hits with people from different cultures, mainstream and not precisely because they tap into that experience of transitioning between cultures.
710 MS GILL: I will just add a few things to this.
711 I had the privilege of being this person that we talk about -- well, for another year or so anyway, this person under 34 who lives multiple identity. I also get to produce this programming and live in a city that is one of the most diverse cities in the country, if not in the world.
712 I was saying to a few of my colleagues the other day, and I hope that the next time I sit in front of the Commission that we will have a new definition for what programming is, period, not just cross-cultural programming, but this is something that I strongly feel should be inclusive in all types of programming we produce in Canada, particularly the kind of information non-news programming that I am responsible for in Vancouver.
713 I want to add that the crux of all our programming and our philosophy at CHUM is to be inclusive and culturally diverse, but the type of programming that we propose here in Calgary and that we produce in Vancouver is targeted to feature all of those young people in the same kind of programming where we do, as Bani mentioned, and Sarah -- is that our similarities is what connects us all together.
714 Certainly in the community and in the city that I have grown up in and still live in, I didn't see or hear diverse faces and voices on mainstream television. The response that I have had in Vancouver for the shows that we produce has been shocking.
715 When somebody says "Oh, I have seen the show", like "Thanks for watching first of all", but they also just say "It's great to see somebody who is an aboriginal person, a gay and lesbian person, a disabled person, a South Asian person on mainstream television not just talking about their ethnicity or their cultural background".
716 They might be sitting up there talking about the latest local civic election and how it affects them personally, but interestingly enough, often the discussions do come back to challenges that we face in terms of racial issues.
717 We also often talk about the complexities of defining or I guess a generation and the kind of -- just to give you an example of some of the shows that I have done.
718 There are a lot of comedians in Vancouver who use their racial heritage as part of their stand-up routines. Some people -- this has been kind of an ongoing discussion within groups: does this harm us or does this help us? Are we poking fun at ourselves and does that kind of perpetuate the mainstream stereotype of who we are?
719 We have a great discussion on the nuances of it. I can tell you about the whole show, but I won't do that, but that's an example of something that I personally have never seen on a mainstream television station. That has always been the case.
720 We want to see ourselves on mainstream television in all kinds of roles, not just as the news anchors. We want to know who the people are behind the scenes, producing the shows and we want to see people in those diverse range of roles on the screen, particularly in local programming because those are the people in our community.
721 They are accessible to us, they look like us, they speak some of the same words as us. I think that Priti and Tanya here in Edmonton, speaking of local Edmontonians and Calgarians, can maybe tell us a bit about why this particular kind of programming interested them in our application.
722 COMMISSIONER CARDOZO: I have perhaps heard enough, unless there was something you wanted to add to that. Please go ahead.
723 MR. MARTIN: I think it's also very important, if I may add, that it's not just the ethnic communities and the visible minorities that is being reflected on mainstream TV here in Calgary, but also to be reflected in a positive way across Canada from Alberta.
724 I already said our ethnic as well would have a chance of having a voice being heard, not just in Calgary and Edmonton, but having that other system to take it to Canada and to say "You know what? Calgary is not just cowboys. It is everything else in there as well".
725 Having CHUM as well as their vision and their policies and their philosophies in the system has given visible minorities as well as in Edmonton that voice.
726 COMMISSIONER CARDOZO: Ms Kappo, I don't want to intimidate you. Please do add anything you feel that you want to add.
727 MS KAPPO: Thank you. I just wanted to not really add to it because it's generally truly reflective of my position, first of all, as an aboriginal person here in Edmonton.
728 A lot of the comments that you heard in relation to the focus groups I can attest to their authenticity because I was part of the focus groups. In my professional life I do communications for a large political First Nations organization. I can tell you from my own experiences that opportunities aren't always there.
729 When interest does come for only issues that are sort of high profile, it's not reported or transmitted in a way that's balanced and fair.
730 This one time there was an issue that was starting to heat up in the north. Some reporters gave me a call to ask me if I could set up some interviews for them from the people in our communities.
731 I thought I'm always trying to be proactive, so, yes, let's develop a relationship with the media, let me see them talk to our communities and convince them that this is the best way that we can begin a proper public education process.
732 As it turned out, the way that the story ran was very one-sided. It looked really bad to the people in our communities. I felt personally responsible for having participated and allowed that to happen because it was really negative to our communities and didn't help the issue at all.
733 That's just one of the examples. Everything that has been said here today in regard to the aboriginal community is the way that it is.
734 Speaking as an Edmontonian as well, I think the whole issue of multiculturalism and separate the ethnic question is really coming to a point where it's not going to be looked at as different. It is coming to a point where it is going to be regular.
735 There's not going to be special programming towards it any more because that's going to be the reality of our communities, of our urban centres.
736 If you take a look at our Heritage Days here in Edmonton, just by the sheer number of people that go out and participate in that to see the different ethnic groups and the different cultures on display and the celebration of that I think just goes to show that there's not only one time events like that that people want to see. It's becoming a reality of everyday life.
737 Thank you.
738 COMMISSIONER CARDOZO: Thank you very much for that.
739 Mr. Miller, just a one word answer on the matter of ethnic programming -- this shouldn't reflect on any other answers we have just received -- on the matter of ethnic programming, of third language programming.
740 You are not making a commitment about the number of hours with regards to the definition of cards two and three.
741 MR. MILLER: With the Commission's help if it was appropriate, we wouldn't shy away from it. Our stance was the flexibility to determine how much third language versus how much cross-cultural would be a good thing, but if the Commission felt it appropriate to connect to certain levels of third language, we would not shy away from that.
742 COMMISSIONER CARDOZO: Thank you.
743 I have a quick question on the business case. Mr. Switzer, you talked about Craig as having been more like your model when they started and they moved away from it. I will let Mr. Craig comment on that if he chooses later on.
744 If that's the case, I wonder if your model may not be lucrative in this market. What works in Toronto or Vancouver doesn't have to work everywhere else. Do you think you are going after a niche that is there that may not be lucrative in terms of advertising dollars as it concerns --
745 MR. SWITZER: We absolutely think it will work because it's a mirror for the reflection that is these communities.
746 It's not my place to suggest whether it was done well or not or reasons for the transition or reasons for carrying more CanWest programming over time or whatever else the Craigs had on their mind. They do some very good things here.
747 It's not about. It's about our passion to do the things we want to do, our financial size and ability to take these risks and our ability to make these very serious commitments to you in terms of dollars and hours.
748 We are prepared to take this risk because of all the things we have talked about today between the economic reasons that talk about buoyancy and ability to sustain and the need that we have come across. This is an absolute priority for us and we wouldn't be here otherwise.
749 COMMISSIONER CARDOZO: Okay. My last question is on the second issue you raised, which I might call a comfort question, which is how much licensing you expect. Would it unduly impact on an incumbent broadcaster?
750 If part of you thought that Craig, who may be most directly affected because of their style of programming and the fact that they are the newest in the market, if part of your thinking is that they won't be impacted that much negatively because they now will have a new station in Toronto and should we be concerned about the impact of licensing a new station in a market if there is a demonstrated need for the service --
751 MR. SWITZER: It's a complicated question, Commissioner.
752 There are factors at work in the system with existing players that -- the world today is different than it was seven years ago. The Craigs and others have had -- revenues have risen considerably.
753 Seven years ago there was WIC. Seven years ago I don't think there was a CTV. Seven years ago CanWest wasn't here. You flash forward to today, there are all these forces of consolidation and centralization, companies getting larger, CanWest becoming national, CTV under one owner, Craig's getting a large base in the east and the ability to raise lots of money.
754 That has caused things to happen whether we are privileged to win this licence or not.
755 I see in next year's fall schedule there are no CanWest programs in the Craig Alberta fall schedule. That's none of our business. We can only read into it that for whatever reason they have chosen to not do business. That's for you to analyze and decide.
756 What we can do is to make our best case as to the strength of the market, the reasonableness and soundness of our advertising ratings estimates, the ability for the market to absorb that and the huge unquestioned need for our service.
757 It's not just about someone getting a licence somewhere else. It's about our desire to add local service now while we can during the best times going forward in this market where the need is the most and we believe the impact the least.
758 MR. MILLER: If I can add to that specific factor though, we have concluded that even if we were to have somewhat of a more disproportionate impact on Craig, that impact would still only be in the second year of operation, $2.5 to $3.8 million in that year.
759 Certainly we do think it is a factor for the Commission to consider that with the launch of Toronto One, not only will the Craig Broadcasting System presumably continue to rely less and less on our programming, it's gone from over 50 per cent to now 6 per cent, so presumably that trend will continue.
760 Also, their growth in Toronto will also allow them as a company to grow and to withstand the small and marginal impact we would have here in Alberta.
761 COMMISSIONER CARDOZO: Thank you.
762 Thank you, Mr. Chair.
763 THE CHAIRPERSON: Thank you.
764 We will break now and resume at 2:15. Nous reprendrons à 14 h 15.
--- Upon recessing at 1255 / Suspension à 1255
--- Upon resuming at 1415 / Reprise à 1415
765 THE CHAIRPERSON: Order please. À l'ordre s'il vous plaît.
766 We will resume the questioning now with Commissioner Langford.
767 COMMISSIONER LANGFORD: Thank you very much, Mr. Chairman, members of the CHUM concession. I just have a few questions kind of following on some of the more general questions following on the specifics you covered today and I must say that as I listened this morning to some of the discussion that went on I felt a little bit like Woody Allen in Sleeper. I thought maybe sometime after May of last year I must have gone to sleep for 20 years and when I woke up the world had changed completely.
768 I guess what I am referring to is that I am finding a little trouble understanding where the consistency line or the line of consistency is in the presentation you put to us today and of course earlier in written form in your application and supplementaries.
769 I went back and studied pretty carefully some of the transcripts from the December 6, 2001 hearing which took place in Hamilton that was looking at licensing in the Toronto area where you were an intervener basically telling us that the sky is falling. Then I went ahead to may 6, 2002 where, at your license renewal, the same message "the sky is falling", worst case scenario and other doom and gloom statements. Today we are hearing that the sky is the limit. I had trouble with the consistency and I would like you to try to explain to me in words rather than in numbers what has happened here in the last year and a half to make the world such a different place.
770 It seems to me that, beside the conversion I am hearing here, what Paul experienced on the road to Damascus was nothing in comparison. So, if you could explain to me what has happened in the last year and a half to make your corporation so bullish on conventional television that you are wanting to start two new stations here in Alberta, I would be grateful.
771 MR. SWITZER: Commissioner Langford, perhaps I will begin. It is not easy to do conventional television, you are quite correct. It takes art and science and we believe we have certain skills and the ability to do a few things very well. There are two or three differences that might explain and defend what we believe is essentially a very consistent argument. One has to do with the very buoyant and very dynamic economic indicators that are going on in the province of Alberta that are quire extraordinary and different from much of the rest of Canada.
772 As to the Toronto hearing which you just referred to, one of our main thrusts, probably our most important point, was that with the Toronto decision, put aside that Toronto is a very competitive market with lots of services and there aren't physically yet as many competitive services here, but our main thrust in Toronto was that with certain of the applicants, not all of them, the licensing of another station would create a competitive buying group, that the factor was not just about revenue and impact, but about cost pressure that --
773 COMMISSIONER LANGFORD: But in Toronto it was only Global that you didn't object to.
774 MR. SWITZER: Our concerns, I believe, with Alliance and with Craig were many concerns, but the most important or certainly one of the most important was the potential of increasing the buying groups for foreign programming from three to four and that that would have a significant system benefit, a cost push if you will on the system. That has happened, we are not complaining about it, we haven't raised it today or made it a big part of our thrust. But in Hollywood this year there was one additional buying group and already all of our renewals this year, even for ordinary renewals, have been up considerably because of the presence of that new national buying group.
775 We are grown men and women here, we are not complaining about it, we are here to serve our viewers and get on with our business. But for us, that defends and explains some of the consistency in our argument from things that were happening there to things that are happening now. We already, and have for many years, been buying national rights. The licensing of our stations here changes nothing in terms of market forces, dynamics, pricing, dollars to Hollywood --
776 COMMISSIONER LANGFORD: There is nothing for you you mean?
777 MR. SWITZER: It doesn't change it for other players, their business remains as national and they have their own plans. The Toronto decision created another national buying force and that is fine. We are now here to talk about local service.
778 COMMISSIONER LANGFORD: But you are talking about a dynamic economy here in Alberta and I see in your opening statement that you find great comfort, and I am reading from the top of page 9, the Conference Board of Canada predicts the Alberta GDBP will grow from 5.5 per cent this year and 4.9 per cent in 2004. Yet, when we were in Toronto you found quite the opposite of comfort in a 6 per cent figure provided by exactly the same Conference Board of Canada. That was, in Toronto, a disaster scenario. How can that be such a change? Why is 5.5 and 4.9 this year and next a comforting set of figures, when 6 per cent in Toronto was apocalypse now?
779 MR. MILLER: First of all, just on the facts. My recollection of the Conference Board average projection for Toronto for 2003 to 2006 was 3.5 per cent, so a little lower than what we had here. Secondly, just a few other facts. To be clear, we weren't saying the sky was falling, we were saying there would be a material impact and we had various estimates as to what that might be. One of the reasons we believe that is because both we and many of the applicants would be in the national spot and retail area where the numbers we had at that time showed no growth.
780 It is a different situation here in terms of the growth in the market. But what is consistent with the two is, at the end of the day, you decided that the impact in Toronto would not be undue and we think, by analysis, the same kinds of numbers in proportion would suggest the impact in Alberta would not be undue. So, part of it was in a sense you saying we have more faith in CHUM and in your ability to compete and so we acknowledged that at the end of the day you are the arbitrator of those decisions.
781 So, what we are suggesting is that given the kinds of numbers we are seeing here and if you draw that analogy as licensing was appropriate in Toronto it would appear to be appropriate here.
782 COMMISSIONER LANGFORD: Well, on the 6 per cent number I am quoting Mr. Chairman, who is not that far from me as we speak, from the May 6 license renewal -- CHUM license renewal May 6, 2002, I am looking at page 38 of the transcript, paragraph 216 where the following quotation can be found:
"I have Conference Board numbers that show approximately 6 per cent GDP growth rates for Ontario and British Columbia 2002/2003 and going forward..."
783 Your Mr. Palframan responds to that:
"Yes, we do look at all of those statistics and of course we look at all of the TVB data that gives us..."
-- and he goes on from there.
784 I am only going by the transcript of the proceedings, but it seems that 6 per cent was the accepted number at that point. I don't see why 6 per cent was such a problem with you, both in the Hamilton hearing and at the license renewal, but 5.5 and 4.9 are sources of comfort. I am sorry to come back to it, but I think it is important for us to understand if there is a consistent line of philosophy here in license applications as well as in interventions against others' applications. I think that is terribly important to settle.
785 MR. MILLER: And I would concur with that. Just so you know, what I was reading from was the CRTC decision, public notice 2002-17, paragraph 15 where it says and I quote:
"The real GDP growth rate is predicted by the Conference Board to average 3.5 per cent from 2003 to 2006"
-- but that was the number I was --
786 COMMISSIONER LANGFORD: That may be the national figure though, is it?
787 MR. MILLER: No, that was in the context of Toronto, as I understand the paragraph.
788 COMMISSIONER LANGFORD: That is perhaps something we will all have to check this evening and try to find out.
789 Now, with regard to the dynamic economy of Alberta, to use your term just moments ago, Mr. Switzer, and I certainly don't want to sound as though I question in any way the ability of this great province to out perform all of us repeatedly, but it seems to me that some of the numbers that have been put forward here today don't tell the whole tale. I would wonder, and again in a more of a narrative source than a statistical source, have you factored in for example the impact on the oil and gas industry of the new situation in Iraq. Have you factored in the generally sort of depressing impact of this SARS problems which, granted is at this point a Toronto problem but it certainly got markets queasy. Have you factored in the BSE problem and the impact on the cattle industry? Have you factored in American protectionism which is growing again? Have you factored that in generally?
790 In other words, in looking at these rousing numbers that you have and we had something of an explanation this morning about how they work and projections on how the percentages just "fall out" if you get enough numbers on this page. But have you looked, in a sense, at these sorts of things and their impact on this dynamic economy?
791 MR. SWITZER: Commissioner, perhaps I can begin. As we discussed earlier today, we have more accurate data about the current year, from September until the end of March, based on actual market data and I believe that number is close to 7 per cent. We have suggestions and indications, as you say, very rosy predictions by the Conference Board, by the Toronto Dominion Bank economics department and others that suggest continuing high numbers. We didn't take those numbers, we took a much more conservative going forward average over seven years of 3.3 per cent, considerably lower than the numbers we are seeing in estimates for current year, next year and the year after.
792 We agree there is an obligation to be conservative, it is part of any sound analysis and certainly there are going to be fluctuations in any one year. We are very comfortable with a 3.3 per cent average going forward, which is fundamental to our growth projections.
793 COMMISSIONER LANGFORD: Yet, in a more macro sense, we have statement after statement from yourself, from Mr. Sherratt, from different people who have appeared at different hearings, that numbers don't tell the tale all the time. I am thinking back to Vancouver where Moses Znaimer said I don't worry about the numbers, I get out and walk around, I feel the pulse and I think his quotation was, "the joint is jumping, it can take more TV". Well, that was the Znaimer approach and maybe there is some question in it now as I heard from the early returns from Vancouver and Victoria.
794 In Toronto the numbers were reasonably good, perhaps 6 per cent, perhaps less, we will calculate that, but we have different numbers on the record, but you weren't comforted by those. Again, at license renewal time, you made statements about conventional television and I can find some of them here that perhaps Mr. Kirkwood, on volume I, May 6, 2002, page 39, paragraph 220:
"We are dealing with a market reality that dictates that there is no growth really in conventional television advertising."
795 There are a number of these statements that can be found all through, I have marked -- you can see the number of yellow stickers I have got on this book. They all say the same thing, conventional television is flat, specialty television is eating its lunch. Well, you are lucky enough to own some specialty television so at least you don't go hungry. Yet somehow it doesn't add up. You come here, if I look at all of this type of approach of what you said at the past, if I look at the doubt hanging over the economy, if I stand back from just these hard numbers, it seems to me to be the wrong application at the wrong time.
796 MR. SWITZER: With complete respect, Commissioner, we disagree. We think it is exactly the right application that provides the maximum benefit with a minimum amount of impact. And it is not about numbers and Conference Board of Canada. Yes, that is important, or TD Bank, it is about talking to as many people here in the province as possible and we have done that.
797 I don't want to suggest that we haven't spent month after month not only meeting with viewers and community leaders, but meeting with business people and advertisers and local advertisers and national advertisers who have told us with testimony available and on the record. Some of them may be speaking to you that for the foreseeable future they are continuing to buy Alberta first, demand is high, supply is low, rates are rising, they see no change in that, they cannot get the inventory they want and they are forced to look elsewhere out of television.
798 That is as comforting to us, us who are prepared to invest more than $30 million here in having comfort that we will have not only a great channel that is excellent and innovative, but a good business.
799 MR. KIRKWOOD: In an attempt to redeem myself, we are talking about two different markets. I have here the figures for television ad sales in Toronto, local and national -- starting with 1995-1996 was a .6 gain and up to 9.3, then in 1997-1998 minus 1.5 up to .1, down to .4, up 1.4 and then a mere half point increase in the last year.
800 By comparison Calgary is 4.9, 8.9, 8.1, then two years at 1.8 and 3.3. So, there are greater gains in this market. There is a difference in the market. Actually, when the Conference Board number was brought up actually it wasn't our source and I think we did express some concern about Conference Board projections being a little ambitious. But it wasn't a source we were necessarily quoting.
801 It does seem the Toronto, in credence to the Conference Board, did have a better year in this past year. We are thankful for that, we expect still to be impacted by the Toronto license and it is not a secret to anyone now and the press reports them as being head to head, it will also have impact on our new station, but we are big people and we will survive. But they are two different markets.
802 COMMISSIONER LANGFORD: Well, no one said they weren't, but I am looking overall at your philosophy that when you think the time is right, either to apply for a new license or object to someone else applying to a new license, and I must tell you I am finding inconsistencies and I am trying to share them with you today.
803 Let me try another part of the CHUM philosophy on you, this one I am quoting from the December 6 hearing in Hamilton, it is volume 4, that was the 6 of December, 2001, volume 4, page 700, it is paragraph 2,900, that Mr. Sherratt still had lots of energy and after all of those paragraphs:
"Madam Chair, commissioners, you have heard a lot of words this week, but the two words you barely heard were alternative and complimentary. These are the qualities we have always strived for in our applications. That's the standard to which you have held us time and time again; and with good reason. And yet there is not a program, not a format, not a genre offered in any of these applications that is alternative, let alone complementary."
804 I would like you now to try to apply that test to what is going on here. How alternative and how complementary is using that test; in other words, how non-threatening is your application to this market?
805 MR. SWITZER: That is part of the core of why we are here. We believe it is alternative. We believe it is complementary. We believe this market to be severely underserved, that there are three traditional choices: that the two network operators in this city, CFRN and CITV, serve the needs of a national network; and that the third player, A-Channel, is migrating from when it launched seven years ago towards more of a conventional approach in terms of chasing the big networks.
806 We have talked at great length today about our difference in sensitivity, the importance of inclusiveness, the importance of richness of diversity and reflection of this community in every local production, news and non-news, that we do. That by itself deals with choice and diversity and additional voice, as well as us creating a new news voice.
807 We haven't talked as much about the additional news voice in a market of only three; not in a market of eight or a market of nine, but in a market of three.
808 I don't want to review everything we have talked about today, but between our approach to reflection of the market, between our approach to targeting visible minorities and aboriginals to targeting in a more youthful way that is not now being well served, to targeting non-news local programming in the heart of prime, none of which is in the heart of prime on any of the existing three services today, there is lots we offer that is adding to this market.
809 These markets deserve more choice than three broadcasters.
810 COMMISSIONER LANGFORD: I think perhaps the intervenors will have more to say about what particular new niche you might fill, but it seems to me that a good deal of what you have just described explains what the Craig operation is offering. It seems to be aimed at the same demographic. The timing may be different.
811 There is local news. There are outdoor shows, there is local news. They will make their own case, I am sure, tomorrow.
812 I would suggest to you further that if one is looking for what Mr. Sherratt I think wisely described as alternative and complementary, what precisely is it they are going to find on your channel, but for a little bit of local news, that isn't here already?
813 Isn't most of your programming available on cable or satellite in both of these cities right now?
814 MR. SWITZER: Commissioner, they are going to find lots of things. I can give you some examples perhaps with local productions.
815 We have been told, and according to our checks and some comments from AMPIA members, that in this province, in Edmonton and Calgary in the past six months there has not been a prime time telecast of an Alberta based drama on any of the three commercial services.
816 Expanding drama here with Alberta producers is first and foremost a benefit that is important, needed and added to what -- yes, there have been occasional things that happen now and then elsewhere. It has not been a fundamental part of what is reflected prime time.
817 I think, with great respect, you do a disservice to the difference in approach, to the context, to the target, to the inclusiveness that you have heard about today; to the non-news programming, including multicultural and aboriginal programming; to the community arts and music and business programming, much of it in the heart of prime which now does not exist.
818 We have many acquired programs: Canadian movies, Canadian series. I will have an example.
819 We produce a show in Vancouver called "City Cooks". Prem supervises the production of it. It is seen in Ontario. It is a fantastic daily show. It is not seen anywhere in the province of Alberta.
820 Next year in the fall we have a Toronto show called "City Line", an extraordinary daily one-hour helpful show that Marcia supervises production of. It has played Alberta in the past in the fall schedule on A-Channel. They have chosen to take it off, and it is not available on any other cable channel.
821 It has great response, good ratings. It is now, starting this fall, not going to be seen. There are over 40 hours, 40 different titles of U.S. network programming that were presented to the Craigs this year, and they chose six or seven hours' worth. And we thank them for that.
822 We have over ten or twelve U.S. network simulcast hours; yes, technically not new to the market because they are on an American service, but available to a Canadian broadcaster to repatriate tuning.
823 We only represent approximately 6 per cent of the fall upcoming Craig schedule for all the reasons we have talked about. This isn't a thing of commodity. This is a thing of these people's lives every day.
824 COMMISSIONER LANGFORD: And yet the commodity is somewhat what is on the table here today. You have characterized what I am doing as a disservice. I am terribly sorry you see it that way.
825 I am not trying to do a disservice to you. Nobody questions that the CHUM group runs stations well. There is no question in the world that were you to have a licence in any market anywhere in Canada you would do a good job on it. I don't think that is the question.
826 The question is: Is this the time? Is this the place? And is there a consistency in your approach to how you deal with these things which would enable us then to make an objective and comprehensive judgment on this thing?
827 There is more at stake as to whether you can run a good channel. I don't think that is the question at all and never was. If you feel I am doing you a disservice, I am terribly sorry. But I am going to continue with this line of questioning.
828 Let's talk about drama, which you say you will be adding. I need some explanation about how that would work.
829 As I understand your benefits package and the conversation that we had this morning, there is going to be $12.5 million for licence fees, some of which will be directed towards drama.
830 Is that correct?
831 MR. SWITZER: Yes, of which at least half will be directed towards drama.
832 COMMISSIONER LANGFORD: If you don't mind, we can take the drama part or we can take any part. It really doesn't matter to me. What I am trying to figure out, and what is not clear from your application -- and it may just be because you assume we know this stuff. But I must tell you that I don't. I don't feel comfortable with at least my knowledge base in one area, and it is terribly important for me to clear it up.
833 Let's break down this $12.5 million and somehow help me translate that into programs.
834 If it would help, I could give you a very colloquial sort of example, and if it is not appropriate, you will tell me.
835 I am Joe Boggs Production of Edmonton and I come to you with an idea, and what I am going to do is I am going to have this terrific prime time show because you said you were interested in moving into serials, and it is going to be about three ugly men and three ugly women who live in two apartments and we are going to call it "Enemies". I don't know.
836 You like the idea. So where do we go from there? How do I tap into the $12.5 million?
837 We don't have to have a long narrative, but I am really looking at the numbers. What kind of money do I get if you like my idea? Where do we go between our first meeting, our first cup of coffee and when it is on the air?
838 MR. SWITZER: That is a very specific and very good question.
839 For the record, Commissioner, we encourage any line of questioning. We are seeking to earn the privilege of these stations, and I didn't want to suggest that we were not encouraging any question along any line.
840 That is a very good example, because there are development funds available. There are pre-licensing funds available. There is a local development officer to help advise, guide and, in some cases where appropriate, nurture and teach.
841 We have some examples of how that might work in a real sense; perhaps our Victoria example this past year with a smaller show called "Alienated". There are large examples, but it is a drama that is created by, produced by, conceived by and financed out of Victoria. Perhaps it is a good example of physically what might happen as we give development along the way. You come to us and we help you either get the show made or help trigger some of the licensing funds to assist you.
842 Diane, can you briefly run through how it might work?
843 MS BOEHME: Sure. Thanks very much.
844 In the case of "Alienated", we have just gone before the CTF, and we are fortunate enough to be receiving support on the LFP side of things for season two.
845 We decided that we liked the idea, and we wanted to support the producer and we thought it would work for our audience. We knew at the time that the idea came through the door that we had missed the funding deadline for the CTF of last season. In fact, what we came to the table with and what I concocted with the producer was our licence fee basically covered three-quarters of the production budget, and because it was a regionally shot show they could use federal tax credits, as well as provincial tax credits, which are fairly considerable once you get off the Lower Mainland in British Columbia.
846 We went through the funding system for season two. Just so you know about the numbers that we are talking about, it is very common knowledge that if you want to trigger CTF funding for an hour of drama, you are looking at about $255,000 an hour. So a half hour of that -- we were paying substantially more than that.
847 This show was not fortunate enough to receive EIP funding, and in order to make up the gap of the financing we came to the table with the additional money to cover what would have been the EIP investment.
848 We have lots of ways to make it financially viable and easy for producers, whether it is in tandem with any of the funding agencies or outside of the funding agencies. We have a similar program that we are working on the long form fiction side out of Victoria, where we announced what we called the Real Edge project. It was a competitive thing where we picked ultimately two, because there were two very good projects, where we again once again are financing most of the production budget.
849 MR. SWITZER: To be specific, along the way we would have perhaps written development cheques to you as a producer or producer/writer to help go from treatment to draft to script. If we would have liked it, we would have told you what we liked or didn't like, given you monies to improve it all the way through to licence fees.
850 COMMISSIONER LANGFORD: Could we do that, please. I know we are running a little late, but it is terribly important for me to understand. We have about $6.5 million in one fund and some development money.
851 You can round the figures out. They don't have to be exact, obviously. If it's 255, let's do 250 because I can do that. Math is not my thing.
852 If I am coming to you with my show "Enemies" and we are here in Edmonton, how is it going to work? What are you going to give me if you like the idea?
853 MS BOEHME: The local person would respond to the material. I would support their decision by helping them craft technicalities and legal agreements.
854 What would happen is we would make an offer for licence fees, for national licence fees in English Canada. It would be $255,000 times the number of episodes that you were proposing to us.
855 COMMISSIONER LANGFORD: So specifically, what kind of episodes would I logically propose?
856 MS BOEHME: Usually 13 or 22. Those are the standard numbers.
857 COMMISSIONER LANGFORD: Thirteen or 22.
858 MS BOEHME: Yes.
859 COMMISSIONER LANGFORD: So 13 perhaps if you don't know me that well?
860 MS BOEHME: No. Sometimes it depends on the material.
861 COMMISSIONER LANGFORD: You are talking about 13 times $250,000?
862 MS BOEHME: That is correct, yes.
863 COMMISSIONER LANGFORD: Thirteen times 250.
864 MS BOEHME: Yes.
865 COMMISSIONER LANGFORD: Or 22 times 250.
866 MS BOEHME: Or 22 times. In some case, depending on the material --
867 COMMISSIONER LANGFORD: Does anybody have a calculator?
868 How money is left in your budget after that?
869 Thank you, Madam Wylie.
870 MS BOEHME: That is $3.25 million.
871 COMMISSIONER LANGFORD: That is three and a quarter. So that is half the whole thing.
872 MS BOEHME: No. On a traditional big budget drama that is only a percentage. It is probably substantially less than half.
873 COMMISSIONER LANGFORD: No. It is half of your fund.
874 MS BOEHME: Half of our money, yes.
875 When we are saying we are committing to the $12 million, it is a minimum of 50 per cent of that. It is 6.025.
876 COMMISSIONER LANGFORD: Right.
877 MS BOEHME: So yes, it would be approximately half.
878 COMMISSIONER LANGFORD: So we are going to do two dramas --
879 MR. SWITZER: If they are large full budget dramas there, we would be fortunate to get two that were successful and were able to continue. It is more likely there would be one large one, one medium one, several smaller ones, some documentaries.
880 MS BOEHME: Some "made for television" movies.
881 MR. SWITZER: Some "made for television" movies that would all come out of that.
882 COMMISSIONER LANGFORD: Let's deal with the large one, can we, because this is getting a bit like Goldilocks and I am starting to lose the thread.
883 We have Joe Boggs has come in with "Enemies". You like it, and you have committed to $3-million-plus worth of licensing fees.
884 MS BOEHME: Yes.
885 COMMISSIONER LANGFORD: That is not going to make the show, is it.
886 MS BOEHME: No.
887 COMMISSIONER LANGFORD: So where does Mr. Boggs go next?
888 MS BOEHME: The usual places would be through the provincial funding agencies and the monies that are available there; through the federal funding agencies, the Canadian Television Fund; in some cases international distribution. In some cases these shows are financed because they are international co-productions at the same time. It depends on the show.
889 COMMISSIONER LANGFORD: We are hearing every day on the news that the CTF, for example, is over-subscribed desperately.
890 MS BOEHME: Yes, they are.
891 COMMISSIONER LANGFORD: So what are the chances of Mr. Boggs getting any money there?
892 MS BOEHME: If it's good material, yes, absolutely. We were very fortunate this year. A number of the shows that we supported went through the fund. We were very grateful for that support and were able to round out the budgets.
893 For the ones that didn't, we complemented the budgets where we are making introductions for international broadcast partners. And we do have an awful lot of them that we have in place.
894 In the case of "Alienated", for instance, it was not a big budget show. It is a half hour. It is designed to also be a spoof of reality television. So it was a different kind of financing scenario for that one.
895 COMMISSIONER LANGFORD: I am very grateful for this information.
896 I am trying to figure out exactly what it is that you have committed to, in the sense that in five years if we are all in this room together, or some other room, what is the likelihood of some show being on? What happens? What do you do? What is your guarantee to us?
897 What happens if Mr. Boggs simply can't get his CTF funding? Are you going to finance the whole thing?
898 MS BOEHME: Depending on the show, that is certainly one of those things that we would debate. But it is unlikely.
899 There are other ways and other partners that we get to introduce. Sometimes it is an interprovincial co-production. Sometimes we bring in a partner from Quebec. There are international co-production partners that we can bring to the table, because we have good long-term, long-standing relationships with broadcasters around the world. We know the kinds of things that other people are looking for.
900 In many cases those are the kinds of questions that we address at the development phase.
901 In addition to the creative side of the material that the producer is working on with his creative team, there is also a "what's the likelihood of your financing scenario" that we end up debating. Very often it's a question of here's our ideal scenario. This is how much we think you can make the show for, and then we sit down and have a realistic conversation and say: You know what? You are never going to raise that much. Why don't you reconfigure to do this, this or this.
902 And that is also part of the development phase that every producer goes through.
903 COMMISSIONER LANGFORD: Is it possible that you could come to us in seven years, assuming you were licensed for a full seven years, and say: Look, we did what we said we would do. We spent the whole $12.5 million and we didn't get anything on.
904 MS BOEHME: No, absolutely not. That is not possible.
905 MR. SWITZER: Not to interrupt Diane, Commissioner, our goal is to generate viewers and make a success of this programming.
906 COMMISSIONER LANGFORD: Absolutely. I am just trying to figure out what $12.5 million means in the real world when we see funding being cut all over the place. I am trying to figure out whether it is conceivable that you could be starting show after show and desperately trying to get them funded, all in goodwill. I am not looking at any ledger domain here or anything. I am talking about just the way it would work.
907 MR. SWITZER: An excellent question.
908 What Diane hasn't touched on is the large amount of development work you have to do so it is not just you coming in wanting a series; it is five or ten others. Those all receive development monies because only perhaps one out of five or one out of ten that actually look encouraging, have merit, are worth going to the next level. We write some development cheques for $25,000 along the way to pay for the next script or the next version, up to the point where we actually say yes, we will do that.
909 COMMISSIONER LANGFORD: So how deeply could you be in before you were disappointed on a project?
910 MR. SWITZER: At the start of any cycle you have to prime the pump and start with lots of development to get to the point of things.
911 MS BOEHME: It is not unusual in a television drama series -- and I am only speaking from the experience we have had on the science fiction side -- to be developing projects where we have committed $100,000, $150,000 to any project to get it to a stage where you think it is financeable.
912 You have a full series bible. You have episodes that are written. You have a creative team that is ready to go out into the world. That is not unusual at all for drama series.
913 COMMISSIONER LANGFORD: So you might have to eat that. That could happen.
914 MS BOEHME: Yes.
915 COMMISSIONER LANGFORD: When you are talking about spending $12.5 million on drama, are you talking about spending $12.5 million on drama that gets to screen or are you talking about doing your best to do that?
916 MS BOEHME: That would be licence fees, and that is different from development.
917 MR. SWITZER: Commissioner, the $12.5 million is for licence fees for programs that get to air. The $2.1 million of development is expected to drop off along the way.
918 You touched on the challenge at CTF, Commissioner, and certainly we think the more opportunities there are for new creative and innovative proposals will result in more ratings generating programming.
919 Paul Gratton, if you will allow us briefly, has been on the board of CTF and may be able to add a short overview as to the pressures at CTF and some role for the future.
920 COMMISSIONER LANGFORD: Make it good, Paul, because I have no more questions. This is your free chance to hit a home run.
921 MR. GRATTON: Well, I don't know if I can hit a home run, given the controversy surrounding the CTF and the cutbacks from government and the effect that has had.
922 I can say that this year there were some changes in the ranking process which allowed different broadcaster groups to put forth their favourite programs in a priority fashion. Some of the changes that we are looking at for next year might include things like broadcaster envelopes. So it would be very possible for us to squire, if you will, or favour certain projects within these envelopes as we go forth. This would almost guarantee that all of our projects would not get turned down.
923 Another critical factor might well be a sort of subjective qualitative analysis of the projects that are put forth so that some selection will occur.
924 Again, I think it is important that we have a critical mass because part of that evaluation will be based on public dollars per eyeballs available. So having more outlets in which to show our shows will make us more competitive.
925 Generally speaking, I think the CHUM group has shown to be street smart, more alternative, more connected with the younger generation of creative people.
926 There is frustration in Canada about Canadian drama; that it has failed to click with audiences. On the feature film side, in fact Telefilm has changed its rules recently to allow CHUM in particular, and certain broadcasters, to actually access their funds to produce feature films.
927 We think we have been extremely successful in supporting theatrical features in Canada and that sort of sensitivity, that sort of street smart, that sort of appeal to youth really is the next stage in our evolution. That is one of the reasons we want to hit this critical mass.
928 As you talk about your so-called "Enemies", my response is to be very specific because every project has its own convoluted road to its financing and there is no real blueprint that can apply to all programs. "Enemies", as you describe it, would probably be a half-hour sitcom and because ugly people exist everywhere in the world, it would probably be very attractive to the international market.
929 Now if we were focusing exclusively on ugly Canadians, it might be harder at that point to sell internationally and that would be a slightly different road. So it is very hard to have a sort of blueprint.
930 But we really believe that we will be in a position, both within the CTF and generally, to champion and squire a couple of pet projects. That is why these shows will be financed. Then of course our marketing and promotional expertise will kick in and we are committed to try to be part of the solution, in terms of Canadian drama and Canadian television.
931 COMMISSIONER LANGFORD: If that wasn't a home run, it was a very solid triple.
932 Those are my questions. Thank you, Mr. Chair.
933 THE CHAIRPERSON: Thank you.
934 Commissioner Williams...?
935 COMMISSIONER WILLIAMS: Good afternoon. I guess just following up on this $15 million in the initiative, some of the smaller ticket items, I just want to fill out the record on the them.
936 Say, for example, this $250,000 development and licensing specifically targeted to cross-cultural and aboriginal programming with broad audience appeal. Is this the total allocation for aboriginal programming?
937 MR. SWITZER: No, it is not, Commissioner. That $250,000 is per year and it is inclusive in the larger number.
938 There are additional in-house production dollars available in the normal production area that includes other programs.
939 COMMISSIONER WILLIAMS: Thank you.
940 On the cultural diversity internship program, what specifically do you plan to spend the $55,000 on?
941 MR. SWITZER: It will be spent -- Peter Miller will touch on how we are supervising or who is supervising it, but it is intended to pay for three interns per year, every year, specifically from the visible minority and aboriginal community, I believe, to cover their expenses for 35 or 39 weeks per year and it will be administered.
942 MR. MILLER: It is administered by the CFTPA as part of their successful national internship programming and what we have designed together as a program specifically for Alberta, in terms of placing aboriginal and visible minority interns with producers in Alberta. So it covers their cost and a small administrative overhead.
943 COMMISSIONER WILLIAMS: So one of these interns, what could they expect their share of that $55,000 to be? One of these three.
944 MR. MILLER: I believe it is for four months internship, period, and I believe the sum would be on the order of $10,000, but CFTPA could confirm that with you.
945 COMMISSIONER WILLIAMS: Okay. Thank you.
946 I guess now moving to the area of CHUM Alberta will ensure strong reflection of participation of aboriginal peoples through a number of initiatives as part of your opening remarks earlier today.
947 How does CHUM ensure strong reflection of participation of aboriginal peoples in the marketplace that it already serves? Could you say, for example, provide specific examples from your Vancouver, London, Toronto or Ottawa stations and then the learning at Skills TV to give us more of a local flavour for how you meet this challenge?
948 MR. SWITZER: Of course, Commissioner, and I might ask Prem Gill, who is the supervising producer in Vancouver, to touch on Vancouver and possibly some of Victoria initiatives. Sarah Crawford and Marcia Martin may want to add, as well.
949 MS MARTIN: Part of the local production that we are planning to do, and based on a conversations that we did have with the aboriginal people, two of those which we spoke about earlier, two series, and I think Richard even talked about what they were. NATV is one of them, which is a magazine format dealing with aboriginal arts and entertainment. The other one is more of a discussion/debate show series, called "Whose Land Is It Anyway?"
950 Those are the two specific shows that we are doing for the aboriginal people. But obviously all of our programming, news included, will have representation from the aboriginal communities with all the programs we do.
951 MR. SWITZER: Marcia, perhaps I could ask Richard Gray to begin with answering Commissioner William's question about what we are doing at present in some of our other stations.
953 MR. GRAY: Thank you, Jay.
954 At present, in Ottawa, for example, we are involved in the co-production of a half-hour weekly series entitled "Aboriginal Voices" that airs on our channel.
955 In addition to that, we incorporate the coverage of aboriginal people, aboriginal issues, into our breakfast show on a regular basis, into our noon hour, six o'clock and 11 o'clock newscasts.
956 In fact very recently we took our breakfast show live on location to a native friendship centre in the City of Ottawa to showcase some of the services and fantastic activities that are being offered there to the young aboriginals in the city.
957 In London, at The New PL, for example, we have been involved in supporting regular commentary on our six o'clock newscast. In fact you saw Dan Smoke, Dan and Mary Lou Smoke on our video today. They are regular news commentators speaking specifically about aboriginal issues on The New PL six o'clock newscast. We have been involved in other productions across our various stations, "The New Canoe", in Victoria, and I will let Prem talk now about something that we are doing in Vancouver.
958 MS GILL: Thanks, Richard.
959 Richard mentioned we produce "The New Canoe", in Victoria. It is a show that CHUM produces.
960 We also have a second show called "Ravens and Eagles" with an independent producer which is not only on the VI, it is produced in British Columbia, but it is also on Bravo so it appears nationally as well.
961 Just sort of going back to some of our internship initiatives that we have done in Vancouver, particularly with feature film and developing talent in communities, both in the visible minority community and the aboriginal community where we traditionally haven't seen a lot of film-making talent emerge from, we have several programs similar to the CFTPA program here that we are proposing for Alberta with the Praxis Centre for Screenwriters based out of Simon Fraser, in Vancouver, where we have cultural diversity fellowships and internships that go from story editing to people who need their scripts revised, and taking them basically through the story editing system.
962 We also have another project called "CineCity: Vancouver Stories", based out of -- that is for B.C.-based aboriginal and visible minority film-makers. It is the opportunity for these film-makers to make their first film and we give them a generous licence fee, but the idea is to mimic them -- give them the opportunity to go through what it is like to make a film in Canada so that they are prepared to make their big feature film and have some sort of calling card.
963 So there are several initiatives like that that we are doing to develop talent within the producing, film-making and writing communities.
964 In addition to the two shows in Victoria, we are co-producing a variety special with an independent producer and APTN that will be hopefully broadcast in the next year or two that will be a B.C.-based production that will appear nationally, not just on Citytv Vancouver but hopefully across our specialties and our other conventional channels, highlighting music and entertainment from an aboriginal perspective and ongoing relationships with APTN with some of our other channels as well.
965 I think my colleague Sarah Crawford has something to say on that.
966 MS CRAWFORD: We do of course have many aboriginal people who work at our various stations across the CHUM television system at both the national level and the local television station level.
967 We are involved specifically from an HR and recruitment point of view in developing new talent in the aboriginal communities to bring them into broadcasting generally and to bring them into CHUM specifically. We know that all broadcasters were invited to participate in an aboriginal workforce participation initiative spearheaded by the Ministry of Indian and Northern Affairs. We were one of three broadcasters who showed up to talk about what we could do to be part of that initiative.
968 We are, in Citytv, I think, somewhat known for having a full-time aboriginal reporter, a very long time aboriginal reporter, by the name of Duke Redbird, who reflects the community very, very well. And of course Richard has mentioned both Dan and Mary Lou Smoke who are regular features with the biweekly commentary on our local station in London, The New PL.
969 We do have a very specific commitment to focus and reflect aboriginal youth, specifically through MuchMusic and other of our services. We try to partner with APTN who also have a shared vision to engage aboriginal youth in what they are doing.
970 Most recently, we were involved in producing something called the Expression Awards which is the first award ceremony and gala. We hope it will become an annual national event to celebrate diversity in the arts in Canada. CHUM was the producer. It is going to air, I am happy to say, in prime time on a variety of our local and national stations on June 27th, which is Canada's first national multiculturalism day. So that is something to look forward to next week.
971 I could go on, I literally have a list of four pages as initiatives, as aboriginal, both workforce examples to give you and to community outreach examples, but in the interest of time I will leave it at that.
972 COMMISSIONER WILLIAMS: No, that is -- your answer is addition. Thank you very much, I have no further questions, Mr. Chair.
973 THE CHAIRPERSON: Thank you. Counsel.
974 MR. McCALLUM: Yes, I just want to follow-up on just a couple of points if I may. First of all, CHUM's 10 point plan that you have proposed, if the Commission wished to impose all of the elements of the 10 point plan as a condition of license, would you have any difficulty with such a condition?
975 MR. SWITZER: No difficulty at all, I am just making sure that there aren't any issues of words -- of course we stand behind everything. I think we are absolutely okay. Yes.
976 MR. McCALLUM: Thank you. Earlier today, you undertook to provide I guess a definition of what you mean by cross-cultural. I just want to fix a time frame for filing that definition. I had in mind first thing tomorrow morning, would that be a convenient time?
977 MR. SWITZER: If that is what you have in mind, that is what we will do.
978 MR. McCALLUM: Thank you. In responding to the Chair, I believe you answered with respect to the commitment to broadcast two new culturally diverse one hour Canadian drama priority programming series by saying that you would produce two series I guess of 13 episodes of one hour each, that's correct?
979 MR. SWITZER: Yes, at a minimum and we would either produce them or finance them with independents, yes.
980 MR. McCALLUM: Can you translate the commitment into hours of original first run programming for each of these series per year?
981 MR. SWITZER: I guess if we were to push to a worst case scenario it would be those 13 one hours or 26 half hours times two, with normal repeats of those at a bare minimum as a commitment.
982 MR. McCALLUM: Now, will it be two series for the whole seven year -- assuming it is a seven year license term, lets assume that -- is it two series over the total seven years as your minimal commitment?
983 MR. SWITZER: As a minimum commitment to cause to be produced, regardless of funding pressures elsewhere, at least two 13 episode one hour series or equivalent that we will ensure get produced.
984 MR. McCALLUM: When would they start? I mean, I assume that you may not be able to start right off the bat. When would it start?
985 MR. SWITZER: It obviously depends on development. We would certainly see the first one on the air, we would expect in year two, but certainly no later than the beginning of year three.
986 MR. McCALLUM: Could the Commission impose that commitment as a condition of license, that you do two 13 hour series starting in year two of one hour each?
987 MR. SWITZER: If that is the Commission's choice. We would certainly think, given the size of the budgets and the dollars involved, we wouldn't want to rush the development beyond what would be good material, certainly the beginning of the third year would make sense to us. We are not trying to be evasive, we don't want to rush into production something that isn't ready, but we will of course accept whatever the Commission thinks is appropriate.
988 MR. McCALLUM: So, your preference would be if it were imposed as a condition, to start at the beginning of year three?
989 MR. SWITZER: Yes.
990 MR. McCALLUM: Thank you. Dealing for a second with the license fee funding matter, what would be the minimum annual amount of original first run Canadian programming to be produced as a result of your license fee funding?
991 MR. SWITZER: That is something we cannot quantify. The dollars are specific, they are minimums, they are commitments, we don't know what the producers in Alberta will wish to produce in terms of volume, whether it will be a large number of inexpensive pieces, a small number of large pieces. Again, we believe it is more constructive and important to the system to have the dollar commitments firm that will be spent every year and we are committed to spend those dollars on an annual basis.
992 As to make commitments as to what hours those would generate, we would not find that a constructive exercise because we may suggest that it be a small number of more expensive made for television movies or series and the producers may wish to produce a larger volume of less expensive pieces. So, with respect, that is a difficult one to answer.
993 MR. McCALLUM: So, what you are saying effectively is that commitment is difficult to translate into a condition of license?
994 MR. SWITZER: It is absolutely acceptable as a condition of license in dollars, it is much more difficult to express it as a condition of license in hours.
995 MR. McCALLUM: How soon into a license term would you expect to be broadcasting programs funded by the initiative.
996 MR. SWITZER: We would expect certainly some of the non-dramatic programming that would result from independent Alberta producers as part of this initiative would make it to air towards the end of the first year, certainly with some of the smaller documentaries. The larger amount would begin in the second year.
997 MR. McCALLUM: A further question, if I may, on aboriginal programming. In the area of aboriginal programs to be broadcast, could you adhere to a condition of license to broadcast two weekly half hour programs of local or regionally produced aboriginal programs for each station?
998 MR. SWITZER: We are prepared to of course accept the two half hours as a condition of license. Counsel, could you just repeat that exactly again so that we are very clear on what you asked?
999 MR. McCALLUM: Could you confirm that you could adhere to a condition of license to broadcast two weekly half hour programs of local or regionally produced aboriginal programs for each station?
1000 MR. SWITZER: Yes.
1001 MR. McCALLUM: Dealing with local or regional non-news programming during peak viewing hours, there was a discussion of this I believe earlier with the Chairman, you undertook to broadcast non-news local or regional reflection programming during the heart of prime or, if you like, peak hours, based on the sample program schedule.
1002 I guess Commission staff have looked at it and I believe that it works out to about four hours of such programming between the hours of 7:00 and 9:00 p.m. And we looked at the schedule and found Edmonton and Calgary tonight, which is two hours per week live on location .5 hour per week, out door .5 hour per week, NATV of .5 per week and diversity of .5 hour per week, which adds up to four hours. Does that seem like a reasonable reflection of your application?
1003 MR. SWITZER: Yes, we believe that is an accurate reflection of what is in the draft schedule. All of our references and commitments today and in everything we have supplied in writing when we describe "the heart of prime" we are using the tradition heart of prime from 7:00 to 11:00 p.m., not including 6:00 or 6:30, not including 11:00 or 11:30. To ask us to narrow down exactly between the hours of 7:00 and 9:00 where we may wish to run some of it at 9:00 or 9:30 or 10:00, which is clearly in the heart of prime, would perhaps not be constructive. But heart of prime, 7:00 to 11:00, in terms of four hours per week, absolutely.
1004 MR. McCALLUM: So, I am just trying -- if the Commission wished to design a condition of license, could you adhere to a condition of license that would require a minimum of four hours of non-news, local or regional reflection programming that would be broadcast each week between the hours of 7:00 and 9:00 p.m.? If you wish to adjust the hours, state what you wish to adjust it to.
1005 MR. SWITZER: Yes, counsel, with the adjustment of 7:00 to 11:00 p.m., the answer is yes.
1006 MR. McCALLUM: And if the question were again posed 7:00 to 9:00 p.m., would it also be yes?
1007 MR. SWITZER: No, with respect, no it would not.
1008 MR. McCALLUM: If it were between 7:00 and 9:00, would the answer be three hours or two hours for the purposes of a condition?
1009 MR. SWITZER: We could probably -- and it is not that we are trying to be evasive about promises, we are trying to not get into individual title and exact day part and clearly 7:00 to 11:00 is a very serious commitment, but I believe we could be comfortable on a 7:00 to 9:00 basis. If it was a case of either or, of being two hours of a condition of license.
1010 MR. McCALLUM: Thank you. In the area of priority programming, of the eight hours of weekly priority programming to be aired on your Citytv Toronto and Vancouver stations and on your proposed Alberta stations, what would be the weekly minimum level broadcast only on and specific to the Alberta stations?
1011 MR. SWITZER: Counsel, I believe our answer in Alberta would be the two hours that we have committed in the heart of prime priority programming. As to specifics, as to the eight hours in Toronto and Vancouver, we have discussed we are going to be applying for whatever the correct word is -- an amendment for Citytv Toronto to take it up to eight hours. I don't think it would be helpful if we were to kind of further subdivide what is already in place in Vancouver or Toronto, but we will have to give that one a little thought.
1012 MR. McCALLUM: Again, I am attempting to design a condition of license around your answer and your answers seem to indicate that two hours would be acceptable, is that a fair summary?
1013 MR. SWITZER: We want to end up with conditions that encourage the Alberta local priority programming to be seen elsewhere across the system and I don't think, if I have understood your question, that would specifically and exclusively be seen in Alberta. We wouldn't want to suggest any conditions of license that would discourage the best of that being seen across the system.
1014 MR. McCALLUM: So, two hours in Alberta and the condition would be drafted in such a way that you would be permitted to air those elsewhere, is that what you are suggesting?
1015 MR. SWITZER: Yes.
1016 MR. McCALLUM: Could you comment on the effect of a news bureau that you would have in Red Deer upon the presence of the local station CKRD in Red Deer, but the financial and programming impacts?
1017 MR. MILLER: It would have no discernable impact to the extent that we would sell any retail advertising in that market. It would have to compete with the cost for selling that retail advertising in Edmonton, so the likelihood of us accessing that market is pretty slim. So, we didn't see any discernable impact.
1018 MR. McCALLUM: How important is that Red Deer bureau to your coverage of central Alberta?
1019 MR. MILLER: We believe the bureau is a tremendous asset for that coverage because it gives us a permanent presence there, ensures that we have staff there, that it not only can cover the news that happens through a Live-Eye truck, but also they would be responsible for producing at least one of our half hour shows in central Alberta this week. The fact that it is a store front presence in that community is something that we heard loud and clear from the residents of Red Deer that they wanted to see.
1020 MR. McCALLUM: Thank you. You may be aware that Industry Canada, just before the hearing, stated that the channel that you have applied for, 38C, is technically mutually exclusive with the channel that Global has applied for, channel 23C in Calgary on the basis that the channels are adjacent to each other. What would you do if channel 38C were not available?
1021 MR. MILLER: We are aware of this issue. I can't remember the precise details, but we understand in our discussions with Industry Canada that there are available alternatives that we can pursue in the event that that channel we applied for was no longer available.
1022 MR. McCALLUM: But you don't have any specific plans at this point in time, you would investigate it if it were not available, is that correct?
1023 MR. MILLER: I don't have specific answers at this point, I could inquire further if it is something you would like to hear more about for tomorrow.
1024 MR. McCALLUM: I take it it would have no discernable impact on your business plan if you had to choose another channel?
1025 MR. MILLER: That is correct.
1026 MR. McCALLUM: Finally, I understand that the teleresearch was conducted by an automatic survey, is that correct?
1027 MR. MILLER: That is correct.
1028 MR. BALCON: May I address details about it? It is not quite an automatic survey, Mr. Chairman. May I just explain the technology and methodology? We have been using for about 12 --
1029 MR. McCALLUM: I just have one quick question about which is on its reliability and I assume that you could perhaps comment on that in your response.
1030 MR. BALCON: Sure. We have been using this technology for about 10 to 12 years in Alberta and Western Canada and elsewhere in the country. The technology is a pre-recorded message by a fairly audible regular voice which indicates to the person receiving the phone call details about the survey being conducted and if they would like to complete it and then goes into the questions to which people respond with their touch tone phone after getting instructions as to how to do it.
1031 As I say, we have been doing it and using this technology for over a decade now and in terms of reliability have found next to no difference between using live interviewers in the results we are getting. Our best test has been during election campaigns where we have used the local Edmonton media outlet for almost every election campaign in the last 10 years and are results had been well within our margins of error and often more accurate than other surveys conducted during those election campaigns. So, that is one test of reliability I think.
1032 MR. McCALLUM: Thank you. Sir, just one further question, it deals with potential reach. In the CHUM Group TV renewal decision 2002-323, the Commission noted that CHUM's national potential reach at that time was approximately 67 per cent, just below the threshold of 70 per cent specified in the Commission's definition of a large multi-station owner. We calculate that if these applications were approved CHUM would see its national potential reach increase from 67 per cent to 80 per cent, would you agree with that?
1033 MR. MILLER: Yes.
1034 MR. McCALLUM: Thank you, Mr. Chairman.
1035 THE CHAIRPERSON: Vice-Chair Wylie.
1036 COMMISSIONER WYLIE: I did find, during the lunch, the definition of paragraph 10 and the problem is that it includes cross-cultural programming with a caveat, provided that it is specifically directed to any cultural or racially distinct group. So, I hope that you go back to Mr. Grant's book and look at paragraph 10. What we may want to have is when it is not ethnic but it is cross-cultural, how would you define it so that we would have a point of reference or mechanism to test whether that benefit is actually being provided.
1037 You filed your projections obviously before knowing that there would be another applicant heard at this hearing for projects in the same market and we will be hearing in a few minutes an application by Global to disaffiliate CKRD and have it rebroadcast here in Calgary and in Edmonton, the two markets that you are applying for a license to broadcast in. How different would your financial projections be if the Commission were to find in its wisdom to approve all the applications before it? And, as a follow-up question, would you proceed if that was the decision we were to make?
1038 MR. MILLER: I am going to try and avoid getting into the intervention phase in providing this answer, but --
1039 COMMISSIONER WYLIE: That is an application phase question.
1040 MR. MILLER: Okay. But certainly we do have some concerns with respect to what the rebroadcaster applications in Calgary and Edmonton would do in terms of the dominance of Canwest in the Alberta market and nationally. So that has a significant potential economic impact that we haven't specifically quantified for our applications, but there is a potential impact there.
1041 COMMISSIONER WYLIE: But surely you have seen the application and looked at it sufficiently to have a -- you may not be able to quantify and tell me how you would change your projections, but certainly as a company you would have thought about whether you would proceed on if the applications were approved as filed.
1042 Or do you want to hear first as to just exactly how they are going to present their application?
1043 MR. SWITZER: Madam Vice-Chair, we don't want to pre-empt or prejudice the discussion that may happen later today or tomorrow. If you would allow us to comment at the intervention phase --
1044 COMMISSIONER WYLIE: Well, you can comment again, but you have seen the application and how it is put forward. It would provide two more stations in the market.
1045 MR. SWITZER: We do and we have our own feelings and belief about perhaps more legitimacy with the disaffiliation part of their proposals than with the rebroad --
1046 COMMISSIONER WYLIE: So after you have heard their presentation and the questioning you will be a little closer to telling us whether besides being mutually exclusive, they are exclusive on the basis of market. And the former is probably easier to cure than the latter.
1047 MR. SWITZER: Thank you, Madam Vice-Chair.
1048 COMMISSIONER WYLIE: Thank you.
1049 THE CHAIRPERSON: Just to take up on that, when you filed new projections today without any reference or caveat to those conditions, and I think based on one of your answers as well where you said that irrespective of financial impact you would proceed with your commitments, I had assumed that there were no more changes to be made to your projections under various of the scenarios.
1050 If that is not correct, you should let us know.
1051 MR. SWITZER: Mr. Chair, you are absolutely correct. Commitments are unequivocal as to everything on the agenda today.
1052 THE CHAIRPERSON: Irrespective of other decisions that might emerge from this proceeding.
1053 MR. SWITZER: Not to take away from concerns that we may wish to express. But you are correct.
1054 THE CHAIRPERSON: We may be back to you in reply on impacts, because while I am taking from what you are saying that your commitments are firm I am wondering whether your projections about market size and shares would hold firm under that other scenario.
1055 You may want to think about that in preparation for reply stage.
1056 Thank you very much. Those are all of our questions. We will break now for 15 minutes and resume with the next item at that point.
--- Upon recessing at 1531 / Suspension à 1531
--- Upon resuming at 1550 / Reprise à 1550
1057 LE PRÉSIDENT: A l'ordre, s'il vous plaît. Order, please.
1058 Mr. Secretary.
1059 MR. LEBEL: Thank you, Mr. Chairman.
1060 The second item on the agenda are applications by Global Communications Limited to: amend the licence of television station CKRD-TV Red Deer by disaffiliating from the CBC network, adding transmitters in Edmonton and Calgary, and deleting the service of the transmitter in Coronation; and an application to amend the licence for television station CITV TV-1 in Red Deer, to change its channel from 10 to 2, and to decrease the effective radiated power from 180,000 to 15,930 watts.
1061 The station's local programming would not be affected by this amendment.
1062 Ms Charlotte Bell will introduce the panel in a moment.
1063 Mr. Rick Camilleri, you have 20 minutes to make your presentation.
PRESENTATION / PRÉSENTATION
1064 MR. CAMILLERI: Thank you.
1065 Good afternoon, Chairman Dalfen, Madam Vice-Chair, Commissioners and Commission staff. My name is Rick Camilleri, and I am the Chief Operating Officer for CanWest Global Communications Corporation.
1066 While I appeared before the Commission many years ago as an intervenor in my then capacity as President of Sony Music Entertainment Canada Inc., this is my first appearance before you as a licensee.
1067 I understand that as a general rule, licensees spend more time up here than intervenors. So before I ask Charlotte Bell, our Vice-President of Regulatory Affairs, to introduce our panel, I would like to take a few moments to discuss our vision for local television in Canada, the unique challenges we face as local broadcasters, and how our plans to disaffiliate and revitalize CKRD is an integral part of our commitment to maintain local service in each of the markets that we serve.
1068 As you know, we currently operate 16 local television stations across Canada, serving markets that range in size from small to large. Our lager market stations provide the economic support required to help subsidize smaller, unprofitable stations across this country. These include our television stations in the prairies, the maritimes, Quebec, as well as our two CBC affiliates in Red Deer and Kelowna.
1069 While I appreciate that you have heard this before, the magnitude of change that local television must adapt to in today's new world media cannot be overstated.
1070 The challenges we face now are more complex and more significant than those of decades gone by. Through the years broadcasters have had to respond to increased fragmentation caused by the addition of foreign and domestic signals of all kinds in all markets. This is not new.
1071 What has changed, however, is the pace at which technology as overtaken our ability to continue to operate as we once did. The local television model of the 1990s, and for that matter the television landscape that existed even 12 months ago, is changed dramatically and fundamentally. Status quo is no longer an option in our business.
1072 In this new role the distribution of hundreds of distant signals received in all local markets and in all time zones poses a tangible threat to local television as stations find themselves lost amongst a sea of unlimited choice and variety.
1073 To put this into perspective, consider that anyone who owns a satellite dish can actually find an episode of "The Simpsons" on one or more channels throughout most of the day. Consider that in prime time a viewer has multiple viewing options to watch the same program on different channels, and that same viewer is often not aware or doesn't care about where the signal he or she is watching originates from.
1074 Consumers now have access to home devices that allow them to bypass the normal scheduling of programming as well as the advertising that supports and subsidizes the content that they are watching. The paradigm has shifted and this represents a new reality for local broadcasting.
1075 Since we are here today, to a large extent, to discuss local television in the province of Alberta, I raise these issues because it is important to put into context the world in which local television finds itself in today before we consider adding to it.
1076 It does beg the question: Do we continue to compound the problem by licensing more local services, or do we take a different turn and find innovative ways of addressing the existing problems faced by small market stations such as CKRD?
1077 Please don't get me wrong. Despite the challenges of the past few years, we have not stepped away from our local orientation. In fact, we have bolstered it.
1078 Our local programming commitments are among the highest in most markets in this country, including Alberta. These commitments were made two years ago in the context of our group licensing renewals, and today each of our local stations, whether profitable or not, remains deeply rooted in their respective communities. We have ensured that each of our local managers has the tools and resources needed to meet the needs of their local audience.
1079 As you will recall, it was through our acquisition of WIC that local service was restored in markets like Hamilton and Victoria. Prior to CanWest ownership there was virtually no local reflection in either of these markets.
1080 Our ability to return these stations back to their local roots is a success story that we are extremely proud of at CanWest. As a result of CanWest ownership these stations, in addition to providing quality prime time programming through the CH schedule, are connected to their local community because they have the local management, programming, resources and commitment that have made them an integral part of their respective markets.
1081 Today we are pleased to appear before you to discuss our plans for Red Deer in response to the CBC's request to disaffiliate from our station. The proposal we have put before you is designed to respond to the particular circumstances and needs of the communities we serve in Red Deer and Alberta, taking into account the special challenges faced by small market stations like CKRD.
1082 This proposal is designed to ensure that CKRD, as a non-CBC affiliate, has the necessary revenue base to ensure its future viability and that it continues to play an important role in its local community. At the same time, this proposal fully meets the goals entrenched in the Broadcasting Act, as well as those of the CBC.
1083 At this time I would like to ask Charlotte Bell to introduce our panel.
1084 MS BELL: Thank you, Rick.
1085 Chairman Dalfen, Madam Vice-Chair, Commissioners, with us today, to my right, is Rick Camilleri, CanWest's COO. To his right is Leonard Asper, CanWest's President and CEO. Beside him is Jack Tomik, President of CanWest Media Sales.
1086 To my immediate left is Ray McBeth, General Manager of CKRD.
1087 In the back row is Greg Treffry, Director of Development; David Rathan, Research Manager, CanWest Media Sales; Kathy Gardner, Vice-President Integrated Media Research; and Don Gaudet, Program Manager.
1088 At our side panel is Loren Mawhinney, Vice-President Canadian Production; Doug Hoover, Senior Vice-President Programming and Promotion; Dan Gold, Director Technical Services for Global Calgary; and Chris McGinley, General Manager, Global Alberta.
1089 Commissioners, as you have heard, this proposal was developed as a result of CBC's request to terminate its affiliation agreement in Red Deer in order to extend its full schedule and brand to residents in Red Deer and central Alberta.
1090 Throughout the process that led us here today, and in recognition of the special role of the public broadcaster in this country, we have been mindful of ensuring that this proposal, first and foremost, fully meets the attainment of the objectives of the Broadcasting Act.
1091 In particular, we have addressed those provisions calling for the extension of CBC service to as many Canadians as possible, the requirement to provide programming that reflects local and regional concerns, as well as the requirement to reflect the needs and interests of Canadians from a diversity of ethnic and cultural backgrounds, including aboriginal people. In each of these areas we have included specific proposals to address these issues.
1092 As you know, CKRD is not currently distributed on either of the Canadian authorized DTH services. The station has long depended on cable carriage in Alberta's two largest markets in order to generate additional national revenues to help subsidize local service in Red Deer. Despite this, and due to the increasing forces of change, the station continues to show losses.
1093 To further compound the problem, given CKRD's status as a distant signal in these markets, cable carriage in Calgary and Edmonton is neither mandatory nor guaranteed. Consequently, the distribution of CKRD in those markets remains precarious and at the option of cable companies who can either move it up the dial at will or simply remove it at their discretion.
1094 While we continue to believe that the conventional television market in Alberta neither needs nor can support the entry of new local television services that would rely on both national and local advertising revenues, we are seeking authority to add transmitters in Calgary and Edmonton in order to generate the economic support needed to continue to provide local service in Red Deer.
1095 Approval of our proposal would do the following:
1096 (1) maintain local service to Red Deer residents;
1097 (2) provide, at no charge to the CBC, the transmitting facilities necessary to extend full CBC service to central Alberta;
1098 (3) generate sufficient revenues through transmitters in Calgary and Edmonton to ensurer the economic viability of CKRD and its ability to continue to meet the needs of its local audience;
1099 (4) provide regional programming of relevance to Albertans in markets outside Red Deer where our signal will be available;
1100 (5) reflect the cultural diversity of Alberta through our ethnic, aboriginal and multicultural programming initiatives; and
1101 (6) refrain from soliciting our accepting local advertising in Calgary and Edmonton except during those periods where we provide ethnic, aboriginal or multicultural programming to ensure that this proposal will add maximum diversity while having a minimal impact on incumbents.
1102 I would now like to ask Ray McBeth, General Manager of CKRD, to tell you how this small station continues to play a large role in the community it services.
1103 MR. McBETH: For more than 40 years CKRD has been operated as an intensely local station, serving the needs of this community. Since the 1980s, and through successive ownership changes, the station has been operated as a privately owned CBC affiliate. In the 1980s and 1990s, being a CBC affiliate meant that small market independent stations could provide a full schedule of programming to their local viewers, while allowing the CBC to extend part of its schedule to Canadians in markets where they did not operate stations.
1104 But while this local television model may have been relevant in the 1980s and 1990s, it has become increasingly challenging for affiliates to continue to meet the scheduling needs of the CBC and at the same time fulfil their own licence obligations.
1105 While much of the CBC's schedule in prime time is Canadian programming, a large portion of it does not qualify as priority programming and does not meet our requirement to provide eight hours between 7:00 and 11:00 p.m. per week.
1106 In addition, we often find ourselves making up for lost hours of local programming due to hockey games that ran too long, or special event programming from the CBC, such as the Olympics.
1107 In our view, these disruptions to our schedule do not benefit our viewers.
1108 Despite this, we have remained grounded in our community. Our management and staff continue to take a leadership role in the community, and we are proud of our accomplishments. Whether it be through donations of free air time for PSAs, chairing or attending community events, lending support to local fundraising drives or getting involved in joint projects to help address the social issues that affect our community, we have made it a priority to keep lending a hand whenever possible to our community.
1109 We would like to show you a short video presentation that will give you a glimpse of what this station is all about.
--- Video presentation / Présentation vidéo
1110 MR. ASPER: Commissioners, in closing, we believe that approval of this proposal will yield significant benefits to the local community, the province of Alberta, as well as the broadcasting system as a whole. The proposal is a win-win for all involved.
1111 CKRD currently provides 9 hours, 45 minutes of local programming to Red Deer. We also produce 2 hours and 30 minutes of local programming that is aired on CITV TV-1. Approval of this application guarantees that we will be able to maintain existing levels and quality of these combined local programming totals.
1112 We recognize that in accessing audiences in Red Deer, Edmonton and Calgary we must provide programming of interest to these audiences as residents of a larger region. Rather than compete for local revenues in the larger markets, we will provide new regionally focused programming that will be of interest to those markets without the impact of taking local dollars out of those markets.
1113 Approval of this proposal will provide transmitters at no cost to the CBC to ensure the provision of the full CBC network television schedule to Red Deer and area residents. As a result, local audiences will receive 89 new hours of CBC programming.
1114 Approval of this application will add significant diversity to the Alberta marketplace with the introduction of the full CH schedule, including eight hours of priority programming per week that will be distinct and different from that currently aired on CITV Edmonton and CICT Calgary.
1115 Recognizing the important place of the First Nations peoples in the community, we have developed a number of initiatives designed to support and develop projects of interest to the aboriginal communities of central Alberta. We are proposing a three-hour weekend block that will be made available to APTN in order to provide a second window for APTN programming.
1116 We will also develop regular features within the weekday early evening newscasts that focus on the activities, interests and issues of relevance to Alberta First Nations peoples.
1117 In conjunction with APTN, CKRD will also produce and broadcast a half-hour weekly First Nations "round up" report highlighting many of the top features of the week.
1118 As part of our commitment to reflect the diversity of Alberta, we have committed to provide a block of ethnic programming, including some English-language multicultural programming of relevance to Alberta's diverse ethnocultural groups.
1119 Commissioners, we have presented you with a plan to revitalize CKRD, much in the same way as we did with our stations in Hamilton, Victoria and Montreal. Approval of this proposal will breathe new life into the station and ensure its long-term viability in an increasingly challenging marketplace for small market television.
1120 It will also enable CBC to provide its full service to central Alberta at no cost to the CBC. And we will achieve this in a way that causes minimal or negligible impact to the marketplace.
1121 We thank you for your attention, and we are prepared to answer your questions.
1122 With that, as you know now, Charlotte Bell knows all the answers. While I am here to answer any questions you have specifically for me from a CanWest perspective, please save me and direct your questions to Charlotte.
1123 Thank you.
1124 THE CHAIRPERSON: Thank you.
1125 Commissioner Wylie.
1126 COMMISSIONER WYLIE: Welcome, Mr. Asper and your colleagues. You are not going to get away that easily. Especially I have come to you Mr. Camilleri as a different kind of participant; this time an applicant. I understand that you were an intervenor before. You must have been well-behaved because I don't remember you.
1127 I will have questions in four different areas and then a question that I am sure you have anticipated by now about technical or frequency issues.
1128 So, first, I want to look at your programming; second, at your business plan and the impact on the market; then issues of common and cross-ownership; and then licensing scenarios.
1129 In programming, I see four different areas: priority programming; regional programming; ethnic programming and aboriginal, which is within regional; and then local programming. So we will try to proceed in that fashion. Obviously these are not silos and I will trust that you direct the question to wherever you think they best be answered and to Mr. Asper if you can't get the answer.
1130 Priority programming is not a problem. I guess you have, this morning, repeated and you have specified in answers in deficiency questions that by condition of licence you were prepared to accept that there would be eight hours of priority programming that would be different from those of the stations CIBT and CICT which you already have in the markets concerned.
1131 The regional programming you have identified under aboriginal and ethnic programming. So, first, I would like to discuss with you your aboriginal programming. You have called it a second window for APTN and your schedule it shows that the plan would be to air it between one and four on Sundays and you have again today referred to it as an opportunity for APTN.
1132 In your supplementary brief, at page 6, you discuss the fact that you have entered into discussions with APTN about this matter. Could you update us on where you are with these discussions?
1133 MS BELL: Yes. We have had a number of discussions with APTN about this proposal and they are very excited about it. I don't know if you are aware of that. The representative from APTN just recently had surgery and is unavailable to appear before you tomorrow but nonetheless, I believe the Commission has been advised of that. In any case, we have had a number of discussions with them.
1134 For us, this proposal really is again to provide aboriginal programming to the Alberta marketplace in a way that is perhaps more relevant to them than just what we could provide in terms of the local station because we have also proposed to do a half-hour aboriginal program in addition to this and we have also proposed to do some enhancements to our local news that would have an aboriginal component. But we approached APTN and proposed this partnership with them to make available this three-hour block so that in fact they could -- it would provide a second window for some of their programming, at their discretion.
1135 COMMISSIONER WYLIE: Will this programming have been produced by APTN with its own resources, without any input from CanWest?
1136 MS BELL: I believe so. But if you are referring to the programming commitment that we had with APTN as part of the WIC benefits, is that what you are referring to?
1137 COMMISSIONER WYLIE: No, I am just wondering if it will be APTN --
1138 MS BELL: Yes, it is.
1139 COMMISSIONER WYLIE: -- programming that is with their own resources --
1140 MS BELL: Yes.
1141 COMMISSIONER WYLIE: -- or resources from other packages of benefits.
1142 MS BELL: Yes.
1143 COMMISSIONER WYLIE: But as a result of this application, there will not be any input into the production of these programs. What you are providing is a three-hour block on Sundays to air it?
1144 MS BELL: That is right.
1145 COMMISSIONER WYLIE: Again, in your supplementary brief, at page 6, you say that you have agreed to allow APTN to solicit and retain all ad revenues during that programming block.
1146 So how do you perceive this working? APTN is going to sell the air time itself and give it to your traffic people to insert into the programming?
1147 MS BELL: We have --
1148 COMMISSIONER WYLIE: Or will it come with the ads in it?
1149 MS BELL: That is right, Madam Vice-Chair. We haven't determined all the details as to how that is going to work, but the commitment is there and the advertising time is made available to them and they will retain the advertising dollars sold during that period.
1150 COMMISSIONER WYLIE: Now, you have also committed, and you have clarified today, that you would neither solicit nor accept -- which will relieve me of one question -- local advertising in Calgary and Edmonton. And while we are at it, would you accept that as a condition of licence as well?
1151 MS BELL: Yes.
1152 COMMISSIONER WYLIE: You have a caveat: except during those periods where we provide ethnic, aboriginal and multicultural programming.
1153 So does that mean that Global itself would reserve the right to sell air time in that programming if APTN is not successful at it?
1154 MS BELL: We haven't considered -- we did not consider that option during the APTN block. No, we haven't. It is made available to them and that is a commitment.
1155 In terms of the ethnic programming, we feel that it would be new advertising sources or new advertisers that are not presently advertising in the marketplace and that it wouldn't pose significant competition in the marketplace.
1156 COMMISSIONER WYLIE: You say you haven't contemplated whether, if APTN is not successful, you would -- whether or not you would yourself solicit and accept local advertising in that program.
1157 Are you prepared to tell us now whether you would or not?
1158 MS BELL: Whether we would -- no, we would not.
1159 COMMISSIONER WYLIE: You would not?
1160 MS BELL: We would not.
1161 COMMISSIONER WYLIE: Not inside that --
1162 MS BELL: Not inside that APTN block, no.
1163 COMMISSIONER WYLIE: Now the newscasts between -- so that is the first aboriginal benefit of your application would be that block.
1164 The second one is -- I may not have this chronologically right, but you also have proposed that the supper hour newscast, 5:30 to 7:00, Monday to Friday, would contain some minutes devoted to aboriginal news or of interest to the aboriginal community in particular. In the block schedule you provided, the colourful one, in that block I see five minutes. But in your schedule 17, I see six minutes. Which is it?
1165 MS BELL: It is six minutes. We wanted it to add up to a half hour a week.
1166 COMMISSIONER WYLIE: So in the block schedule, the five minutes --
1167 MS BELL: Yes.
1168 COMMISSIONER WYLIE: -- should be six minutes?
1169 MS BELL: It was a sample block schedule and it --
1170 COMMISSIONER WYLIE: Okay. Now if I understand well, then, the third item under aboriginal programming, at six p.m., on Saturday, to six-thirty, you would have a weekly highlight of these six minutes for half an hour, which would be called "First Nations Report". Correct?
1171 MS BELL: That program would include some of the highlights during the week. But it is not just repackaging those six minutes into one 30-minute block. It would have other components to it. Because our intention is that that would be a regional program and that we would have in fact an aboriginal producer helping us produce that program and that our other stations in Alberta, including Lethbridge, would also contribute stories and items for that program.
1172 COMMISSIONER WYLIE: So it won't simply be a compilation of these six minutes; it --
1173 MS BELL: No.
1174 COMMISSIONER WYLIE: -- will be a program. And that program will be produced by Global, not by APTN?
1175 MS BELL: It will be produced by Global, out of our facilities, with probably an aboriginal independent producer that we would contract to produce the program for us.
1176 COMMISSIONER WYLIE: And again in your supplementary brief, at page 7, another advantage for the aboriginal community of approval of your proposals would be the hiring of an aboriginal journalist?
1177 MS BELL: That is correct.
1178 COMMISSIONER WYLIE: Would that journalist work at CKRD?
1179 MS BELL: Yes.
1180 COMMISSIONER WYLIE: And insert the six-minute segments into the supper hour newscasts?
1181 MS BELL: And would also contribute to the regular news outside of the aboriginal minutes also.
1182 COMMISSIONER WYLIE: But the advantage would be his connection --
1183 MS BELL: Exactly.
1184 COMMISSIONER WYLIE: -- to that community?
1185 MS BELL: Exactly.
1186 COMMISSIONER WYLIE: Now, again if I go back to schedule 17 -- which I must admit has been testing my eyesight. It is very small. I would not like to -- I guess I can admit in public that I even brought a little magnifying glass to see this. I am sure you are not hiding anything.
--- Laughter / Rires
1187 COMMISSIONER WYLIE: But if I look at schedule 17 -- and Ms Bell of course being much younger will see this right away -- the "First Nations Report" is identified as a group production and the production includes your B.C. stations.
1188 MS BELL: That is a mistake, Madam Vice-Chair. It is quite possible that it would find a home, in terms of being aired on some of our other stations, but it will be produced out of CKRD. As I said, the other stations in Alberta would contribute, but not the stations in Victoria or in Kelowna.
1189 COMMISSIONER WYLIE: So I am looking at your revised schedule 17. What would be the further revision on "First Nations Report"?
1190 MS BELL: I am sorry, I am not --
1191 COMMISSIONER WYLIE: You said there was a mistake. How --
1192 MS BELL: Oh, no, it is not on the schedule. It was in the schedule B, I guess, where we described it as a group production. All I am saying is it is not a group production with the Victoria --
1193 COMMISSIONER WYLIE: So that should be altered to "not group production" and I should remove, then, the two stations, the other two stations?
1194 MS BELL: That is correct.
1195 COMMISSIONER WYLIE: And substitute CKRD only?
1196 MS BELL: That is correct.
1197 COMMISSIONER WYLIE: Of course it won't be a surprise to you that we will be looking at the benefits that would flow to these communities if we approved your applications. So I would like to go back to the approval of the applications in Victoria and Vancouver, where you had an aboriginal initiative there which I think was called "Long House"?
1198 MS BELL: Yes.
1199 COMMISSIONER WYLIE: What is the relationship between these two? I am obviously looking at whether "First Nations Report" will be seen in B.C. or whether it will be an Alberta production only and resources used for that in particular not combined with what you do in the aboriginal initiatives in B.C.
1200 MS BELL: I can guarantee that they are completely separate. They are not related at all.
1201 COMMISSIONER WYLIE: Now in your revenue projections there is a line item ranging from -- my understanding is your revenue projections are not confidential?
1202 MS BELL: The projections are not, you are correct.
1203 COMMISSIONER WYLIE: Yes. There is a line item from $1.5 million in year 1 to $1.8 million in year 7 in ad revenues. So presumably that would be for local ads sold in Red Deer?
1204 MS BELL: That is correct.
1205 COMMISSIONER WYLIE: And it would not include any ads sold into "First Nations Report"?
1206 MS BELL: That is correct.
1207 COMMISSIONER WYLIE: So that if APTN is not successful in selling the ads, there would be fewer or possibly none in the program?
1208 MS BELL: That is correct.
1209 COMMISSIONER WYLIE: Now the internships, again, as an advantage, or a benefit, to the aboriginal community, which is at page 7 of your supplementary brief. Again, there is a mention in your supplementary brief of Broadcasters of the Future. What is that? Is that an initiative that was brought forward in another application?
1210 MS BELL: Broadcasters of the Future is something that we do separately. It is a CanWest initiative. I believe we were just referencing to the fact that we have had a long history in terms of providing bursaries or scholarships and it is a separate initiative. This has nothing to do with Broadcasters of the Future Awards. And they are awarded every year, I believe; they are announced at the CAB convention every year.
1211 COMMISSIONER WYLIE: Is the Broadcasters of the Future Awards an initiative that was put forward in another application?
1212 MS BELL: Madam Wylie if it was, it was before my time. It has been around for years.
1213 COMMISSIONER WYLIE: That could be just a short, short time ago.
1214 MS BELL: It has been a while.
1215 COMMISSIONER WYLIE: So this aboriginal internship is a brand new program, brand new money, separate from anything you have done before?
1216 MS BELL: Absolutely. Yes.
1217 COMMISSIONER WYLIE: And it will be done in co-operation with AMMSA. Have you had discussions with AMMSA already?
1218 MS BELL: I Have. We spoke to AMMSA, and also APTN, about this. It is very interesting. AMMSA is in the process of trying to design a journalism program, in conjunction with the Northern Alberta Institute of Technology, for aboriginal people that would -- this is still in the discussion stages. They are quite excited about this project and apparently it is a long-term goal for them. They told me I could say this to you publicly. So they are working towards developing this program that would be, I guess, a little bit like a co-op program where students would have class times and also would have the opportunity to do a practical internship. AMMSA of course operates radio stations in Alberta, and they also have a number of print publication,s and this is where they thought they would be able to train people. With the partnership with Global, eventually, when that program takes off, we would be able to probably weave it into this internship program.
1219 In the meantime, I asked them if they would help us with this initiative, which would be to go to Alberta institutions, educational institutions, and look for journalism programs and provide two work internships to students who are currently enrolled in a journalism program at one of the Alberta institutions.
1220 So AMMSA would provide a member of their organization, as well as APTN, to sit on a selection committee and help us design the criteria, and sit on the judging committee.
1221 Now the second portion of the programming initiatives that you put forward is ethnic programming. There has been some discussion this morning, and there was some discussion in deficiency questions as well, as to what can be put in this schedule 18 ethnic programming schedule that you filed. It is a little bit -- it is calculated by month. So would it be fair to say it will be about 10 hours a week?
1222 MS BELL: I think, in fairness, after we answered the questions in deficiency, we had inadvertently included our half-hour aboriginal program originally as part of the 10 hours. So if you would like, I could walk you through exactly what the commitment is so that you know exactly.
1223 COMMISSIONER WYLIE: This question was asked of you in a deficiency question and you have heard this morning the discussion we had about the way ethnic programming is defined, I would define a third language, which is not difficult to ascertain, or English language cultural programming but very specifically directed to a cultural or racially distinct group. So we may want to know from you as well whether the program which is mostly, I think, as "Neighbours", which is identified as cross-cultural, whether it would fit the definition of ethnic programming in English language and if not, whether you would also provide us with some reference point as to what a cross-cultural program which doesn't quite fall within the definition of English language ethnic programming is. So perhaps you can go, as you suggested, to schedule 18, taking that into consideration.
1224 MS BELL: So to recap, on the ethnic programming portion of our commitment, we originally said 10 hours, but the aboriginal half-hour had been included in that. So I just want to make sure that that is separate and we are not double counting anything. So "First Nations Report" is taken out. That leaves us with nine and a half hours per week of ethnic and cross-cultural or multi-cultural programming, which includes "Neighbours". Of those nine and a half hours, one hour is devoted to "Neighbours" per week and eight and a half hours is devoted to ethnic programs.
1225 Our intention is that most of those programs would be in third languages, for the time being. Although, as time goes on and as the demographic make-up of those markets changes and the interests of those communities may change with time, some of that programming may end up being ethnic English language programming.
1226 But those eight and a half hours would qualify as ethnic programming, they would not be multi-cultural like the Neighbour's model that we have proposed.
1227 COMMISSIONER WYLIE: Am I to understand that you will not do Neighbours or you will do Neighbours and it will be in addition to?
1228 MS BELL: That is right.
1229 COMMISSIONER WYLIE: So now we have eight and a half hours of ethnic, right?
1230 MS BELL: We have eight and a half of ethnic and then, because we are not sure where we are going to put Neighbours, if it is multi-cultural or if it counts as part of ethnic, but that is one hour a week, so we are at nine and a half hours all together and we have the half hour of aboriginal, which brings us to the 10 hours.
1231 COMMISSIONER WYLIE: If counsel eventually asks you how we would hold you to this by condition of license, would you have to say eight and a half hours a week of ethnic in case you do Neighbours as a cross-cultural non-ethnic English language?
1232 MS BELL: I think we would have to say that.
1233 COMMISSIONER WYLIE: And you may as well then address this issue of how we would --
1234 MS BELL: Define it.
1235 COMMISSIONER WYLIE: -- reference or know that you are doing the cross-cultural programming for that half hour and then advertising and programming. First let me ask you, how will this be produced? It is described in your difficult schedule 17, difficult to read, as a co-production. Are you planning to have it produced by ethnic broadcasters and brought to you all produced, advertising unit -- will they sell advertising, will you sell advertising, what will be the model?
1236 MS BELL: We are referring now only to the program Neighbours or all of the ethnic?
1237 COMMISSIONER WYLIE: I am referring to ethnic and I am trying to probe how -- because you will not solicit or accept advertising in Edmonton and Calgary except for in the aboriginal programming, which you have now said you will not either, it will be APTN.
1238 MS BELL: That is right.
1239 COMMISSIONER WYLIE: So, we are down to no soliciting or accepting of local advertising in Edmonton or Calgary, except in ethnic programming, correct?
1240 MS BELL: That is correct.
1241 COMMISSIONER WYLIE: So, how will that work? Because, as you know, there are many models, it is co-production.
1242 MS BELL: Exactly. I would like to ask Don Gaudet to describe to you how the program would be produced and then perhaps Jack Tomik could shed some light on the advertising portion of your question. I would like to clarify, before I pass this along to Don, that this is two half hours a week for Neighbours, so it does represent one hour and they are two separate hours.
1243 COMMISSIONER WYLIE: Now I was talking about the ethnic programming and say that Neighbours may only not be in the ethnic programming which will be co-produced, how will this work since you reserve the rights to solicit and accept advertising?
1244 MS BELL: Yes, Don.
1245 MR. GAUDET: The ethnic programming will come from various sources and we are looking at other multi-cultural channels across Canada to source that material, including our own CJNT in Montreal. We have spoken to CFMT in Toronto as well as the new channel about to launch in Vancouver, M-Channel, that we are looking at sharing programming with in order to fill these time slots.
1246 COMMISSIONER WYLIE: So, quite possibly then, you would get programs that are already produced in Montreal for CJNT?
1247 MR. GAUDET: That is correct, although we will put the caveat on it that it has to be programming that is of specific interest to the multi-cultural community in Alberta and we will put resources behind that. That is why we put co-production dollars in there, that we could actually enhance programming that they are already doing that may be local now but we wouldn't run programming that is specific to Montreal obviously.
1248 COMMISSIONER WYLIE: And possibly it would be produced or co-produced or totally produced by ethnic producers from this community?
1249 MR. GAUDET: I think as we go forward we will obviously try to source that as well. At this point, we would be looking at programming mostly produced, as I say, for the other multi-cultural channels. Most of that programming is done with independent producers across Canada, not specifically in Alberta.
1250 COMMISSIONER WYLIE: I still don't know how you will handle the advertising. Will it be on the basis of brokerage at any time, will it be you will simply sell local advertising in the usual course?
1251 MR. TOMIK: Madam Co-Chair, our plan with the advertising is in fact to allow the co-producers to sell the advertising within the body of their programming, they are much better at it than we are in their communities, and to in fact keep that money.
1252 COMMISSIONER WYLIE: Would it be the same as APTN, they keep all of the money or you would share?
1253 MR. TOMIK: That is correct.
1254 COMMISSIONER WYLIE: So what you are saying then, Global would not solicit or accept, contrary to what we said earlier, local advertising itself in these programs?
1255 MR. TOMIK: Yes.
1256 COMMISSIONER WYLIE: So, they would come with the air time sold by the co-producer, to be part of the arrangement?
1257 MR. TOMIK: That is what our model is. I think the difference here is because, on behalf of the co-producers, they will be selling this advertising locally if we get a program coming out of Edmonton, they will be selling locally but that broadcast will take place on Red Deer. That is just a bit of a nuance for us. They won't sell the programming advertising, they will keep the revenues. APTN is the same.
1258 COMMISSIONER WYLIE: Would be the same?
1259 MR. TOMIK: Yes.
1260 COMMISSIONER WYLIE: So, going back to the $1.5 million in year one to $1.8 million in year seven -- I think I have the right numbers --
1261 MR. TOMIK: Yes.
1262 COMMISSIONER WYLIE: -- of local advertising. This would all be local advertising sold in a normal course in Red Deer?
1263 MR. TOMIK: Correct, Madam Co-Chair.
1264 COMMISSIONER WYLIE: And any other local advertising that will show up will have been sold by APTN and kept by APTN or by the ethnic producers?
1265 MR. TOMIK: That is right.
1266 COMMISSIONER WYLIE: The third language programming, you show already in your schedule 17 some Spanish and Ukrainian 9:00 a.m. Monday to Friday and some also on Sunday, I think Indo-programming. Have you come closer to figuring out where the rest of this ethnic programming will be positioned in your schedule?
1267 MS BELL: No, we have not at this point, Madam.
1268 COMMISSIONER WYLIE: How much of it will be on the weekend? You already have some 8:00 and 9:00 a.m. on Sunday and then some 9:00 a.m. Monday to Friday. You are not at a stage to be able to tell us when it will be on the air?
1269 MS BELL: I believe it is three and a half hours on the weekend.
1270 COMMISSIONER WYLIE: On weekends. Now, the Neighbours program which is twice weekly, half an hour, again it is shown on schedule 17 as a group production with independent producers. Is it going to be produced in part by your other stations? Am I right, that it is shown as a group production?
1271 MS BELL: Just a moment, I will double check. Yes, it is. It is going to be produced in Alberta and, again, it has nothing to do with our stations in any other markets in B.C. So, it will be produced out of CKRD. Our plan is to hire or contract an independent producer to come in and produce the show. There may be collaboration from our other Alberta stations and, in fairness, it is a regional program and we do want it to reflect the larger Alberta market, so those stations might be contributing to the production of this program. But no station outside of the Alberta market is involved in that production.
1272 COMMISSIONER WYLIE: So in this case it is identified as independent producers, so group production would refer to independent producers, not for your adaptation?
1273 MS BELL: That is right.
1274 COMMISSIONER WYLIE: So you will get back to us about how we would clarify what a cross-cultural programming that doesn't fit ethnic programming is?
1275 MS BELL: Perhaps we misunderstood it, it seemed to, in my view, I thought we had clarified it in deficiency in our letter back to the Commission on March 25, on page two it was response to question seven and the Commission itself defined ethnic programming and defined it as including cross-cultural programming provided that it is specifically directed to any culturally or racially distinct group other than one that is aboriginal Canadian or from France or the British Isles.
1276 COMMISSIONER WYLIE: And you said, in that case, we are not changing schedule 18.
1277 MS BELL: We didn't think we had to, but we will if we have to and we will gladly change it if we have to.
1278 COMMISSIONER WYLIE: But do you understand the difference that --
1279 MS BELL: That it is more than one group.
1280 COMMISSIONER WYLIE: In your view, it is Neighbours that we are thinking about, going to fit the definition of ethnic programming in paragraph 10 of our policy which I read to the CHUM panel this afternoon and, if not, do you see a need to specify what cross-cultural means in that case?
1281 MS BELL: I believe it does need the definition.
1282 COMMISSIONER WYLIE: If it does, it does and then it is more ethnic programming, but it is not to be -- I think an example was a cooking show of --
1283 MS BELL: That is not quite what we have in mind here.
1284 COMMISSIONER WYLIE: The Latino -- no?
1285 MS BELL: That is not quite what we have in mind.
1286 COMMISSIONER WYLIE: No, but that is what is in the application?
1287 MS BELL: That is right.
1288 COMMISSIONER WYLIE: And you understand that if that is the case it may not fit?
1289 MS BELL: That is right.
1290 COMMISSIONER WYLIE: I think the example was a restaurateur of some sort.
1291 MS BELL: I think that was a segment where we would -- that the program might include certain segments, but it is certainly not our intention to turn this into a one hour cooking shows or two half hour cooking shows.
1292 COMMISSIONER WYLIE: Well, there is nothing wrong with cooking shows --
1293 MS BELL: No, of course not, but --
1294 COMMISSIONER WYLIE: -- it is just whether it fits the definition. We are regulators, we have to have mechanisms to check back.
1295 In your schedule 17 you have, I believe, seven different languages, correct?
1296 MS BELL: That is correct.
1297 COMMISSIONER WYLIE: Would you be prepared then, considering our discussion, to accept a condition of license that there would be seven different languages served and I think it is six cultural groups?
1298 MS BELL: We did discuss that and, for the time being, I don't see a problem with doing that. The problem is down the road. I guess if we put this into context, the ethnic or visible minority population in Edmonton and in Calgary, when you compare it to other markets it is not that large. The percentage is significant, it is I believe 17.5 per cent in Calgary and 14 per cent in Edmonton. When you look at the numbers you are looking at 166,000 people in Calgary and 137,000 in Edmonton.
1299 So, it is quite conceivable that at some point you are going to see a shift. They are not large groups and you want to be serving the predominant ethnic groups in that community, so I am not sure that we feel comfortable with making a commitment to say there will be seven groups if in a few years it becomes six groups or eight groups. We would just like to have the flexibility.
1300 COMMISSIONER WYLIE: These are your proposals --
1301 MS BELL: Absolutely.
1302 COMMISSIONER WYLIE: -- of the advantages if we were to -- when we look at whether approval of these applications is in the interest of the Alberta viewers. What would be a minimum that you would be prepared to commit to?
1303 MS BELL: I think that a minimum of five ethnic groups would be acceptable to us.
1304 COMMISSIONER WYLIE: And what about languages? Because the Indo-Canadian group has three languages here.
1305 MS BELL: That is correct.
1306 COMMISSIONER WYLIE: So, do you want to look at your schedule 18 and see?
1307 MS BELL: Yes.
1308 COMMISSIONER WYLIE: Right now you have Spanish, Ukrainian, German, Indo-Canadians and Chinese-Canadians as groups and then one, two, three, four, five, six --
1309 MS BELL: We have seven. I would say five and five --
1310 COMMISSIONER WYLIE: Five and five?
1311 MS BELL: -- we would be comfortable with.
1312 COMMISSIONER WYLIE: And in light of our discussion about Neighbours, would you be prepared to commit to 36 hours and 50 minutes of ethnic programming?
1313 MS BELL: If it was counted as part of that? Oh, that is right.
1314 COMMISSIONER WYLIE: How many hours would you be prepared to commit to of ethnic programming and third languages.
1315 MS BELL: Per month, if we include Neighbours, --
1316 COMMISSIONER WYLIE: Well perhaps so that you make sure you don't -- you can wait until later on and tell us.
1317 MS BELL: I do believe it is 36 and a half hours.
1318 COMMISSIONER WYLIE: Thirty-six and a half, I have 36 hours and 50 minutes, but lets check while you are doing this.
1319 MS BELL: That is right.
1320 COMMISSIONER WYLIE: Since it is an initiative that you put forward, we may indeed want to attach conditions of license to make sure that it is something that we can then go back to. So, Neighbours, you are not sure yet whether that will be completely ethnic or simply cross-cultural?
1321 MS BELL: That is correct.
1322 COMMISSIONER WYLIE: So, that is your regional programming, the ethnic and the aboriginal programming. Then the other part of your programming that you put forward is local programming.
1323 MS BELL: May I just --?
1324 COMMISSIONER WYLIE: Yes.
1325 MS BELL: I am very sorry to interrupt, but there is another regional program, the program Go West. It is not ethnic or it is not --
1326 COMMISSIONER WYLIE: -- it out and put it under local, but lets go.
--- Laughter / Rires
1327 It is described under regional?
1328 MS BELL: Yes.
1329 COMMISSIONER WYLIE: So lets then switch it to regional. It is Saturday and Sunday at 6:30, a half hour, right?
1330 MS BELL: That is correct.
1331 COMMISSIONER WYLIE: And it is described at page 8 of your supplementary brief and it is also described as a group production in schedule 17 and MS BELLCHEK is identified as the source.
1332 MS BELL: That is wrong. It is the same situation. I don't know how -- well, I do know how this happened and it was just simply in our haste to get this file done and things were perhaps not double checked in terms of the detail and we know that the devil is in the detail, but none of those productions are being --
1333 COMMISSIONER WYLIE: None of which I find.
1334 MS BELL: That's right. We found them also in the last few days when we went back and checked, none of those programs are supposed to be produced out of --
1335 COMMISSIONER WYLIE: Okay. Now, you won't be surprised if we say that what interested the staff and myself as well is that you have on CHEK-TV a program called Go Magazine, it has nothing to do with that program?
1336 MS BELL: Not at all.
1337 COMMISSIONER WYLIE: But it may have to do with the fact that a mistake was made?
1338 MS BELL: Exactly.
1339 COMMISSIONER WYLIE: So, Go West will be produced in Red Deer by the Red Deer station and it will have nothing do to with the Go Magazine produced in B.C.?
1340 MS BELL: That is correct, nothing at all. And maybe I am advancing or you can let me know, I do have the number of original hours for each of these if you would like them.
1341 COMMISSIONER WYLIE: Yes, now that is good that you reminded me. On schedule 17 you identify 88 original episodes of Go West per year?
1342 MS BELL: That is correct.
1343 COMMISSIONER WYLIE: And you are prepared to accepted a condition of license that you will produce as many of those?
1344 MS BELL: Yes, we will.
1345 COMMISSIONER WYLIE: Now, if we go back to Neighbours, it was also -- a number of episodes were identified for that as well.
1346 MS BELL: Seventy-eight.
1347 COMMISSIONER WYLIE: Seventy-eight, would you be prepared to--
1348 MS BELL: Yes, we would.
1349 COMMISSIONER WYLIE: -- commit to doing seventy-eight original and it may be ethnic or it may be what seems to be a new category where crafting is called cross-cultural programming. So that you want me to place under regional programming?
1350 MS BELL: As well as First Nations Report, which is also 39 original 30 minute episodes. So, the total for the three programs that are regional is 102.5 original hours a year.
1351 COMMISSIONER WYLIE: Now, what duplication would there be between the CITV-TV-1 programming and the CKRD programming, what duplication would there be there with these regional programs?
1352 MS BELL: On the regional programming or local? The duplication is an agricultural program that is produced for CITV TV-1, which is called "AG 21". It is produced out of Red Deer. We also air it as a repeat on the Red Deer station, as well as on CITV TV-1.
1353 COMMISSIONER WYLIE: Then when we go to local, there is the agriculture -- do you refer to it as "AG 21"?
1354 MS BELL: Yes. Agriculture in the 21st century is what it is supposed to be.
1355 COMMISSIONER WYLIE: So if I say "AG 21", that's fine.
1356 MS BELL: That's right.
1357 COMMISSIONER WYLIE: So there is the news and "AG 21" which is strictly local.
1358 MS BELL: Yes.
1359 COMMISSIONER WYLIE: In today's presentation -- let's go back.
1360 The last time CKRD was renewed you committed to do 9 hours and 45 minutes of local, of which 6 hours would be news. Correct?
1361 MS BELL: That is correct.
1362 COMMISSIONER WYLIE: I gather from your application, at page 6 of your supplementary brief, and in today's presentation, that that is what you will maintain.
1363 MS BELL: Nine hours and 45 minutes of local programming per week, yes.
1364 COMMISSIONER WYLIE: Of which six hours will be news.
1365 MS BELL: That was the commitment that was part of the WIC decision. When we went to group licensing, the commitment became nine hours and 45 minutes of local programming per week. There was no specific commitment to news or non news.
1366 COMMISSIONER WYLIE: Is that what you are doing currently, six hours of news?
1367 What is the other local programming?
1368 MS BELL: It is seven and a half hours of news right now.
1369 COMMISSIONER WYLIE: Is it simply 9:45 minus "AG 21"?
1370 MS BELL: No. There is actually "Ask the Professional", which is a half-hour local program; "Sports Zone"; and we also have news updates.
1371 COMMISSIONER WYLIE: Will those disappear?
1372 MS BELL: No. We don't count "AG 21" as part of the Red Deer commitment. We broadcast it on that station, but it is produced for CITV TV-1. We don't want to be double counting. We count it as a local program, but we don't count it towards that nine hours and 45 minute commitment.
1373 COMMISSIONER WYLIE: So indeed "AG 21", which is 11:30 to 12:00 on CITV-1 and 12:30 on CKRD, that is repeats.
1374 MS BELL: That program is repeated from what is on CITV-1.
1375 COMMISSIONER WYLIE: That will continue. It is nothing new.
1376 MS BELL: That is correct. We are going to continue. Actually, what we did say is that we would bolster our resources. We have taken all this into account in our programming costs.
1377 COMMISSIONER WYLIE: They will be identical programs on both stations.
1378 MS BELL: That is correct. So we only count it once.
1379 COMMISSIONER WYLIE: So "AG 21" then disappears as a new local initiative. You say it is going to be enriched.
1380 MS BELL: It is going to be enriched, absolutely.
1381 COMMISSIONER WYLIE: But it will still remain a half hour nevertheless.
1382 MS BELL: It remains a local production.
1383 COMMISSIONER WYLIE: Which will remain identical on CITV-1. And that is an insert on CITV-1.
1384 MS BELL: That is correct.
1385 COMMISSIONER WYLIE: It is not seen on CITV and CICT.
1386 MS BELL: I do not believe that it is. That is correct.
1387 COMMISSIONER WYLIE: Tell me again what, other than the news, will be local programming on CKRD?
1388 MS BELL: If we break down our local programming commitment, we have actually five hours at our supper time newscast. Our supper time newscast is actually one hour; it is not an hour and a half. That is an error in our block schedule. So that is five hours a week.
1389 Our noon newscast is 30 minutes per day. So that is 2.5 hours a week. Our weekend newscast is half an hour; so that is .5.
1390 Then we have another local program called "Ask the Professional", which is 30 minutes; "Sports Zone", which is also 30 minutes. We have news updates, which vary between 45 minutes and an hour per week.
1391 We are also repeating a local program called "Makin' 8", which is in repeat right now and is not original production. So we are not counting it towards our nine hours and 45 minutes commitment.
1392 Commissioner Wylie, I realize that it may not be exactly what is on the sample schedule that you have. So in anticipation of this, we are prepared today to give you a revised schedule to make sure that it reflects what we have just discussed. That is the local programming commitment for the station.
1393 COMMISSIONER WYLIE: Will the revised schedule show any local news or any news on the weekend?
1394 MS BELL: Yes, it will.
1395 COMMISSIONER WYLIE: When?
1396 MS BELL: I will ask Don Gaudet to answer that question.
1397 COMMISSIONER WYLIE: Am I right that the schedule now doesn't show any local news on the weekend?
1398 MS BELL: That is correct.
1399 MR. GAUDET: We are looking at a newscast on Sundays at 11:00 p.m. on the revised schedule that you will receive.
1400 COMMISSIONER WYLIE: That we will receive, yes. The one I have doesn't show any news on the weekend.
1401 MS BELL: It is the same number of hours, and we are over-performing. It is just where they are that is slightly different.
1402 COMMISSIONER WYLIE: We end up with nine hours and 45 minutes.
1403 With this affiliation in your plan, what will be the local component on CITV-1, which I believe is two and a half hours now?
1404 MS BELL: It remains "Agriculture in the 21st Century". It is produced out of CKRD, and it is produced for CITV-1. That is a local program, and that is how we are fulfilling that two and a half hours right now, which is why we are not counting it as a local program to meet our nine hours and 45 minutes on CKRD.
1405 COMMISSIONER WYLIE: Now we have ascertained the nine hours and 45 minutes of local. Considering that I had moved the "Go West" program to local and you say it is in regional, how much regional?
1406 MS BELL: How much regional? It is two and a half hours per week, and it is 102.5 hours.
1407 COMMISSIONER WYLIE: No. I mean on CKRD.
1408 MS BELL: On CKRD?
1409 COMMISSIONER WYLIE: From what I understand, all the ethnic and aboriginal programming is regional programming that will be on CKRD and seen on the rebroadcasters as well. How many hours is that?
1410 MS BELL: Actually, the ethnic programming, some of it will be co-produced regionally. But I don't know if you would count all of it as regional programming.
1411 COMMISSIONER WYLIE: Isn't that how you have identified it in your supplementary brief?
1412 MS BELL: We said that it would be of interest to Alberta residents but not necessarily that it would all be --
1413 COMMISSIONER WYLIE: So what do we add to the 9:45?
1414 MS BELL: We are adding two and a half hours a week of regional programming, plus I would assume about half of the ethic programming hours would be produced or co-produced in the region, of the ethnic block, which is the eight and a half hours.
1415 COMMISSIONER WYLIE: Where would the other half be produced?
1416 MS BELL: As we said, some of it would be acquired or co-produced with CFMT or other multicultural stations that may not -- there isn't a multicultural station in Alberta. That is the problem.
1417 COMMISSIONER WYLIE: I am trying to ascertain, before we leave programming, what are the initiatives that would result from approval?
1418 You would remain with nine hours and 45 minutes of local programming, which would be news and "Go West"?
1419 MS BELL: No. "Go West" is a regional program.
1420 COMMISSIONER WYLIE: Is regional.
1421 MS BELL: That's right.
1422 COMMISSIONER WYLIE: So news and the other programming that you have, nine hours and 45 minutes.
1423 MS BELL: That's correct.
1424 COMMISSIONER WYLIE: Of which some hours will be news. Taking your five-point plan compared to CHUM's ten-point plan, what are the regional hours added weekly?
1425 MS BELL: Okay. It is 9:45 of local programming, which doesn't count the "Agriculture 21". That is a separate commitment. It is two and a half hours of regional programming, including "Go West", "Neighbours" and the aboriginal program.
1426 It is eight and a half hours of ethnic programming in addition to that, which we estimate about half of it would be produced within Alberta. I don't think we could commit to eight and a half hours regionally produced. I don't think there are that many --
1427 COMMISSIONER WYLIE: And some may be acquired, then.
1428 MS BELL: That is correct.
1429 COMMISSIONER WYLIE: That would nevertheless have relevance.
1430 MS BELL: That is correct.
1431 COMMISSIONER WYLIE: Is there anything else about programming that I haven't touched on that you would like to add?
1432 MS BELL: No.
1433 COMMISSIONER WYLIE: Let's look at your business plan and the impact on the market.
1434 At 5.2 of your application you have projected audience share of 4.6 per cent from year one right through to year seven for the 2-plus demographic.
1435 Is that correct?
1436 MS BELL: I am going to ask Mr. Tomik to walk us through projections and impacts in those questions.
1437 COMMISSIONER WYLIE: A 4.6 share throughout the seven years and your application at 5.2. Is that correct?
1438 MR. TOMIK: Yes, it is correct, Vice-Chair.
1439 COMMISSIONER WYLIE: But you target mainly the 18-to-49.
1440 MR. TOMIK: That is correct.
1441 COMMISSIONER WYLIE: Do your current stations CITV and CICT target the same audience; and if not, what audience do they target?
1442 MR. TOMIK: They are targeting the same type of audience.
1443 COMMISSIONER WYLIE: The same audience.
1444 If the Commission were to approve these applications, would there be a tendency to want to change the target audience on CITV and CICT?
1445 MR. TOMIK: Actually, I have made a bit of mistake. The 18-to-49 skew are for the Global stations. If the CH schedules are approved for CKRD, it will be more of a 25-to-54 skew. Excuse me.
1446 COMMISSIONER WYLIE: So the skew will be --
1447 MR. TOMIK: Slightly older than the Global one.
1448 COMMISSIONER WYLIE: Slightly older.
1449 MR. TOMIK: Yes.
1450 COMMISSIONER WYLIE: So you don't perceive any need to re-adjust? You would not see any perceived need to re-adjust your programming on CITV and CICT as a result of CKRD being rebroadcast in Edmonton and Calgary?
1451 MR. TOMIK: There is no reason to adjust those schedules, no.
1452 COMMISSIONER WYLIE: How will the presence of the CH programming -- I guess that is what we will have on CKRD other than what Ms Bell and I have been discussing. It will be the CH schedule.
1453 MR. TOMIK: That is correct.
1454 COMMISSIONER WYLIE: To what extent is that going to affect your other two stations?
1455 MR. TOMIK: There are really three effects. The first one is how it will affect the audience of our incumbent stations in Edmonton and Calgary and the other incumbent stations. The second is the revenue effect.
1456 We can go through those effects one at a time in some detail, if you choose, or I can just give you numbers.
1457 COMMISSIONER WYLIE: You have given some numbers, and maybe you want to go to that. Your source of revenues, in Schedule 14 you predict that 75 per cent will come from off-air TV and 25 per cent from other media.
1458 Then when asked in deficiency question 15 to divide the 75 per cent, you said 52 per cent Global and CTV and 23 per cent between Craig and the CBC.
1459 Maybe, Mr. Tomik, what we need is for you to tell us how the 52 per cent of the 75 per cent will be cannibalized from Global and CTV and what proportion. That will also answer the question as to possibly an effect on revenues.
1460 MR. TOMIK: Sure. First of all, we are projecting audience shares in the Edmonton and Calgary market for CKRD, with the transmitters, to be about 1.7 per cent of viewing in both markets. It will be about that, which is kind of a small amount.
1461 COMMISSIONER WYLIE: Let's backtrack.
1462 What does the 4.6 per cent represent? Is it CKRD in Red Deer only?
1463 MR. TOMIK: David, would you answer.
1464 MR. RATHAN: It is the share of viewing amongst local Canadian stations in the market.
1465 COMMISSIONER WYLIE: What is the market in this case, seeing that you will have two rebroadcasters --
1466 MR. RATHAN: It is the combined market of Calgary, Edmonton and Red Deer.
1467 COMMISSIONER WYLIE: 4.6 per cent of the share in those three markets?
1468 MR. RATHAN: Right, of the local Canadian stations in those markets.
1469 COMMISSIONER WYLIE: Tell me what that will be if I look at Edmonton alone or Calgary alone. What will be the share?
1470 MR. TOMIK: I believe, Vice-Chair, we are predicting that about 5 per cent of the local market viewing in Edmonton, 4.6 per cent, would be to CKRD, of the stations in that market.
1471 COMMISSIONER WYLIE: Would it be fair to say then that if you tried to look at the impact on the market, you predict a 4.6 share in Edmonton for CKRD?
1472 MR. TOMIK: In terms of audience, yes.
1473 COMMISSIONER WYLIE: And a 4.6 share in Calgary.
1474 MR. TOMIK: About that, yes.
1475 COMMISSIONER WYLIE: And in Red Deer.
1476 MR. TOMIK: In Red Deer we are predicting about a 3 per cent viewing share of all viewing. Of course, there is going to be a split now with the CBC signal emanating out of Red Deer.
1477 David, what is our share going to be in the Red Deer market?
1478 MR. RATHAN: 3 per cent of total viewing.
1479 MR. TOMIK: But of that market with the two signals, CBC and RD in the market.
1480 MR. RATHAN: I haven't figured out what the CBC shows.
1481 MR. TOMIK: I would suggest, Madam Wylie, that it would probably be about 40 per cent of viewing of the home stations from Red Deer, because there will be two at that point, CKRD plus the new CBC service.
1482 COMMISSIONER WYLIE: So now let's walk through what the Chairman did this morning about how you translate these shares into revenues. More particularly of the 52 per cent of the 75 per cent, which Schedule 14 predicts will be taken from existing TV broadcasters, how will it be divided between Global and CTV, the 52 per cent?
1483 As you know, one of the issues at this hearing is the impact on the market and the issue of whether or not the incumbents can continue to perform and absorb either your proposal or CHUM's, or both.
1484 What is it that you are predicting will be revenues and audience share and how you translate it into revenues from existing stations and how divided between what you identified was 52 per cent of the 75 per cent between Global and CTV?
1485 MR. TOMIK: We will start with the revenues. There are really two revenue sources for Red Deer. One is the local revenue base, which we predict to be about the same as it is today: $1.5 million going forward and growing slightly over the licence period.
1486 Where the increase in revenues is going to come for CKRD and Red Deer is through the national spot selective revenues that it is going to have access to in both Edmonton and Calgary.
1487 Today the national revenues for CKRD are about $2 million. We are projecting in year one of this approved application that that $2 million will become $5.8 million. So the lift for the station in terms of national revenue is about $3.8 million.
1488 That is route No. 1.
1489 If you take that and split it equally between the Edmonton market and the Calgary market, that means about $1.9 million of national selective will flow from each market through Red Deer.
1490 Now I will break that 1.9 down into real dollars, because 42 per cent of 58 per cent of 63 per cent is a little confusing.
1491 In broad strokes and very close, we look at about a $400,000 revenue impact to our own station Global in either Edmonton or Calgary. We look at about an equitable impact to the CTV affiliates there of about $400,000. Your math should work out to about that.
1492 We look to about a $200,000 impact for the CBC affiliates in each market; about a $200,000 impact to the Craig broadcasters in each market.
1493 We believe radio is a little bit tough to tell, but about $250,000 to radio in each one of the markets.
1494 That leaves a balance of about $450,000 per market to achieve the $1.9 million total. That we believe is going to come from newspapers, outdoor magazines, all kinds of other advertising vehicles that are being used in those markets.
1495 COMMISSIONER WYLIE: Did you tell me how the 52 per cent would be divided and I missed it? Was it half and half?
1496 MR. TOMIK: Half and half, yes. So 52 per cent of the 75 per cent of $1.9 million would give you about $400,000 for Global impact per market, and about equitable $400,000 for the CTV affiliate.
1497 COMMISSIONER WYLIE: And that depends, of course, on the accuracy of your share predictions.
1498 MR. TOMIK: Absolutely.
1499 COMMISSIONER WYLIE: And the accuracy of the translation of your share predictions into revenue.
1500 MR. TOMIK: Yes.
1501 COMMISSIONER WYLIE: How did you translate that into dollars?
1502 COMMISSIONER WYLIE: How did you translate that into dollars?
1503 MR. TOMIK: We would be happy to explain that to you, and David Rathan will give you the gruesome details, but just in general we are predicting a viewing share for CKRD in Red Deer of 1.7 per cent of all viewing in both Calgary and in Edmonton.
1504 If you took a look in general at the television market in Alberta, it's about a $300 million industry in Alberta overall. So just in great numbers, if you took 1.7 per cent of the $300 million that gives you about $8 million, and we are predicting a first year for CKRD of $7.4. So that is an overall 30,000-foot double check.
1505 David, can you take Vice-Chair Wylie through how you constructed the schedule and estimated the ratings?
1506 MR. RATHAN: Gladly.
1507 Madam Vice-Chair, I am going to use a couple of terms you heard this morning. It sounds like everybody is using the same approach to audience projections.
1508 We too used a bottom-up calculation and then confirmed from the top down. Here is how we did it. Our bottom-up audience projections, I have taken the program schedule. We do audience projections for each program in each of the markets of Calgary, Edmonton and Red Deer. We do this for the whole program and we come up with the total schedule ratings in each market and an average rating throughout the day for each market.
1509 Then we confirm it from the top down. The way we did this is we looked at the CH schedule in Ontario and said, "Okay. What are the differences between Ontario and Red Deer, and what were the numbers once we make that adjustments for the different conditions in the two markets?".
1510 We looked at the results of the top-down approach and they were exactly what we came up working from the bottom up. So then we realized we had a good set of projections in each of the three markets.
1511 From that, we looked at the market cost per rating in each of the three markets. We applied to the amount of ratings available in each market to come up with the potential weekly revenue. From that potential weekly revenue, we worked out sell out factors, agency discounts, et cetera, to come up with a weekly projected revenue.
1512 COMMISSIONER WYLIE: Your projections right now show that over seven years that will translate into $25 million. Is that correct?
1513 MR. TOMIK: That's correct.
1514 COMMISSIONER WYLIE: And on the basis of that you want to argue, of course, that the impacts on the market will not be severe.
1515 Your projections for revenues with the CHCH schedule in both Calgary and Edmonton and Red Deer are way lower than CHUM's predictions for revenues. How do you explain that?
1516 MR. TOMIK: I think there is a number of rationales and we would really like to take you through some of ours to show you that our revenue projections are pretty accurate.
1517 I think the first and foremost thing is we operate in all three of these markets. We are the ones operating in Red Deer, and via Global we operate in Calgary and in Edmonton.
1518 I think in terms of CHUM's rationale they have missed some of the specific rationales around why a station doesn't perform as well on an away market as it does in its own market in terms of audience ratings and shares. So that is number one.
1519 Number two, Mr. Rathan will take you through three or four different reasons for differing signal strengths and market factors that make our audience to be substantially lower than CHUM would predict. Again, we are quite confident.
1521 MR. RATHAN: Thank you.
1522 I would like to take you through the latest BBM numbers for CHCH in Hamilton. Hamilton is the local market that CH operates in. Its share in Hamilton on the spring book of total viewing was 12.4 per cent. But if you look at CH's schedule in Toronto, which is down the road, its share drops significantly by 60 per cent all the way down to 2.4 per cent.
1523 So we are looking at 12.4 per cent in the whole market, down to 4.8 per cent in Toronto. But let's look further down. Let's look in Ottawa anglo. The same schedule in Ottawa drops significantly further. It's 80 per cent downwards of Hamilton, all the way down to 2.4 per cent. So shares are not transportable from one market to the other market.
1524 Our projections in Calgary and Edmonton are 40 per cent below our projected shares in Red Deer, and based on what we have just told you in Hamilton, we think that's a very reasonable number.
1525 COMMISSIONER WYLIE: A 4.6 per cent share of the Hamilton schedule which garners a 12 point something share you say?
1526 MR. RATHAN: It's 12.4 per cent share of total viewing in Hamilton.
1527 COMMISSIONER WYLIE: In Hamilton, and you are predicting 4.6 share of the same schedule augmented by regionally meaningful programming would garner only 4.6 per cent in Calgary and Edmonton?
1528 MR. TOMIK: I think, Madam Wylie, it's not quite that. What we are talking about, or David is talking about, is in its own home market, CH in Hamilton does a 12.4 per cent share of all viewing. It drops by 50 per cent just moving 50 miles away to Toronto.
1529 In the case of Red Deer --
1530 COMMISSIONER WYLIE: But you would have to convince me that you can compare what is available at the competition in Toronto to what is available here once you transport the CHCH schedule with its appealing programming. So the comparison is a little bit difficult, isn't it?
1531 MR. TOMIK: Well, it would be and that is why I don't want to compare share of --
1532 COMMISSIONER WYLIE: I am now trying to compare -- how this started was it's startling how low your revenue projections are for the CKRD schedule in Edmonton and Calgary compared to the CHUM schedule. Of course, when we look at the end of the day at the impact on the market as one of the issues, one wants to understand whether the revenue projections are too conservative and are not credible. Then, in fact, the money made will be much higher and, therefore, it affects the impact on the market of approval.
1533 MR. TOMIK: I think there is really a couple --
1534 COMMISSIONER WYLIE: And I have a bit of a problem understanding how the CHCH schedule with all its possibilities of simulcast that you put forward as one of the advantages won't achieve more than 12.6 per cent right through the seven years and, therefore, won't achieve more revenues than is projected.
1535 MR. TOMIK: I think there is really some significant differences in the rationale between what CHUM has projected for RD and what we do. First and foremost, this is not a local market station.
1536 If we came before you in the application for a news service for Edmonton and Calgary with full-up stations in each market that had local programming, that were promoted heavily locally in those two markets, likely as not that we would come before you with the estimates that CHUM have given you.
1537 You have to remember that the RD programming is going to be by and large very local and intensely towards Central Alberta. It's not going to hold the same appeal in Calgary --
1538 COMMISSIONER WYLIE: Mr. Tomik, we have just been through the programming and most of it will be regional.
1539 MR. TOMIK: In terms of the ethnic programming, correct.
1540 COMMISSIONER WYLIE: Well, even I had put "Go West" in local and Ms Bell transferred it back to regional. So there is nine hours and 45 minutes left. Is that intensely local? You are going to picture programming to the regions, including Calgary and Edmonton, won't you? This is what I have heard up to now. I have even been corrected that I had given you more local programming than regional.
1541 So it will be meaningful, presumably, to the Edmonton and the Calgary market in the same way that programming of CH, other than the popular foreign programming, is meaningful to Hamilton and there I find myself with a 12.5 share in Hamilton and a 4.6 share in Calgary and in Edmonton. I find that difficult because eventually it translates into revenues and impacts on the market.
1542 MR. TOMIK: I think it's two things, and you are right, but we have to understand firstly from a local point of view, the local news service really -- as many broadcasters all believe and put forward to you -- is the heart and soul of a station. But when the station is running local news that is intently Red Deer in the Calgary market and in the Edmonton market, it looses some of its audience appeal.
1543 The second thing is both transmitters for these stations are UHF transmitters. I believe in the Calgary market there is only about 61 per cent cable penetration underneath our signal pattern and in Edmonton I believe it's even lower. I think we have 47 per cent of the Edmonton audience, Edmonton extended market audience under signal here and that is another reason.
1544 I think also, just in terms of this programming, a lot of the programming, the acquired programming that we are showing -- and in Alberta prime time does not run 7:00 to 11:00; it runs 8:00 to midnight -- a lot of that programming is running after eleven o'clock at night. So there is some discounting factors that are taking place here for the programming.
1545 MS BELL: I would add also, the signal is not on DTH and we would love to believe that it's easy to get carriage on DTH, but I sat in on negotiations through the CD, DTH Committee, for over a year and I can tell you it is not that easy to get your signal up on DTH. We are still waiting for Montreal and a number of other stations that are not up, and it does have an impact, and as you heard this morning, it can have a significant impact on revenues.
1546 COMMISSIONER WYLIE: I wouldn't want to misquote Mr. Switzer, but I thought I understood him to say that it's obvious that the DTH BDUs would find it in their interest to uplink stations that are meaningful to the markets. So you are not as optimistic about being carried on DTH. You see that as a negative.
1547 MS BELL: I think that as long as you have two DTH providers in this country, I think there are going to be capacity constraints, and I don't see anybody rushing to carry small market stations or add them to the list. I think Craig is still waiting for carriage in Calgary. I believe they are still not up, still waiting.
1548 So is Red Deer going to jump the queue? I really don't think so.
1549 COMMISSIONER WYLIE: But what about Edmonton and Calgary?
1550 MS BELL: Our Edmonton and Calgary stations are already up. We are --
1551 COMMISSIONER WYLIE: No, no, no. I mean --
1552 MS BELL: You mean if --
1553 COMMISSIONER WYLIE: CKRD will also be Edmonton and Calgary.
1554 MS BELL: Madam Wylie, I wish we could believe that. I mean, we did not throw that into our projections because, quite frankly, we are not terribly optimistic that we are going to get carriage and I think if you ask a lot of small market stations, they are going to tell you the same thing. A lot of them are not up and they have no hope of getting up in the short term.
1555 COMMISSIONER WYLIE: Mr. Tomik, now that we talk about the CKRD being more regional than local, you go back to the local component of the news. In your supplementary brief, at page 6, you mention 10 local news items each day on CKRD. Is that what your commitment is?
1556 MS BELL: Actually I think that came from something that we had filed during group licensing. I don't think that is the commitment going forward. I think what we were saying is that it was intensely local. In fact, our local newscast in Red Deer is 70 per cent local local and then you add about 10 per cent regional items.
1557 It is going to remain a very intensely local station. I think you could see from the video, people in that community are attached to their stations. It has been there for years and they want us to remain true to the local flavour of the station.
1558 At the same time, frankly what we are asking is to have guaranteed access to Calgary and Edmonton which is something we have at this time as a distant signal, but we have no guarantee that we can continue to be carried in those markets, and if we are not carried in those markets, then the station's financial viability just doesn't make sense.
1559 So we have added some regional programming which we believe is of relevance and entirely appropriate for us to put on the table given that we are going to be drawing revenues, national revenues, from those two markets.
1560 We think that is appropriate. We have not backed away from our local commitments. The newscast of CKRD is going to continue to remain intensively local. The other regional programming is an enhancement to the station, and the CH schedule will be attractive to everyone in the marketplace.
1561 COMMISSIONER WYLIE: To go back then to viewing share and the generation of revenues, you can buy your 4.6 per cent with $25 million taken from the market over seven years.
1562 MR. TOMIK: Yes, ma'am. Just to further discuss the regional programming, which we had a discussion about. If you recall, we have already promised that that revenue would flow to the independent producer who is producing that programming.
1563 I think also we can't neglect the DTH and the satellite penetration in the Alberta market. Twenty-five per cent of viewing in all of Alberta is done on DTH and Red Deer is not available and doesn't look like it will be. In the Red Deer market DTH penetration of viewing is 44 per cent. It is huge. So it's really a restrictive market.
1564 As far as availability of DTH to our signals, I believe -- and correct me if I am wrong -- we don't even have Montreal up yet. So if we can't get Montreal up, how are we going to get Red Deer up or Kelowna or other important markets? This is a big issue for a small market, and not only --
1565 COMMISSIONER WYLIE: Don't be too pessimistic because it may be a self-fulfilling prophecy --
1566 MR. TOMIK: If we can keep the playing field --
1567 COMMISSIONER WYLIE: -- to say that there is no way you are going to get up there. You may not now.
1568 MR. TOMIK: We are trying our best.
--- Laughter / Rires
1569 COMMISSIONER WYLIE: I would put a more positive cast on it if I were you.
1570 Now, do I understand you correctly to say that one of the reasons why the share in Edmonton and Calgary will be 4.6 and that the revenues will be much lower than what CHUM is projecting is because it will be a CKRD station? Does that occur more when you have a local station into a regional market, and does it occur the other way?
1571 MR. TOMIK: I think Mr. Rathan made some very interesting points. The whole secret of the CH brand that we put forth as a notion three or four years ago with WIC has been about intensely local revitalizing these stations.
1572 We see what happens to the audiences when we do that. They are no longer as watchable in other markets. We see that 60 per cent drop from Hamilton to Toronto and that's for the whole schedule, Vice-Chair Wylie.
1573 We have factored in a 40 per cent drop from Red Deer to Edmonton and Calgary. So we are very confident in these projections. We sell a lot of TV time in this country. We are pretty good at this.
1574 COMMISSIONER WYLIE: What is your local component in Hamilton? I seem to recall something in the 30 hours.
1575 MS BELL: I think it's 36.5, if I remember correctly.
1576 COMMISSIONER WYLIE: That's intensely local.
1577 MS BELL: Not in prime time.
1578 COMMISSIONER WYLIE: But nevertheless.
1579 Interestingly, I can't put on the record the exact amount because it's confidential, but if I look at your '02 fiscal, CITV-1 revenues in Red Deer, compared to the expenses on 2.5 hours of local programming, it's very high. Why is that on an Edmonton station? Because it's the other way around, because it's a regional station into a local market? Because you filed separate returns for CITV-1, and you know in '02 what your revenues were compared to a sum that is very small for expenses for 2.5 hours.
1580 Why is it that in that case you are able to sell CITV-1 in Red Deer to that extent and you are so pessimistic about selling the new CKRD to Edmonton and Calgary?
1581 MS BELL: If we could have a moment.
1582 MR. TOMIK: Vice-Chair Wylie, we don't actually -- ITV-1 in Red Deer is a rebroadcaster of ITV in Edmonton.
1583 COMMISSIONER WYLIE: Well, not really. You filed different returns because it has programming inserted in it.
1584 MR. TOMIK: Yes, we do.
1585 COMMISSIONER WYLIE: The Commission doesn't call a rebroadcasted. That's a station.
1586 MR. TOMIK: But what we --
1587 COMMISSIONER WYLIE: And you filed different returns.
1588 MR. TOMIK: Yes.
1589 COMMISSIONER WYLIE: The revenues that I see on those returns, are they attributable only to Red Deer?
1590 MR. TOMIK: They are an apportioned amount of the total revenue and that is why --
1591 COMMISSIONER WYLIE: They are an allocation of revenues?
1592 MR. TOMIK: Correct.
1593 COMMISSIONER WYLIE: From Edmonton.
1594 MR. TOMIK: Correct.
1595 COMMISSIONER WYLIE: What is the allocation that I have seen in your projections for CKRD?
1596 MR. TOMIK: Chris McGinley will answer this question.
1597 COMMISSIONER WYLIE: For example, you have the CHCH schedule. How did you allocate the cost of that programming and how did you allocate the revenues to CITV-1? I am trying to understand your argument that, "No, it's not conservative because it's not going to be very appealing and we are not going to be able to generate a lot of money out of Calgary and Edmonton". So I am looking at other areas where you actually have stations to see whether that is borne out, or whether maybe we have to look at how revenues and expenses are allocated as between the station, and not rebroadcaster in this case because there is some programming.
1598 Then explain to me how you will allocate the cost of CHCH because eventually your argument is: "We can't possibly do CKRB without you allowing us to have rebroad in Edmonton and Calgary".
1599 So I am trying to understand whether that is the case, if I were to look at the whole picture.
1600 MS BELL: I will ask Chris McGinley to start with the first part of your question, and then Greg Treffry can explain how we allocate program costs.
1601 COMMISSIONER WYLIE: And then revenues. CITV-1, where do these revenues come from?
1602 MS McGINLEY: The revenues from CITV-1 are a percentage of the revenues from the Edmonton station which equates to approximately 12 per cent.
1603 COMMISSIONER WYLIE: So when you file annual returns for Edmonton, they are 12 per cent lower.
1604 MS McGINLEY: Correct.
1605 COMMISSIONER WYLIE: What does this represent in your projections? How did you arrive at this and file this return for CITV-1 with 2.5 hours of local programming?
1606 MS McGINLEY: The 12 per cent is arrived at as a percentage of the population included in the extended area.
1607 COMMISSIONER WYLIE: Just the population. In your projections for CKRD, what did you attribute to the rebroad in Edmonton and Calgary?
1608 MS BELL: I will ask Greg Treffry to answer that.
1609 MR. TREFFRY: In preparing the projections for CKRD in the application, we allocate programming based on population. So in the CH format --
1610 COMMISSIONER WYLIE: No. I was looking at the revenues at the moment.
1611 MS McGINLEY: Sorry.
1612 COMMISSIONER WYLIE: So in your projections for CKRD together -- I know that confidentially you have filed for what would happen if we didn't allow Calgary, if we didn't allow Edmonton. But your 4.1, 4.2 filings are for the whole thing. Similarly to CITV-1, you have made a calculation as to what is attributable to Calgary and Edmonton. How did you do that?
1613 MR. TOMIK: I think there are a couple of dynamics here, and the first thing I want to say about the revenues is in the scheme of trying to calculate television time, this is a very small amount.
1614 The first that I want to talk about, and we talked a little bit about Edmonton and Calgary, but I want to talk about should we get approval what happens to CKRD in the central Alberta market, in Red Deer itself.
1615 There are a couple of things that are happening. Firstly, as you well know, our application says we are going to turn over the transmission grid as it exists today --
1616 COMMISSIONER WYLIE: Mr. Tomik, eventually we will talk about licensing scenarios, but let's not leave what we are talking about now which is not what would happen. We are still looking at your business plan and its impact on the market. I am trying to understand what it is that we will be taken out of the Calgary and Edmonton markets and how you attributed that.
1617 You have explained to me how you do it for CITV compared to CITV-1. How did you do it when you made your projections for CKRD? Obviously, you have told us, I think, that if we didn't give you all three there would be a 77 per cent reduction, if you had Red Deer only, if you had Red Deer and Calgary, a 58 per cent reduction, Red Deer and Edmonton, 56 per cent. So you have obviously attributed a value for the Calgary and the Edmonton markets. What is it and how did you arrive at it?
1618 MR. TOMIK: As Mr. Rathan stated earlier, we looked at the schedule and its performance in each one of the markets, in Edmonton, in Red Deer and in Calgary. We went through and looked at audience estimates for each one of the programs that we would be selling in those markets. We developed audience estimates. To that we applied a rating point cost, a rating point cost for the Edmonton market to the Edmonton schedule, to Calgary for the Calgary schedule, to come up really what a weekly potential is for that schedule. It's discounted by things like agency commissions or long-term discounts, sell it factors and really that is how the revenues from Edmonton that we talked about earlier, and from Calgary that we talked about earlier, were developed.
1619 COMMISSIONER WYLIE: You did file in confidence projections based on not having Calgary or not having Edmonton. What is the simple way of deducting from the 7.4 million what would happen if you didn't have either of these markets? Can I take the 7.4 million and deduct the revenue calculation? Do I take the Red Deer only, the Red Deer and Edmonton and subtract? What is attributable to Calgary and Edmonton in the 7.4 million?
1620 MR. TOMIK: I think the easiest way --
1621 COMMISSIONER WYLIE: How do I arrive at that?
1622 MR. TOMIK: The easiest way to calculate this is you should look at the $1.9 million national impact for each one of the Edmonton and Calgary markets because that is the revenue we are looking at. So that is level No. 1.
1623 Level No. 2 comes into the central Red Deer market and, as I was trying to explain earlier, when we put a new competitor into that market for sales and for audience, the CBC. Part No. 1.
1624 Part No. 2, we leave our grid alone and go to a new channel allocation, a new set of transmitters, and a loss of audience there. We have now opened up the central Alberta market to sales and audience garnering by the CBC. So there is impact within the body of the Red Deer market by the very fact that we have given our grid to CBC.
1625 The rebroad that we have today in Coronation reaches about 12 per cent of the total RD audience today. We are not going to replace that transmitter. So there is a 12 per cent drop right there.
1626 In terms of regional sales by CBC who do regional network and do national network, they are going to be delivering another 120 some odd hours of programming into that market to that market size.
1627 So there really are three different dynamics to how the loss is racked up for RDTV if all three of these transmitters aren't improved.
1628 COMMISSIONER WYLIE: Now, when you talk about the status quo, you mean if there is no disaffiliation and you keep going as normal.
1629 MR. TOMIK: Correct.
1630 COMMISSIONER WYLIE: Which doesn't answer my question of when I look at CKRD projections disaffiliated with two rebroads in Calgary and Edmonton, what is the proportion of the $7.4 million in advertising revenue that is attributable to the two markets other than Red Deer?
1631 MR. TOMIK: In terms of a percentage?
1632 COMMISSIONER WYLIE: Percentage of $7.4 million or an exact number. I have a calculator --
1633 MR. TOMIK: It would be 3.8 million of the 7.4.
1634 COMMISSIONER WYLIE: Pardon?
1635 MR. TOMIK: It would be 3.8 of the 7.4 would be coming from Edmonton and Calgary; 1.9 per market.
1636 COMMISSIONER WYLIE: So 1.9 per market is what has been factored into based on the 4.6 share.
1637 MR. TOMIK: Correct.
1638 COMMISSIONER WYLIE: If your projected share was indeed low, do you attribute a particular value to half a point, one point more?
1639 MR. TOMIK: We were pretty thorough about our numbers for this market. We are not going to have a significant promotional window into this market. We are not a local broadcaster within this market. I guess, if I started comparing the revenue gains that we expect for CKRD to the licence application before you for CHUM, you see a significant difference between the two because of those factors. I don't know that a half a point increase is going to mean very much to the station.
1640 Overall, in terms of total viewing, Vice-Chair -- not percentage of home station -- we are looking at a total viewing in the market share of 1.7 per cent. Red Deer in Calgary and Edmonton is going to be somewhere between Sportsnet in terms of audience size and A&E. This is not a significant player. It does not have the coverage in either Edmonton or Calgary to servicing a little more than half of the market that exists today, unlike the other application before you, or the incumbent broadcasters who have almost 100 per cent coverage of the Edmonton and Calgary markets.
1641 So there are a number of self-imposed limitations or technically imposed limitations that lead us to believe very strongly that this CKRD drop into Edmonton and Calgary will do very little but produce the revenues that we put forward. It's just not that strong a signal.
1642 COMMISSIONER WYLIE: Now, what is your current Edmonton CITV share?
1643 MR. TOMIK: Cathy?
1644 COMMISSIONER WYLIE: I have it for '02 at 12 per cent. Am I right?
1645 MS GARDNER: Spring '03, 11.9 per cent.
1646 COMMISSIONER WYLIE: And Calgary?
1647 MS GARDNER: 10.9 per cent.
1648 COMMISSIONER WYLIE: So it's down from '02.
1649 MS GARDNER: Correct.
1650 COMMISSIONER WYLIE: Which was 12.5 per cent?
1651 MS GARDNER: Correct.
1652 COMMISSIONER WYLIE: And Red Deer?
1653 MS GARDNER: Red Deer is 0.2 in Edmonton and 0.3 in Calgary.
1654 COMMISSIONER WYLIE: So I think we have a better idea of how you attributed the value of Calgary and Edmonton in that 7.4 million.
1655 Now, tell me how the programming costs will be allocated which one of you started to say? In other words, this will be CHCH's programming that is already purchased and aired on the West Coast.
1656 MS BELL: Ontario and partially in Montreal and --
1657 COMMISSIONER WYLIE: And on the West Coast completely.
1658 MS BELL: That's right.
1659 COMMISSIONER WYLIE: So now you will have two rebroads and one station in Red Deer. How will you allocate the cost that I see in your programming expenses? What do they represent over and above the programming that will be peculiar to Red Deer?
1660 MS BELL: I will ask Greg Treffry to answer that question.
1661 MR. TREFFRY: In preparing the projections under the CH format, the programming is allocated based on population. So now the Red Deer market will be added to the Montreal, Victoria, Hamilton markets and, based on a percentage of population, that percentage will be applied to the total cost of programming for the CH.
1662 COMMISSIONER WYLIE: The population of Edmonton and Calgary will be taken into consideration?
1663 MR. TREFFRY: No. We do it just on Red Deer proper, Hamilton CMA, Red Deer CMA, Victoria CMA.
1664 COMMISSIONER WYLIE: So even though there is $1.9 million in revenues that is attributed to these markets it will be just shown on the Red Deer --
1665 MR. TREFFRY: The objective there is for consistency so we are applying the same methodology in each of the markets to achieve the same effects.
1666 MS BELL: And actually, Madam Vice-Chair, just a comment. If we were taking into account the population of Calgary and Edmonton, programm allocation would be a lot higher. So it's actually a lot lower because we are only taking Red Deer into account.
1667 COMMISSIONER WYLIE: When we asked you to give us some projections without Calgary and without Red Deer and only with CKRD, did you consider at that point CKRD continuing to be a distant signal, and what value did you attribute, if any, to its availability as a distant signal in Calgary and Edmonton?
1668 MR. TOMIK: I think Kathy just gave you the Calgary and Edmonton audience numbers. As a distant signal today for CKRD in Red Deer in terms of percentages, they are very, very minor. I believe in Calgary CKRD is on channel 51.
1669 MR. TOMIK: Channel 50, and in Edmonton it's on 52. There is no simulcast opportunity which is very important to the economic model of CKRD going forward. Though we like to be there, Madam Vice-Chair, it is not very economically viable to continue at that rate going forward.
1670 COMMISSIONER WYLIE: So when you desegregated, when you filed in confidence the reduction that would be experienced if you didn't have Calgary or Edmonton, you didn't take distant signal into consideration. It's not a factor. It's too small, too minimal, the value of being a distant signal, to be considered.
1671 MR. TOMIK: Absolutely.
1672 COMMISSIONER WYLIE: Now, in your Schedule 10, where you have the assumptions and you did tell us a bit how you allocate programming costs, you said that your applications would put forward, and your revenue projections would put forward, on the basis of No. 1 in the schedule, no new entrant and No. 4, that you would have simulcast. So I assume that that means you would have your two rebroads.
1673 Also at page 9 of your supplementary brief you say that your applications are filed on the basis that there should be no new conventional television. I cite you:
"Global strongly believes that adding new conventional television stations in most markets in Canada is neither prudent nor warranted at this time."
1674 Can I take it then that your projections were prepared on the basis that CHUM would be denied?
1675 MS BELL: We didn't take CHUM into account in our projections.
1676 COMMISSIONER WYLIE: Let me ask you the same question I asked them: Is this whole plan viable, and would you proceed with it if we licensed CHUM?
1677 MS BELL: Yes, we will.
1678 COMMISSIONER WYLIE: You would?
1679 MS BELL: Yes, we would.
1680 COMMISSIONER WYLIE: And what would be the effect on your projections?
1681 MS BELL: I will ask Mr. Tomik to answer that.
1682 MR. TOMIK: We did prepare for you, Madam Vice-Chair, on this question and if we were approved, as we requested, revenues in year one would be $7.4 million. If all three of the CHUM requests for the Red Deer, Edmonton and Calgary were approved as well, our $7.4 million would drop to $4.7 million in revenue. If they were approved for Red Deer and Edmonton only -- no Calgary -- our revenues would drop from $7.4 to $5.6 million. If they were approved for Calgary and Red Deer -- no Edmonton -- it would again be about $5.6 million and if they were approved for either Edmonton only or Calgary only with no Red Deer rebroad, it would be about $6.5 million in revenue.
1683 We have also prepared estimates of what our last position would be for Red Deer in any of these scenarios, and if you would like I can have those given to you also.
1684 COMMISSIONER WYLIE: And that would depend, of course, on the level of the programming expenses in part that you would maintain. In that case, Ms Bell says, yes, you would proceed. What would be the effect on your programming initiatives since I look at the programming expenses and some of the numbers you were giving me for revenues were lower than the projected expenses.
1685 MS BELL: Are you talking about our projected expenses for programming? Our programming plans in terms of the commitments we have made would go ahead.
1686 COMMISSIONER WYLIE: Would...?
1687 MS BELL: Would --
1688 COMMISSIONER WYLIE: Would be the same?
1689 MS BELL: Yes.
1690 COMMISSIONER WYLIE: Even with the licensing.
1691 MS BELL: We are not baking away from these commitments.
1692 COMMISSIONER WYLIE: And that would be if you get the two rebroads and CKRD.
1693 MS BELL: That's correct.
1694 COMMISSIONER WYLIE: We will take a break if Mr. Chairman agrees.
1695 THE CHAIRPERSON: No. We are going to stay here for the next two hours.
--- Laughter / Rires
1696 THE CHAIRPERSON: We will resume in 15 minutes. Nous reprendrons dans 15 minutes.
--- Upon recessing at 1752 / Suspension à 1752
--- Upon resuming at 1815 / Reprise à 1815
1697 LE PRÉSIDENT: A l'ordre, s'il vous plaît. Madame Wylie.
1698 COMMISSIONER WYLIE: One last attempt to understand the difference between your projections and those of CHUM.
1699 When you look at the advertising projections of CHUM, they are $17 million in the first year going to $38.6 million in the seventh year. Compared to yours at $7.4 million in year one going to $9.8 million, is that correct, in year seven.
1700 MR. TOMIK: That's correct.
1701 COMMISSIONER WYLIE: And you are projecting a 4.6 share. Theirs varies from -- I don't think I remember, but it's not out of that area.
1702 How do you explain the amount of money that can be generated with those shares in their projections and in yours?
1703 MR. TOMIK: I think there are a number of reasons. First and foremost, as you have noted, we are not soliciting local advertising from either the Edmonton or Calgary markets. We have made that commitment.
1704 The second thing is we have no plan in our business plan to be on DTH which is about 25 per cent of the Alberta market that is gone. The signal coverage in Edmonton of this UHF transmitter is only about 47 per cent of the extended market population. In Calgary, it's about 61 per cent of the extended market population.
1705 Also, with the switch, should we be approved, of the grids in the central Alberta market, Red Deer itself, there is about a 12 per cent drop of population there. We are also looking at RD not being on the bottom grid of channel placement within the body of the cable companies, but hopefully under channel No. 30.
1706 We don't have any local programming. We have the regional programming which is ethnic, but we already told you we are not soliciting nor accepting any advertising revenues for that. So all of our local programming, specifically news, has only appeal in the Red Deer market.
1707 So those are a number of the different issues of why this happens, why the differences in the revenues.
1708 COMMISSIONER WYLIE: With regard to local advertising it's easy to see. If you deduct the local advertising that CHUM is proposing to take out of those markets, you have the answer.
1709 Perhaps you can file for us these reductions and attribute a sum to it.
1710 MR. TOMIK: We would be happy to.
1711 COMMISSIONER WYLIE: We still have difficulty understanding for a 4.6 share for CHCH programming with only nine hours and 45 minutes of local when you get 12.5 in Hamilton. What did you say your share was of CHCH Hamilton in Ontario?
1712 MR. TOMIK: Are you asking for Toronto and Ottawa separately?
1713 COMMISSIONER WYLIE: Yes. What is it in Toronto, for example?
1714 MR. RATHAN: Our share in Toronto is 4.8 per cent.
1715 COMMISSIONER WYLIE: And what is it for Ontario? Have you calculated adding the other areas where you have CHCH programming?
1716 MR. RATHAN: I don't have the numbers.
1717 COMMISSIONER WYLIE: So 4.8 per cent with 36 hours of local in a busy market like Toronto and your CHCH programming generates a 4.8. In Calgary and Edmonton, with mostly regional programming and only nine hours and 45 minutes of local, you are predicting 4.6 and, of course, the revenues show also a very big discrepancy between share points in the CHUM projections and these projections.
1718 MR. TOMIK: Madam Wylie, a point of clarification here. When you are talking 4.6 for Red Deer in the Calgary market, for instance, as your percentage of the home stations, you are correct. We predict it's going to be about 4.6 per cent of the home stations. Mr. Rathan's references to Hamilton are to the whole viewing universe.
1719 If you take a look at our projections for Red Deer performance in either Calgary or Edmonton of the whole universe, they are in fact 1.7 per cent of the viewing, not the 4.6 of home stations, but 1.7 per cent of total viewing, as opposed to the 12.6 of total viewing for CH in Hamilton in its home market, or the 4.8 in Toronto.
1720 So we were on two different currencies here.
1721 COMMISSIONER WYLIE: In Hamilton, what would you consider the home station?
1722 MR. TOMIK: It would be what people view within the body of the Hamilton market. So the 4.8 per cent share of viewing that Hamilton enjoys in Toronto, for instance, which is sort of like Red Deer into Calgary, that is 4.8 for Hamilton in Toronto. Our prediction for Red Deer into Calgary or Edmonton is 1.7 per cent of total viewing of all things, not the 4.6 that you are quoting.
1723 COMMISSIONER WYLIE: Now, in discussing the importance of getting these rebroadcasters, you bring up, of course, the benefits of repatriation through simulcast, synergies, cross-promotion, since you already have stations there, I suspect also cross-promotion from the two dailies that you have, and you still will only have $7.4 million in revenues in the first year which won't go any higher than $9.8 in year seven.
1724 What is wrong with this picture?
1725 MR. TOMIK: Again, we are doing comparisons, in terms of the CHUM application, for a full-up service that has a special interest to Calgary, has availability of the local ad market, we will be heavily promoting within the body of that market. The difference between that and the audience performance of an outside signal coming into Calgary--and you can use the CH Hamilton to Toronto example--if we were applying for CH signals in competition with CHUM in Edmonton and Calgary and forgetting about Red Deer, just left it alone, our projections for those stations would be akin to what CHUM's are, I believe, if they were in the market. But they are not.
1726 COMMISSIONER WYLIE: One thing one can do, of course, is deduct the local -- you say they are going to be able to sell local advertising. You are also saying, I suppose, that they will sell more easily and more expensively their national advertising because they will be a local station.
1727 MR.TOMIK: They will be a local station. Also, percentages don't equate actually to dollars, because the bigger percentage of viewing you have in any market the better quality of dollar you get. Certainly you heard the quotes of Global's share in Calgary or Global's share in Edmonton, in terms of viewing, in 10s and 12s, I believe, and yet those two stations are doing about 30 per cent share of the revenue in those markets. So there isn't a real equation between your share of audience and share of dollars except the bigger shares you have, the more top 10 programming that you have on your schedule, you are going to get a much bigger dollar for it.
1728 COMMISSIONER WYLIE: But that is really what the slant is. You are saying you are going to be able to simulcast, repatriate viewers from popular U.S. programming that you already have for CHCH and because you are not as local as CHUM that difference in revenue, that is the explanation, despite the synergies and the availability of the simulcast.
1729 MR.TOMIK: We have those same synergies available in the Hamilton experience.
1730 COMMISSIONER WYLIE: Yes, but you have 36 hours of local.
1731 MR.TOMIK: Yes.
1732 COMMISSIONER WYLIE: I can see, when you project that into a market like Toronto, quite possibly it is harder to make a dent in the market because it is visibly and intensely local which, I do not know if nine hours and forty-five minutes makes it.
1733 MR.TOMIK: I understand your points. But again it really comes down to a combination of those issues of the shift in simulcast hours in the Alberta market, which is eight to midnight instead of seven to 11, which has a discount to it, and really it is about the coverage within the body of those two markets with these U signals. The Calgary market, with 1.2 million in the extended market, I think we are covering about 670,000 people if memory serves me. And in Edmonton, because of the vast size of that extended market and the small size of our U transmitter with no rebroads, gives us only about 47 per cent availability within that market.
1734 COMMISSIONER WYLIE: So you will file how one explains the way you did when we first came back what we are to take away from the value of a rebroad in Edmonton and a rebroad in Calgary, it almost leaves one to believe -- to suggest considering how well CIVT-1 -- right?
1735 MR.TOMIK: ITV.
1736 COMMISSIONER WYLIE: CITV. -- does in Red Deer that maybe that is the solution, you support CKRD from CIBT.
1737 MR.TOMIK: It is not up to me to comment on that. But, really, I think the solution that we are putting forth to the Commission here is simple. Our goal here is to ensure the economic viability going forward for RDTV to serve Red Deer. What we did when we constructed this application was to make sure we were hurting the markets of Edmonton and Calgary as little as possible, for a lot of reasons. Firstly, we are in that market and would hurt ourselves. The second is these are not that strong going markets. So we wanted to be very responsible to the markets that we were taking money out of in order to ensure that RD would have a promising future.
1738 COMMISSIONER WYLIE: Maybe I should discuss with you licensing scenarios now instead of -- and look at common ownership -- concentration of ownership and cross-ownership after.
1739 We discussed that no new entrant doesn't mean you wouldn't go forward, even if CHUM were licensed. Correct?
1740 MS BELL: Correct.
1741 COMMISSIONER WYLIE: So it is not at all a sine qua non to disaffiliation with you whether or not we were to license CHUM?
1742 MS BELL: That is correct, provided that our entire application was approved.
1743 COMMISSIONER WYLIE: All three or four components or three disaffiliations and under two rebroadcasters.
1744 And you of course argue that CKRD cannot continue to sustain losses and therefore you need more than simply disaffiliating CKRD. Considering the high level of success of CITV-1 in Red Deer, would that be an acceptable cross-subsidy?
1745 MS BELL: We haven't considered that and, in fairness, we haven't had any discussions about it. We can take a look at that this evening and get back to you. My sense is that it is not. But we will take a look at that scenario and get back to you tomorrow, if that is acceptable to you.
1746 COMMISSIONER WYLIE: You haven't filed yet -- could you file with us your 2002-2003 CIBT results in confidence?
1747 MS BELL: 2002 --
1748 COMMISSIONER WYLIE: To the end of 2003. I guess part of it will be projected and part will be historical.
1749 MS BELL: Yes.
1750 COMMISSIONER WYLIE: And also financial projections 2004 to 2009 for CITV-1 Red Deer.
1751 MS BELL: Yes.
1752 COMMISSIONER WYLIE: Assuming that we were to deny the rebroadcasters and approve the disaffiliation, do you see any other way of making CKRD viable?
1753 MS BELL: No, we don't.
1754 COMMISSIONER WYLIE: What are the other options, if we were to deny your proposal?
1755 MS BELL: Well, the only other option, in fairness, I think, is to ask the Commission to make it a priority carriage and not implement two transmitters. That would be the only other way that --
1756 COMMISSIONER WYLIE: I don't understand.
1757 MS BELL: I guess if we asked for an exception to be considered as a priority signal without implementing the transmitters, I don't think that this --
1758 COMMISSIONER WYLIE: You mean have the same carriage priority as if you had a transmitter? In other words, reduce your expenses.
1759 MS BELL: Pretty much. That was our only other -- we looked at both options before filing. But we looked at this from a variety of perspectives and, Madam Wylie, it is not feasible.
1760 COMMISSIONER WYLIE: What would happen with the local commitment, CKRD, then, in a CKRD alone scenario?
1761 MS BELL: If you were to accept disaffiliations, we would not -- I guess we wouldn't implement it.
1762 COMMISSIONER WYLIE: What would happen, then, to your proposal with the CBC? What is the situation there?
1763 MS BELL: The agreement that we have made is that we would come forward with a disaffiliation proposal that included the two transmitters, and that is our agreement, and their understanding is that we do not wish to proceed if that is --
1764 COMMISSIONER WYLIE: Would you transfer the transmitters, as well, without cost?
1765 MS BELL: Would we transfer them --
1766 COMMISSIONER WYLIE: The transmitters --
1767 MS BELL: We wouldn't be implementing the CBC disaffiliation --
1768 COMMISSIONER WYLIE: You would not?
1769 MS BELL: We would not.
1770 COMMISSIONER WYLIE: Have you considered the possibility of a scenario where, instead, you would have a distant signal carriage? Have you discussed with the cable operators as to whether, under a CKRD disaffiliation scenario, they would give you distant signal carriage?
1771 MS BELL: Even if they did, we wouldn't be getting simulcast, so your revenues would not be sufficient in order to -- and as we said earlier, the fact of the matter is as a distant signal you really don't have any status; you are at the mercy of the cable operator if they wish to continue to carry you or not. They can move you. I believe we used to be on Channel 10 and we moved up to Channel 50. We had a lot of discussions with the cable companies at that time. We really didn't have any -- we didn't have a leg to stand on. They can move you; they can remove you. If it is not a priority signal then they have the right to do that.
1772 If I may, this application, we feel, is entirely consistent with the Commission's long-term goal.
1773 In fact, in Decision 87-140 when the Commission renewed the licence of CBC and stated in that decision that it wished for the CBC to start pursuing disaffiliation in order to be able to extend its full service to as many Canadians as possible, in that decision the Commission also noted that it understood that by doing so it would place affiliates in a precarious situation in terms of their financial viability and that one of the options would be the twin stick solution.
1774 So we feel that what we are doing is actually quite consistent with the Commission's long-term goal.
1775 We are looking at 16 years later, and the CBC is moving ahead and is making it clear that it wants to move ahead with disaffiliation in many markets in order to extend service to as many Canadians as possible.
1776 We see that as fulfilling one of the goals of the Broadcasting Act.
1777 At the same time, if we are giving them our transmission grid, which is worth more than $1 million, we also have the cost of replacing that grid in Red Deer and the cost of the two transmitters.
1778 CKRD over the last three years has cumulative losses of about $6.3 million. So even at the point where we start to become financially viable down the road -- and I think it is in year five -- you are still catching up because of the accumulated losses.
1779 COMMISSIONER WYLIE: That is assuming, of course, that we are all comfortable with the predictions you are making about the value of your share in the two large markets in Alberta that you would have a transmitter in.
1780 MS BELL: That's right. If I may just add one thing that we haven't mentioned, we are also losing network payments from the CBC which are around $450,000.
1781 COMMISSIONER WYLIE: We will discuss continuation of common ownership in these cities. You were asked about the policy of the Commission about one TV station in one language in each market, with some exceptions, and your answer to deficiency question 10 was that they were not stations, because they are rebroadcasters and there is no special programming for these markets; that you would not solicit local advertising but for in the ethnic programming and even then it would be for the benefit of someone else; that you are already in the market and it is necessary to maintain CKRD.
1782 We have talked about the programming and the extent to which it is regional rather than local. Of your initiatives, all of them but nine hours and 45 minutes are aimed at Calgary and Edmonton as well as Red Deer.
1783 Why would I say then it is a rebroad and it's not a station and it has nothing to do with the common ownership policy?
1784 MS BELL: First of all, we still end up with no more than ten hours of regional programming. In fact, I believe it is less than that. It is two and a half hours a week. We committed earlier to half of the ethnic programming hours, so we are looking probably at around six and a half hours of regional programming and nine hours and 45 minutes of local programming.
1785 I think the distinction we made is that technically the Commission, under the definition of a station, would not include rebroads. Therefore, we don't believe that it is two over the air stations in the same market.
1786 COMMISSIONER WYLIE: Yes. That's a very technical answer which could get you admitted to the Bar.
1787 I am looking at the TV policy in paragraph 18 where the Commission talks about its policy, and I quote:
"This policy ensures the diversity of voices in a given market and helps to maintain competition in each market."
1788 Most of the participants indicated that the Commission's current approach worked well and did not recommend any change. So I think it would be fair to say that the two issues or preoccupations the Commission has, and the reason why it has this policy, is diversity of voices and undue competition.
1789 Global already garners close to half of the ad revenues in Edmonton and Calgary. Correct?
1790 MS BELL: Mr. Tomik?
1791 MR. TOMIK: It is about 40 per cent, yes.
1792 COMMISSIONER WYLIE: Higher than 40 per cent; right?
1793 MR. TOMIK: If you want to include prior broadcasters, Madam Vice-Chair, and take out network and don't include CBC, yes, it was higher.
1794 COMMISSIONER WYLIE: You expect to garner additional revenues with approval, despite the fact that we have had long discussions about whether that was too conservative.
1795 MR. TOMIK: Yes.
1796 COMMISSIONER WYLIE: With regard to undue competition, even if your revenue projections were in fact not conservative, to what extent is that not possibly undue competition if you had these additional revenues?
1797 How much of the ad revenues would you take if you had all three applications approved?
1798 MR. TOMIK: Vice-Chair Wylie, today in the Alberta market we take about 31 per cent of the total television market.
1799 COMMISSIONER WYLIE: Not Alberta. I am talking about the three markets concerned.
1800 MR. TOMIK: In the markets concerned?
1801 COMMISSIONER WYLIE: Edmonton, Calgary and Red Deer.
1802 MR. TOMIK: We would come up by one more percentage point.
1803 If you look at the revenues that we get in Calgary or in Edmonton, they are about equitable. It is about 31 per cent that come to us. This would take us to 32 per cent.
1804 COMMISSIONER WYLIE: When we speak of undue competition -- and that is why your revenues appear conservative -- is it not having two schedules and two inventories of air time to sell that matters when one assesses whether somebody has too much clout in the market?
1805 You yourself have raised as the reasons why we should allow that, and not only CKRD, the benefits of simulcast, the benefits of counter-programming, the benefits of -- or if you haven't, I am -- purchasing power, cross-promotion. You already have the two dailies and all the synergies that come from that.
1806 Is that not what creates undue competition, is the clout that one can generate from all these possibilities, rather than Ms Bell's distinction between a station and a rebroad?
1807 MR. TOMIK: I think really what we have to do is frame this properly in terms of what we are talking about.
1808 COMMISSIONER WYLIE: You are not suggesting I am not doing that.
1809 MR. TOMIK: No, not at all. I want to give you another angle to look at, Madam Vice-Chair.
1810 COMMISSIONER WYLIE: Yes, I welcome that.
1811 MR. TOMIK: Earlier today I heard others talking about markets that are served by three television stations. If you look at the total service to this market in terms of not just three television stations, Edmonton has four television stations. CBC is an alive, vibrant, local news producing, advertising, friendly vehicle in both Edmonton and Calgary.
1812 As a matter of fact, "Access Alberta" is in prime time a significant garner of audiences in these markets. So I would suggest that both Calgary and Edmonton have four and a half stations, to be fair.
1813 In terms of a viewer in Alberta, a viewer in Edmonton, they can watch the Global signal today in Edmonton. They can see RD on Channel 50-something-or-other.
1814 If I look at our competitors, I look at CHUM who doesn't have a licence here today except for "Access", but I look at the eight or nine specialties that come into this market that is fully available to that viewer. They are fully sold in this market.
1815 If I look at CTV with CFRN in this market, and eight or nine specialties, including all of the ones that they have and the audiences they garner in this market and the revenues that they garner from this market as a result of being here, I don't see undue size.
1816 If you look at the total Alberta market of about $300 million in television, we get about one-third of that.
1817 In terms of newspaper, we own two large dailies, one in Edmonton and one in Calgary. But there are two other large dailies in that market. In fact, in Alberta there are a number of papers in the smaller communities that we don't hold.
1818 If, for the sake of revenue, you looked at the $10.8 billion revenue market in Canada for advertising and apportioned let's say 10 per cent of that to Alberta -- that is about $1.1 billion -- and you looked at our revenues within the body of the Alberta market from all sources, you would come up with a revenue percentage of about 26 per cent from all sources.
1819 That doesn't mean that we have a 26 per cent share of voice or attention of the consumer, but that is what we have in terms of revenues.
1820 I see that as far from control in total media. I see it as far from uncompetitive, certainly in television.
1821 So that is my rationale for your question. I hope I answered it.
1822 MR. ASPER: If I could just add a comment to that. Just looking at the overall advertising landscape of the last 13, 14 years, what has really hurt specialty or hurt local television and hurt any pricing advantage or sales clout that local television had on its market is the ad end of the specialty channels and their increasing audience share, the 40 or so analog channels and now the digital channels. Because they were so cheap, when they came out and then the inventory increased from eight minutes to twelve minutes for most of them, that is what took a lot of clout away from the local TV stations.
1823 Certainly in my experience, listening to Jack and the other people in the sales group, we don't have the kind of clout, that is really what is behind the strategy of the company from trying to re-aggregate or come close to -- we are not able to do it yet, but at least come close to where we were 15 or 20 years ago with just one TV station and no newspapers and no anything in the market. There are a lot of other competitors for that local advertising dollar even if they are based right in Edmonton or Calgary.
1824 COMMISSIONER WYLIE: Would your competitor advantage, once you have two stations in Calgary and Hamilton with two different program grids, which you already have purchased in large part for another station already and you are now amortizing, would it be helped by the fact that you have a daily in both in terms of promoting those stations even if they were at different signals?
1825 MR. TOMIK: Certainly, it helps to have a daily paper to promote and it helps to have a national paper to promote. We have been before the Commission recently and talked about how that has helped certain vehicles like Global National with Kevin Newman become a big success in less that two years in this country.
1826 I guess does having a newspaper in the Edmonton market or the Calgary market with a significantly older kind of average audience help when you are marketing some of the programming on CH? Certainly it helps, but it doesn't help a lot. If you look at markets where we have these assets and we use them regularly today and you can pick Vancouver or Toronto it helps, but not a lot.
1827 COMMISSIONER WYLIE: It is more diffused on Toronto, isn't it because of the much larger market? Here you would have the Herald and the Journal as well as the Post and two television grids?
1828 MR. TOMIK: Yes, correct. We would have all of those assets here.
1829 COMMISSIONER WYLIE: So in the policy -- the Commission has this policy for two reason and I read you the first was on undue competition on other places in market and the second one was diversity. So, in this case you would have in Edmonton and Calgary the ability to reach the viewer through TV and print. Diversity of voices was the other one in the TV policy paragraph I read you, the desire to keep diversity of voices and the desire to forestall undue power in one player.
1830 So we have looked at whether or not it would be possibly anti-competitive and the other one I am looking at now is diversity of voices. We will also hear this week an application for radio. Should we put that in there too when we look at diversity of voices, the National newspaper, the Daily and possibly a radio station?
1831 MS BELL: I am assuming if you don't include it today you will be including it later this week, so we may as well get through it.
1832 COMMISSIONER WYLIE: Get two applications for you that are completely severable and different. But with the National Post, the Daily and two television stations, what effect would that have on diversity in your view -- diversity of voices.
1833 MS BELL: Madam Wylie, I guess basically the proposal that we have before you is that there would be no more than 10 per cent programming overlapped between CH and the Global schedule, which is what we have committed to in Ontario and also in B.C. So, it does preserve a distinction between the two stations, they are very separate. They will each have, as every other station, every other entity that we own, has its own newsroom and its own news director who makes the decisions about what goes on the newscast of that station or newspaper or whatever and that will be preserved.
1834 And there is two streams of eight hour priority programming that is different and distinct on the CH station than what will be available on the Global station. So, we feel that through these initiatives we are preserving diversity.
1835 COMMISSIONER WYLIE: And I suppose your answer would be the same in Red Deer and you don't have a daily in Red Deer?
1836 MS BELL: That is correct.
1837 COMMISSIONER WYLIE: Now, suppose the Commission were not to accept your characterization that it is a rebroad and the policy doesn't apply and you have said well there are very good reasons why we should make an exception and reasons were given in other markets where this has occurred and exception was made, what is your response to whether when you have this privilege of simulcast counter programming purchasing power, cross promotion and synergies, more should be expected in return than the few hours of local programming and regional programming that would be added for the viewer in Alberta? That is one, that benefits to Alberta and secondly benefits to the Canadian Broadcasting system. There is no commitment to drama. Should more be expected when that privilege is given? That has been the case before in Hamilton --
1838 MR. CAMILLERI: Maybe can I touch on the issue in terms of the benefits, in terms of asset that we have? The predominant benefit really is in the consolidation, if you will, of non-core back office functions. So things like, and you have heard CHUM speak about it, technology, accounting, finance. What that has been able to allow us to do is to create efficiencies that then allows us to redeploy resources in three particular areas that benefit the system.
1839 These are the three areas that we are focused on. And, if you would indulge me a little bit, I would like to speak a little bit about the three of them. One is content, and I will speak about that, the second one is technology and the third one is in people, it is in training, it is in development, it is in diversity and development of people. So, if I could just speak about the three of those for a second. In terms of content initiatives, and lets just talk about it on a national scope, we have been able to reinvest in terms of the growth of our national new cast Global National with Kevin Newman.
1840 We have been able to create and grow Global Sunday, the number one current affairs program in the country. We have been able to start a new current affairs program in Ottawa, Ottawa Inside Out. We are starting a local morning newscast in Toronto, Morning Show. We are strengthening and investing in all of our news operations across the country in terms of broad cast. Although it is not the broadcast system, you should be aware that because of the efficiencies we have been able to garner, we are able to actually fight to preserve a strong and diverse national voice the National Post, when everybody in this country, critics, competitors, writers, analysts, shareholders all think it should be closed.
1841 So it is giving us the freedom and flexibility to invest and create new voices. That is on the news side and I think it is important to note in terms of the news operation that all of our news operations have separate and distinct editorial operations and editorial voices and decisions. Even within broadcast, the editorial decisions with our national news cast are completely separate and distinct from all the local editorial decisions.
1842 In terms of continuing content and entertainment, Train 48 is a very ambitious project for us, drama project. It is five nights a week, 30 minutes, so two and a half hours a week. Thirteen weeks is the initial roll out. We are bringing it back for 52 weeks next year, that is a $7.5 million commitment for us that basically we are funding. That commitment, when we start to talk about diversity, that shows ethnically diverse, it is innovative. We look at it as not only being potentially a hit on a national scale, but we think it is something that has already had success in Australia and it can roll out and travel beyond these borders.
1843 So we are making heavy investments and that is something corporately we are passionate about. Personally I am passionate about investing in Canadian content across platform, although I appreciate we are here to talk about broadcast. We are investing heavily in technology and I just want to touch on your point about undue competition. In the world that we live in now with the way technology is impacting our business, it is not just about -- we all talk about I know in this industry and I am a relative newcomer to it in the last year, but people are focused on DTH and the impact it has had and it is very dramatic the impact that that has had, the impact that PDRs have had.
1844 But one thing nobody is talking about is MPEG compression technology. You can get movies and television shows right now for free on the web and you can distribute them on the web. People are doing that right now today. I can access any show I want from any point in the world on the web, compress it with MPEG and share it with anybody I want. I personally think that is going to fundamentally alter our industry more. As dramatic as DTH has been, that is going to be even more dramatic.
1845 So, as a company, we are making heavy investments in terms of technology. Some of the things we have rolled out and we have publicly disclosed at a presentation we did at the CMDC, on the Media Directors' Council, in terms of some of the things we are doing to combat some of those influences. What it really means is we have increasing fragmentation, increasing threat and what that means is in our industry if anybody wants to think that we or any individual in this industry are omnipotent, we are not. Leadership in newspapers is declining, conventional viewing share is declining, we simply don't have the power that everybody wants to espouse to us and credit us with. It is just simply a fallacy and a fiction.
1846 We are making heavy investments in terms of technology to deal with those challenges. We are going to be making heavy investments as is all of our contemporaries in this industry and HGTV technology with no potential return in sight, it is just something we have to do to stay in business. We are making heavy investments in terms of digitizing our newsrooms, creating archiving infrastructure, that is tens of millions of dollars. There is no imminent return for us to do that, we simply have to to stay in business, that is the reality we live in.
1847 And then finally, the third thing we are making heavy investments in are training and development in people. That is something that we are making heavy investments in our company.
1848 If you look at me I know I am a newcomer and you don't know me that well, but if you look at me and my career I will stand passionately for a number of things. The creation of Canadian content and creation of Canadian hits and artists. Not only artists that exist on a national scale, but artists that travel around the world as symbolic representatives and cultural ambassadors and exports of this country, that is what we are focused on at CanWest. Stand for basically technological innovation, which is something we are bringing to CanWest in terms of what we need to do in our industry to deal with the challenges and threats that are creating not only fragmentation, but real threats to the underlying paradigm that we call the media industry in Canada.
1849 And finally, I will stand in my career for development of people and ethnic diversity. That is something I am personally passionate about and we are passionate about. So, I just wanted to touch on, in a bit of a long-winded way, your comment about undue competition or influence, because I simply just think that technology -- it just doesn't exist any more, nobody has that kind of power in this new world.
1850 Finally, in terms of diversity of voices, we are investing heavily in both sides of our business, the business we are here to talk about today, broadcast, as well as our newspaper business, to preserve and create diversity of voices.
1851 COMMISSIONER WYLIE: Mr. Camilleri, my question was when one gets two stations in a market, should the Commission expect more to be put into the broadcasting system? And those things that you have focused on were proposed as the quid pro quo for getting two stations on the B.C. coast and in Ontario when you were only an intervener, not an applicant.
1852 MR. CAMILLERI: Sure, I understand that.
1853 COMMISSIONER WYLIE: So, my question was, what if, if that proposed here that would be a quid pro quo for the privilege of having two stations and I am making an exception if we would find that the policy does apply and promises made in the past that two stations on the coast and in Ontario don't add very much to this application as a quid pro quo for the privilege.
1854 MR. CAMILLERI: Sure. I think my colleague, Charlotte Bell, was taking you through in terms of the commitments we are making in terms of --
1855 COMMISSIONER WYLIE: Yes, we have heard about them this morning or this afternoon rather. We went through the programming commitments and initiatives that form part of this application and I am asking you whether they commenced with the privilege of having two stations in two large markets in Alberta.
1856 MR. ASPER: If I could just maybe make a comment --
1857 COMMISSIONER WYLIE: So, you know, go back to the initiatives we discussed earlier in the afternoon, I guess that is it.
1858 MR. ASPER: Just as a general comment, in comparing the Hamilton/Victoria, I would even bring Quebec even though it is a different -- it wasn't the two stations in one market or serving one market situation. There are times where the opportunity is bigger and therefore the quid pro quo is more tangible in terms of what additional things we are willing to do and should do to have the privilege. I think the opportunity in Hamilton, for example, to serve the Ontario market was such that we did practically double the local commitment and then made significant investments in the station in the millions of dollars.
1859 Sitting back and looking at the Alberta situation, I think we are talking about saving a station as opposed to, and also responding to a request from the CBC to be quite frank as to how we got here and the opportunity where I think we stand quite firmly by our numbers as to just how big the opportunity is or to put it another way, how small the opportunity is. So, it is not like we are jumping a quantum leap forward in any financial sense by having these privileges adding the second signal to the market. We are agreeing to maintain the station and I think to look at it in a larger picture, I don't see the Craig broadcasting or CHUM broadcasting applying for stations in Regina or Saskatoon or Halifax or Quebec City or Winnipeg. CanWest or Global -- the Global Group and CTV are really the groups that are holding up those markets and Red Deer is another example. Kelowna is another place where it is just not a profitable market any more, it loses money.
1860 So, if you look at it in a larger picture, yes there is not a huge platter of additional tangible benefits being offered, but I think on the other hand we are maintaining a station that otherwise wouldn't be maintained and we are serving another purpose of the broadcasting system, which is the strengthening of the CBC.
1861 COMMISSIONER WYLIE: I only have a few more questions about cross-ownership. Now, I don't know if you remember my discussion with you, Mr. Asper, less than two years ago --
1862 MR. ASPER: The constitutional law?
1863 COMMISSIONER WYLIE: The constitution, and I did not bring the charter of rights. All I am going to ask you is the validity of a pre-occupation about this concentration, especially as it regards cross-ownership, and what it is that you are prepared to do to meet it so no constitution, no charter of rights, whatever it is that you are prepared to meet our preoccupation.
1864 When we asked you on your application to answer the 3.2 part of the application, you referred us to Prime TV's renewal and your answers there. So, I looked at the Prime TV renewal and if I paraphrase what you said was in this case it is necessary for companies to be strong owners, to have economies of scale and that this was necessary to preserve local content, which is a good segway to the comments he just made about Kelowna and Red Deer. And you also referred to the fact that you had already proposed safeguards before about separate management and separate management structures when your renewal of Global was before the Commission and that you are working with the CBFC towards the selection of a code. So, number one, where are we in that exercise?
1865 MS BELL: Actually, it is before the Commission and has been since the fall.
1866 COMMISSIONER WYLIE: In your renewal in 2001 you committed to a statement of principles and practices, which would be the adherence to it was imposed by a condition of license and paragraph 125 of decision stated that there would be a suspension of the CBFC code was ever put in place. Now, your statement of principles and practices, does it extend to rebroadcasters?
1867 MS BELL: Yes, it would.
1868 COMMISSIONER WYLIE: So, it would -- that would be adherence in those markets?
1869 MS BELL: Absolutely.
1870 COMMISSIONER WYLIE: Now, in light of the increase cross-ownership that would result if we were to approve your proposal, what is your view about whether a code more similar to QMI-TVA situation would be more appropriate in that case?
1871 MS BELL: I am not sure how it would be relevant to the situation unless the Commission is --
1872 COMMISSIONER WYLIE: Well, it was a relationship between television and newspapers. In this case you would have two televisions and one daily in the market, the only daily right in Calgary in Edmonton?
1873 MS BELL: Is there another daily?
1874 COMMISSIONER WYLIE: The post and -- oh, two dailies, there is the Sun, right. In your statement of principles right now, there is management and presentation structures are different. As you know, the TVA code of ethics is much stricter, it requires independent newsrooms, no exchange of information and that the newsrooms not be linked that there be no receipt or exchange of information. What is your view, Mr. Asper, about whether separate management and presentation structures would be sufficient in Alberta if you were to approve all three of these applications?
1875 MR. ASPER: I think we had a long discussion, as you will recall, about the relative merits of the TVA or the Quebec market solution versus the English market solution. We concluded and the Commission, by its decision, agreed at the group licensing hearings that the English market solution that we reached, being the filing of something negotiated with the CBFC would be sufficient. I don't think this addition to or change would change our view of things. For example, Alberta is still a lot less concentrated in certain ways than the Quebec market which was attempting to be addressed.
1876 Also, I think our position was that we had evolved in considering the matter further from what the Quebec market solution that was imposed was. I think the idea -- I can't remember everything that is in the Quebec code, the TVA code --
1877 COMMISSIONER WYLIE: Well, I am giving you the difference between yours.
1878 MR. ASPER: One example is the example you did give, if I can address that, which was the exchange of information. We just thought, I remember thinking this through and discussing it, was it is absurd that today the Winnipeg Free Press which is an independently owned newspaper and Global Television, they work together all the time talking about how they can work together on stories and sometime share information. Global Television in Winnipeg would work with other non-CanWest radio stations. In some cases CHUM owned stations worked with Quebecor owned news papers, the Sun chain. It would be absurd that the only people who couldn't talk to each other were people under common ownership who could combine their resources to create truly unique and well-researched news stories.
1879 We have proven time and time again in the last two or three years, both in terms of audience popularity that by combining resources and by having exchanges of information, our news organizations are able to get deeper, better, broader coverage of any given story that they decide to cover.
1880 COMMISSIONER WYLIE: Are you familiar with the condition of license that you agreed to in Winnipeg when you received a radio license as to what that relationship of the radio station would be with CKNB TV?
1881 MR. ASPER: Yes.
1882 COMMISSIONER WYLIE: Where it is a lot more separate than what is in place between your newspapers and Global?
1883 MR. ASPER: Yes.
1884 COMMISSIONER WYLIE: News gathering, for example, is to be separate from those of the TV station and they are to have a separate newsroom, separate news director, which was to be in control of news broadcasts and dedicated news personnel. Do you see that as a lot more restrictive than the principles in what is the statement of principles and practices that is attached to the Global Television station which simply talks of news management and presentation structures? Then it goes higher with no news manager -- Global News managers on the editorial board of an affiliated newspaper. But you have already agreed, as between radio and TV, to have a lot more restrictive codes --
1885 MS BELL: May I address that, Madam Vice-Chair? At the time when the decision came out I was actually quite surprised when I saw the wording in the decision because it certainly did not reflect the discussion that we had had at the hearing. So, I did --
1886 COMMISSIONER WYLIE: -- the license?
1887 MS BELL: No, we did not. No, I made a phone call. I called legal counsel to verify why that language had been inserted in the decision and the explanation and I said should I be asking for an amendment or what does this mean? And the way it was explained to me is that it means simply and, in fact legal counsel who happens to be legal counsel here verified in the debriefing notes that in fact it had not been flagged as an additional issue, it is just the way of the wording of that particular condition of license. That it means that both units have their own news gathering facilities, but it doesn't mean that they cannot cooperate together. That is not explicitly stated in that condition, had it been, we would have come back to the Commission and asked for a revision.
1888 So, all it is doing is telling us that there is separate management, separate news management and separate news gathering functions and that is the way all of our stations work, but that does not mean that they cannot collaborate on projects and --
1889 COMMISSIONER WYLIE: I have that condition before me now, the one that was attached in Winnipeg, which is condition number seven. Would you look at it and see whether a similar condition, as interpreted, could be something that could be a condition of license with regard to the newspaper and television stations in Edmonton and Calgary markets?
1890 MR. ASPER: Can I just respond? The difference between a jazz radio station, for example, on the one hand and on the other a T.V. station and a newspaper is quite pronounced, for the purposes of this discussion. The raison d'être of the jazz station is to attract audience by virtue of its music. In fact I think it is only because of the Commission policy, I believe, that we would generally have as much news as we have, which I think is only very little. I think it is five minutes per hour on the station. So it doesn't earn its bread and butter, or its advertising, or its ratings, based on its news; it does it based on the quality of the music and the way it serves its audience.
1891 On the other hand, the business of newspapers and the business of television stations, to a large extent, is news.
1892 So when you put that condition in the terms of newspapers or television stations, we would, I think, reject it or not be satisfied with that because they do have to work together. They do benefit from working together and exchanging information, even if the editors have the ultimate decision on what goes in the newspaper or what goes to air and they do bring to each other benefits in terms of quality of news gathering that they couldn't otherwise bring alone. So we see newspapers and television stations working together a lot more so than a television station and, for example, a music radio station. If that station in Winnipeg that we had applied for had been a top radio station or a news station, we probably would have taken a very different position and one quite similar to what we would take here.
1893 COMMISSIONER WYLIE: What you are saying, really, is that the constriction, or restriction, or limitation, as between radio and your jazz station, is nothing to worry about for you as a limitation and it would if it were between T.V. and newspaper.
1894 MR. ASPER: Yes, it is very de minimis in the case of a jazz station.
1895 COMMISSIONER WYLIE: So pending any suspension of the condition of licence that is attached now, that is the extent of what you would propose if you were licensed to serve Edmonton and Calgary where you own dailies and the "Post"?
1896 So the extent of the safeguard you would be prepared to accept would be extending the statement of --
1897 MR. ASPER: Yes. Yes.
1898 COMMISSIONER WYLIE: -- and practices to the Edmonton and Calgary rebroadcasters?
1899 MR.ASPER: Yes.
1900 COMMISSIONER WYLIE: Now I have the same technical question that was posed to CHUM about the 15th channel adjacent interference between channel 23 and 38 and what your view is of how this could be resolved.
1901 MS BELL: I would like Dan Gold to answer that question.
1902 MR. GOLD: Obviously at the time we submitted our application, we didn't know what channel CHUM was going to pick and they didn't know what channel we were going to pick. We are aware of the 15th channel adjacent interference problem. In the event the Commission chooses to approve both applications, we would propose to move to channel 27. We believe that addresses the interference issues; and in fact we have a brief prepared for Industry Canada review.
1903 COMMISSIONER WYLIE: Thank you.
1904 Mr. Camilleri or Mr. Asper, you may want to -- counsel may have questions, or my colleagues, but after, you can re-tell us why we should approve those three applications.
1905 THE CHAIRPERSON: Thank you.
1906 Commissioner Langford...?
1907 COMMISSIONER LANGFORD: I just have one specific question and then just a little general enquiry. I know it is late but there is only one Phase I, so I guess we had better just keep marching.
1908 I am interested in exactly how much time on these Edmonton and Calgary repeater stations you would be selling ads, local ads. We got into a discussion of which particular shows. I thought I had it before that discussion, and I am sure the Vice-Chair has it because she is much more familiar with this brief, but I am just a little vague on the final number.
1909 MS BELL: It is three hours during the APTN block on a weekend, which again we are not retaining that money, and there is a possibility of eight and a half hours of ethnic programming, in which case we don't plan to be retaining that money either. So it is eleven and a half hours; none of which is in prime time.
1910 COMMISSIONER LANGFORD: None of which will accrue any revenues to Global?
1911 MS BELL: That is right.
1912 COMMISSIONER LANGFORD: So am I right in saying that other than some sort of fundraising for these people by selling local ads during their blocks, there will be absolutely no local ads sold on the repeater stations?
1913 MS BELL: On Calgary and Edmonton?
1914 COMMISSIONER LANGFORD: Right.
1915 MS BELL: That is correct.
1916 COMMISSIONER LANGFORD: Okay. Thank you for that. I am glad I asked because I wasn't clear on that.
1917 Now, in a general sense I kind of want to ask you the same question that I asked the CHUM representatives today because I am as confused in a very general sense. Everything is specific when you folks come in here. You all know your briefs. You all know your numbers. You are just marvellous on splits and percentages and points of percentages and decimals. You are fabulous at it. But the question why never seems to get answered. You will recall that I was confused because for some years now CHUM has been telling us, and we have it all on the record, that conventional is just not where you want to be these days. It is losing money. It cost them $46 million over the last few years in southern Ontario alone and may cost them another $10 million this year. All kinds of figures bandied around. It is horrible. It is horrible. But they want more. And we are viewing some of the similar things this afternoon from this panel, that "It is awful; conventional television is not where you want to go, but we want more".
1918 I guess I just don't understand why more is the solution. I don't understand why you wouldn't find another way of approaching this problem of getting yourself out of the CBC situation, giving them what they want.
1919 Why ask for more of something that by everyone's admission isn't a winner?
1920 MR. TOMIK: You ask the ultimate question, and you said it earlier today. We have not been before this Commission screaming the sky is falling at this or previous ones, but let me tell you the ceiling is starting to crack.
1921 You can see that in the degradation of convention audiences which, in our case for our stations range between 25 and 40 per cent degradation of audience over the last five years due to fragmentation. Specialty is growing like a bandit. We all know that.
1922 If you took a look at Alberta, for instance, and its revenues, all of the revenue growth, literally almost all of it over the last five years, has been in network television; not in spot television and not in local television.
1923 I don't think we are here asking today for more of conventional. The benefit today of what we are attempting to do in this licensing is to preserve a local voice that exists today.
1924 If you looked at Red Deer revenues in 1995 -- and somebody correct me if I am wrong, because it wasn't our station then.
1925 In 1995 Red Deer revenues were $8 million; today they are $4.5 million.
1926 If we don't make some changes to Red Deer and its ability to get revenue -- let's face facts, central Alberta is not a big economic hub -- that $4.5 million is going to be three pretty soon, then it is going to be two.
1927 And guess what? It is not just about Red Deer. It's about how can we find ways to ensure the economic viability of a number of small market stations who have a big problem because the network payments from CBC are no longer available to them. Where do they go?
1928 We have come forth with what I think is a very sound way to provide that financial stability for this one small station market, and it is not about more; it is not about new licences in the traditional sense.
1929 COMMISSIONER LANGFORD: At the licence renewal in Ottawa, some very specifically said we want all our different segments to stand on their own. I am not trying to tie it to you. But we want conventional to stand on its own and we don't want to be financing it out of revenues from specialty forever. We want all the different parts of our portfolio to be self-sustaining.
1930 You have said something similar here today. When Mr. Camilleri so eloquently did not answer the Vice-Chair's question a while ago, he did however provide some very interesting information.
1931 He seemed to be saying that successive television helps in other areas: keep the National Post afloat, for example.
1932 Well, why wouldn't we use some of the success in television and other areas to keep CKRD afloat? Why pour the money into the National Post?
1933 Fine, if you want to own a newspaper, own a newspaper. But why do we suddenly hear that every tiny element of your Global television portfolio has to be self-sustaining? Why isn't it perfectly legitimate for us to expect that if you are doing extremely well -- you have over 40 per cent of the advertising revenue in this Alberta market right now.
1934 You are doing extremely well. Why wouldn't you just prop this other one up until you can find another solution? Why does it have to suddenly stand on its own or be threatened with closure so soon after you purchased it?
1935 MR. TOMIK: Commissioner Langford, first of all, we haven't threatened closure. We have promised that we will not close this station in this licence term. We have racked up I believe $6 million worth of losses. The plan that we have put before you says it will be five years before we start breaking even. So we are not looking for this unit to stand on its own tomorrow.
1936 You said something earlier that is very important: that we are looking for solutions. What we found is for our small market stations every solution is going to be different.
1937 We have a solution for Red Deer that we think fits. It doesn't hurt the markets too much, and it gives it that financial equity going forward.
1938 We have been trying to find a solution for Kelowna. It is not the same solution, because every one of these markets is different. So we are looking for those solutions to try and do exactly what it is that you want.
1939 As we are looking for these solutions, the ground around us is changing dramatically. DTH and those kinds of signals, the way advertisers buy, the very nature of who an advertiser is any more. We are looking for solutions, and we think we have found one for this station. Hopefully, we will be before you with more solutions for the other smaller stations.
1940 COMMISSIONER LANGFORD: I may be thick, but it seems to me when I hear someone saying to me the ground is shifting around them -- and you spoke very eloquently, sir, about how you have to get into digital, and you repeated a little bit of it now, all the different aspects that you have to spend money on. It seems clear to me that the way not to do it is to stretch yourself even thinner.
1941 Why when you are being stretched so thin would you encourage us to stretch you even further? It is like being hanged, drawn and quartered. How much pain do you want?
1942 Why wouldn't the solution be to consolidate a little more?
1943 You have a station in Calgary now. You have one in Edmonton. You have two in Red Deer. Why isn't the solution to do more with a little less rather than less with a lot more?
1944 It seems to me to be counter-intuitive to everything I am hearing here today -- as it was with your colleagues from the other side. We hate it: give us more. We are in pain: hit me again.
1945 I don't understand why the solution is to have more pain. I simply don't get it.
1946 MR. ASPER: Can I take a stab at that?
1947 Nobody is saying we hate it. That is not the way anybody has put it and certainly CanWest I can say has never said "we are poor CanWest; give us more". What we have said is it is a more difficult environment.
1948 One of the ways in which we can survive in this fragmenting world with HDTV and other problems on the horizon, distant signals, grey market satellites, that is just life. That is just business. Some of it we think is a problem caused by or can be addressed by regulatory issues. It is just competition. We are happy with that.
1949 What we have said, and why CHUM applies for more outlets, why Craig Broadcasting wanted to get into Toronto, is because the business of programming is a high fixed cost business. What people in our position need is more revenues to try to amortize those costs.
1950 If the Craigs, for example, buy a program and it costs them $100 for that program, if they are in Alberta and Manitoba, they will get X dollars of revenue to cover the cost of that program. When they then get access to the Toronto market, typically the way the business works is yes, there may be more costs for the regional cost for that market. But typically what broadcasters do is they buy national rights to programs. That costs like the universe, $100. So the more territory you have to get the revenue to cover those costs, that is why people need access to the markets, the additional markets.
1951 COMMISSIONER LANGFORD: But the cost on the other side is we may lose some of the smaller players, some of the weaker players. You are incredibly strong in Alberta. Now you want to be stronger because you want to amortize out your costs. Well, good for you.
1952 What about the viewers? What about the people sitting in the livingroom? They want diversity. They want choice. If you amortize out your costs and grab the whole pie, are they going to be very happy?
1953 If you have figured out ways to get more of your programs in and to get more mileage out of your program purchases by getting different signals and getting them up, but the cost of that is the death or weakening of other players in the market, how does the consumer benefit from that? How does the viewer benefit? How does the concept of diversity of voices benefit?
1954 Why should we say to you: Oh, what a good idea to have a bigger reach and a bigger grasp when you already have the newspapers, and you are coming here next week for radio. You have television and you want more.
1955 Why is that a good risk for us to take? Why should we take that risk?
1956 MR. ASPER: Well, the last time we asked for more, as a result of us being stronger we launched the third national newscast, which is seen by $800,000 people a night. It gave us the courage to launch two additional public affairs shows, an additional breakfast show in Toronto. It gave us the courage to expand some of our newscasts that we are doing in some markets.
1957 I wouldn't equate revenue share with lack of diversity. I think those are two very different issues.
1958 Because we have more revenues does not mean, first of all, that any smaller player in this market or any other market is going to go away. If Craig Broadcasting, for example, as they likely have or will, says this is going to hurt us, well, guess what, they are in Toronto launching a new television station that is going to hurt us and hurt CHUM probably even more.
1959 The players on the playing field have been pretty much set by the competitive environment and I don't think this application in particular is going to in any way hurt whatever smaller players there are in the market.
1960 The players are who they are and most of them, if not all of them, are able to withstand the very minimal, we think, impact this will bring to the market.
1961 So not only are we as a company growing and giving back more to the system by creating new programming -- not to mention, by the way, the additional 20 hours of local programming in Hamilton we put back and six in Victoria.
1962 As we grow, first of all, we are adding new programming to this market. Even though it is under common ownership, that is completely irrelevant to the fact that a new program schedule is coming to this market.
1963 I see there is additional programming nationally that we are creating. There is additional local programming that we are creating and bringing to different markets. We are not so big that we are hurting anyone.
1964 For example, I think in this market our share of viewing, even with approval of this application, will be less than it was three years ago because of fragmentation.
1965 COMMISSIONER LANGFORD: The share revenue will be pretty healthy.
1966 MR. ASPER: But not in any way destructive to anybody.
1967 COMMISSIONER LANGFORD: We may hear more about that tomorrow morning. Thank you very much.
1968 MR. ASPER: Thank you.
1969 THE CHAIRPERSON: Counsel.
1970 MR. McCALLUM: I will just pick up on a few points, if I may.
1971 At the beginning of the discussion with Commissioner Wylie you spoke about discussions that you had had with APTN representatives, and you said they could not appear tomorrow because one person had had surgery.
1972 I didn't really get a sense of where did the discussions go. What was the outcome of the discussions with APTN?
1973 MS BELL: We had discussions about making a three-hour block available to them, and we have not signed an agreement with them. They are excited about having access to that three-hour block.
1974 MR. McCALLUM: What are their preliminary indications; that they are favourable to that, or not?
1975 MS BELL: Yes, they are, absolutely.
1976 MR. McCALLUM: What would happen if for whatever reason APTN did not come through and did not want to sign that agreement or could not sign that agreement?
1977 MS BELL: Then we would replace that three-hour block with either ethnic or aboriginal programming from another source.
1978 I don't think that is going to be the case.
1979 MR. McCALLUM: That would be your commitment, to replace it with one or either of those two.
1980 MS BELL: That's right. The commitment is to make three hours available to APTN on Sunday afternoon. Should they choose to not utilize the entire three hours or not use it at all, then we would use that time to air other ethnic or aboriginal programming.
1981 MR. McCALLUM: That is simply replacing the three hours with that same time. Is that right?
1982 MS BELL: In the same time block. That is correct.
1983 MR. McCALLUM: And that is over and above what you had already committed to in those categories for ethnic and aboriginal. Is that right?
1984 MS BELL: Yes, it is.
1985 MR. McCALLUM: In terms of the "First Nations Report", I think you had committed to broadcasting at least 260 original six-minute features annually and 39 original episodes of "First Nations Report" per year.
1986 Is that correct?
1987 MS BELL: That is correct.
1988 MR. McCALLUM: If that were made a condition of licence, that would be acceptable to you?
1989 MS BELL: Yes, it would.
1990 MR. McCALLUM: In addition, you had made a number of undertakings in the course of questioning. I won't detail them all at the present time, but I think we had in mind that you might come back tomorrow with as many responses as possible.
1991 Would that be acceptable?
1992 MS BELL: Yes, it would.
1993 MR. McCALLUM: In terms of the condition of licence that was discussed with Commissioner Wylie on ethnic programs and the number of groups -- five languages, five groups -- if the condition were a minimum of 36 hours and 15 minutes of foreign language ethnic programs per month directed to the minimum of the number of groups and languages that were discussed, is that reflective of what you would be willing to commit to a condition of licence to?
1994 MS BELL: Yes, it is.
1995 MR. McCALLUM: You have also undertaken to produce, I think, a revised schedule that will show Sunday news at 11:00 p.m.
1996 Is that going to be a half-hour or a one-hour newscast?
1997 MS BELL: It's 30 minutes.
1998 MR. McCALLUM: Thirty minutes?
1999 MS BELL: Correct.
2000 MR. McCALLUM: You indicate that Global will be transferring the assets at Coronation, the rebroadcasting antenna that serves Red Deer to CBC by way of donation, and that presumably Global would get a tax receipt for those assets.
2001 Can you give me an estimated value of the assets that will be donated to CBC?
2002 MS BELL: I am not sure if we are getting a tax receipt for that. I am just not aware.
2003 The value is estimated at between one and $1.2 million.
2004 MR. ASPER: Thanks for the idea, though.
2005 MS BELL: We had not thought of that.
2006 MR. McCALLUM: You spoke of the alternate frequency Channel 27 in response to one of the questions by Commissioner Wylie.
2007 If you had to go to Channel 27, for whatever reason, what would be the impact on the business plan that would result from that channel change?
2008 MS BELL: There is none.
2009 MR. McCALLUM: Further, Madam Wylie asked a question about duplication or programming overlap between Global and CH, I guess in Red Deer, and you said that there would be no more than 10 per cent programming overlap between the two stations.
2010 Did I get that correct?
2011 MS BELL: That's correct.
2012 MR. McCALLUM: Could the Commission design a condition of licence limiting the amount of duplication of program titles in each broadcast week between those two stations, CKRD-TV and CITV TV-1 Red Deer?
2013 MS BELL: I am assuming -- we have not considered that. I am not sure what we mean by that.
2014 MR. McCALLUM: If an episode of "Friends", for example, ran on one of the stations, could it be the case that "Friends" would not run on the other, for example?
2015 MS BELL: I would like to ask Doug Hoover to answer that.
2016 MR. HOOVER: That is our current practice.
2017 Our current practice is not to run the same series, even though it may be different episodes, within the same broadcast year.
2018 MR. McCALLUM: But the 10 per cent flexibility that you discussed would allow you to do that and would allow you to run "Friends", for example.
2019 MR. HOOVER: I'm sorry, I meant over and above the 10 per cent.
2020 Within the 10 per cent we do air in some markets a repeat of the same episode within the same broadcast year.
2021 MR. McCALLUM: So could we design a condition of licence around the 10 per cent flexibility you are asking for and program titles in each broadcast week?
2022 MR. HOOVER: I'm sorry, I am still not clear.
2023 If we have 10 per cent duplication, by its very nature if it is a duplication it has to be the same program title. I am not quite sure if I follow a condition that would restrict it from being the same program title.
2024 MR. McCALLUM: If we made the no more than 10 per cent programming overlap between Global and CH, which is your commitment, if we made that into a condition of licence, you would have no difficulty with that, I take it.
2025 MR. HOOVER: We treat that as a condition now.
2026 MR. McCALLUM: Thank you, Mr. Chairman.
2027 THE CHAIRPERSON: Thank you.
2028 I guess this is perhaps addressed to you, Mr. Tomik.
2029 I must say, in following the discussion between Mrs. Wylie and you, I was quite confused about how you had built up your revenues. I think the source of it is probably the alternation between using combined market and the market.
2030 I wonder whether you could de-average -- and I am going from your deficiency responses here -- because you are using 0.2 in the 25-to-54 demographic average rating in the combined markets as the key to building that up.
2031 I guess if you broke that out among the three markets and did three tables, we could calculate your revenues in that way, could we not?
2032 MR. TOMIK: Absolutely. Where the confusion comes in is between a different set of base numbers. It comes into revenues, and it also comes into audiences.
2033 THE CHAIRPERSON: Right.
2034 MR. TOMIK: So I will be happy to put those schedules together for you.
2035 THE CHAIRPERSON: So if you could do that.
2036 Then if you could, for each of those markets, indicate how those rating levels translate into market share in those markets, I think we would then have the confusion possibly alleviated.
2037 If you could do that by the morning, again, intervenors could perhaps have a look at whatever part of that was not confidential.
2038 MR.TOMIK: We will have it done for you, sir.
2039 THE CHAIRPERSON: Thank you.
2040 MR. McCALLUM: Mr. Chair, could I have another attempt at the clarification that was asked for?
2041 THE CHAIRPERSON: Perhaps you might sleep on that one. It is up to you.
2042 MR. McCALLUM: I just wanted to -- I was asked to clarify the question about the duplication and I did not immediately think of an example. So I wondered if I could try again to provide a better example.
2043 THE CHAIRPERSON: Just to see if you are awake, Mr. Hoover.
2044 Go ahead.
2045 MR. McCALLUM: It would be a condition of licence -- and I am not saying the Commission will; I am just asking hypothetically -- a condition of licence limiting the amount of duplication of program titles in each broadcast week between the two Red Deer stations. So to give an example concretely, if "Friends" was running on one station season three, could there be a condition preventing the other station from running, for example, "Friends" season four in the same week?
2046 MR. HOOVER: It is a very difficult condition for us because we buy strip rights to programs after they have been on the air for perhaps five years. So in our current circumstance, we may be airing the current prime time series of "Will and Grace", for example, and "The Seventies Show", for example, on our Edmonton and Calgary stations while running the strip rights to the same program on our Red Deer station. It would be a very onerous restriction not to be able to do that and very difficult for us to monitor because we do not control the scheduling of the prime time U.S. schedule; the distributor would instruct us which episodes to air. So we have not considered the airing of syndicated episodes, or strips rights as I explained, a duplication of the 10 per cent because it is not the same episode of the program that is airing on the Global signal.
2047 MR. McCALLUM: So are you saying it is not even caught by the duplication of program titles, the 10 per cent rule?
2048 MR. HOOVER: It is not the same program that is running in the prime time schedule of the Global station. It is not the same episode. It is episodes from previous years. Therefore, it is not considered part of the overlap.
2049 MR. McCALLUM: Thank you, Mr. Chairman.
2050 THE CHAIRPERSON: Thank you very much.
2051 We will resume with the intervention phase at 9:30 tomorrow morning.
2052 MS BELL: May I make a clarification, please, because it has come up twice already and I am a little nervous?
2053 Commissioner Langford and legal counsel, you have referred a couple of times to us having two stations in Red Deer. We don't have two stations in Red Deer. Red Deer is one local station and what we have applied for are rebroads of the Red Deer signal in Calgary and Edmonton. But we don't have a second signal in Red Deer. Maybe it is just the way you phrased it but it seemed like it was unclear to me, or perhaps unclear to you. I wanted to make sure that was clarified.
2054 MR. McCALLUM: What I was referring to myself --
2055 MS BELL: It is a transmitter.
2056 MR. McCALLUM: But the CITV-TV-1 has local programming originating in Red Deer right now. Is that not correct?
2057 MS BELL: It is actually produced in Red Deer and put on a transmitter. It is a transmitter. CITV-1 is a transmitter.
2058 MS McGINLEY: CITV-1 is a rebroad of our ITV signal coming out of Edmonton.
2059 MS BELL: It is not another station. It is simply a rebroad that in fact we have a commitment to do two hours and a half of local programming because it is coming into that marketplace. But it is not a Red Deer station.
2060 COMMISSIONER WYLIE: Ms Bell, you are almost ready for the court of appeal by now.
--- Laughter / Rires
2061 COMMISSIONER WYLIE: If I am a viewer in Red Deer, do I see two signals emanating from your company?
2062 MS McGINLEY: One signal being ITV-1 and one signal being RDT --
2063 COMMISSIONER WYLIE: One and one is two?
--- Laughter / Rires
2064 MS BELL: Technically, it is not a Red Deer station.
2065 THE CHAIRPERSON: We will think on that overnight.
--- Whereupon the hearing adjourned at 1943, to resume
on Tuesday, June 17, 2003 at 0930 / L'audience est
ajournée à 1943 pour reprendre le mardi 17 juin
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