TRANSCRIPT OF PROCEEDINGS BEFORE

             THE CANADIAN RADIO‑TELEVISION AND

               TELECOMMUNICATIONS COMMISSION

             TRANSCRIPTION DES AUDIENCES DEVANT

              LE CONSEIL DE LA RADIODIFFUSION

           ET DES TÉLÉCOMMUNICATIONS CANADIENNES

                       SUBJECT/SUJET:

VARIOUS BROADCASTING APPLICATIONS /

PLUSIEURS DEMANDES EN RADIODIFFUSION

HELD AT:                              TENUE À:

Conference Centre                     Centre de conférences

Outaouais Room                        Salle Outaouais

Portage IV                            Portage IV

140 Promenade du Portage              140, promenade du Portage

Gatineau, Quebec                      Gatineau (Québec)

April 30, 2007                        Le 30 avril 2007

Transcripts

In order to meet the requirements of the Official Languages

Act, transcripts of proceedings before the Commission will be

bilingual as to their covers, the listing of the CRTC members

and staff attending the public hearings, and the Table of

Contents.

However, the aforementioned publication is the recorded

verbatim transcript and, as such, is taped and transcribed in

either of the official languages, depending on the language

spoken by the participant at the public hearing.

Transcription

Afin de rencontrer les exigences de la Loi sur les langues

officielles, les procès‑verbaux pour le Conseil seront

bilingues en ce qui a trait à la page couverture, la liste des

membres et du personnel du CRTC participant à l'audience

publique ainsi que la table des matières.

Toutefois, la publication susmentionnée est un compte rendu

textuel des délibérations et, en tant que tel, est enregistrée

et transcrite dans l'une ou l'autre des deux langues

officielles, compte tenu de la langue utilisée par le

participant à l'audience publique.

               Canadian Radio‑television and

               Telecommunications Commission

            Conseil de la radiodiffusion et des

               télécommunications canadiennes

                 Transcript / Transcription

            VARIOUS BROADCASTING APPLICATIONS /

            PLUSIEURS DEMANDES EN RADIODIFFUSION

BEFORE / DEVANT:

Konrad W. von Finckenstein        Chairperson / Président

Rita Cugini                       Commissioner / Conseillère

Helen del Val                     Commissioner / Conseillère

Stuart Langford                   Commissioner / Conseiller

Elizabeth Duncan                  Commissioner / Conseillère

ALSO PRESENT / AUSSI PRÉSENTS:

Chantal Boulet                    Secretary / Secrétaire

HELD AT:                          TENUE À:

Conference Centre                 Centre de conférences

Outaouais Room                    Salle Outaouais

Portage IV                        Portage IV

140 Promenade du Portage          140, promenade du Portage

Gatineau, Quebec                  Gatineau (Québec)

April 30, 2007                    Le 30 avril 2007

- iv -

           TABLE DES MATIÈRES / TABLE OF CONTENTS

                                                 PAGE / PARA

PHASE I

PRESENTATION BY / PRÉSENTATION PAR:

CTVglobemedia Inc. on behalf of CHUM Limited        3 /   24

                 Gatineau, Quebec / Gatineau (Québec)

‑‑‑ Upon commencing on Monday, April 30, 2007 at 0930 /

    L'audience débute le lundi 30 avril 2007 à 0930

LISTNUM 1 \l 11                THE CHAIRPERSON: Good morning, everybody. Bonjour, tout le monde.

LISTNUM 1 \l 12                This is a hearing into CTV's Application.

LISTNUM 1 \l 13                L'ordre sera le suivant : premièrement, CTV; après ça, ceux qui appuient la soumission de CTV; après, ceux qui opposent; et finalement, ceux qui ont des commentaires sur un aspect ou l'autre.

LISTNUM 1 \l 14                We have a full day, so we will now go ahead.

LISTNUM 1 \l 15                Madame Boulet, would you make certain procedural announcements.

LISTNUM 1 \l 16                Thank you.

LISTNUM 1 \l 17                LA SECRÉTAIRE : Merci, Monsieur le Président. Bonjour, tout le monde.

LISTNUM 1 \l 18                Permettez‑moi de porter à votre attention quelques points d'ordre pratique qui contribueront au bon déroulement de cette audience publique.

LISTNUM 1 \l 19                Simultaneous interpretation service is available during the public hearing. Receivers are available at the commissionaire's desk outside the hearing room.

LISTNUM 1 \l 110               The English interpretation is on channel 7 and the French on channel 8.

LISTNUM 1 \l 111               When you are in the hearing room, we would ask you to please turn off your cell phones, beepers and BlackBerrys, as they are an unwelcome distraction and they cause interference on the internal communication system used by our translators.

LISTNUM 1 \l 112               We would appreciate your cooperation throughout the hearing.

LISTNUM 1 \l 113               As you will have noticed there is a camera in front of the room and the purpose is to retransmit the applicant's and the intervenors' presentations for the public in the room.

LISTNUM 1 \l 114               We expect this hearing to take approximately two days. We will begin at 9:00 or 9:30 and finish approximately at 4:30. We'll take about an hour for lunch and a morning break and afternoon break.

LISTNUM 1 \l 115               We will let you know of any schedule changes that may occur.

LISTNUM 1 \l 116               Pendant toute la durée de l'audience, vous pourrez consulter les documents qui font partie du dossier public dans la salle d'examen situé à la Salle numéro V, à l'arrière de la salle Pontiac. Vous y avez accès via le corridor situé à votre droite à la sortie de la salle d'audience.

LISTNUM 1 \l 117               Vous pouvez également communiquer avec la salle d'examen au 819‑994‑7929.

LISTNUM 1 \l 118               Une transcription quotidienne des comparutions sera affichée sur le site web du Conseil peu après la fin de l'audience.

LISTNUM 1 \l 119               If you wish to obtain all or part of the transcript of these proceedings, you may speak to the Court Reporter sitting at the table to my right or communicate with the company Mediacopy directly.

LISTNUM 1 \l 120               And now, Mr. Chairman, we will proceed with the presentation on the application by CTVglobemedia Inc. (CTVgm), formerly Bell Globemedia Inc., on behalf of CHUM Limited, seeking authority for the transfer of effective control of CHUM to CTVgm through its wholly‑owned subsidiary 1714882 Ontario Inc.

LISTNUM 1 \l 121               Appearing for the applicant is Mr. Ivan Fecan, who will introduce his colleagues.

LISTNUM 1 \l 122               Mr. Fecan, you will have 20 minutes to make your presentation thereafter.

LISTNUM 1 \l 123               Please go ahead.

PRESENTATION / PRÉSENTATION

LISTNUM 1 \l 124               MR. FECAN: Good morning, Mr. Chairman, members of the Commission and of course staff.

LISTNUM 1 \l 125               My name is Ivan Fecan, and I am president and CEO of CTVglobemedia. It gives me great pleasure to be here today to present our application to acquire effective control of CHUM.

LISTNUM 1 \l 126               Before beginning our presentation, I would like to introduce our panel for the record.

LISTNUM 1 \l 127               Seated to my right is Kathy Robinson, our regulatory counsel at Goodmans; to my left is Rick Brace, president of CTV; Dawn Fell, group vice‑president of human resources at CTVglobemedia and team leader of our CTV‑CHUM integration project; Brian McClusky, CTV's vice‑president of revenue management; Robin Fillingham, our CFO and chief administrative officer; Allan Mayne, CHUM's CFO and Jay Switzer, the president and CEO of CHUM; and Paul Ski, president of CHUM Radio.

LISTNUM 1 \l 128               In the second row, starting from your left, we have Jim Waters, chairman of CHUM's Board of Directors; Fred Sherratt, a director of CHUM's board; Sarah Crawford, CHUM's vice‑president of public affairs; Paul Sparkes, senior vice‑president corporate and public affairs for CTVgm; Rob Malcolmson of Goodmans; Debra McLaughlin of Strategic Inc.; Steve Armstrong of Armstrong Consulting; David Kirkwood, CHUM Television's executive vice‑president of sales and marketing; Peter Palframan, senior vice‑president of operations at CHUM Television, and Roma Khanna, senior vice‑president of content at CHUM Television.

LISTNUM 1 \l 129               Finally, in the third row, beginning again from your left, is Ryan Voegeli of Merrill Lynch. Beside Ryan is Corrie Coe, CTV's director of program administration and administrator of our BCE‑CTV benefits; Susanne Boyce, president of CTV programming and chair of the Media Group at CTV; and Andre Serero, group vice‑president legal and corporate secretary for CTVgm.

LISTNUM 1 \l 130               I would also like to introduce the independent trustee of the CHUM Services, John D. McKeller, who is seated in the front row of the audience.

LISTNUM 1 \l 131               Before I begin, I would like to take a minute of your time to say how meaningful this particular hearing is to me.

LISTNUM 1 \l 132               I've been before the Commission, if not more than any other broadcaster, certainly as often. But for me this hearing has a special significance because just under 30 years ago, at the ripe old age of 24, I left CBC Radio to begin my television career at Citytv, Toronto.

LISTNUM 1 \l 133               I didn't own a suit or a tie, my hair was long, and brown. I was a green kid, but it was there that I co‑created City Pulse News with a legendary Moses Znaimer from whom I learned much, especially about risk taking.

LISTNUM 1 \l 134               Canadian television at that time was spectacularly non‑ethnic and dry. The vibrancy and reality of the street was not portrayed on the screen.

LISTNUM 1 \l 135               Citytv changed all that and stood conventional television on its head here in Canada and abroad. It was bold and innovative, culturally diverse and intensely local. It hired people and aired shows never before seen on our screens.

LISTNUM 1 \l 136               I was there when CHUM bought Citytv and, in doing so, provided the long‑term stability and financial resources for City to grow, and grow it did.

LISTNUM 1 \l 137               I love the place, but never in my wildest dreams could I have imagined that almost 30 years later, in a suit and tie, with grey hair, I would now be seeking approval for the purchase of CHUM by CTVglobemedia.

LISTNUM 1 \l 138               It is an honour for me to be here, and thank you for indulging me. Now to the matter at hand.

LISTNUM 1 \l 139               This transaction marks the departure of the Waters family from broadcasting after some 53 years. Jim Waters, Allan's oldest son, is Chairman of the Board of CHUM Limited and Fred Sherratt was Allan's partner since the early sixties.

LISTNUM 1 \l 140               Our presentation this morning begins with Jim.

LISTNUM 1 \l 141               MR. WATERS: Mr. Chairman, members of the Commission, immediately following the death of my father and CHUM founder, Allan Waters, in early December 2005 it was not our intention to sell CHUM.

LISTNUM 1 \l 142               In fact, I said so publicly later that month at the CHUM Limited annual meeting of shareholders.

LISTNUM 1 \l 143               However, my brother Ron and I were appointed executors of the Allan Waters' estate.

LISTNUM 1 \l 144               As chairman, vice‑chairman and executors, Ron and I now had to decide not only what was best for CHUM and all its shareholders, but also what was best for the family.

LISTNUM 1 \l 145               On the family side, we knew that it had always been dad's wish that his life's work at CHUM would provide stability for his family well into the future.

LISTNUM 1 \l 146               On the business side, CHUM's radio division was holding its own. But, as was the case with other broadcasters, our conventional television business was suffering.

LISTNUM 1 \l 147               We took on significant debt, including the purchase of Craig Media, to try and improve our television business. But things were simply not getting any better.

LISTNUM 1 \l 148               It was clear that due to fragmentation and new media, the conventional television business was changing dramatically.

LISTNUM 1 \l 149               We came to the realization that there was room for only a limited number of players if it was to survive.

LISTNUM 1 \l 150               After very careful consideration, we concluded that the best decision for CHUM, and all its shareholders, including the Waters family, was to sell the company.

LISTNUM 1 \l 151               We held a limited auction, looking for a company that would be the best buyer and the best custodian of the CHUM assets and our people.

LISTNUM 1 \l 152               Over the years I knew that the late Ken Thompson and my father had spoken a number of times. Mr. Thompson had said if you are going to do something, to call him.

LISTNUM 1 \l 153               Three or four years ago Ron and I met David Thompson, and he expressed the same interest to us. The Thompsons wanted to see their holdings in Canada grow.

LISTNUM 1 \l 154               In addition, Ron and I have known Ivan Fecan since his days with Citytv, and in recent years have admired his leadership of CTV.

LISTNUM 1 \l 155               We are extremely pleased that we were able to complete this transaction with CTVglobemedia.

LISTNUM 1 \l 156               We know that with your approval of this application, CHUM will be falling into good hands, and we strongly believe the strengths CTV brings to the table will ensure the future of CHUM's television stations, and that they will be good custodians of CHUM's other highly successful broadcasting undertakings.

LISTNUM 1 \l 157               MR. FECAN: Thanks Jim.

LISTNUM 1 \l 158               First I'd like to talk about why this proposal is good for Canada and how it actually will expand the diversity of voices.

LISTNUM 1 \l 159               Growth is more than a good thing. It's a necessity for a strong economy here in Canada and around the world.

LISTNUM 1 \l 160               Strong economies are based on strong businesses, with the ability to innovate and adapt.

LISTNUM 1 \l 161               As we all know in today's business world, there's no such thing as a status quo. You either go forward or you are left behind.

LISTNUM 1 \l 162               But, in the media world, the rate of change is explosive. Much of this is driven by the advent of new media which has no borders, recognizes no regulated system and has no particular interest in furthering Canadian culture.

LISTNUM 1 \l 163               It is within this context that we are asking for the right to grow. We believe that in order to compete, and indeed survive, we must achieve more scale.

LISTNUM 1 \l 164               In my view, scale, in and of itself, is neither good nor bad. It's an instrument. And, like any instrument, it depends on what you do with it.

LISTNUM 1 \l 165               To best understand how we wish to utilize this new scale, it's instructive to look at what we have been able to accomplish with the increased size previously granted to us by the Commission.

LISTNUM 1 \l 166               Several years ago our predecessor company, Baton Broadcasting, was awarded the privilege of buying the CTV network, most of its affiliated stations, TSN and Discovery, and launching several new and conventional specialty licenses.

LISTNUM 1 \l 167               From those pieces came the CTV Inc. of today, a broadcasting company that fulfilled the destiny that the founders of CTV in the 1960s only dreamt about.

LISTNUM 1 \l 168               We needed and used that scale to help create the Canadian programs of today are the top‑rated English Canadian programs in virtually every genre.

LISTNUM 1 \l 169               The number one comedy, "Corner Gas"; the number one drama series, "Degrassi: The Next Generation"; the number one Canadian series since the advent of electronic ratings, "Canadian Idol"; the number one award show, the Junos.

LISTNUM 1 \l 170               Scores of many important Canadian movies and mini‑series, many of whom won their time periods while deeply touching Canadians. I'm thinking of the "Terry Fox Story", "The Louise Arbour Story", "Lies of the Saints".

LISTNUM 1 \l 171               In fact, over 24 of our movies have each achieved audiences of over one million viewers in the last eight years. And, by the way, many of these programs are making a huge impact internationally.

LISTNUM 1 \l 172               No other broadcaster, public or private, can lay claim for this list of achievements.

LISTNUM 1 \l 173               Some of these efforts were kick‑started by the BC benefits, but this track record of invasion and audience appreciation continues today without the push of those benefits.

LISTNUM 1 \l 174               These achievements were made possible by the growth, the scale, that you the Commission approved. And this is precisely what we at CTVglobemedia want to do again. We want to make a difference again. This time with CHUM.

LISTNUM 1 \l 175               As you are all aware, our system is under increasing strain, a strain seen most clearly in conventional television where the city stations are teetering at the financial edge.

LISTNUM 1 \l 176               The approval of this application not only ensures the survival of the CHUM services, it will give the people of CHUM the opportunity to once again be risk taking trail blazers.

LISTNUM 1 \l 177               We will provide the resources to let City be City, to enrich the programming of CHUM specialty services, and to provide the backing, financial and otherwise, to further develop CHUM's radio group.

LISTNUM 1 \l 178               We will give CHUM Services the opportunity to no longer be forced to make comprises for the short term, but to make decisions for the long term.

LISTNUM 1 \l 179               In short, we will do for CHUM what CHUM did for City 30 years ago.

LISTNUM 1 \l 180               Our core belief, my core belief, is that homogenization destroys value. The corollary being the value is created through distinctive voices.

LISTNUM 1 \l 181               Our proposal not only preserves diversity, I submit it actually enhances diversity. After all, asking someone to be different, without giving them the economic freedom to do so, is hollow.

LISTNUM 1 \l 182               I know, as with any applications, there are all sorts of issues you need to examine, some more complex than others.

LISTNUM 1 \l 183               Perhaps one of the most difficult issues is the matter of the twin sticks.

LISTNUM 1 \l 184               At the essence, this issue is about diversity of voices.

LISTNUM 1 \l 185               This morning we are making a new commitment to demonstrate our seriousness on this matter. We pledge that there will be zero overlap in programming, that's zero overlap, between any CTV station and any Citytv station, measured not just on a weekly basis, but on an annual basis.

LISTNUM 1 \l 186               This guarantees that both screens will remain measurably and demonstrably different with the one twenty hour per year cultural exemption that we propose.

LISTNUM 1 \l 187               This commitment is more than any other broadcaster has made in asking for exemptions and been granted those exemptions to your two stations in a market rule.

LISTNUM 1 \l 188               When you combine that with our proposed journalistic safeguards, again more than any other broadcasters has put forward, we believe we've set a new benchmark in guaranteeing diversity.

LISTNUM 1 \l 189               Broadly speaking, I think you can divide the twin stick markets into two categories.

LISTNUM 1 \l 190               In the Toronto/Hamilton market and in the Vancouver/Victoria market there is much diversity in media.

LISTNUM 1 \l 191               This application doesn't negatively impact that, as we are essentially stepping into the shoes of a pre‑existing exception.

LISTNUM 1 \l 192               In addition, Rogers, if approved, will prove to be a very strong new entrant in these markets and create additional diversity.

LISTNUM 1 \l 193               This is because in Toronto there currently exists some 33 hours per week of programming overlap between the CHUM station, City and CKVR.

LISTNUM 1 \l 194               And in Vancouver there is some 12 hours per week of programming overlap between CHUM station CKVU and CIVI.

LISTNUM 1 \l 195               Under our proposal that overlap will disappear because the Rogers programming will be new and there will be zero overlap between our two services.

LISTNUM 1 \l 196               Calgary, Edmonton and Winnipeg are different cases. CanWest does have an imperfect second stick in Alberta, which is seen in Calgary and Edmonton on basic cable.

LISTNUM 1 \l 197               And, in a sense, CHUM also currently has an imperfect twin stick in Alberta through the access stations, which are allowed to air certain commercial programming in prime time with simulcast privileges.

LISTNUM 1 \l 198               However, with your approval, access will now be owned by Rogers.

LISTNUM 1 \l 199               We believe our promise of zero programming overlap and journalistic safeguards will ensure the city stations in Edmonton, Calgary and Winnipeg remain distinct.

LISTNUM 1 \l 1100              I would also note that we've received an overwhelming number of positive interventions, and only a handful of negative ones from citizens in those three communities who believe we will be good stewards of their stations.

LISTNUM 1 \l 1101              There are those that may suggest that we should divest these three stations. Here are the three reasons why this is not in the public interest.

LISTNUM 1 \l 1102              One, efficiency. Love it or hate it, the fact is that the economic engine of Canadian conventional television is still American programming.

LISTNUM 1 \l 1103              Canadian private broadcasters, who don't enjoy the guaranteed support of public money, must buy the American to finance the Canadian. Hollywood studios force package. You can't just buy the hits.

LISTNUM 1 \l 1104              CanWest can efficiently buy volume because they have two conventional networks. We have had to match their volume so that we could, too, get the hits.

LISTNUM 1 \l 1105              However, unlike CanWest, we don't have the second network to air those shows. The extra programming we buy goes to waste; thus, it doesn't earn money for us or for the Canadian system.

LISTNUM 1 \l 1106              This is a lost opportunity. Instead, some of this program, that which is appropriate to City's brand, could be used on City to approve its revenues and support its Canadian programming.

LISTNUM 1 \l 1107              In other words, the excess American can be put to work supporting Canadian production.

LISTNUM 1 \l 1108              The second reason is that the loss of City programming in these community takes away a unique voice.

LISTNUM 1 \l 1109              Alberta is Canada's third largest and fastest growing market. Manitoba is our country's heartland. Its citizens deserve the opportunity to continue seeing City's distinctive brand of programming.

LISTNUM 1 \l 1110              If we were to divest these stations, the buyer would almost certainly be someone else seeking scale with their own programming line up. Consequently, City's programming would disappear in these markets.

LISTNUM 1 \l 1111              The third reason is the health of Citytv. A healthy City requires national scale, which is why CHUM expanded City from just Toronto in the first place. You need national scale to afford top quality Canadian programming, to enlist top talent, and to secure national sponsors.

LISTNUM 1 \l 1112              We've all seen what happens to stand‑alone TV stations, even in major markets.

LISTNUM 1 \l 1113              Diversity is not well served by weakening City.

LISTNUM 1 \l 1114              My point is that Citytv is one of the most iconic media brands in Canadian history. It's worth fighting for. It's worth strengthening and reinvigorating.

LISTNUM 1 \l 1115              In summation, we believe that the combination of CTV and CHUM conventional, radio, specialty and new media, along with its most important asset, its talented people, will create a stronger Canadian champion in media.

LISTNUM 1 \l 1116              This will give rise to new opportunities for the production and promotion of Canadian programming and artists.

LISTNUM 1 \l 1117              It will enhance the quality and distinctiveness of programming available to Canadian audiences and will create a solid base to face the challenges of the unregulated universe.

LISTNUM 1 \l 1118              We believe that CTVglobemedia in particular is uniquely positioned to achieve this.

LISTNUM 1 \l 1119              CTV and CHUM have a history. We have a special understanding of who and what CHUM is and what it could be.

LISTNUM 1 \l 1120              We also have a history of successfully managing diverse creative entities and delivering on‑screen results, and we have the reputation and the track record of keeping our promises.

LISTNUM 1 \l 1121              For all these reasons, we respectfully ask you to approve our applications.

LISTNUM 1 \l 1122              We look forward to your questions.

LISTNUM 1 \l 1123              THE CHAIRPERSON: Thank you Mr. Fecan.

LISTNUM 1 \l 1124              Now, this has been divided, sort of, into various subject matters by your application, and we'll do our questioning on that basis.

LISTNUM 1 \l 1125              First of all on the whole issue of media concentration. I have read your submission very carefully and you suggest that, in effect, there's no room for intermediate players and that's part of it.

LISTNUM 1 \l 1126              Can you elaborate on that? I find that sort of difficult to believe ‑‑ not believe, but to accept or understand, because CHUM was not a failing network, and you've referred to CHUM, you've referred to the upcoming purchase of Standard by Astral, both of those intermediate players were not suffering. As far as I understand it was a question of the young generation not taking over, but wanting to sell out.

LISTNUM 1 \l 1127              So what is the basis of your relatively categorical statement that there's no role for intermediate players in the Canadian market?

LISTNUM 1 \l 1128              MR. FECAN: My reason for that statement, and let's parse it in pieces.

LISTNUM 1 \l 1129              CHUM Radio is doing well. When we originally made this deal, was one of the larger groups. Today it's, if you approve the Astral‑Standard merger, it will be the smallest of the four. But it's doing relatively well. It needs support. It needs backing to grow.

LISTNUM 1 \l 1130              CHUM's specialty is doing relatively well as well.

LISTNUM 1 \l 1131              But, as Jim Waters pointed out, and I think as the evidence in our application pointed out, the conventional stations are not doing well. The As are probably not doing well at all, and the Citys are teetering on the financial edge.

LISTNUM 1 \l 1132              There's a huge symbiotic relationship between the Citytv conventional stations and the specialty stations. They exchange staff and programming back and forth. The health of one affects the health of the other.

LISTNUM 1 \l 1133              And so, when you consider the new media, when you consider the unregulated world, when you consider economies of scale, putting more money on the screen, putting more money into programming where it can create differences, I do believe that you either have to have scale to create those efficiencies, or you have to be small to have as much nimble ability as possible, and I think it's very difficult in the middle.

LISTNUM 1 \l 1134              THE CHAIRPERSON: Thank you. And you made a very detailed explanation why this is in the interests of CTV, but I am not quite so sure whether I quite understood why it is in the public interest that this deal be approved.

LISTNUM 1 \l 1135              MR. FECAN: It will be in the public interest because it'll allow CHUM, the people of CHUM, the programs of CHUM, to be the risk taking trail blazers that they were at the beginning, that parts of them still are, but parts of them are no longer able to be because they need to ‑‑ they need to make decisions for a shorter‑term basis rather than the long‑term basis.

LISTNUM 1 \l 1136              We want to let City be City. And City hasn't been able to be City in the last few years because it needed to be the breadwinner for a whole bunch of things.

LISTNUM 1 \l 1137              THE CHAIRPERSON: But you're a public company, too. You have to justify to yourself to shareholders.

LISTNUM 1 \l 1138              How come you can take longer views than City can take right now?

LISTNUM 1 \l 1139              MR. FECAN: Well, we're not a public company. We're a private company.

LISTNUM 1 \l 1140              THE CHAIRPERSON: Sorry, you're absolutely right, but your shareholders will presumably want to see return on their equity.

LISTNUM 1 \l 1141              MR. FECAN: Our shareholders understand that with the economies of scale we can make decisions for a longer term. And it has been ‑‑ and our shareholders, many of them, if not all of them, have been fortunate in giving us the opportunity to think in terms of multiple years, not quarters.

LISTNUM 1 \l 1142              It doesn't mean we don't have to perform on a sound financial basis, but it does mean that we have the ability to look just beyond that horizon.

LISTNUM 1 \l 1143              THE CHAIRPERSON: And this would not have been capable under ‑‑ why is City ‑‑ I'm sorry, I'm trying to grasp the idea of why City's time horizon is so much shorter.

LISTNUM 1 \l 1144              I mean, they're eclectic, they're urban, they're different than everybody else, and they obviously sell. They have been very successful in the past.

LISTNUM 1 \l 1145              So what will they be doing under CTV ownership that they're not doing right now?

LISTNUM 1 \l 1146              MR. FECAN: They haven't been as different, they haven't been as eclectic, and they haven't been as ‑‑ as ‑‑ as invigorated as they want to be, as they have been, and we submit in the interests of the system, they can and ought to be, and that is what we are bringing to them. We are giving them the opportunity to do what it is they did best.

LISTNUM 1 \l 1147              THE CHAIRPERSON: I see. Undoubtedly you have seen the CBC submission, which have a nice little pie chart showing the proportion of advertising revenue for a major player. And if CTV and CHUM are together you basically occupy 50 percent of the pie chart.

LISTNUM 1 \l 1148              And so we going to have one very large player here and the rest of it sort of divided amongst smaller ones.

LISTNUM 1 \l 1149              Why is that healthy for the Canadian system to have such a large disproportionate player?

LISTNUM 1 \l 1150              MR. FECAN: Well, the pie chart I suppose is accurate in a point in time. But in ‑‑ in the broadcasting business, and in television in particular, revenue follows ratings.

LISTNUM 1 \l 1151              People pay a disproportionate amount of revenue to get top 20 shows.

LISTNUM 1 \l 1152              In the last few years we have been very successful, some might say skillful, others might say lucky, probably in truth a combination of the above, in getting a majority of the top 20 shows.

LISTNUM 1 \l 1153              Five or six years ago CanWest had the majority of those shows.

LISTNUM 1 \l 1154              And I think they're coming back now, as they have said to their shareholders, that they intend to ‑‑ they feel they're in a position to challenge us again for the top shows.

LISTNUM 1 \l 1155              When you actually kind of think about it, we were lucky and maybe chose well when we bought "American Idol", but that's two nights a week. So that's two out of 20.

LISTNUM 1 \l 1156              We bought "CSI" and there's three of those as it turns out. We only bought one. But there are now three. And that's five out of 20. So third ‑‑ say we have 15 now, a third of that is two shows.

LISTNUM 1 \l 1157              The flip side of that is four or five years ago we had a show called "Who Wants to be a Millionaire", it was on four days a week, it was a top‑rated show, and then it died and we lost four positions of the top 20.

LISTNUM 1 \l 1158              My point is, it's completely cyclical. It will go up, it will go ‑‑ those revenues will go up and will go down depending on how well we perform.

LISTNUM 1 \l 1159              And so that was a bit of a high water mark.

LISTNUM 1 \l 1160              Our increase this year has not been very much. I noted in the CanWest report to shareholders they're up eight percent. We're not anywhere near up anything like that. You can see it beginning to turn again.

LISTNUM 1 \l 1161              And then of course the other thing the chart doesn't really deal with is all the other forms of advertising in those markets. It doesn't deal with print. It doesn't deal with new media. It doesn't deal with radio.

LISTNUM 1 \l 1162              Advertisers have lots of choices. And, you know, those ‑‑ so that's a very narrow view taken in a point in time, probably a high water mark, and that's why I think you need to look at it within that context.

LISTNUM 1 \l 1163              THE CHAIRPERSON: I have a question for Mr. Waters.

LISTNUM 1 \l 1164              You explained the reasons why you're selling it and it was described as a limited auction. Why was that? Why did you select it ‑‑ only ask two players to bid since you presumably wanted to get the biggest return for your family? Why did you have a limited auction here?

LISTNUM 1 \l 1165              MR. WATERS: Mr. Chairman, we enlisted a private company to help us with evaluation and so on at the beginning, and we actually did look at all of the possibilities that were out there for CHUM to consider.

LISTNUM 1 \l 1166              And no matter how much research and number‑crunching was done, it always came up that really Bell Globemedia was the best choice.

LISTNUM 1 \l 1167              I think that also during that process it was very important to my brother and I that we ‑‑ that the company ‑‑ that CHUM fall into the hands of a company that would take not only good care of our assets, but of our people.

LISTNUM 1 \l 1168              And we felt very strongly that that was the case with Bell Globemedia, and we were very comfortable with our dealings with them and that's really where it ended.

LISTNUM 1 \l 1169              THE CHAIRPERSON: Okay. Thank you.

LISTNUM 1 \l 1170              Mr. Fecan, one problem I have with your submission ‑‑ you're basically positioning yourself as a national champion. Say I need to have the necessary size and I will do what is necessary for Canada.

LISTNUM 1 \l 1171              This idea of a national champion I'm very familiar with from my previous experience as commissioner of competition.

LISTNUM 1 \l 1172              And one of the problems with the national champion is that the idea in theory is wonderful in practice, unfortunately very often it becomes not a national champion but a national predator.

LISTNUM 1 \l 1173              This company becomes very large, very big.  It is so controlling that it really doesn't need to use its creative energies in order to be productive, generate new efficiencies in the ‑‑ but rather it becomes relatively laid back and just milks the profits.

LISTNUM 1 \l 1174              What is shown ‑‑ so we have here that should you ‑‑ this be approached, and should you be as successful as you suddenly hope to be, we don't wind up with a laid back CTV that milks profits rather than is innovated, forward looking, and efficient, et cetera.

LISTNUM 1 \l 1175              MR. FECAN:  I think companies in general, but maybe media and broadcasting companies in particular, are about the people.  So let me kind of address your question in the parts that you pose.

LISTNUM 1 \l 1176              First, I'm not saying we should be the media champion.  We're not saying that there shouldn't be others.  We think we should be one of the national champions.  We have no problem with there being others.  We think that's a good thing.

LISTNUM 1 \l 1177              Secondly, we have the track record.  We have demonstrated that we have taken that scale, and we have helped with the creation of wonderful programming that has the best ‑‑ the best possible reaction ‑‑ the audience reaction.

LISTNUM 1 \l 1178              I mean we're all here for the audience.  And if our programming was just terrific but it didn't connect, it wouldn't be as meaningful.  But it's actually connected with the audiences.  I think ‑‑ and that's good for us too.  But we have this track record.

LISTNUM 1 \l 1179              So we've shown what we've done when you've given us scale before.  We've showed what you've done ‑‑ what we've been able to do with that scale.  And that's precisely what we want to do again with this other increased scale.

LISTNUM 1 \l 1180              But I think ‑‑ I think the other thing I would really want to point to is our core belief that the value is in diversity.  The value is not in homogenization.

LISTNUM 1 \l 1181              If you have ‑‑ if you have all kinds of things that are basically the same voices, the same programs, the same points of view, why do you need all of these different things?  Why does anybody need them?  The value is in having the differences.  And that's where we've put our money and that's where we've put our resources.  And that's why I submit we have been successful with the scale we've been given.

LISTNUM 1 \l 1182              In addition, I would just point out to you that we're on a very short leash here.  Within a year our licences ‑‑ our conventional licences come up.  And as we have proposed in our submissions, we would be delighted should we get approval of this to advance the city licences, so that within a year you can take a quick look and see whether we're behaving as we said we would have.

LISTNUM 1 \l 1183              So, you know, track record, people, core beliefs of our shareholders who also believe that values of diversity ‑‑ homogenization destroys value, and a short leash.  Those would be my answers.

LISTNUM 1 \l 1184              THE CHAIRPERSON:  Do any of my fellow Commissioners have any questions on concentration, Rita?

LISTNUM 1 \l 1185              COMMISSIONER CUGINI:  Thank you.  Good morning.  I just have a follow‑up question with regards to the conversation you just had with the Chairman, wherein you said that CHUM has not been able to be as innovated or eclectic or as different as it once was.  Yet in response to deficiencies on ‑‑ dated January 29, you say that CFTO and City TV in particular, for example, target and appeal to very different demographics.

LISTNUM 1 \l 1186              Is that not an indication of how different and innovative and eclectic it has been able to stay?  Because I'm also assuming when you make that statement that you are staying that City TV has been able to target a younger demo than CFTO.

LISTNUM 1 \l 1187              So what compromises has it made in your opinion that have caused it or caused you to say it hasn't been as innovative, eclectic, or different?

LISTNUM 1 \l 1188              MR. FECAN:  Thank you for the question.  I'm going to going to answer first, but I would also like Jay and Roma to answer because they can provide firsthand testimony.  Because they are there.

LISTNUM 1 \l 1189              CTV is a mainstream top 20 broadcaster.  We go after everybody.  You know it's the town square of Canada when we're doing our job right.

LISTNUM 1 \l 1190              City TV focuses on a much younger audience.  But in the last three or four years, maybe five years, they've moved more to the mainstream because they had to pay the rent.

LISTNUM 1 \l 1191              I submit that's not a good thing for the system.  I submit that diversity is better served if it can do its job without worrying about supporting the A Channels or being a breadwinner generally.

LISTNUM 1 \l 1192              I'd like to pass it to Jay and to Roma who I think can talk about their firsthand experiences.

LISTNUM 1 \l 1193              MR. SWITZER:  Thank you. Commissioner Cugini, you hit on an important point.  There is a desire for difference.  We're very proud of the creativity and innovation that exists across the CHUM stations, and we're speaking now particularly of City TV.

LISTNUM 1 \l 1194              The challenges that we faced both in the market in terms of competition and terms of technology, there's a long list of reasons why the conventional television space has challenged many of them ‑‑ came up during the recent look at television.  Have forced us in the past few years in small ways, decision by decision, to slowly move a little bit towards the middle.

LISTNUM 1 \l 1195              Because at the end of the day it was about survival.  These are difficult things to talk about.  You're very aware of what our financials are.  You're aware that our conventional television business overall is not making money and that things are getting worse.

LISTNUM 1 \l 1196              Several years ago ‑‑ for many years ‑‑ for 20 years, as a point of pride, as a point of difference, for example, we made a programming decision that City TV Toronto was not going to carry any paid infomercials.  Late night, 24 hours a day as a unique point of differentiation to support our brand and our unique voice there would be no infomercials on City TV Toronto.

LISTNUM 1 \l 1197              A few years ago we reviewed that decision and said we just can't afford to do that anymore.  We have to support the rest of our system.  We've had increasing challenges on specialty and City TV Toronto now carries infomercials.

LISTNUM 1 \l 1198              Program by program, City TV today ‑‑ Roma can speak to many of these things ‑‑ carries in prime time an American simulcast show, America's Funniest Home Videos.  A very fine show.  It makes us lots of money.  It pays for other things that we have to do.

LISTNUM 1 \l 1199              It's is probably as far off brand ‑‑ and with respect to the producer of that show ‑‑ not particularly innovated or created, but as the breadwinner inside is CHUM television family, City TV has had to make decision by decision.  In their hearts there is a desire and passion to continue to do the risk taking and innovating things, not only at City TV, but in specialty that we dream of doing.

LISTNUM 1 \l 1200              But without the stability, the financial comfort, the ability to look long term, the removal of the reliance to continue to be a breadwinner for group, it has been an increasing challenge.

LISTNUM 1 \l 1201              And if it's appropriate, I'd like our Head of Contend, Roma Khanna, to just expand a little bit.

LISTNUM 1 \l 1202              MS KHANNA:   Thank you, Jay.  As Mr. Switzer and Mr. Fecan said all of that is exactly right.  But from the actually programmers and content people's perspective I can tell you that the core has to do with this difference between short term versus long term as stability.

LISTNUM 1 \l 1203              The heart and soul of the City TV brand is about re‑invention in any given moment of time, risk taking, innovation, and doing something differently.  And what that means to us today is looking at alternative business models, alternative revenue streams, alternative programming, and things that are different than every ‑‑ what everybody else on the street might be doing.

LISTNUM 1 \l 1204              A very specific recent example of something that we are very excited and proud about was a late night block of programming called "Play to Win", which was essentially an interactive program controlled entirely by the audience via SMS, where they would play along with word games and such things while they were watching TV.

LISTNUM 1 \l 1205              And the idea was you didn't need as many people watching, as long as the people watching were fully engaged and participating.  It was about stickiness as opposed to ratings and revenue.

LISTNUM 1 \l 1206              It made us money.  It made a decent amount of money.  We believed very strongly that over time it would make even more money for us.  The problem was that in the moment ‑‑ in the short term it wasn't make enough money to make up for the fact that it was eroding general audience numbers at the time, and therefore bringing down our traditional business model of the audience numbers across the board.

LISTNUM 1 \l 1207              So we made the decision to take that off of the air because we couldn't wait the six to eight months that I believe it would take for those numbers to get to the level where they were supporting themselves in the traditional business models as opposed to the new ones.

LISTNUM 1 \l 1208              So just one example.  And things like that happened every day where we made choices that were less innovative than we wanted them to be based on the financial realities.

LISTNUM 1 \l 1209              COMMISSIONER CUGINI:   And what effect has this shift in your programming had on your demographics, both in terms of size and core demo for this ‑‑ let's use the City TV station as an example.

LISTNUM 1 \l 1210              MS KHANNA:  Well, my colleague Mr. Kirkwood, might be able to speak to specifics in terms of the demographic and how that might have changed in the last little while.

LISTNUM 1 \l 1211              MR. KIRKWOOD:  The overview, Commissioner Cugini, would be our demographics remain younger, and we're very proud that we're effectively the youngest ‑‑ askew youngest average age both in terms of our news and our overall turning to conventional television versus the others in the Toronto market.

LISTNUM 1 \l 1212              But audiences for conventional television overall as a sector continue to decline.  You're very well aware that what used to be a 70 or 80 percent total share of tuning is now under 50.  And unfortunately the audiences for our City TV Toronto station have been decreasing at a rate faster than the industry decline in total tuning.

LISTNUM 1 \l 1213              COMMISSIONER CUGINI:  Thank you very much, Mr. Chairman.  Thank you.

LISTNUM 1 \l 1214              COMMISSIONER LANGFORD:  I'm having trouble with this line of defence or whatever it is that you're putting up here.  Because I see in it an inherent contradiction that I can't seem to get around ‑‑ I need some help with.

LISTNUM 1 \l 1215              You're saying, if I get Mr. Switzer correctly, "It's about survival."  He said:

"We had to move to the middle.  It's about survival."

LISTNUM 1 \l 1216              And you Mr. Fecan are saying, "We've got the deep pockets.  We'll move it back to the edge."  Which edge I'm not sure, but an edge.

LISTNUM 1 \l 1217              So don't you want it to survive?  I mean if that wasn't selling for Mr. Switzer, how's it going to sell for you?  Because there's nothing in your application or any of your file materials that tells me what edge he is.  I keep hearing it's going back to its original roots, and it's going to be "edgy".

LISTNUM 1 \l 1218              But Mr. Switzer said that didn't work.  And it was survival.  He had to change.  So it seems to me you've got either a secret formula that I'm dying to be let in on here.

‑‑‑  Laughter / Rires

LISTNUM 1 \l 1219              Maybe we're going back to baby blue movies, I don't know.

‑‑‑ Laughter / Rires

LISTNUM 1 \l 1220              Or you're telling us you've got deep pockets and you're just going to subsidize this second ‑‑ this second service forever.

LISTNUM 1 \l 1221              MR. FECAN:  Well, what we're going to do is invest.  And investment takes patience.  And I don't think that city TV has been in a position to invest for the long term.  I assure you we're not trying to bring disco back.

‑‑‑  Laughter / Rires

LISTNUM 1 \l 1222              We are looking at reinventing in a way appropriate for today what that risk taking brand stood for 30 years ago.  It's not going to be the same thing.

LISTNUM 1 \l 1223              That's going to be the job of the programming people at City and CHUM and the independent producers they work for.  But they will have in their heads a very clear sense of the brand with a backing to invest in that brand for the longer term.

LISTNUM 1 \l 1224              And our gamble, our assertion is that that will pay dividends for both the system and ourselves, but it might take a bit of patience.  And that's what we offer.  We offer the longer term opportunity.

LISTNUM 1 \l 1225              COMMISSIONER LANGFORD:  Well, that may not be good enough for me right now.  And I'll tell you why it may not be good enough.  Because you've come here, in everything you've written to us, and this morning you put particular emphasis on it, I'm sure I can pick it out of what you said, but you know it's there as well as I do.

LISTNUM 1 \l 1226              And you're not only going to maintain diversity, you're going to enhance it, I think, is the mantra here this morning, and that's fine.  That's music to our ears.  That's what the Broadcasting Act tells us to listen for.  And we've been listening for it, we've heard it.

LISTNUM 1 \l 1227              The trouble is we haven't heard how you're going to do it.  And then you said, well you'll get another shot at us in a year.  Well, by then it will be too late.  By then this thing ‑‑ city TV, whatever it is, CHUM, whatever it was, will be chopped up, some of it will be divested, some of it will be rolled into something we won't be able to do anything about if we don't like the look of it.

LISTNUM 1 \l 1228              You know, it's not going to be ‑‑ this is our chance today to deal with CHUM.  Not in a year.  There will be no CHUM in a year.  There will be pieces of CHUM in different places, doing different things.

LISTNUM 1 \l 1229              You have someone here, Ms Fell, who is the team leader for the CTV CHUM Integration Project.  So by very definition this thing is going to change, and it's going to be integrated, and it's going to become a big different organization.  So it's today we've got to know.

LISTNUM 1 \l 1230              So I'm hearing some contradictory things.  I'm hearing you want to be edgy.  I'm hearing you've got plans, but I'm not hearing what the plans are.  At the same time I heard you say again this morning, we've got all this extra program we're buying, and we're going to put some of it ‑‑ as appropriate, was your term ‑‑ into City TV.

LISTNUM 1 \l 1231              I don't want to be unfair about this.  I heard the conditional.  So here's what I'm hearing ‑‑ and I'm sorry to go on so long.  But I think we're really at the threshold of something ‑‑ I am in my mind.

LISTNUM 1 \l 1232              I'm hearing from you that we're going to make this diverse.  I'm hearing from Mr. Switzer that in order to be the breadwinner, we couldn't go down that road.  I'm hearing from you we're going to put some programming, which you call in your reply, "less attractive programming", but as appropriate, that we can't use right now in City.  And I'm hearing from you be patient.  But I'm not hearing a plan.

LISTNUM 1 \l 1233              I have no idea having read every bit of this record and listen to what I've heard this morning in the last 45 minutes ‑‑ I have no idea what edgy means and what City TV is going to look like.  And that scares the pa‑Jesus out of me.

LISTNUM 1 \l 1234              MR. FECAN:  Well, the creative process is a scary process, Commissioner.  And I think it's unfair for you to consider that suits in a room should be designing programs.  Program makers do that, programmers do that.  And what they need is the support and backing to do it.  And that's what we're offering.

LISTNUM 1 \l 1235              It would be foolish of us ‑‑ of me to tell them in isolation what these programs ought to be.  That's for them to do.  And that's ‑‑ and it is trial and error.

LISTNUM 1 \l 1236              If programming could be designed by a box, GE would have all the programming in the world.  They don't.  It's a creative process.  It's trial and error.  It's depends on people who have ideas that they've have been carrying around for years who just are looking for the right opportunity.  It's a messy process.  But in order to play that process well for the long term you need the support and the backing and the safety to do it in.  And that's what we're offering these people.

LISTNUM 1 \l 1237              COMMISSIONER LANGFORD:  But I don't know what that means.  I mean ‑‑ I'm sorry.  In terms of making a decision for Canadians to guarantee them the diversity of voices that they have gotten used to, in terms of saying, look Canada, everybody out there in vacuum land, when you're out there looking at your television, this is the sort thing you can expect.

LISTNUM 1 \l 1238              I mean maybe you can give me at least an example of what's an edgy program right now.  If you had ‑‑ if you and your suit, though you're not a programmer ‑‑ or somebody here had to do some programming for City ‑‑ the new City, the City you envisage, the City that's moving out of the bread basket, out of the breadwinner role, out of the middle, no longer concerned about survival, give me some idea of what we're ‑‑ what we're being asked to accept here in the sense of diversity of voices?

LISTNUM 1 \l 1239              MR. FECAN: You're being asked ‑‑ well, first of all the differences in the screen that we're talking about ‑‑ there's diversity in differences.  The differences are measurable, and I think we've addressed that with a zero overlap what these new programs might be.

LISTNUM 1 \l 1240              All I can say is look at what we've been able to create by ‑‑ through the creative method, through the development of programs look at our track record at doing that.

LISTNUM 1 \l 1241              And, you know, I don't really want anybody on this panel to make up ideas on the stand that then, you know, somebody has to attribute to.  The ideas have to come from the creative people.  And we have to believe in that creative process, and that creative process has delivered programs that have hit total targets with our audiences in Canada.  We've done it.

LISTNUM 1 \l 1242              COMMISSIONER LANGFORD:  When you use the word "edgy" you must have had something in mind.  I mean there must have been some show that was top of mind.  Can you not give me the title of one existing show that you would categorize as edgy?

LISTNUM 1 \l 1243              MR. FECAN:  I'm not going to play that game, Commissioner.

LISTNUM 1 \l 1244              COMMISSIONER LANGFORD:  It's not a game.  It's a question.  It's a question that arises from a concern that we want to ensure that when you tell us you're not ‑‑ not only going to maintain but enhance a diversity of voices, we want some idea of that that's going to work.

LISTNUM 1 \l 1245              MR. FECAN:   And for that you have to rely on the creative people, both in the independent production sector, and at CHUM, and a development process, and the funding to carry out that development process and to take risks on the air.  And through that process you will have hits and misses.  It's the only ‑‑ it's the only truth I know in this area.

LISTNUM 1 \l 1246              COMMISSIONER LANGFORD: If I could switch to another subject.  I have your answer.  Level playing fields, which I think is part of this general area.  Would you agree, Mr. Chairman?  We're still in this general area?  I don't want to overlap?

LISTNUM 1 \l 1247              THE CHAIRPERSON:  Yeah.  As you know we're going to move on to two stick policies in a second.

LISTNUM 1 \l 1248              COMMISSIONER LANGFORD:  Yes, maybe that's a good idea.  We'll hold off on level playing fields and see what else we've got.

LISTNUM 1 \l 1249              My only other question and, Mr. Chairman, maybe you can guide me on this, too, would be with the notion of news voices, distinctive news voices.  I don't know whether that comes into this category or whether we can filter that down.  Pardon me?

LISTNUM 1 \l 1250              THE CHAIRPERSON:  I think that's all the next part.

LISTNUM 1 \l 1251              COMMISSIONER LANGFORD:  We'll hold off then.  Maybe before Phase IV you could come up with an edgy program.

‑‑‑ Laughter / Rires

LISTNUM 1 \l 1252              THE CHAIRPERSON:  Any other questions from the other commissioners?

LISTNUM 1 \l 1253              Mr. Fecan, my colleague brought out I think one thing that leaves me a bit troubled, too, is the contradiction between you're one thing saying acquiring TV, bigger clout, bigger heft, you have to buy packages from Hollywood and you put the big hits on CTV, and you can have the secondary program on CHUM and off‑load and it doesn't get to waste, which somehow is a little bit in contradictions, as at City will be this urban, edgy station, et cetera.

LISTNUM 1 \l 1254              So how do you reconcile on the one hand using it as a place to air the secondary program on, on the other hand it's supposed to be the new leader in edginess?

LISTNUM 1 \l 1255              MR. FECAN:  Only the ones that are appropriate.  And that ‑‑ so that the entire distinction there is in the program selection and choosing the ones that we may have access to through our volume buying that are appropriate to City, that make sense for City and it's demographics.

LISTNUM 1 \l 1256              COMMISSIONER LANGFORD:  Just one further, if I may.  Why wouldn't you keep the other ones, then?

LISTNUM 1 \l 1257              If you've got all this programming, and you don't know what to do with it, and you can't monotize it, and you've now come to the realization that zero overlap will make us a lot happier than ten percent on a weekly basis.  Somebody had a brainstorm over the weekend and that's a good thing.

LISTNUM 1 \l 1258              Why wouldn't you ‑‑ I mean, you can run this stuff on weekly and probably people wouldn't ‑‑ I mean, why wouldn't you keep some of the other ones?

LISTNUM 1 \l 1259              What are you going to do with all this program that's not appropriate?  You've got no room for it on CTV, and it seems to me you're putting yourself in a bad situation.

LISTNUM 1 \l 1260              What are you going to do with this programming?

LISTNUM 1 \l 1261              MR. FECAN:  I'm sorry, Commissioner, I'm not sure which programming you're ‑‑

LISTNUM 1 \l 1262              COMMISSIONER LANGFORD:  You have told us ‑‑

LISTNUM 1 \l 1263              THE CHAIRPERSON:  The secondary, none of ‑‑

LISTNUM 1 \l 1264              COMMISSIONER LANGFORD:  The less attractive programming.

LISTNUM 1 \l 1265              MR. FECAN:  It gets wasted.  It goes to waste is what we do with it.

LISTNUM 1 \l 1266              COMMISIONER LANGFORD:  That's what you do with it now.

LISTNUM 1 \l 1267              MR. FECAN:  Yes, that's right.

LISTNUM 1 \l 1268              COMMISSIONER LANGFORD:  The hope certainly was ‑‑

LISTNUM 1 \l 1269              MR. FECAN:  We don't intend to force inappropriate programming to City's brand on City's brand.

LISTNUM 1 \l 1270              COMMISSIONER LANGFORD:  Whatever that means.

LISTNUM 1 \l 1271              MR. FECAN:  It's called breakage.

LISTNUM 1 \l 1272              COMMISSIONER LANGFORD:  Yes, okay.  The edgy brand.  Okay.

LISTNUM 1 \l 1273              THE CHAIRPERSON:  Let's then go to the second area, which I think is very difficult for us to follow you, which is a two stick policy.

LISTNUM 1 \l 1274              Your submission, in effect, asks us to disregard that policy.  You're asking for exemptions in five markets.  There's never been an exemption application of that nature.

LISTNUM 1 \l 1275              We've made exemptions in the past.  All of them have been based essentially on a station in a secondary market not doing well, allowing them to extend their reach into the major neighbouring centre, and therefore improve their revenue and continue as a local station and provide the local programming.

LISTNUM 1 \l 1276              What you're now proposing is quite different.  You set out ‑‑ you say you're stepping in the shoes of CHUM in Vancouver, Victoria and in Hamilton, Ontario, Toronto, but you're making a completely separate case for Alberta, and I haven't heard any justification at all for Winnipeg.

LISTNUM 1 \l 1277              So maybe you can explain to me why you feel this should be approved and why, in effect, we should be canning our two stick policy as far as CTV is concerned.  Because that's how it appears at first blush.  I mean, we totally could be wrong and stand to be corrected.

LISTNUM 1 \l 1278              MR. FECAN:  Well, a bit of perspective, please.

LISTNUM 1 \l 1279              First, there are three station groups currently in English conventional television.  Two of them have the exemptions to the policy.

LISTNUM 1 \l 1280              So ‑‑ so we're the only ones that don't have an exemption to the policy.  From a distance, I think that's worth noting.

LISTNUM 1 \l 1281              Secondly, in the case of CanWest and WIC, Hamilton was in Toronto and Victoria was in Vancouver.  Yes, they were failing stations.  Yes, these are failing stations.  But, as a matter of fact, both the stations were already in ‑‑ in ‑‑ in that market.

LISTNUM 1 \l 1282              THE CHAIRPERSON:  I'm sorry, these are failing stations?

LISTNUM 1 \l 1283              MR. FECAN:  City is.

LISTNUM 1 \l 1284              THE CHAIRPERSON:  I thought the Channel A could be characterized as such.  I thought the City actually were not failing.

LISTNUM 1 \l 1285              MR. FECAN:  A station that on the EBITDA line barely makes money and under the PBIT line loses money is not a healthy financial station.  It's one that needs help.

LISTNUM 1 \l 1286              THE CHAIRPERSON:  So you consider the City station failing stations?

LISTNUM 1 \l 1287              MR. FECAN:  I think it's teetering on the edge, yes.  I think the As are in worse shape, and I'm delighted that the Rogers company will add its scale in all its various dimensions to revitalizing those stations.

LISTNUM 1 \l 1288              So, in the Toronto/Vancouver market, that's why my remarks this morning, I put them in two different categories.

LISTNUM 1 \l 1289              I recognize that in Edmonton, Calgary and Winnipeg it's a different case.  It's not the same case as Toronto, Hamilton, Vancouver, Victoria.

LISTNUM 1 \l 1290              And for those cases I thought ‑‑ I tried to make my points about why I think it's still in the public interest.

LISTNUM 1 \l 1291              First point being the ‑‑ the idea of efficiency.  Second point being it's not in public interest to take those programs off the air that are there now, because they are not going to be seen most likely with whoever acquires those stations, should you ask us to divest those stations.

LISTNUM 1 \l 1292              They will be looking for scale as well.  They will be looking to expand their scale.  Whether it's Rogers or Videotron or whoever, chances are it's going to be somebody who doesn't have stations there, who will want stations to expand their scale.

LISTNUM 1 \l 1293              Why do they want the scale?  To pay for the foreign programming, to pay for the Canadian programming, to get the national sponsors.  For all the reasons that City wanted to expand the scale in the first place.

LISTNUM 1 \l 1294              And so the third reason is the health of City.

LISTNUM 1 \l 1295              THE CHAIRPERSON:  Excuse me if I interrupt you on that point, but just the logic here somehow I can't follow it.

LISTNUM 1 \l 1296              You say because you have the heft, you can take a long‑term view.  You are convinced that edginess will sell in the long run.  It needs to be invested in, you have to grow the audience, you have to grow the appetite, and that's what you intend to do with City.

LISTNUM 1 \l 1297              Fine.  Why couldn't, for argument's sake, if Rogers bought City rather than you, Rogers has the heft, et cetera, why could they not take the same long‑term view and say everybody is offering the same brand.  City has a unique brand.  It hasn't been properly marketed, it hasn't had the necessary money.  I'll pump the money in there and I will reap the rich rewards because it's something different that urban youths want to watch, et cetera.

LISTNUM 1 \l 1298              Why are you unique and be able to do this?

LISTNUM 1 \l 1299              MR. FECAN:  We think we have a history with City, we think we have a joint appreciation of how to develop Canadian programming, and so we think we are uniquely positioned.

LISTNUM 1 \l 1300              I can't speak for what would or could happen in some other hypothetical situation.  But clearly we ‑‑ we believe we're the best possible steward of these assets.

LISTNUM 1 \l 1301              THE CHAIRPERSON:  So then Vancouver and Toronto basically you're saying continue in existing exceptions.  You just switch stations.

LISTNUM 1 \l 1302              MR. FECAN:  And create more diversity through ‑‑ because the overlap that exists in those markets between the two City stations and the A Channel, so to speak in those markets, there's a lot of overlap now, 33 hours in Toronto, 12 hours in Vancouver.  That disappears because we have zero overlap.

LISTNUM 1 \l 1303              And Rogers, as the new purchaser of the A stations, will have their own program line up.  So there's actually more diversity in those two markets.

LISTNUM 1 \l 1304              THE CHAIRPERSON:  And you ‑‑ in terms of Calgary and Edmonton, again you make the same argument in terms of keeping the City format alive and available, which under other ownership might not.

LISTNUM 1 \l 1305              You also talk about competitive equality with Global, something that I just don't understand.  Number one, I don't know why I should be concerned with competitive equality.  I don't think there's anything in the Broadcasting Act that speaks of it.

LISTNUM 1 \l 1306              Secondly, I find it difficult to understand the competitive equality given the difference in size between you and Global.

LISTNUM 1 \l 1307              Is this really a valid point?  I appreciate what you said about off‑loading secondary programming on a different chain, but you are vastly bigger than Global right now.  So even if you want to go down this road, I will have thought you are more than capable of fending for yourself.

LISTNUM 1 \l 1308              MR. FECAN:  The difference in scale has to do with ratings, which drives revenues.

LISTNUM 1 \l 1309              THE CHAIRPERSON:  Yes.

LISTNUM 1 \l 1310              MR. FECAN:  And that's incredibly cyclical.  If you had looked at it five or seven years ago, it would be the opposite to what it is today.

LISTNUM 1 \l 1311              And so I think people come and go, they get hot and cold.  I do think as a business person I need to look at structural fairness and some sort of equity.

LISTNUM 1 \l 1312              If they have the opportunity to more efficiently buy volume, and monotize that volume for their own benefit, and for the benefit of the system, I'd like to have the same opportunity.  Because right now in order to compete, we need to match their volume, and the matching goes to waste.

LISTNUM 1 \l 1313              So we don't think that ‑‑ I don't see how that benefits the system to have this go to waste, because we ‑‑ because in order to compete we do need to match volume.

LISTNUM 1 \l 1314              And there's no benefit to us doing that, except, you know, we do well, but we could do better for ourselves and the system, because the American does support the Canadian.

LISTNUM 1 \l 1315              THE CHAIRPERSON:  Now, any ‑‑ how does Winnipeg fit into the mix?  I mean, even ‑‑ and I heard you ‑‑ will accept as the rational explanation for Vancouver, Toronto.  I see one for Alberta.

LISTNUM 1 \l 1316              I am not aware yet about Winnipeg, why we should make an exception for Winnipeg.

LISTNUM 1 \l 1317              MR. FECAN:  It is probably the thinnest of cases of the ones we've put forward, but I still don't see that there's an advantage of taking programs that people are used to and like in Winnipeg and ripping it off the screen.

LISTNUM 1 \l 1318              You would substitute presumably somebody else's programs for ours.  It is the weakest of the cases, I concede.

LISTNUM 1 \l 1319              THE CHAIRPERSON:  Okay.  The other thing is you decided to divest the A Channel and keep Citytv.

LISTNUM 1 \l 1320              Just as a matter of interest, why wouldn't you have done that the other way around?  I mean, in terms of our policy, failing station, et cetera, by your own admission Channel A is on the brink, and would have been a slam dunk in terms of exceptions, while this is a very difficult one.  So ‑‑ and you still would have given, you know, the secondary network to dump the packaging that you have to buy from Hollywood also, which you have no room for.

LISTNUM 1 \l 1321              So explain to me why you chose to do ‑‑ if one of your competitor ‑‑ if competitive equality is one of your concerns, why you chose the harder route in terms of regulatory approval rather than the obvious one.

LISTNUM 1 \l 1322              MR. FECAN:  Because I think it's the right thing for the system.  And let me explain.

LISTNUM 1 \l 1323              From an economic point of view, purely from the competitive equality point of view in particular, it would be easier and possibly better for us to hold on to the As and to divest the City's.

LISTNUM 1 \l 1324              However, we believe we can make a difference at City.  We believe we've got a special connection with City.  We believe it's worth fighting for.  And so that's why we chose to go down that road.

LISTNUM 1 \l 1325              The other thing that is very clear is we actually kind of think of City as almost as a specialty channel.  When it's doing its job right, it's very focused.

LISTNUM 1 \l 1326              And, yes, it's the youngest of the conventionals now, but it needs to be younger than what it is and it was in its heyday.

LISTNUM 1 \l 1327              Whereas the A channels effectively become CTV, too.  It's just ‑‑ it's a second network for CTV.  It's not necessarily a new diverse re‑invigorated outlet.  The demographics are almost precisely what CTV's demographics are.

LISTNUM 1 \l 1328              So because we believe the values and diversity, because we think we can do better by not so much changing CTV, because that's ‑‑ I think it's doing a pretty good job of where it needs to be, but helping position City as more distinctive.

LISTNUM 1 \l 1329              We think that's a benefit to the system that we can provide.  Whereas, if we owned the A channels, it would be much too close for my liking to what CTV already is.  It's in my interest to make them different.

LISTNUM 1 \l 1330              And ‑‑ and those stations, with their particular audience blend, are almost duplicative to CTV's.  And that's why, even though the short‑term answer might have been, and the easier answer, might have been keep the As, I think the better long‑term answer, we think for us, and we submit for the system, is the combination we've proposed.

LISTNUM 1 \l 1331              THE CHAIRPERSON:  You make twice in your submission a distinction between markets and City's, and saying that the CRTC policy is one station per market per language, not per City.  And, in effect ‑‑ but you don't elaborate on that.

LISTNUM 1 \l 1332              If I understand what you're driving at City ‑‑ if successful City serves a different market than CTV, and therefore they're not in the same market because one is sort of a hip urban generation and one is the general public or what ‑‑ what did you mean by drawing out this distinction?

LISTNUM 1 \l 1333              MR. FECAN:  Well, I think I was trying to refer to what the policy actually said was three stations in a market, and Toronto, Hamilton is a market.  Vancouver, Victoria is a market.  And so that's what I was keying to.

LISTNUM 1 \l 1334              My point with the difference in City's audience is it's not just necessarily defined by demographics, although that's an easy way.  It's almost more probably appropriately defined by psychographics.  Attitudinally young.

LISTNUM 1 \l 1335              THE CHAIRPERSON:  Yes.

LISTNUM 1 \l 1336              MR. FECAN:  Attitudinally young.  So you can be whatever age, but be attitudinally young.

LISTNUM 1 \l 1337              It's an energy, it's a way of looking at things, it's perhaps some cynicism, perhaps an alternative view.  It's a whole bunch of things.

LISTNUM 1 \l 1338              When I ‑‑ when you drive from Toronto and Hamilton, with the exception of a park here and there, it's urban sprawl.  It's ‑‑ it's the same market.

LISTNUM 1 \l 1339              THE CHAIRPERSON:  And coming back to your earlier comment that, you know, there's essentially no room for intermediate players, and yet at the same time in your submission you're saying by selling the A Channel to Rogers we are sewing the seeds for third national network, et cetera.

LISTNUM 1 \l 1340              How do you reconcile those statements?

LISTNUM 1 \l 1341              MR. FECAN:  Well, Rogers is way bigger than us ‑‑

LISTNUM 1 \l 1342              THE CHAIRPERSON:  Yes.

LISTNUM 1 \l 1343              MR. FECAN:   ‑‑ so we don't think of them as an intermediate player.

LISTNUM 1 \l 1344              Clearly the Rogers organization, and Ted Rogers personally, has made a decision that he would like to build this group of stations, and it's part of his vision for what he wants to do with his broadcasting group.  Which, when it's appropriate, and if you approve this deal, he would be sitting here and explaining.  I think he has to speak for himself.

LISTNUM 1 \l 1345              But, you know, when you consider their size, not just in broadcasting, but on the BDU, on the wireless and telephony, all these different forms of communication, many of which are ‑‑ are causing difficulty to conventional television.

LISTNUM 1 \l 1346              I think he has all the pieces to potentially make a difference to those stations, and I was delighted that he stepped forward to offer to do so.

LISTNUM 1 \l 1347              But I don't think he's a medium player.

LISTNUM 1 \l 1348              THE CHAIRPERSON:  Medium really in terms of financial resources to not only in terms of the presence in the broadcasting.  Okay.

LISTNUM 1 \l 1349              Now, before I pass you on to my colleagues, I just want to say that we have a policy that says one station per market per language except for exceptional circumstances.

LISTNUM 1 \l 1350              We've always ‑‑ when we allowed an exception it was because it was a failing station.

LISTNUM 1 \l 1351              Here, let's be honest, they're not failing stations.  They may not be doing as well as the others, but failing is ‑‑ you think we should invoke the exception nonetheless because it will create diversity of great deficiencies.  And if you go market by market you're saying essentially Vancouver, Hamilton and Toronto ‑‑ Toronto, Hamilton, Victoria and Vancouver, you're just substituting the stations.  You're contending one is an exception, therefore they're all exceptions.

LISTNUM 1 \l 1352              Edmonton and Calgary you suggest they are appropriate because it will allow City to continue and provide that programming there and it will put you on a ‑‑ in a ‑‑ it will not deprive those cities of the diversity that City and its former brings, while City on the other hand will undoubtedly go back into the mainstream.

LISTNUM 1 \l 1353              For Winnipeg you essentially admit it's a very weak case along the same line.

LISTNUM 1 \l 1354              Thank you.

LISTNUM 1 \l 1355              I'll pass on to my colleagues.  Helen?

LISTNUM 1 \l 1356              COMMISSIONER DEL VAL:   Thank you, Mr. Chair.

LISTNUM 1 \l 1357              On this ‑‑ on the one station per market policy, you know, and there's going to be a hearing on diversity of voices, and that policy itself will be considered.  But say just today, and let's assume for now that we do grant yet another exception in the CTV situation, where do you see that one station per market rule applying?

LISTNUM 1 \l 1358              Is there any scenario that you see that it would still apply?

LISTNUM 1 \l 1359              MR. FECAN:  I have to confess, Commissioner, I haven't really considered that question.

LISTNUM 1 \l 1360              I think your policy states that you consider this on a case‑by‑case basis.  That it's not ‑‑ not the case that made the argument work before necessarily should be the case that makes it work today.  I mean, they're judged on its individual merits, and I think ‑‑ I think that's the right way to do it.

LISTNUM 1 \l 1361              COMMISSIONER DEL VAL:   Okay.  And I don't know whether you're aware, you know, Australia just did a media and policy review, and they decided to retain the ‑‑ the one station per market.  What they call their reach rule.  I believe that the States also has one.  It's got some qualifications, but two stations.

LISTNUM 1 \l 1362              And one of the main reasons I think for such a rule, I think the key benefit is to have an objective quantitative rule for diversity of voices, pluralicy of ownership.

LISTNUM 1 \l 1363              I'm wondering whether you're aware of the situation and whether you have any comments on those.

LISTNUM 1 \l 1364              MR. FECAN:  Well, I think every conventional broadcaster in Canada would love to have the geographical separation Australia has from America over the air signals.  And that ‑‑ and that, you know, I'd happily trade one for the other, thank you very much, but that's not the situation we have.

LISTNUM 1 \l 1365              In the U.S., I could be mistaken, but I thought in some situations there are two stations in the market by common owners.  But I'm not ‑‑ I might ‑‑ I don't know, Kathy, you can ‑‑ let me get back to you on that one.

LISTNUM 1 \l 1366              But I like the Australian situation a lot if it was possible.

LISTNUM 1 \l 1367              COMMISSIONER DEL VAL:   Okay.  Then, a follow‑up question from your discussion with Mr. Chair here.

LISTNUM 1 \l 1368              And you were saying, you know, the Rogers is buying the ‑‑ the A Channels and you felt that you were the best candidate to ‑‑ for the ‑‑ for the Citytv.  But why do you think you are the best?  As you said, say Rogers is in your own ranking of revenues for media operations is number one.

LISTNUM 1 \l 1369              In that situation it would be a continued grandfathering of what is already a grandfathered situation, and in terms of ‑‑ of strengths, why do you think that you are the best?

LISTNUM 1 \l 1370              MR. FECAN:  We think we're best ‑‑ well, and I want to preface this.  I think the Rogers organization is a wonderful organization, and this is ‑‑ this is not about them.  It's about why we think we're the best.

LISTNUM 1 \l 1371              And we think we've got a great cultural fit.  We have a demonstrated track record of dealing with diverse, independent media entities, different brands, and letting ‑‑ letting and supporting those brands flourish.  This is something that we think we know how to do particularly well.

LISTNUM 1 \l 1372              And of course there's also, for better for worse, my own personal connection with Citytv, and understanding the brand at its formation and what it stood for in the context of that time, and what it might stand for in the context of this time.

LISTNUM 1 \l 1373              COMMISSIONER DEL VAL:   Thank you.  Then just on the ‑‑ the chart that you have provided in your January 29th reply to deficiencies.  I'm looking at page 35 and figure 9 where you've ranked the media operations before and after acquisition.

LISTNUM 1 \l 1374              MR. FECAN:  Let me just have someone find if for me.

LISTNUM 1 \l 1375              COMMISSIONER DEL VAL:   It's page ‑‑ yes, it's page 35 of ‑‑ yes, it's the 77‑page document.

LISTNUM 1 \l 1376              MR. FECAN:  Thank you.  Yes, I have it in front of me.

LISTNUM 1 \l 1377              COMMISSIONER DEL VAL:   Okay.  Good.  Now, I just wanted to ‑‑ to clarify some numbers.  One theory you have two separate lines ‑‑

LISTNUM 1 \l 1378              MR. FECAN:  Yes.

LISTNUM 1 \l 1379              COMMISSIONER DEL VAL:   Are you ready?

LISTNUM 1 \l 1380              MR. FECAN:  Yes, I am now.  Thank you.

LISTNUM 1 \l 1381              COMMISSIONER DEL VAL:   You have two separate lines for CanWest, one for total, I take that's worldwide operations, and one for just Canada.  And I see that the others, obviously some of them also have worldwide operations.

LISTNUM 1 \l 1382              I just want to make sure I'm comparing apples and apples.

LISTNUM 1 \l 1383              Is ‑‑ for the others that you have ranked, do they reflect their worldwide income of revenues?  Or ‑‑

LISTNUM 1 \l 1384              MR. FECAN:  Before I ask Steve to ‑‑ Steve Armstrong, who prepared the chart ‑‑

LISTNUM 1 \l 1385              COMMISSIONER DEL VAL:   Yes.

LISTNUM 1 \l 1386              MR. FECAN:   ‑‑ to answer the question, I just kind of want to make the point that, you know, capital is fairly portable.

LISTNUM 1 \l 1387              COMMISSIONER DEL VAL:   Pardon me?

LISTNUM 1 \l 1388              MR. FECAN:  Capital is portable.

LISTNUM 1 \l 1389              COMMISSIONER DEL VAL:   Sorry, yes.

LISTNUM 1 \l 1390              MR. FECAN:  And as a company we've decided to invest all of our capital in Canada.  I'm not saying it's better or worse.

LISTNUM 1 \l 1391              Some companies have chosen to, you know, get into print in a much bigger way than we have, or broadcasting in other countries.  And there's no ‑‑ there's no attempt to be pejorative about this one way or the other, it's just who we are.

LISTNUM 1 \l 1392              COMMISSIONER DEL VAL:   No, Mr. Fecan, I didn't take it that way.  I just wanted to make sure that I was ‑‑ I had the correct information and was interpreting it correctly.

LISTNUM 1 \l 1393              MR. FECAN:  Steve Armstrong.

LISTNUM 1 \l 1394              MR. ARMSTRONG:   Yes, Commissioner, the revenues there for all of the companies are as reported in their 2005 annual reports.

LISTNUM 1 \l 1395              CanWest is the only company where I chose just for interest to look at its Canadian‑only operations.

LISTNUM 1 \l 1396              COMMISSIONER DEL VAL:   So is it possible to ‑‑ so that I can have the picture, the same type of picture for the Canadian media environment, is it possible for you to produce another table ranking these media operations just according to their Canadian revenues, please?

LISTNUM 1 \l 1397              MR. ARMSTRONG:   I will certainly try to do that.

LISTNUM 1 \l 1398              COMMISSIONER DEL VAL:   Thank you.

LISTNUM 1 \l 1399              MR. ARMSTRONG:   I'll be limited by what's ‑‑

LISTNUM 1 \l 1400              COMMISSIONER DEL VAL:  Sure.

LISTNUM 1 \l 1401              MR. ARMSTRONG:  ‑‑ what's in their annual reports.

LISTNUM 1 \l 1402              COMMISSIONER DEL VAL:   Yes, I understand.  And also, I'm looking at your footnotes on the previous page where you've broken it down to broadcasting services, broadcasting distribution services.

LISTNUM 1 \l 1403              MR. ARMSTRONG:   Yes.

LISTNUM 1 \l 1404              COMMISSIONER DEL VAL:   Is it possible to get a breakdown according to those categories to the best that you can?

LISTNUM 1 \l 1405              MR. ARMSTRONG:   Absolutely, to the extent it's set out in the annual report.

LISTNUM 1 \l 1406              COMMISSIONER DEL VAL:   Okay.  So while we're on ‑‑ just can I ‑‑ while we're on the same reply, can you go to page 19, please?  That's figure number 1 where this chart is supposed to tell me the diversity of ownership among traditional media post transaction.

LISTNUM 1 \l 1407              Now, I see you list, say, for each sector a number of distinct owners.  Now, if the ‑‑ for example, if the number of seven distinct owners is the same as the seven distinct owners in newspaper, this will be quite a different picture than if those ‑‑ those owners were ‑‑ were distinct between the two groups.

LISTNUM 1 \l 1408              So is it possible for you to please file with me the names of the outlets and the owners that's backing up this table?

LISTNUM 1 \l 1409              MR. FECAN:  We'll be happy to do so.  Debra McLaughlin prepared that.

LISTNUM 1 \l 1410              COMMISSIONER DEL VAL:   Thank you.  Great.  Great.  Sorry?

LISTNUM 1 \l 1411              MS McLAUGHLIN:   I can file it.

LISTNUM 1 \l 1412              COMMISSIONER DEL VAL:   Is it also possible to just make some footnote or distinction to ‑‑ to indicate what's changed pre and post merger?

LISTNUM 1 \l 1413              MS McLAUGHLIN:   Yes, absolutely.

LISTNUM 1 \l 1414              COMMISSIONER DEL VAL:   Thank you very much.

LISTNUM 1 \l 1415              Those are all my questions.  Thank you, Mr. Chair.

LISTNUM 1 \l 1416              THE CHAIRPERSON:  Thank you.  Any other questions?

LISTNUM 1 \l 1417              Stewart?

LISTNUM 1 \l 1418              COMMISSIONER LANGFORD:   Thank you, Mr. Chairman.

LISTNUM 1 \l 1419              I'm trying to figure out a way to give you what you want ‑‑

‑‑‑ Laughter / Rires

LISTNUM 1 \l 1420              ‑‑ in the smithee of your soul, as Joyce might have said.

LISTNUM 1 \l 1421              And what you want is an opportunity to recreate, I suppose, the City energy, edginess, and tell me if I've got this wrong, but I think that's one half of it.  The other half seems to be to be on a level playing field with CanWest Global in the sort of twin stick rule.

LISTNUM 1 \l 1422              Is that generally pretty accurate?

LISTNUM 1 \l 1423              MR. FECAN:  Yes, Commissioner Langford.

LISTNUM 1 \l 1424              I would just suggest that what we're looking to do is to re‑invigorate the City brand.

LISTNUM 1 \l 1425              I know we can't go back to the context of the time and make it the same.  It needs to be authentic, but it needs to be in the moment.

LISTNUM 1 \l 1426              COMMISSIONER LANGFORD:   Okay.  What station is City on in Toronto?

LISTNUM 1 \l 1427              MR. FECAN:  It's on cable 7.

LISTNUM 1 \l 1428              COMMISSIONER LANGFORD:   Cable 7.

LISTNUM 1 \l 1429              MR. FECAN:  Channel 57.

LISTNUM 1 \l 1430              COMMISSIONER LANGFORD:   Channel 7.

LISTNUM 1 \l 1431              MR. FECAN:  57.

LISTNUM 1 \l 1432              COMMISSIONER LANGFORD:   What would happen if it had to move ‑‑ the channel became impaired and it had to move to 10 or something, let's just pick a number.

LISTNUM 1 \l 1433              Does it in your view have devoted enough followers that they'd find 10 and settle in and get used to it?

LISTNUM 1 \l 1434              MR. FECAN:  I can't imagine why anybody would want to put snow ‑‑ or distort a picture and then ask Canadians to watch that.

LISTNUM 1 \l 1435              COMMISSIONER LANGFORD:   No, no, that's not what I'm suggesting, sir.

LISTNUM 1 \l 1436              Let's assume that that channel became impaired for some reason, we don't know why, some, you know, thermal ducting over Lake Ontario, who knows, and suddenly it just wasn't usable any more, so Rogers had to move it just for your benefit, for the benefit of City they just had to move it.  So they moved it to some other channel, pick a channel, 10, it doesn't matter.

LISTNUM 1 \l 1437              Would their fans do you think at this point, though it's been breadwinnered a bit, be loyal enough that they'd go seek it and find it?

LISTNUM 1 \l 1438              MR. FECAN:  I would hope that with the right amount of promotion ‑‑

LISTNUM 1 \l 1439              COMMISSIONER LANGFORD:   M'hmm.

LISTNUM 1 \l 1440              MR. FECAN:   ‑‑ and marketing to let people know.

LISTNUM 1 \l 1441              I mean, as you know, when cable companies move channels there is ‑‑ there is for a period of time a loss of audience because people ‑‑

LISTNUM 1 \l 1442              COMMISSIONER LANGFORD:   M'hmm.

LISTNUM 1 \l 1443              MR. FECAN:   ‑‑ no matter how well you tell people where it's gone, I mean they just may not know.  But ultimately, with the right marketing promotion, I would hope so, yes.

LISTNUM 1 \l 1444              COMMISSIONER LANGFORD:   Okay.  So if we're trying to re‑invigorate, to borrow your word, City, and we're also going for a level playing field, why couldn't you have constructed something along these lines, and you don't necessarily have to approve of my future for you, but you could sort of speak to the underlying themes that I'm getting at.

LISTNUM 1 \l 1445              Why couldn't you have said to Rogers or some buyer, we're keeping quite a few of the A Channels, certainly the one in Victoria, because that would make us perfectly equal, perfectly level playing field with CanWest Global, and we'll just deal with Victoria and Toronto to make it simpler, and we're going to keep Barrie, because Barrie would be perfectly synonymous with Hamilton.  And we'd have all the same local programming handicaps, soliciting ad handicaps.  It would be a perfectly level playing field.

LISTNUM 1 \l 1446              And then said, we're selling off the Vancouver station rather than Victoria, and we're selling off what's now the City station, the Queen Street property, but we're keeping the City brand.

LISTNUM 1 \l 1447              So you'd have your edginess, you'd have no problem with the twin stick, or a lot less problem, because you wouldn't be asking for an advantage, you'd be asking for what you ‑‑ you say you're asking for, a perfectly level playing field.

LISTNUM 1 \l 1448              Why couldn't you have gotten more creative in that way and made the exceptions less monumental?

LISTNUM 1 \l 1449              Isn't there room here for more creativity in that way?

LISTNUM 1 \l 1450              MR. FECAN:  I think it wouldn't be authentic.

LISTNUM 1 \l 1451              COMMISSIONER LANGFORD:   Oh, for ‑‑

LISTNUM 1 \l 1452              MR. FECAN:  The City brand stands for a cyclographic, it stands for an urban‑minded focus, and I think ‑‑ I think it needs to be exactly where it is.  And I don't think it would be authentic, and I think ‑‑ I think when you push something inauthentic at people, they'll push back.

LISTNUM 1 \l 1453              COMMISSIONER LANGFORD:   Well, at least they play it in Ottawa.

LISTNUM 1 \l 1454              MR. FECAN:  It's not Citytv in the market it's ‑‑

LISTNUM 1 \l 1455              COMMISSIONER LANGFORD:   No, they do have a rebroad for City in Ottawa.  It's quite popular.

LISTNUM 1 \l 1456              MR. FECAN:  Yes, they've got a rebroad, but it's the rebroad of the authentic Toronto experience, the downtown Toronto experience.

LISTNUM 1 \l 1457              COMMISSIONER LANGFORD:   So it's got to be on Queen Street, it's got to have the little booth where the people can stick their tongue out at the camera ‑‑

LISTNUM 1 \l 1458              MR. FECAN:  May not have to be on Queen Street, but it has to be authentic.  It could be at the distillery district in Toronto, it could be in harbour front, it could be in any number of places, but it can't be in Barrie.

LISTNUM 1 \l 1459              COMMISSIONER LANGFORD:   Can it be out at, where are you, McGowan Road and 401?

LISTNUM 1 \l 1460              MR. FECAN:  Yes, we're in Scarborough.

LISTNUM 1 \l 1461              COMMISSIONER LANGFORD:   So you can move City out there for synergistic reasons and it would still be authentic?

LISTNUM 1 \l 1462              MR. FECAN:  I don't think it would be.  How would you walk by and ‑‑ and go to the video booth on the McGowan for one?

‑‑‑ Laughter / Rires

LISTNUM 1 \l 1463              It needs to be authentic, Commissioner, that's ‑‑ that's kind of the issue here.

LISTNUM 1 \l 1464              You choreographed it ‑‑ I mean, we thought about, you know, should we keep Vancouver, should we keep Victoria and not Vancouver.  But really, I mean, how do you have a City brand that's not in Vancouver?

LISTNUM 1 \l 1465              So if you're going to do this, you've got to do it right.

LISTNUM 1 \l 1466              COMMISSIONER LANGFORD:   Well, we may give you the opportunity to try to figure that out, but anyway, I've heard your answer.

LISTNUM 1 \l 1467              Thank you very much.  That's my question on that one, Mr. Chair.

LISTNUM 1 \l 1468              COMMISSIONER DUNCAN:  Mr. Fecan, I have a question also to do with the statistics in the 77‑page letter, response, and that's at page 31.  And a similar question at page 33.

LISTNUM 1 \l 1469              And you'll see on ‑‑ I'll wait 'til you get there.

LISTNUM 1 \l 1470              In the paragraph where you're talking about national conventional television shares, and partway through that paragraph you say that you will be left with ‑‑ sorry, that other conventional stations will hold 63 percent of the television shares after this acquisition.

LISTNUM 1 \l 1471              But I'm just wondering when I look at the table, it looks to me that the other conventional television owners would own 80 percent and not 63.

LISTNUM 1 \l 1472              MR. FECAN:  Can I pass that to Debra who prepared the chart?

LISTNUM 1 \l 1473              COMMISSIONER DUNCAN:  Sure.

LISTNUM 1 \l 1474              MS McLAUGHLIN:   I'm sorry, can I just understand the question?  If you're adding up these?

LISTNUM 1 \l 1475              COMMISSIONER DUNCAN:   I'm just looking at the paragraph the national conventional television shares, and in the table it shows that post acquisition CHUM would have 20 percent of the share, right?

LISTNUM 1 \l 1476              MS McLAUGHLIN:   Yes.

LISTNUM 1 \l 1477              COMMISSIONER DUNCAN:   So doesn't that mean the others would have 80?

LISTNUM 1 \l 1478              MS McLAUGHLIN:   Well, yes, but the base that is used in that table is for conventional and specialty.

LISTNUM 1 \l 1479              COMMISSIONER DUNCAN:   Oh.  Because the paragraph, then, above is talking about national conventional and it has 63.

LISTNUM 1 \l 1480              So you don't mean it just in relation then?

LISTNUM 1 \l 1481              MS McLAUGHLIN:   That's right.

LISTNUM 1 \l 1482              COMMISSIONER DUNCAN:   Okay.  Thank you.  And that's undoubtedly the same explanation, then, on page 33?

LISTNUM 1 \l 1483              MS McLAUGHLIN:   Yes, that's correct.

LISTNUM 1 \l 1484              COMMISSIONER DUNCAN:   Okay.  Thank you.  Thanks.

LISTNUM 1 \l 1485              That's it, Mr. Chairman.

LISTNUM 1 \l 1486              THE CHAIRPERSON:  Mr. Fecan, I have one more question for you.

LISTNUM 1 \l 1487              Put yourself in my shoes for a second.  We are the regulator, we are governed by the Broadcasting Act, we are supposed to do things that are in the best interests of Canada as defined under the Broadcasting Act.  We establish rules.

LISTNUM 1 \l 1488              One of the rules ‑‑ one of our purposes is obviously diversity of voices and variety of programming so Canadians see themselves.

LISTNUM 1 \l 1489              Our tool ‑‑ our principal tool is for programming for over the air station gets carried by broadcasters and satellites.

LISTNUM 1 \l 1490              We have this rule of one station per market per language.  The rule has been honoured somewhat in its breach in the past, we both know that, but it's mostly because the exceptions each time was driven by economics, by local stations that would go out of business otherwise if we didn't make the exception by doing it, we allowed local programming to continue and along come you with this transaction.

LISTNUM 1 \l 1491              It has absolutely nothing to do with that.  You want us to do an exception, and you've made a very good case in terms of efficiency, in terms of keeping the variety and edginess of City alive.  You're asking us to make an exception for five cities.

LISTNUM 1 \l 1492              Assume I agree with you, assume I think, yes, you're right, City is unique, let's make sure it keeps on.

LISTNUM 1 \l 1493              How do I justify that in light of my policy, which by approving your deal I sort of way, you know, that policy is very fine.  We have established exceptions, they no longer apply.  But here is this whole new exception that I honour basically on the basis of efficiency and variety of programming.

LISTNUM 1 \l 1494              Doesn't that ‑‑ I mean, how can I explain that?  How can I justify it and still retain any credibility as a regulator who does things in a consistent way on the basis of well thought out policies?

LISTNUM 1 \l 1495              MR. FECAN:  Well ‑‑

LISTNUM 1 \l 1496              THE CHAIRPERSON:  I know I'm stating it on purpose, but I just wanted you to see how the dilemma looks from the other side.

LISTNUM 1 \l 1497              MR. FECAN:  Well, hopefully you would, in this case, since your policy suggests you consider this on a case‑by‑case basis, in this case I would hope that the benefits to the system are such that it is worth making an exception to the policy.

LISTNUM 1 \l 1498              I would also suggest that happily you have a whole new proceeding in the fall to ‑‑ to consider the question you just posed in the larger context.

LISTNUM 1 \l 1499              And I think the other thing that I would suggest that might be worthy of factoring in is the pressure ‑‑ the overall pressure conventional television is under.

LISTNUM 1 \l 1500              It's a different time today than even a few years ago.  And I don't think it's going to get a whole lot better.

LISTNUM 1 \l 1501              THE CHAIRPERSON:   Well, maybe you can elaborate because I did not hear you mention that at all in your submission.  I know it's in your written submission.  But in our overall today that part of the pressure of over the air from other media ‑‑ from new media presumably, et cetera ‑‑ can you give me a little bit more background on how you see that from somebody has to live it daily?

LISTNUM 1 \l 1502              MR. FECAN:  Well, it's was just this morning in the Globe and Mail in the report on business, page three.  The Internet Advertising Association pointed out that the spend is now a billion dollars in Canada on Internet advertising.

LISTNUM 1 \l 1503              We see direct evidence now that by virtue of geo‑gating, because these companies can isolate the Canadian market, they can sell directly to Canadian advertisers.

LISTNUM 1 \l 1504              In fact, the Citytv Conventional lost a deal recently to ‑‑ I'm not sure if it was Google or Facebook or whoever.  But somebody who was geo‑gating Canada took money out of the conventional marketplace and moved it on to a geo‑gated Canadian targeted Internet platform.

LISTNUM 1 \l 1505              We don't believe for a second that the clock is going to turn back on this kind of change.  It's going to keep increasing.  And if you like I can actually ‑‑ you know, I don't know whether you want it or not, but Jay can provide direct testimony to that one thing.  But let's take it for granted, unless you'd like to hear it, of course, that this is happening.

LISTNUM 1 \l 1506              The city stations just, you know ‑‑ you know, I think our public filing shows, Vancouver, Calgary, Edmonton, and Winnipeg are losing money.  Toronto is making some money.  Just to be clear on that.

LISTNUM 1 \l 1507              So the entire sector is under a lot of pressure.  Viewing is down this year.  It's down not just in Canada, the conventional; it's down in the US, the conventional.

LISTNUM 1 \l 1508              I don't think anybody with accurately say it's because of this or that or the other thing.  It's time shifting, it's DVRs, it's this, it's that, it's Internet.  At the end of the day I'm not really sure it matters where it's going.  I know it's going down for conventional.  So that's also part of the context that I think you need to consider at this point in time.

LISTNUM 1 \l 1509              THE CHAIRPERSON:  We've been at this an hour and a half.  Why don't we take a 15 minute break, and that will give you a chance to consult with your colleagues, and we can come back to this question after the break.  Thank you.

‑‑‑ Upon recessing at 1103 / Suspension à 1103

‑‑‑ Upon resuming at 1122 / Reprise à 1122

LISTNUM 1 \l 1510              THE CHAIRPERSON:   Mr. Fecan,  I said I would come back to my last question and give you a chance to elaborate on your answer after ‑‑ with the benefit of coffee.  So it's over to you.

LISTNUM 1 \l 1511              MR. FECAN:  Thank you, Mr. Chairman.  There is a worldwide competition for youth viewers that has no boarders.  This competition, I think, is felt first maybe as the canary in the mine, maybe not with other kinds of consequences, but it is felt first and foremost right now in conventional.

LISTNUM 1 \l 1512              When we look at the conventional English language trend, the decrease in audiences on a year‑to‑year basis, '07 versus '06, well it's down five percent and two plus.  Everybody.  If you look at the youth demos, it's ten percent in 18 to 34.

LISTNUM 1 \l 1513              THE CHAIRPERSON:  I'm sorry, are you looking at some particular statistics?

LISTNUM 1 \l 1514              MR. FECAN:  Yes.

LISTNUM 1 \l 1515              THE CHAIRPERSON:  In your submission?

LISTNUM 1 \l 1516              MR. FECAN:  I'm not sure ‑‑ these are fresh.

LISTNUM 1 \l 1517              THE CHAIRPERSON:   Okay, fine.  Go ahead.

LISTNUM 1 \l 1518              MR. FECAN:  And we'll happily file them.

LISTNUM 1 \l 1519              THE CHAIRPERSON:  We'd appreciate that.  Go ahead.

LISTNUM 1 \l 1520              MR. FECAN:  I'd like to turn it over ‑‑ I'd like to kind of go deeper into some statistical analysis of what's going on to conventional.  We're kind of going to try and answer your question in three parts.

LISTNUM 1 \l 1521              We're going to answer some of the statistical with Deborah.  I'd like Fred Sherratt to talk about why it hasn't worked for CHUM.  I mean what ‑‑ they've expanded, and what was the problem.  And I'd like to also then turn to Roma ‑‑ Roma Khanna who perhaps can help Commissioner Langford and others with the definition of edgy.

‑‑‑ Laughter / Rires

LISTNUM 1 \l 1522              But you'll have to wait for that.

LISTNUM 1 \l 1523              COMMISSIONER LANGFORD:  I didn't think it was ever going to come.  So I'm willing to wait.

‑‑‑ Laughter / Rires

LISTNUM 1 \l 1524              MS McLAUGHLIN:  All right, I'd just like to review some of the stats.  If we just look at two plus from 2002/'03 year to 2006, the pro capita tuning overall is down from 28.6 to 27.9.  Now that's just over the full week and that's all measurable audiences.

LISTNUM 1 \l 1525              When you start to go through the demographics the most striking of these is 18 to 34.  And it moves from a per capita tuning in the week of 24.6 to 22.4.  Those are broad national stats.

LISTNUM 1 \l 1526              If we look at market like Calgary where arguably it's the youngest market in the country, in prime time the decline is 22 percent in the 18 to 24 demo.  So the youth demographic is turning away from television.  They are the future of television.  You've heard us argue this when it comes to radio.  Well, it's same in this medium.

LISTNUM 1 \l 1527              In direct contrast they're increased in terms of the time they spend with Internet ‑‑ has been increasing exponentially.  Those numbers are a little harder to provide because unlike television it's not as succinctly measured or as consistently measured.  But we can provide to you by rely some of those really impressive growth numbers in terms of both access and use.

LISTNUM 1 \l 1528              MR. FECAN:  So faced with ‑‑ sorry.

LISTNUM 1 \l 1529              THE CHAIRPERSON:   I said thank you.  That's all.

LISTNUM 1 \l 1530              MR. FECAN:  So faced with that, and it was coming and it was evident years ago ‑‑ Fred Sherratt who was Alan Waters partner from the '60s, who's been on the board of CHUM for a very long time, and who has been there with Jay, wanted to offer some perspective on what they try to do and why it didn't quite work.

LISTNUM 1 \l 1531              MR. SHERRATT:   Well, Mr. Chairman, it's been clearly demonstrated that we're going through a systemic change in television.  And the audience erosion and those things that they've talked about, it's up 25 percent in a very short period of time.

LISTNUM 1 \l 1532              We attempted to ‑‑ when City really was structured 30 odd years ago it was built on movies, news, music.  Movies started to not work because there were so many sources of movies.  And the movies that were getting reasonable ratings in prime time, and generating the revenue that was going into the shows that we've been talking just wasn't coming in.  The movies weren't working.

LISTNUM 1 \l 1533              What we were going to?  We had to get programming that would drive revenue.  To do at that we felt you had to have a national platform.  So we attempted to expand over a number of years.  We tried it by trying to get new licences.  We didn't get very far with that.  We tried in Ottawa.  We tried in the prairies.  We eventually got into Vancouver and had Victoria, then we bought the Craigs.

LISTNUM 1 \l 1534              By the time we did that it was too late.  We couldn't get the revenue generation to buy the programming that was going to allow us to continue with the City brand.

LISTNUM 1 \l 1535              That's why ‑‑ it's not a matter of bad management.  You can say it's bad management if you didn't expand fast enough.  But we just couldn't.  It wasn't there to be done.

LISTNUM 1 \l 1536              So on that basis City needed a buyer ‑‑ or CHUM needed a buyer that would bring the kind of strength to the cities that would allow them to have the programming to drive revenue.  And that's why Jim in his opening remarks said we looked at all the potential buyers in Canada.

LISTNUM 1 \l 1537              And we clearly ‑‑ it was clear to us that the most logical place for these stations was with CTV because they could bring that programming that we'd not been able to build the strength to acquire.  And with that programming you could then finance the shows that are already there, many of them.  There's edgy programming there.  They just need to be invigorated.  They need more investment.  And you can only do that by generating more revenue.