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:

 

 

 

            DIVERSITY OF VOICES PROCEEDING /

            AUDIENCE SUR LA DIVERSITÉ DES VOIX

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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)

 

September 20, 2007                    Le 20 septembre 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

 

 

DIVERSITY OF VOICES PROCEEDING /

AUDIENCE SUR LA DIVERSITÉ DES VOIX

 

 

 

 

 

BEFORE / DEVANT:

 

Konrad von Finckenstein           Chairperson / Président

Michel Arpin                      Commissioner / Conseiller

Rita Cugini                       Commissioner / Conseillère

Andrée Noël                       Commissioner / Conseillère

Ronald Williams                   Commissioner / Conseiller

Stuart Langford                   Commissioner / Conseiller

Michel Morin                      Commissioner / Conseiller

 

 

ALSO PRESENT / AUSSI PRÉSENTS:

 

Chantal Boulet                    Secretary / Secrétaire

Nick Ketchum                      Hearing Manager /

                                  Gérant de l'audience

Shari Fisher                      Legal Counsel /

Bernard Montigny                  Conseillers juridiques

 

 

 

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)

 

September 20, 2007                Le 20 septembre 2007

 

- iv -

 

           TABLE DES MATIÈRES / TABLE OF CONTENTS

 

                                                 PAGE / PARA

 

INTERVENTION BY / INTERVENTION PAR:

 

Rogers Communications Inc.                       902 / 5066

 

Corus Entertainment Inc.                         948 / 5312

 

Writers Guild of Canada                          986 / 5529

 

Directors Guild of Canada                       1011 / 5644

 

Association québécoise de l'industrie

du disque, du spectacle et de la vidéo (ADISQ),

Association des producteurs de films et

de télévision du Québec (APFTQ),

Association des réalisateurs et réalisatrices

du Québec (ARRQ),

Société des auteurs de radio, télévision

et cinéma et l'Union des artistes (SARTEC)      1040 / 5804

 

Alliance of Canadian Cinema Television and

Radio Artists (ACTRA)                           1069 / 5987

 

Skywords                                        1096 / 6154

 

Norflicks Productions Ltd.                      1104 / 6209

 

Canadian Independent Record

Production Association (CIRPA)                  1140 / 6393

 

Centre for Research‑Action on

Race Relations, (CRARR),

New Canada Institute,

Catholic Immigration Centre                     1167 / 6514

 

 

 

 

                 Gatineau, Quebec / Gatineau (Québec)

‑‑‑ Upon resuming on Thursday, September 20, 2007

    at 0830 / L'audience reprend le jeudi

    20 septembre 2007 à 0830

5059             THE CHAIRPERSON:  Good morning.  I see some familiar faces.

5060             Madam Roy, would you like to introduce our first guest?

5061             THE SECRETARY:  Thank you, Mr. Chairman.

5062             We will now hear from Rogers Communications Inc.

5063             Appearing for Rogers is Mr. Phil Lind.

5064             Please introduce your colleagues.  You will then have ten minutes for your presentation.

5065             Thank you, Mr. Lind.

INTERVENTION

5066             MR. LIND:  My name is Phil Lind, and I am Vice Chairman of Rogers Communications Inc.

5067             With me today are members of the diversified Rogers media companies.

5068             On my left is Robert Buchan of Fasken Martineau DuMoulin, lifelong counsel to Rogers.

5069             On my right is Ken Engelhart, Vice President of Regulatory for RCI, who will be the quarterback for our presentation today.

5070             Pamela Dinsmore is Vice President of Regulatory for Rogers Cable.

5071             Dave Purdy is Vice President of Television for Rogers Cable.

5072             Alain Strati is Vice President of Regulatory Affairs for Rogers Media.

5073             Dave Watt is beside him.  He is Vice President of Regulatory Economics for RCI.

5074             And Robin Mirsky is our expert on funds ‑‑ the various funds at Rogers.

5075             Mr. Chairman, you will have noted from Rogers' written submission that we are not calling for a major overhaul of the Commission's current ownership regulations and policies.

5076             As we stressed in our written submission to you, and as you heard repeatedly on Monday and Tuesday, there is no shortage of readily accessible voices and choices in the Canadian broadcasting system.

5077             As the Commission knows, there was considerable ownership consolidation in the cable industry in the 1990s.  That ownership consolidation and the clustering of cable systems into regional systems was not only approved by the Commission, it was encouraged by the federal government on convergence and competition.

5078             That consolidation made possible the upgrading and digitization of cable systems over the past decade.  This has, in turn, allowed us to provide access to a wide range of diverse news, information and editorial opinions on matters of public concern that are available here today on our systems.

5079             We believe there is a healthy number of different ownership groups in the Canadian commercial media industry today.  These groups include CTVglobemedia, CanWest MediaWorks, Quebecor Média, Rogers, Astral, Corus, Torstar, Newcap and Cogeco.

5080             Therefore, in respect of the first issue on which the Commission's Notice to Appear asked us to focus, that of plurality of commercial editorial voices, we can say that Rogers does not believe there is a systemic problem today, nor do we believe there is one on the horizon.

5081             With regard to the second issue, that of diversity of programming choices, Canadian consumers enjoy a much broader and more diverse choice of programming options today than they ever have.

5082             By way of example, when Rogers acquired Maclean Hunter in 1994, our then state‑of‑the‑art Toronto cable system distributed video programming to subscribers on 53 analog channels.

5083             At that time the 100‑channel universe was only a glint in the cable marketer's eye.  Today Rogers offers over 450 different digital and analog channels.

5084             Digital has allowed cable BDUs to respond to consumer demand for greater choice and diversity of programming services, including third language services.  This has helped us respond to strong competitive challenges from Bell ExpressVu, Star Choice and Telco TV, from the grey and black markets, and, more recently, from new media platforms, particularly the internet.

5085             Therefore, on the second issue of diversity of programming, we do not believe there is a systemic problem; exactly the opposite.

5086             The third issue is that of safeguards for journalistic content in cross‑media situations.  I would note that, in respect of broadcasting properties owned by Rogers, there is a physical and linguistic separation and distinctiveness between our radio stations and our OMNI TV stations.

5087             In addition, under the Rogers' proposed ownership, the Citytv stations will continue to pursue their own editorial direction.

5088             We have reviewed the CBSC Journalistic Independence Code and we support it.  The safeguards reflected in that code, which build on those already in existence at CTV and CanWest, will assist in ensuring a diversity of commercial editorial voices in both local and national markets in Canada.

5089             Mr. Chairman, I would now like to comment on the proposal made on Monday morning by our friends at the CBC for new rules and regulations to deal with common ownership of certain classes of broadcasting undertakings.

5090             In general, we believe that the imposition of fixed regulations or rules of this kind, in a rapidly changing technical, business and consumer environment, may create more uncertainty, not less.

5091             The internet and other new platforms, new business models, and commercial and customer relations reactions to them could soon render those rules obsolete.

5092             In a dynamic business environment such as ours, where a company like Google, which did not even exist six years ago, and which now has a greater market and is worth more money than Viacom, which is a media powerhouse and has been in existence for over half a century, I think it is pretty dangerous to have too many fixed rules.

5093             Having said that, let's look at the CBC proposal.

5094             The first ownership rule proposed by the CBC was that no single‑owner entity or ownership group should own a radio station, a TV station and a daily newspaper serving in the same market.

5095             We do not believe that such a hard‑and‑fast rule is necessary.  Such a rule would not, of course, affect Rogers directly, since we are not engaged in the daily newspaper publishing business.

5096             However, from our own analysis of the Australian rules on common ownership, we have come to appreciate that such rules give rise to significant issues of interpretation.

5097             For example, when does a national newspaper count as a local newspaper in an existing market?

5098             What level of tuning or advertising share should a radio station enjoy before it is counted?

5099             How does the regulator take account of specialty channels and of third language radio and TV stations?

5100             Should an all‑news radio station be counted the same as a music station?

5101             The second proposal made by the CBC is that no single entity should be allowed to control more than 33 percent of pay and specialty services.  We would not favour adopting such new ownership rules, although, again, it would not have much bearing on Rogers, since we own only three specialty services.

5102             In this regard, we listened closely to the views expressed by Astral Media.  We agree with them that the Commission already has, through the licensing process and through the power to approve or deny transfers of licence, all the authority that it requires to deal with an excess of market power of any one ownership group.

5103             The third rule suggested by the CBC was no common ownership by one entity of more than two BDUs serving in a single market.

5104             We think the proposal is fine in principle, but, again, we do not believe that the Commission need introduce a new rule or regulation to that effect.  As noted, the Commission has the authority, through the licensing process, to implement such a policy.

5105             Mr. Chairman, in regards to the issue of predictability, we listened very closely to your exchange with the representatives of Bell Video Group.  They suggested that the Commission might develop and publish ownership policy guidelines along the lines of the Merger and Acquisition Guidelines of the Competition Bureau.

5106             Such guidelines would not be carved in stone.  They would still allow the Commission to make a decision in the public interest.

5107             Such guidelines would be designed, though, to build a greater degree of predictability into the broadcasting regulatory environment.

5108             We believe that there is some merit to this proposal.  We believe, however, that the development of any such proposed guidelines should not occur before the Commission's determination following the hearing next January.

5109             Mr. Chairman, the final issue on which the Commission has solicited our comments today is that of disclosure of financial information by ownership groups of radio and conventional TV stations.

5110             Rogers is opposed to such disclosure.  We agree with the reasoning regarding disclosure that was set out in your August 1998 circular.  The disclosure of the profitability of specialty services assists the parties in the process of wholesale rate negotiations for those services.

5111             We do not believe that the same rationale applies for over‑the‑air TV stations or radio.

5112             Mr. Chairman, we look forward to any questions that you might have.  Thank you.

5113             THE CHAIRPERSON:  Thank you very much.

5114             I am not surprised by your response.  It is very much in line with other major media players.

5115             I am also glad that you paid close attention to our hearing.  You have actually anticipated some of the questions that I was going to pose to you.

5116             Let's take a step back.  Why are we having this hearing?

5117             There is great concern in this country about the concentration of media.  Three major mega deals were announced.  We called this hearing, thinking that it would be unfair of us to implement rules or to stop those deals, because they were done on the expectation of present rules.  Our concern is to make sure that the Canadian system reflects the objectives of the Broadcasting Act, not to interfere with private business where it is in accordance with those objectives.

5118             However, as we go forward, the degree of concentration worries some people.  It is time to have a review of it and lay down some rules.

5119             What happens if there will be further mergers?

5120             Your own submission says that we have large groups ‑‑ CTV, CanWest, Quebecor, Rogers, Astral, Corus, Torstar, Newcap and Cogeco.  What if some of these big ones want to merge?

5121             A member of your own firm yesterday speculated that he might be interested in buying Shaw.  I assume it was only speculation, a musing, or whatever, but, be that as it may, others, I am sure, are musing too.

5122             These are issues, and if such a merger ‑‑ whatever ‑‑ of two entities or three comes up tomorrow, if we do not adopt some rules, some approach, some guidelines, some framework for analysis, you are going to say:  It is unfair for you to stop it just because there is too much media concentration.  You never told us what the threshold was, how far we can go, what we can do and what we can't do.

5123             That is the purpose of these hearings.

5124             So help me.  If you do not like the CBC proposal, what do you suggest we do?

5125             And when it comes to Bell, you say that you like the approach, but don't do this until such time as we have had the BDU hearings.

5126             We have made it quite clear that we will not entertain any major deal ‑‑ and you have been the first victim of this ‑‑ until the new rules are in place.  If we wait until the BDU hearings, you, in effect, will not have a new framework, a new approach, until mid‑2008.

5127             That also will cost in terms of business planning and progress.

5128             If you were in my shoes, what would you do?

5129             MR. ENGELHART:  Thank you, Mr. Chairman.

5130             You are right that there was a comment in the media about Rogers and Shaw, but I think that Mr. Rogers, in a subsequent statement ‑‑

5131             MR. LIND:  There was another comment.

5132             MR. ENGELHART:  Exactly.  I think he put paid to that suggestion.

5133             You are absolutely right that there is concern about media consolidation, but, at the same time, there is a lot of concern in our industry, and generally, about the impact of new media on traditional media.

5134             Is the internet going to threaten conventional television?

5135             Does the iPod render radio obsolete?

5136             All of this kind of speculation and concern and anxiety pervades every hearing you have.

5137             Our concern is, if we establish some rigid rules in an environment where the impact of the new media is uncertain, you might end up with some rules that are obsolete very quickly.

5138             Regulatory certainty in an environment of changing technology can really end up being counterproductive.

5139             To give you a small example, we used to have a very certain rule which said that cable companies couldn't own analog specialty services.  You had certainty, but the rule just stopped making sense, because satellite companies were as big as many BDUs, or bigger than many BDUs, and Bell ExpressVu was part of a corporate group that owned many analog specialty services.

5140             So we had a crystal clear rule that said we couldn't buy analog specialty channels, but the rule just didn't make sense, and we had to have a major policy hearing to change the rule, and then we were allowed to buy Sportsnet.

5141             There is an example where regulatory certainty actually created more business risk and more problems for us.

5142             That is why we think that guidelines are the way to go.  We think the Bell proposal has some merit.

5143             You are absolutely right, we need some sort of indication to the industry of what is going to be allowed and what isn't.  But you are quite correct that we think the January hearing will have a big impact.

5144             For example, right now we have genre protection and we have access rules.  I think that creates market power in a large group of specialty services.  They have ‑‑ whatever ‑‑ the history genre, the comedy genre ‑‑ whatever it is, they have it.

5145             If they put together too many powerful brands, too many powerful specialty channels, I think that gives them market power, and, by having market power, it might well mean that one wants to pick a number, as the CBC has done, and put that number in the guidelines.

5146             On the other hand, if you get rid of the genre protection rules, if you get rid of the access rules, so that new entrants can form these specialty services, I think that diminishes a lot of their market power.  Maybe now we don't need a number.

5147             Those are the reasons why we think it would be better to wait until January to start to craft these guidelines.

5148             THE CHAIRPERSON:  I appreciate that and, of course, that is the easy way, for us to do that.  But, at the same time, you and others keep telling us that this is a very dynamic industry, that your biggest threat is the internet, and you don't know when it's coming, et cetera.  Therefore, there is also a cost to delay.  In effect, we are saying, fine, we will take your comments, we will do the BDU review, and then, as a result, we will do a joint decision; in effect, what changes there will be for the BDU, and then, on top of that, what will be the new rules in terms of media concentration.

5149             That, effectively, puts a brake on all deals until that happens, and there will be a certain cost for that, as well.

5150             We are trying to balance things.  We are trying to give you the maximum ability to react to a dynamic market, but, at the same time, making sure that you don't come forward with something, a fait accompli, which will be very difficult to undo.

5151             Or, you or others will scream about a lack of procedural fairness:  We never knew there was such a barrier.

5152             MR. ENGELHART:  I think it might put a bit of a damper on mega mergers, but for most transactions, I wouldn't see them stopping while this process took place.

5153             If there was something that changed the ground rules, you might say:  Look, we need those guidelines first.

5154             MR. LIND:  I think that a huge merger, such as CanWest and CTV, would be intolerable without guidelines, but smaller mergers should be allowed to exist, just like they exist today.

5155             THE CHAIRPERSON:  Let's go to the Bell proposal.  Intellectually, it is very appealing, and as a former Commissioner of Competition, I am very familiar with the MEGs and how they work and their strengths and benefits.  They are flexible, too, and yet they give you some predictability and an ability to forecast whether a merger will be approved or not, or what are some of the ‑‑

5156             But MEGs are based on the SNIP test, as you know ‑‑ Significant Non‑temporary Increase in Pricing Power ‑‑ i.e., no raise of 5 percent over two years.  A purchaser should not be able to maintain an increase of 5 percent over two years.

5157             That is, roughly, the rule of thumb that people apply.

5158             What would be the equivalent of a SNIP test here?  That is what I am struggling with.

5159             What do we measure?

5160             Are you talking about market reach, or audience share?

5161             The MEGs only make sense because, in the background, you have the SNIP test, and that is what you apply.

5162             Hypothetical monopolist is the other expression used for it, et cetera.

5163             What would one do here?

5164             I asked Bell that, and they said, "We will reflect on it," and I have the feeling that you may give me the same answer, but I think it is crucial to any such approach that we have the equivalent of a SNIP test.

5165             MR. ENGELHART:  I think what has emerged this week from this proceeding is that, although diversity is an issue, plurality is sort of where the rubber is hitting the road, particularly on the national scale.  We have such a broad diversity that, even with a mega merger, I am not sure that diversity would be threatened.

5166             So, really, it is plurality.  And we will have to invent an acronym for a Significant Non‑transitory Decrease in Plurality ‑‑

‑‑‑ Laughter / Rires

5167             MR. ENGELHART:  ‑‑ and figure out what that would look like.

5168             But that is the idea, if this was going to lead to a permanent structural diminution in the number of voices in an environment where you are already at, sort of, too low a level of voices.

5169             Now, you heard a lot of people saying to you today that, with internet and blogs and new media, there are still lots of voices, but I think that's the idea.

5170             THE CHAIRPERSON:  I agree with you that plurality is the issue.

5171             The way we have defined plurality is the number of professional editorial voices in a given market, whether national or local.  Obviously, some markets may be offside already, and they will be grandfathered.  But the question is where the threshold is, or where the danger line is, where we would have to look at either not allowing or providing a remedy.

5172             I would very much encourage you to put your creative hat on and help us with this.

5173             I think the Bell proposal clearly put in context how one could approach it, but the key item is missing, and we would welcome any ideas that you might have.

5174             Moving onto news scheduling ‑‑ and I heard your position that, in effect, on separate newsrooms the code is okay, and that you have full confidence in the Standards Council, et cetera.

5175             Yesterday we heard from various organizations, particularly from Quebec, who all felt that, no, the code does not go far enough, that you have to go the extra step and insist on separate news gathering.

5176             By single news gathering, even if you have separate editorial rooms, you are, in effect, homogenizing news at the outset, and therefore it will stay homogenized, even if you distribute it.

5177             You heard the submissions, but I think that was the thrust of them.

5178             I would be interested in your view on that, and also your view on the comment made by my colleague Commissioner Noël:  Is there a difference between the French market and the English market, and should one have different rules for the two.

5179             MR. ENGELHART:  It seemed to us that a lot of the comments yesterday were really worried about what many in the media industry hoped would happen with media convergence.

5180             A lot of owners felt that, by combining print and broadcast, they would achieve synergies.

5181             I think what is happening is that everyone has been disappointed.  There really aren't any synergies.

5182             Certainly, at Rogers, we don't have any.  What the folks at Maclean's do, what the folks at 680 News do, what the folks at OMNI do ‑‑ we are desperate to try and get some synergies going there, and there just aren't any.  They all have their separate news gathering and editorial policies.

5183             Even within OMNI we can't get much synergy.  Sometimes we can send a crew out that can take pictures for both, but, surprisingly, not very often.

5184             I believe, if you drilled down into what is going on at Global, for example, I think the message that they would give you is that there has been less synergy than they ever dreamed.

5185             I am not sure that this concern about a single news voice is a realistic one.

5186             Now, that having been said, I am not as familiar with the Quebec situation, so I probably can't speak authoritatively about that.

5187             THE CHAIRPERSON:  All right.  Lastly, financial disclosure.  I am somewhat surprised by your answer.

5188             Several intervenors have submitted that it's fundamentally unfair that we do not have financial disclosure for networks on an aggregate basis, the same way we do for specialty services, and that they really are at a disadvantage in coming to us, et cetera, without seeing that information.

5189             Now, obviously, nobody wants to hurt you financially, but you are a publicly traded company, so some of the information is available anyway.

5190             Why could we not do this kind of disclosure, putting everybody on a level playing field and eliminating this procedural disadvantage?

5191             Frankly, I don't quite follow, so maybe you could explain your position.

5192             MR. ENGELHART:  Specialty services are entitled to mediation before the Commission in the event that you cannot agree on the rate.

5193             Inevitably, during those negotiations, or during those mediations, the issue comes up where the specialty service says, "If I don't get 30 cents," or whatever, "I am not going to be able to meet my obligations under my Conditions of Licence," and their profitability immediately becomes relevant.

5194             You say, "Well, you are earning 57 percent PBIT.  I think, with a few cents less, you will be doing just fine."

5195             If there is a mediation before the Commission, it would always be disclosed.  That profitability would always be disclosed prior to that mediation being concluded.

5196             So it is better for the Commission to put the number out now, or put the number out on a regular basis, to give the parties that information to assist them in their negotiations, so they don't have to go to mediation.

5197             But there is no reason for anyone to know the profitability of an individual television station, or even a television station ownership group.  There is no practical reason, and I don't think there is any public policy reason.

5198             When we had the Over‑the‑Air Television Hearings, there was industry‑wide PBIT, and that gave everyone the ability to discuss the profitability of the industry as a whole.

5199             When you are dealing with public policy issues, you don't really want to say, "This group is doing well, and this group is doing poorly," because that might be due to better managerial decisions.

5200             Public policy issues focus around:  How well is the industry doing.  How well is the market doing.

5201             And the disclosure that you have currently works for that.

5202             I agree with you that there is perhaps no overwhelming commercial reason why the number could not be disclosed, but we don't think there is any practical or public policy reason for disclosure.

5203             THE CHAIRPERSON:  Let me give you one.

5204             We are not talking about station‑by‑station, first of all, we are talking about group.

5205             The industry one may show that the industry is suffering or not, but there is no way for people to know whether these numbers are skewed by somebody being very profitable or somebody having a great loss, while the others are all average.

5206             If you break it down by group, then at least you can see to what extent it is common, or whether the numbers are being skewed by one outlier at either end.

5207             Secondly, it also would show you which combination of groups works and which doesn't work.

5208             And to what extent, for instance, the same synergies, which you tell me are not there, et cetera ‑‑ do they actually have them available.

5209             The groups that do not have the ability to have the synergies, because they don't have holdings in various things, how are they doing compared to the ones who concentrate solely on broadcasting?

5210             I think these are all pieces of information that would be very relevant to the public discourse.  It should not, in any way, hurt you, but it would allow us to get much more targeted and pointed interventions, and it would allow the intervenors to speak from a level of knowledge which they don't have at the present time.

5211             MR. ENGELHART:  I am sure that everyone would like to know what their neighbour's house is worth, but, really, if you are dealing with a public policy issue on real estate, it is the average price or the median price of real estate in that neighbourhood that matters.

5212             You might be right that there might be a hearing one day where you need it by ownership group, and if that hearing was taking place, then the Commission could release that information.

5213             But in terms of a regular, ongoing release of information, I think that the competitors and others would find the information fascinating, but I don't really think it would be solving many public policy or practical problems in the same way that the ongoing release of the speciality information does.

5214             THE CHAIRPERSON:  But take fee for carriage, we made it quite clear that the evidence wasn't there.  But the issue is going to come back and, you know, we will have to next time around bite the bullet and say yes or no.  To do that would be much, I think, the discord will be improved and our decision better to the extent that people would have that information and go places rather than on the industry basis.

5215             MR. ENGELHART:  We used to have a sort of a similar issue, and to some extent we still do, when a TV station or radio station wants a new licence in a given market.  And the test now really looks at the viability of the entire market.  But the test used to look at the viability of the existing incumbents.  And the existing incumbents would come up and say, well with me, I am not making any money on my radio station and if this new guy gets a licence I am going to go under and it will be terrible.  It was a very kind of a protectionist set of arguments.

5216             I don't think that is the issue.  If a given radio station is going to go under when a new radio station is licensed, that is the marketplace working.  The issue, if there is one, is whether the market as a whole is viable, whether the market is saturated.  So I think market‑based metrics are more relevant to the public policy issues than the individual company metrics.

5217             THE CHAIRPERSON:  Well, I don't want to beat this to death, Mr. Engelhart.  Just finally, if we did impose it upon you could you live with it or not?

5218             MR. ENGELHART:  If there was a legitimate ‑‑

5219             THE CHAIRPERSON:  And you have no choice, I know that, but I meant as a businessman.

5220             MR. ENGELHART:  I don't think the sky would come crashing down if this information was released.  But if you did it I would urge you to do it when a particular hearing was called on a particular issue and not an ongoing release of that information, as you do for specialty channels.

5221             THE CHAIRPERSON:  Okay.  Thank you very much.

5222             Stuart, I believe you had a question.

5223             COMMISSIONER LANGFORD:  Thank you, Mr. Chairman.  Good morning, folks.

5224             I have just got a few picky questions, you have done the global overview.  But there is a few things that I want to go back to on your original written submission that I would just like to explore with you.

5225             You say that you would like to get rid of the 5 to 1 rule, which basically says you are going to carry five un‑owned specialty services for every one of your own.  Not exactly a hardship for you folks if you only own four, but still it does set a rule and other companies have bigger holdings and it becomes more of an issue there.

5226             The problem with getting rid of it, of course, is that if people ‑‑ at least this is how I see it ‑‑ if people feel aggrieved they have to come to us.  And about the only remedy they can explore is the undue preference, undue discrimination.  And you say that yourself on page 28 of your original submission. 

5227             Now, the problem with that, and I explored this with the Shaw Group, is that it takes time, just the rules of natural justice and process take time.  You know, they get to make their complaint, you get to make a reply, they get to make a reply to your reply, then somebody has an interim motion because they don't understand something, time drags on.  Meanwhile, the weaker party really is in danger of being victimized and just going away. 

5228             So would you support as a kind of quid pro quo for getting rid of the 5 to 1 rule and relying on the undue preference more general rules?  Would you support a greater range of remedies in the hands of the Commission?  So that if BDUs really were trying to quash some other services, hopes and reasonable aspirations we have more remedies than to just say stop doing that.

5229             MR. ENGELHART:  With your indulgence, Commissioner, I would like to put your comments a bit into context.  So just first on the numbers, the rule that you referred to actually applies to Category 2 services.  We currently carry zero of our own Category 2 services.  We have got a couple of licences, but we have never launched one.  And we carry virtually every Category 2 service that is available to us; English‑language, ethnic, all of them, we have 70 Category 2 services.

5230             Now, we also have a VOD service, which I believe is technically classified as a Category 2 service, so we have a five for one match, we still have 65 leftover, so we are in good shape.

5231             So the reason why we advocated removing the rule, and I am going to ask my colleague, Mr. Purdy, to give you a quick snapshot of the business environment that he operates in, but we think that contrary to some of the messages you heard cable operators have to carry these services because it makes business sense.  We think we do, we carry them all because we are in a struggle with satellite providers. 

5232             So the context that this message has been given to you on, which is the big bad BDUs for whatever purposes are trying to keep people out, we don't think it realistically describes what is going on in the marketplace.  Our perception is that we are desperately trying to get content to enhance our platform and we are sometimes frustrated by our inability to do so.

5233             COMMISSIONER LANGFORD:  You may not rob banks, Mr. Engelhart, but we have rules against robbing banks in this country.  And so I guess what I am asking you is would you have any problem with setting up some new remedies, at least exploring perhaps a finding power, which we have to get legislated permission for anyway, but expedited hearings, different process for it, different burden of proof, where would the burden of proof be, what would it be?  Would you have any problem with exploring that as a kind of quid pro quo though it doesn't touch your situation right now pragmatically at all?

5234             MR. ENGELHART:  Not at all.  In fact, I am familiar with the expedited proceedings in the telecom side.  So far, we have a perfect record on them.  So we would be happy to have the expedited hearings here as well and we think they work really well.  Finding power, I don't think it is necessary, but we wouldn't object to it.  So absolutely, if you want to put some more teeth into the dispute resolution side of things I don't see a problem with that.

5235             COMMISSIONER LANGFORD:  Thank you. Moving onto the notion of getting rid of the benefits.  It is easier to see from your perspective than it is, of course, from the broadcasters' perspective because you folks are putting 5 per cent into the fund yearly, 5 per cent of your gross revenue.  So it is not hard to understand why you feel you are already pulling your weight.

5236             At the same time, if we get rid of the benefits for you we get rid of the benefits for everybody.  So now we have got to say what is going to become of independent production.  And, you know, on page 32 of your brief you are singing the praises of independent producers, so you obviously like them, you rely on them, you think they do good work.  But do we want to cut the tap off? 

5237             One of the associations told us if there were no benefits between 2000 and 2006 it would have meant a loss of over $400 million in production funds for them.  So what do we do?  We can't believe in independent production, we can't require independent production and then starve them.  So do you have some sort of a solution of how to replace the benefits?

5238             MR. ENGELHART:  As your question notes, you know, cable companies and BDUs will continue paying their 5 per cent, so the question is whether the benefits, when transactions take place, should continue or not.  And, as we say in our brief, philosophically since the benefits were a move for BDUs when they became in a more competitive environment we think the same thing should apply to TV now that they are in a more competitive environment.

5239             As you said the other day, one of the problems with the benefits is it creates a feast or famine situation.  If there is no big transactions then there is no benefits even under the current rule.  So the current rule is sort of very dependent on people buying and selling things to generate those benefits. 

5240             I think, generally speaking, and it is something we are all wrestling with and I certainly don't have any magic silver bullet, but generally speaking the Canadian system and priority programming has got to be more self‑sustaining and have a more stable model and become less dependent on benefits and subsidies and taxes.  Now, exactly what the answer is to that we don't know, but I am not sure it makes perfect sense to carry on relying on benefits as the solution.

5241             COMMISSIONER LANGFORD:  I can agree philosophically with a lot of what you are saying.  The problem, of course, is that it is difficult to make that leap of faith.  We will get rid of your $400 million but something will replace it somehow along the line.  That is pretty hard for the folks who have had the $400 million.

5242             Now, there may be no more mega deals and $400 million will be something we will all look back at as sort of an aberration in history, but there may be more mega deals as well. So I think I would ask you to give that more thought if you don't mind.  We have until I think it is about October 5 for reply.  I am not directing you to do it, I don't have that kind of authority and I wouldn't exercise it even if I did.  But if you could give it some thought, I know the producers are going to give it some thought, I am hoping some of the broadcasters will as well, and get back to us with some ideas. 

5243             Because it just seems just turn the tap off and say trust in God is perhaps not quite enough for these people.  You can't eat philosophy.

5244             The last question I have for you is an old one, one you have faced before.  But we have heard again the tales of woe with regard to access and carriage.  Now, I know that in theory that is the January hearing.  But also, you have to admit that it makes a certain sense in this process.  If you can't get your signal out to people you can't get a variety of voices.  So there is an element here that is worth looking at.

5245             Now, you guys are carrying everything, you are the good guys, fine.  But what they say is you are not paying for what you are getting.  You have got huge power and you are essentially stealing our service from us, you are paying us pennies when you should be paying a reasonable rate.  How can we make this more transparent?  I have been here for almost nine years now and I have heard this story, you have heard this story, we always hear this story.  No one will give us the numbers, but they all say, believe me, it is awful out there.  We go in, we are small players, we have no bargaining power. 

5246             Not all of them, of course, CTV is not singing that tune, but the standalone folks, the people with a couple of Category 2s or a Category 1 and a Category 2 are saying, we just can't stand‑up to these people and we need some help.  What do you say to these people?

5247             MR. ENGELHART:  I think you have been getting a skewed message, and I am going to ask Mr. Purdy to respond.  We just don't see it that way.  We are out there trying to get as much content as we can for all of our platforms; for cable, for wireless, for internet, and we are finding it more and more difficult.  We have a VOD platform where we are desperate for the Canadian producers to give us content and we are not getting it. 

5248             So I am going to ask David to respond.

5249             MR. PURDY:  Thank you, Mr. Commissioner.

5250             I guess I will provide a little bit of context.  Right now Rogers faces, we feel, enormous competition.  We battle with both Star Choice and ExpressVu in our marketplace, but also with the over‑the‑top technologies, you know, the BitTorrents, the eDonkeys, the Kazaas of the world as well as, you know, Telco TV in the form of Videocell at IPTV. 

5251             So we are constantly on the lookout for new channels that will allow us to differentiate ourselves against the competition and to retain younger people in the system. 

5252             The notion that we are underpaying or not trying to fund properly our broadcast partners I think is archaic and I don't believe it is widely held.  I mean, I think there is one or two very vocal people that come up here regularly and use this opportunity. 

5253             But, quite frankly, I think most of our broadcast and programming partners feel that while our negotiating is aggressive it is certainly not unfair.  And Rogers is always looking to differentiate itself with better and stronger content, not just to beat off the satellite competition, but really to try and retain young people within the broadcasting system and that is, I think, our critical battle.

5254             When you look at a specialty channel they really have a couple of different ways that they can get leverage with their BDU partners; one, is that they can produce great programming; and two, they can aggressively market that.  I think some of the people who have spoken this week have failed on one of those two counts.

5255             When we look at our programming partners that have done very well it is largely because they have got strong sources of content and they aggressively market it.  Those programming partners are the ones that have flourished and do end up getting carriage on our competitors as well as ourselves.

5256             COMMISSIONER LANGFORD:  Carriage doesn't seem to be the complaint, it is cost, the price, what they are getting.

5257             I mean we have heard narratives ‑‑ we don't have any evidence on this, hard, empirical evidence; you have got the evidence ‑‑ that people are getting two cents from you and you are charging $2.00 for their service.

5258             MR. PURDY:  Right.

5259             COMMISSIONER LANGFORD:  I mean is that story possible?

5260             MR. PURDY:  No.  Thank you, Commissioner, for giving me a chance to speak to this.

5261             Typically, our margins in the analog world are far better than our margins in the specialty channel world.  So the notion that we are getting a significantly greater margin by underpaying for digital specialty channels is just not backed up by the facts.  The most profitable part of our business is the analog part.  So that would be one indication.

5262             COMMISSIONER LANGFORD:  Is there some way to make this more transparent so this complaint will go away?  It has just been hanging around so long.  It is the old if there's smoke, is there fire problem that we have.

5263             MR. PURDY:  We could bring it before the Commission, I imagine it will come up in the BDU hearings, but really, it is about market forces and those specialty channels that have strong and compelling content, great brands and aggressively market those brands end up extracting a higher wholesale fee from the cable companies and satellite companies.

5264             COMMISSIONER LANGFORD:  Yes.  It is the chicken and egg though, isn't it, I mean you need some money to do some marketing.

5265             Anyway, I have beat it to death for today but it seems to me to be an underlying diversity of voices issue.  It is not maybe the biggest one in the world, it is not like one company buying all of the other companies, but for a small player it is a big issue, I think, and for consumers who want to see a signal, it is an issue because if you are not getting enough money to keep the business going and to market it, the consumer loses in the end as well.

5266             MR. PURDY:  I might want to point one other point out there, which is that when we are looking at the overall supplier situation it is in our best interest to have a diversity of suppliers.  So the least attractive scenario to me is that I am dealing with one or two suppliers for all of my specialty channels.

5267             So it is actually in Rogers' interest and we try very hard to make sure that we have a diversity of suppliers out there.  So we are actually incented by our own self‑interest to make sure that we have lots of strong broadcast ownership groups in the marketplace.

5268             COMMISSIONER LANGFORD:  Well maybe they should form a union.

5269             MR. LIND:  I think one of the key variables here is the popularity of the channel.  I mean that has got to play in this thing too.  I mean you can have an idea, it may be desperately unpopular, but it is an idea that has to be heard.  Well yeah, but, you know, not ‑‑ they don't have the same sort of compelling reasons for marketing and ‑‑

5270             COMMISSIONER LANGFORD:  Yes, it is like selling that asparagus‑flavoured ice cream, it is a tough one.

‑‑‑ Laughter / Rires

5271             COMMISSIONER LANGFORD:  Thank you, folks, those are my questions.

5272             THE CHAIRPERSON:  I think some of the issues we will revisit in January when we are dealing with BDUs.

5273             Michel, you had another question?

5274             CONSEILLER MORIN :  Oui.

5275             Bonjour.  J'aimerais vous parler de la diversité, non pas au niveau national, mais au niveau local.  Il y a des sources qui comptent plus, et c'est peut‑être la radio, la télévision, les journaux, principalement.  J'ai beau avoir mon MP3, quand je veux m'informer localement, j'écoute la radio, et, en fait, je l'écoute de plus en plus parce que la radio me suit maintenant tous les jours.

5276             Il y a une règle qu'on pourrait peut‑être établir, qui n'est pas actuellement... qui ne fait pas partie des règles du CRTC.  On a des règles pour la radio, le nombre de postes de radio.  On a la règle qui veut que, dans un seul marché, il n'y ait pas plus d'un poste de télévision qui soit propriété... même là‑dessus, il y a eu une exception.  Bon.

5277             Mais est‑ce que les Canadiens ne mériteraient pas, dans les marchés principaux justement, où il y a possibilité d'avoir un poste de radio, un poste de télévision et un journal, qu'on interdise toute transaction qui ferait en sorte que dans un marché de 100 000 habitants... 80 pour cent des Canadiens habitent dans des villes de plus de 100 000 habitants.

5278             Pourquoi, à votre avis, les Canadiens ne mériteraient pas, au niveau de l'accès, pourquoi ils ne mériteraient pas que sur les trois médias les plus importants qui comptent encore, qui génèrent de la nouvelle, pourquoi on ne dirait pas, bien, quand un propriétaire a en sa possession soit un journal, soit un poste de télévision dans un seul marché, il ne peut pas acquérir... avoir la possibilité d'acquérir un journal, et vice versa, si un propriétaire a un journal et un poste de radio dans un marché, il ne peut pas acquérir un poste de télévision?

5279             Pourquoi les Canadiens ne mériteraient pas cette diversité qui leur assure quand même une certaine sécurité, disons, au niveau démocratique?

5280             MR. ENGELHART:  Alain?

‑‑‑ Rires / Laughter

5281             M. STRATI : Merci, Monsieur Morin.  C'est, bien sûr, une question très importante, une question à laquelle beaucoup d'intervenants et beaucoup de présentations ont parlé durant cette semaine.

5282             Je pense que si on regarde les trois différentes sortes de médias, nous, dans notre expérience, nous avons... vraiment, il y a un développement dans différentes sortes de médias.

5283             Par exemple, si on regarde la radio, nous, certainement, on a fait un grand investissement dans la radio et dans les nouvelles dans la radio.  Nous avons, certainement, plusieurs stations, et le nombre de stations à notre service a grandi durant le temps.

5284             Donc, si on parle... il y a beaucoup de changements dans les trois différents médias qu'on a parlé : radio, télévision et journaux.

5285             Alors, si on regarde d'ici trois, cinq, 10 ans, je pense que les médias, surtout quand on parle de l'internet, du nouveau média, je regarde, par exemple, le * New York Times + maintenant sur l'internet.  C'est maintenant... il n'y a aucune suscription qui est nécessaire.  C'est complètement seulement avec les annonces qu'on peut regarder sur l'internet.

5286             Donc, il y a plusieurs nouvelles voies, et surtout quand on parle, je pense, des journaux, que ça soit les journaux qui sont maintenant gratuits et disparaissent dans le marché, que ça soit l'internet, nouvelle média, on regarde vraiment un développement dans les nouvelles locales et aussi nationales et régionales, où il y a vraiment maintenant beaucoup plus de différentes sources d'information.

5287             Donc, pour nous, on essaie de développer des sources locales de nouvelles qui sont attirantes et qui gardent la population aux médias traditionnels, les médias qui sont réalimentés, mais on voit surtout dans le côté des nouvelles, il y a des changements énormes, il y a différentes sources.

5288             Alors, je comprends très bien votre question, mais de notre côté, il y a un grand changement où le numéro devient de deux à trois, et c'est vraiment... les sources s'agrandissent de jour en jour.

5289             CONSEILLER MORIN:  Mais au niveau local, j'ai un Palm Pilot avec le programme AvantGo.  J'ai toutes les informations nécessaires.  J'ai Bloomberg, j'ai le * New York Times +, j'ai le * Washington Post +, j'ai * Le Monde +, j'ai BBC, j'ai CBC.  Ils sont tous dans mon Palm Pilot.

5290             Mais au niveau local, je n'ai rien.  J'ai le site de Radio‑Canada, j'ai Canada.com, mais les nouvelles locales dans un marché, soit à Kitchener ou à Sherbrooke, je dois compter soit sur la radio, grosso modo, pas sur l'internet.  Il n'y a pas de scoop sur l'internet.  Je dois compter sur la radio ou sur la télévision, puis le journal local.

5291             Et si on parle ici de diversité, puis on n'a pas une règle pour assurer qu'au niveau local ‑‑ je répète ‑‑ au niveau local, il n'y a pas cette diversité, qu'est‑ce qui reste?  Est‑ce que les Canadiens peuvent vraiment dire tous les marchés locaux, c'est l'amalgame des trois médias, il n'y a pas de problème?

5292             M. STRATI : Je ne dirais pas qu'il n'y a pas de problème, mais je pense que les sources s'agrandissent si on parle de Toronto.  Moi, j'habite à Toronto.  Il y a toronto.com, il y a redToronto.  Il y a différentes sources qui se développent et qui deviennent importantes de jour en jour.  Il y a Eye Weekly.  Il y a d'autres sources différentes qui sont dans le marché.

5293             Je comprends qu'on se concentre sur ces trois sources là, mais de jour en jour, surtout les différents groupes démographiques, les sources d'information locales sont très différentes si on parle de différents groupes démographiques.  Alors, les jeunes, pour eux, leur journal n'a pas l'importance qu'il avait avant.

5294             Moi, je reçois le * Globe and Mail +.  Il y a Stephen Brunt qui est un écrivain pour les sports.  Je le regarde.  Moi, je reçois le * Globe and Mail +.  Chaque jour, je le lis.  Je ne lis pas, d'habitude, son article, mais je le vois sur Bob McGowan, qui est un autre programme qui est sur * Le Fan +.

5295             Alors, il y a des différentes sources et différentes opportunités, mais certainement, il y a un agrandissement, et je pense que...  Je trouve que c'est important, mais moi, je vois les sources s'agrandir de jour en jour au lieu de rétrécir.

5296             THE CHAIRPERSON:  With all due respect, that is not an answer to the question.

5297             I mean the question is quite precise and quite straightforward.  In local markets, the source of local news is radio, journalism or TV and that one owner owns all three basically deprives the people in local markets of local news.

5298             That is what Commissioner Morin puts forward and I think nothing I have heard from you refutes that.  Therefore, the CBC rule that is saying in one market you should not own all three, I think, is a very logical proposition if you want to ensure that people in local markets have access to local news.

5299             The objection that you make on the definition of what is a local newspaper, what is local radio, et cetera, that is like every rule, you know, you have got to have an interpretation, you have got to draw the line somewhere, et cetera.

5300             But I have not heard anything from Rogers saying exactly to this question by Commissioner Morin why one should permit one owner in a local market to own all three sources of local news.

5301             MR. WATT:  If I could just interject and go back to the discussion that you had with Mr. Engelhart.

5302             I know that we undertook by October 5th to try and put some flesh on the guidelines that might be used.  When that discussion was taking place we were frantically trying to consider what guideline we might put forward here today and we sort of deferred to October 5th but certainly one of the guidelines that I think might be put forward is exactly this particular issue.

5303             In smaller communities, communities where there isn't a plurality of voices, this could well be a guideline that you want to put in place, that if there is only one owner of the radio and television and the newspaper in that location, that then would be a guideline that people before the fact would think that is not a market where I can go in and purchase and accumulate these types of properties.

5304             But having said that I think it doesn't directly address the problem of where to get local news from the newspaper but we do have to bear in mind that, I think, it still is an open question as to ‑‑

5305             THE CHAIRPERSON:  You would prefer it to be done by way of guidelines rather than rigid rules but the effect would be the same?

5306             MR. WATT:  I think so because it may be the case that newspapers are a very dicey proposition in the future.  They are facing lots of competition from other sources and it may be that the only way you can have a newspaper in a smaller location is to have it benefit from the economics of being in a group with the radio or television station and then maybe you have to look at issues of separate newsrooms.  But again, in a small location it just may not be economic but you would consider all those factors.

5307             THE CHAIRPERSON:  Basically a failing from exception or something like that.  Okay.

5308             Thank you very much.  If there are no other questions, I thank you very much for your intervention.

5309             Madame Roy, who is next?

5310             THE SECRETARY:  I would now invite Corus Entertainment Inc. to come to the presentation table.

‑‑‑ Pause

5311             THE SECRETARY:  Appearing for Corus is Mr. John Cassaday.  Please introduce your colleagues and you will then have 10 minutes to make your presentation.

INTERVENTION

5312             MR. CASSADAY:  Good morning, Mr. Chairman, members of the Commission, ladies and gentlemen.

5313             My name is John Cassaday.  I am the President and CEO of Corus Entertainment.

5314             With me today are Sylvie Courtemanche, Vice‑President, Government Relations, and Gary Maavara, General Counsel.

5315             We appreciate the opportunity to appear before you today.  You have our written submission where we made specific policy proposals.  We would be happy to answer any questions the Commission might have concerning these suggestions to improve the system.

5316             Corus also requested that the Commission adopt a broad policy approach which perhaps you could think of as the Big Five.

5317             First of all, allow Canadians to experiment.

5318             Second, embrace the merits of fostering a Canadian‑owned industry that can be globally competitive.

5319             Third, increase the probability of success by encouraging the creation of larger and stronger enterprises.

5320             Fourth, develop a Canadian industrial strategy that supports the creation of high quality Canadian content from all Canadian producers, including producers that are affiliated to Canadian broadcasters.

5321             And, fifth, recognize that success in private broadcasting is what will lead to a stronger system in the digital world, not the current system of progressive fees, conditions and tariffs.

5322             It is our view that diversity will be enhanced if the Commission develops a policy framework that embraces these Big Five ideas.

5323             The fact is that Canadian broadcasters are the engines of diversity in our system.

5324             Through the course of this process, the issue of diversity has often drifted into other matters such as the mandate of the CBC, program funding, carriage, access and other matters and most of these will be covered in upcoming processes.

5325             But this underscores our view that diversity is not a discrete issue; it is tied to all the factors that challenge our potential for success in meeting the goals of the Broadcasting Act.

5326             We believe that by embracing the Big Five the Commission will facilitate the achievement of these goals and, thus, also preserve diversity.

5327             The Commission has posed specific questions for this public hearing and we will, therefore, concentrate our oral remarks in responding to these.

5328             First of all, plurality of voices.  This question relates to preserving a plurality of commercial editorial voices in a community.

5329             We submit that any analysis must take into account the variety of public broadcasting services that operate in each community.  Their contribution is relevant as they obviously add diversity, but they also compete for audiences, programming and sponsors with private broadcasters.

5330             In this regard we agree with the CBC's position that they do add diversity to the marketplace of ideas and opinions.

5331             It is also important for the Commission to formally recognize that there is a vast array of the media industry over which it has no jurisdiction or impact.  Part of this is digital interactive media.

5332             However, we should also not forget that a large proportion of the unregulated realm is foreign broadcast services that compete with us.  This number grows each day as the Commission adds new foreign services to the eligible list.

5333             And please keep in mind the estimated 1‑million households that use pirate satellite receivers.  These pirates operate with impunity in our country and the Commission should encourage the Government of Canada to take more active steps to control this crime.

5334             Few things are more threatening to the Canadian broadcasting system than this illegal intrusion that diverts an estimated $1‑billion each year from the Canadian system.  The environment is increasingly competitive as the Commission is well aware.

5335             Another impact of digital interactive media is that news rooms are under dramatic more scrutiny than was ever the case in the past.  Every fact or opinion immediately faces the examination facilitated by the Internet.  The Commission is well aware of the myriad examples of where erroneous news reports or facetious opinions have been challenged by the online community.

5336             Our news rooms must remain credible to our listeners to remain valid sources in a very competitive news and information market.

5337             This is the strictest test that we must meet each day, the test of the market.

5338             In addition to the rigors of the market, a broad range of measures already exist that govern content and diversity.  The Broadcasting Act, regulations, CRTC policies, licence conditions, expectations, the Elections Act across Canada, the CBSC process, rules about access to funding, mechanisms and even other statutes such as the Criminal Code have provisions that impact upon the diversity, balance and fairness of the programs which we broadcast.

5339             So, what else can the Commission do to foster diversity?

5340             An important element of editorial diversity in each market in Canada is the AM radio news talk station.  News talk is one of the best means by which Canadians can access the Canadian broadcasting system.  Each and every day across our 16 news talk stations, Canadians are given the opportunity to air their concerns and opinions using their own voices which augments the work done by our journalists.

5341             This crucial means of information and access is being threatened by the abandonment of the AM frequency by listeners, especially young people.  This problem is exacerbated by the technical interference caused by the massive urban development in most cities, and in recent weeks we have discovered that the introduction of the IBOC AM services in the United States will result in nighttime interference with our stations in major centres close to the border, such as Winnipeg and Vancouver.

5342             As the Commission is aware, the CBC has recognized this problem and is leaving the AM band.

5343             Corus has had some success in transferring our signals in the east, but less so with major stations in the west, such as CJOB in Winnipeg.

5344             News talk radio is important to editorial diversity and we believe we can win back young listeners.

5345             Corus is dedicated to expanding our news talk services and, for example, we have made application to launch a new service in Kelowna.  Our consumer research also indicates that young people will listen to information radio if we do it in the right manner on FM.

5346             The Commission must make the preservation of the heritage news talk stations a priority or the diversity of editorial voices will be greatly diminished in local markets.

5347             This is an active step that the Commission can take to immediately preserve this foundation service and the hundreds of editorial opinions distributed each day.

5348             The solution lies in what we call nesting the AM signal in low power FM frequencies.  We have identified FM frequencies in each market that are not being used and which can fill the gaps in our coverage, especially downtown where most people live, work and play.

5349             You can also amend the radio regulations by allowing an FM format to evolve to news talk without a cumbersome regulatory process.  We just can't afford to wait an uncertain 18 months to see if the Commission will allow a format change.

5350             The second question is about diversity of programming choice.  The Commission's licensing of new Canadian services and the entry of more foreign services has fostered a system which is probably unparalleled anywhere in the world.  Adoption of our Big Five ideas will build on this success.

5351             For example, you can allow us to experiment in digital radio so we can develop the value added elements that will entice Canadians to purchase  the new digital receiver dishes.

5352             You can also allow us to grow so we can continue to take the risks that any venture into new platforms will entail.

5353             Let me give the Commission an example of why we need to grow.

5354             We recently faced a program acquisition circumstance where the foreign rights owner demanded a considerable sum for the digital platform rights in addition to the fees for the traditional rights.  Our financial analysis indicated that this amount was not recoverable in the short term.  We also realized that we could not afford to lose the traditional programs if we didn't step up to secure these digital rights, so we needed to take on that risk.

5355             It is our view that that type of challenge will increase and all Canadian broadcasters will face the challenge of new media investment in order to protect their existing revenue streams.  We need to grow to cover these risks.

5356             Similarly, and as recommended by the Dunbar/Leblanc Report, it would be in the public interest to adopt a system that allows for vertical integration in fostering the independent production sector.  Our production studio meets the challenge of the Broadcasting Act by creating and distributing great Canadian drama.  Corus should be permitted to use this content without restriction while, at the same time, accessing independent works.

5357             The challenges of the production sector are well known to the Commission, however, the solution to getting more high quality Canadian programming is not by restraining the activity of some players in the system, it is not a zero sum gain; it will actually grow larger if you allow some producers to grow.  We need to adopt an industrial strategy to meet our cultural goals.

5358             A theme throughout the week has been the need for a test and here we agree with our colleagues that no test really exists anywhere in the world that is appropriate to our circumstance.

5359             The Commission already places limits where scarce spectrum is involved for both radio and TV and we believe that in the area of discretionary pay and specialty services, the method to ensure diversity is a two‑fold approach.  The first is by opening genres to domestic competition and, second, is to ensure that new entrants can access the distribution system.  If you adopt this approach, you will ensure diversity across the regulated system.

5360             Now onto financial disclosure.

5361             The Commission has also requested our point of view regarding the publication of financial results of private over‑the‑air broadcasters.  We are not sure in what form this would take place, however, we submit that this is both unnecessary to your ability to regulate and harmful to our ability to compete.  We also feel this way about the current practice of releasing the specific financial figures for discretionary services.

5362             If the Commission proceeds with this, then it should be done only on an aggregated basis and the other regulated segments should also have their information published on the same basis at the same time.  Specialty and pay service information should only be published on an aggregated basis as well.

5363             By way of summary, we urge you to adopt or at least consider our Big Five ideas.  Large enterprises are needed to take on the enormous risks that venturing into the digital interactive media requires.  Our competition is increasingly the world and you can help us prepare for that.

5364             And we need the Commission to recognize that in this new world, it is success that will facilitate the achievement of cultural goals.

5365             One immediate step that the Commission can take to preserve diversity is to protect the heritage of news talk stations across Canada by allowing them to utilize FM frequencies to improve reception by the listening public.

5366             We thank you for your attention and we look forward to your questions.

5367             THE CHAIRPERSON:  Thank you very much.

5368             I believe you were in the room during my exchange with Rogers just now.

5369             MR. CASSADAY:  Yes, we were.

5370             THE CHAIRPERSON:  And you remember how I said at the outset what really is in terms of plurality  what our issue is that, you know, increasing media concentration raises great worry for a lot of people and before we see the next wave, we should have some clear rules in place.

5371             Now, what forms the rules take, et cetera, and what should be in them is the purpose of this hearing.

5372             Now, I see your Big Five but, you don't specifically address this issue.  Do you have any views on this, on the CBC rules, on the Bell proposal, on what Rogers was saying, basically, that's just premature, should be done in the context of a BDU review on specialty or whatever.

5373             I would be interested in your views.

5374             MR. CASSADAY:  Well, we certainly agree that it's important to debate the issue, as you suggest.  Many people are asking questions, whether there is too much concentration and I guess our point is, we do believe there is considerable diversity and you should remind the Canadian people that they should take some comfort in that.

5375             Secondly, we make the point that we believe that while diversity is important that even more important is the fact that we need large Canadian companies in order to compete on a global basis.

5376             And I guess if I was to make some suggestions, I would just remind the Commission that there are specific tests in place where spectrum is scarce and I think it's more than appropriate, in those instances, that there be specific rules, but in areas like pay and specialty where spectrum is not an issue, we believe that there should be a more open environment.

5377             And I think the largest determinant, if I was a Commissioner of the CRTC, was to ensure that Canadians feel that they are well served relative to their friends in the United States.

5378             So, I think the most important thing that we can do as an industry is ensure that when Canadians look at the available services in Canada they feel that they are getting at least as good a system as is available in the United States.  And I think we're in a position right now where we can safely make that comment.

5379             THE CHAIRPERSON:  Yes.  I don't dispute that, but we are looking forward, we want to make sure we preserve and go forward.

5380             But what the concern seems to be  specifically towards local markets and ensuring that in local markets there is local news available from more than one source, and one of the proposals, CBC says just do what the Australians did using the Herfindahl‑Hirshman Index rule across the board saying, in any local market or national too, but we know ‑‑ I don't think we have to ‑‑ it is an issue at the national, nobody may be the owner of all three major source of commercial editorial news; i.e., radio, TV and newspapers.

5381             How do you feel about that?

5382             MR. CASSADAY:  Generally I agree with that and I think Ms Commissioner Morin made a very strong impassioned argument in favour of that.

5383             I guess the only thing that I would say is that I think we have to be reasonably flexible.  I spent a number of years of my life as a member of the Board of Canadian Airlines and I believed passionately that we needed two national airlines in this country.

5384             THE CHAIRPERSON:  Right.

5385             MR. CASSADAY:  And yet everything that we tried to do to ensure that happened failed and ultimately we ended up with one national carrier.

5386             And I think that in a town like Kitchener that was referenced earlier, it would be as a first priority important that one owner does not own the newspaper station ‑‑ the newspaper, rather, the radio station and the TV station.

5387             But I think if the only alternative is that there wasn't a newspaper or wasn't a television station or wasn't a radio station, that there would be some flexibility there.  But, generally speaking, perhaps two out of three would be the maximum that should be allowed.

5388             THE CHAIRPERSON:  Okay, thank you.

5389             Rita, you have some questions.

5390             COMMISSIONER CUGINI:  Thank you.

5391             Good morning, and as is the pattern, the Chairman very diligently takes care of the 30,000 feet questions and leaves the detail up to us.

5392             So, I'd like to go to your proposal with regard to being able to own more than two FM stations in one market.

5393             If we were to allow that, what does that do to diversity of voices in the market and what does that do to the opportunity for new entrants in any given market?

5394             MR. CASSADAY:  Well, I think you'd certainly still use the rules that we have in place now as to the total number of stations that one can own in a market based on its size.

5395             So, in this particular case we would not be proposing that we be allowed to own more than four stations in a market like Calgary, but that we would have the flexibility to operate the two FMs and at least a low power FM to house a news talk station because of the importance of making sure that stations like CKNW, CJOB and CHED are made available on a more accessible basis to people in cities and the downtown area in particular.

5396             MR. MAAVARA:  I think the other thing that's happening from a technological standpoint, Commissioner Cugini, is that we're discovering that this spectrum that's available is a little broader than we  thought.  That's as a result of the development of better receiver devices as a lot of the old radials get out of homes and you're aware of where radio stations that have launched recently have actually gone out and given people new receivers so they can receive frequencies that are closer together.

5397             We're very quickly developing a lot more spectrum by starting to explore things such as second adjacencies and also the tightening of distribution patters so that you can have contiguous stations that weren't considered in the past.

5398             And, as Mr. Cassaday said, one of the things that we're looking at with respect to our nesting is small power which solves the immediate problem of the downtown but doesn't create the overlap problems that a larger signal would have.

5399             COMMISSIONER CUGINI:  But that addresses your nesting proposal and I get that, but you do say that if an owner has no existing AM licences, then they should be permitted to own three FM licences in markets larger than eight stations.

5400             MR. MAAVARA:  That's correct.

5401             COMMISSIONER CUGINI:  That is in your written submissions.

5402             MR. MAAVARA:  Yes.

5403             COMMISSIONER CUGINI:  So, same question:  If we were to ‑‑ first of all, would you do that ‑‑ would you want that to occur even in markets where there is only one FM frequency available?

5404             MR. CASSADAY:  Well, we would propose that that rule be governed by the market size rules that govern now, so we would really be looking at that rule applying only in the markets that have eight stations or more.

5405             And our view is, to echo what I said earlier, is really that we feel there are more frequencies available, even in the Toronto market, for example, where you're probably aware there's quite a discussion going on right now with respect to the launch of one service.

5406             But we know that, in fact, there are more services that are looking at the spectrum across ‑‑ really across the swath from Oshawa to St. Catharines and if we look at the whole spectrum slightly differently from what we've done traditionally in the past, we think there's going to be more spectrum there and a change of this rule, which in our immediate perspective is we need to protect our news talk position, in fact, we are also going to have more diversity in the system because we think there will be more licensing.

5407             And we're seeing that, I mean even with this Kelowna call that's come up recently ‑‑ I'm not sure of the exact number, but I think there are 10 or 11 new applicants.  So, people are starting to see that, yes, there are more frequencies and, yes, there is more opportunity in even a small market like Kelowna.

5408             COMMISSIONER CUGINI:  Okay.  You also suggest that radio operators should not be permitted to change their formats within the first licence term to preserve diversity.

5409             We're always told that broadcasters need maximum flexibility to adapt their formats to the needs and tastes of their listeners.  So, how does your objective further ‑‑ or how does your suggestion further this objective?

5410             MR. MAAVARA:  Well ‑‑ sorry, go ahead.

5411             MR. CASSADAY:  I was going to say, I think on the service it may look that we're contradicting ourselves, but what we're saying here simply is, in the  case of a public hearing where there's a competitive situation for a new service and an individual applicant receives it on the basis of offering a diverse choice, it seems only appropriate that they should be committed to stay with that until they've gotten through the first licence term, then we couldn't care less what they do.

5412             But if the only reason they got it is because they were going to offer a Hungarian folk dance service and then they decided to turn it into a classic rock station the next week or flip it two months later, we think that's inappropriate and unfair to the other participants in that public process.

5413             COMMISSIONER CUGINI:  By the same token, as has been suggested by other participants in this proceeding, would you support a policy that prohibits the sale of a radio station within the first licence term?

5414             MR. CASSADAY:  Yes.

5415             COMMISSIONER CUGINI:  You would.  Okay.

5416             Do you think that these policies, if they were adopted, again an effort to increase diversity, should they apply equally to multi‑station ownership groups as well as to independents?

5417             MR. CASSADAY:  I don't see any reason why there should be a difference.

5418             Gary or Sylvie, I don't know whether you have a different point of view on that.

5419             MR. MAAVARA:  I'm just not sure what you mean by that in terms of, how would the impact be different?

5420             COMMISSIONER CUGINI:  Well, I guess I'm asking you that question.  In other words, should we  allow for independent broadcasters to sell sooner than ‑‑

5421             MR. MAAVARA:  Oh.

5422             COMMISSIONER CUGINI:  ‑‑ than the first licence term?

5423             MR. MAAVARA:  No.

5424             COMMISSIONER CUGINI:  Or, you know, should we say to multi‑station groups now, you know what, you guys are tough enough, ride it out

5425             MR. MAAVARA:  Well, I think that's really a fundamental issue of the system going forward and the short answer to your question is:  No, we don't think there should be a distinction.

5426             The challenge that we all face is ‑‑ and this really goes to the heart of diversity ‑‑ if you're coming forward and saying I am going to provide more diversity to the market and then, in fact, it turns out that you don't have the financial wherewithal to pull that off, we're saying basically, turn the licence back and let somebody else try.

5427             And there shouldn't be a distinction.

5428             COMMISSIONER CUGINI:  So, you would prefer opening up a competitive process rather than ‑‑

5429             MR. MAAVARA:  Yes.

5430             COMMISSIONER CUGINI:  ‑‑ the independents engaging in some kind of negotiation with someone who could bail them out, essentially?

5431             MR. MAAVARA:  Because what's happened is, is that of course people have started as independents, and there's plenty of instances in the recent history where the independent has very quickly realized that they're not able to make it and it gets slipped to a larger owner or somebody who's more capable, and we feel that that's not in the public interest; starting with diversity grounds but, clearly, as you can imagine, there are others as well.

5432             COMMISSIONER CUGINI:  Thank you.

5433             Onto specialty services, in which of course you are a major player in Canada.  You're not a fan of capping the ownership of diversity ‑‑ of discretionary services?  I'm getting my terms confused, I'm sorry.

5434             MR. CASSADAY:  No, no, we're not.  Specialty is a broad category, the important thing to look at is the segmentation.

5435             You could be a big player in kids as we are, but a relatively modest player in terms of total revenue in specialty which we also are because of the significant revenue that's generated by the big sports stations.

5436             So, we believe that the Commission should be encouraged to be quite open minded about the ownership of specialty from a corporate point of view.  We think that it would be great to have diversity across a lot of genres but, quite frankly, I don't think it matters that there are diverse choices of recipe channels or gardening channels.

5437             I think in the case of news, we have to be perhaps more sensitive, another perhaps layer of rules that would go into that to ensure that there is a proper diversity of choice there, but I think, more broadly speaking, we should be looking to create large enterprises that can invest in programming and can invest in the digital realm as we talked about and ensure that we're offering services that when our friends and neighbours go to the United States they don't come back and say, gosh darn it, why can't I have channels like they have down there?

5438             Because if more Canadians start to say that, we've got bigger problems than the one we're talking about today, we've got a fundamental issue with whether or not the Canadian system is adequately serving the citizens of the country.  And I think right now it is, but it's going to require us to continue to invest going forward.

5439             COMMISSIONER CUGINI:  Now, you're certainly not advocating that we bring HBO into Canada?

5440             MR. CASSADAY:  That we bring what?

5441             COMMISSIONER CUGINI:  HBO into Canada?

5442             MR. CASSADAY:  No, but what we're saying is that if someone wants to compete, a Canadian service wants to compete with YTV, if we can't defend our position after 10 years, shame on us.

5443             But if Nickelodeon comes into Canada without commensurate Canadian obligations and takes the programming that we have developed over time, that's a, you know, a four point gain, that would be very, very injurious to us.

5444             But from a Canadian point of view, we solidly support the interests of perhaps the Commission and others that say let's open it up, genre exclusivity has got this industry up and going and now it's time to allow for fulsome competition in this area.

5445             COMMISSIONER CUGINI:  I know, Mr. Cassaday, that you in particular said publicly that you believe that the wave of consolidation is over for a while, anyway, but as you know, in this business, never say never.

5446             If two years from now, three years from now one company owned 70 per cent of discretionary services and it wasn't Corus, you'd be okay with that?

5447             MR. CASSADAY:  When I joined this industry in 1990 that was pretty much the case.  I think what we're seeing right now is a repatriation of eyeballs, if you'll excuse a crass term, and we're seeing the system kind of evolve back to where it was where you've got a few strong players, and I fundamentally believe that that's what's required.  I hope that we are one of those strong players.

5448             I think it's far from over as to how this industry is going to evolve, but I do think we're going to see a period of digestion where the two big players come to grips with what they have and demonstrate their ability to operate effectively and, if they can't, I think there will be another round, and I've suggested publicly that I think that will take a couple of years to play itself out.

5449             So, I'm anticipating that there will be what I call tuck‑ins for the next little while, but the big deals are probably 24 to 36 months away and I would say that there will be more of those.

5450             And, again, I guess that makes this kind of hearing more than appropriate at this particular point in time.

5451             COMMISSIONER CUGINI:  And just so I have your position clear, in light of what you have just said, is it your contention that the rules as they exist today take ‑‑ and as you heard Astral say yesterday or the day before, that we already have all the tools to deal with that kind of possible wave of consolidation that might happen in two or three years, that we don't need any brand new rules?

5452             MR. CASSADAY:  Yeah, we believe that's the case.  We believe that as it relates to areas of scarce spectrum that there are clear rules.  As it relates to areas where spectrum is not an issue, the open playing field that we have now is good and it should get even more open.

5453             The only issue that we have is access, and we have some views on that too, but fundamentally we believe that the view expressed by Dave Purdy just a few moments ago is the operative one and, that is, that it is the enlightened self‑interest of BDUs to ensure that they have lots of choice.

5454             So, I saw in the food industry that I came out of prior to 1990 the emergence of private label brands to offset strong national brands, and many of these private label brands are now equal in perceptual value to the consumer to that which was held by the national brand previously.

5455             So, I think we'll see the market evolve in many different ways to ensure that there is access and that there are alternatives, and I think even if one player ended up owning 70 per cent of the licensed services, you would see another form of content evolve to ensure that there was a balance in the system to ensure that pricing was appropriately managed.

5456             COMMISSIONER CUGINI:  I just want ‑‑ my last line of questioning, and it's your first of the Big Five, I want to understand why you think that either regulatory intervention or regulatory removal of any barriers is one of the elements to allow Canadians to experiment?  In other words, do you need our regulatory intervention to experiment and/or do you need us to remove barriers to allow you to experiment and in what fields do you want to experiment?

5457             MR. CASSADAY:  Well, I'll give you one example, it will be a brief one, but we've used it before.

5458             John Hayes, the President of our radio station on a panel, I think at Banff a couple of years ago, said that there should be no Canadian content regulations on digital.  And a number of Members of Commission Staff said, you didn't really mean like no levels of Canadian content?  And he said, yeah, no levels of Canadian content.

5459             Right now no one wants digital radio because there's no real reason.  If the only benefit is a slight increase in quality, why go out and buy a receiver when the average Canadian probably has 10 receivers in their home today.  We have to offer them something different.

5460             Over time, as digital evolves and there is a market for it and there are receivers in place, then we can begin to institute the homogeneity that is required to ensure a strong Canadian system which we fully endorse.

5461             All we are saying is that if we are going to create a new market, that we need to be able to do whatever we want and be experimental and right now, that would be ‑‑ well, that's not doable in this environment.

5462             COMMISSIONER CUGINI:  And that's the only one?

5463             MR. CASSADAY:  So, all we're doing is sima casting services and quite frankly, the consumer is saying, well, I don't really care enough about that to go out and buy a new receiver.  So, we don't have a business in digital today.

5464             COMMISSIONER CUGINI:  And is that the only area?

5465             MR. CASSADAY:  Well, I'm sure there are others that are ‑‑ Gary, I just used that one as a ‑‑

5466             MR. MAAVARA:  Well, actually, Commissioner, we have recently sent an application to the Commission which isn't public yet and I think Sylvie will probably yell at me at least in the hall later if I were to talk about it.

5467             COMMISSIONER CUGINI:  Then you probably shouldn't.

5468             MR. MAAVARA:  That is completely described and we think it's extremely innovative and dynamic and hope you'll love it.

5469             COMMISSIONER CUGINI:  Okay.  Thank you.  Thank you very much, Mr. Chairman.

5470             THE CHAIRMAN:  Michel?

5471             COMMISSIONER ARPIN:  Thank you, Mr. Chairman.  Mr. Cassaday, good morning.  To pick up on the line of questions that Commissioner Cugini was discussing with you regarding radio.

5472             First, regarding Kelowna, you mentioned there might be nine to eleven applications, but there are not nine or eleven frequencies available for that market.

5473             And so, the whole issue of spectrum is still a big one as I think, Mr. Maavara, you've alluded briefly to the Toronto situation where currently there is an outcry regarding a potential second adjacent broadcaster who has been denied the use of that frequency by the current rules of procedures.

5474             So, the spectrum, there is not that much spectrum available for new entrants.

5475             MR. MAAVARA:  Well, that's true and we have been looking at this subject a fair bit over the last year.

5476             The interesting thing about spectrum and my non technical perspective is that every time we send the DEMLN folks out to look for a frequency, they always seem to find one.

5477             COMMISSIONER ARPIN:  That's the experience the Commission has as well.

5478             MR. MAAVARA:  They are not always.

‑‑‑ Laughter / Rires

5479             COMMISSIONER ARPIN:  We are not particularly with that firm, they are quite creative.

5480             MR. MAAVARA:  Well, they're very good and very creative, but there just seems ‑‑ and I am not sure exactly, perhaps Sylvia would know how many frequencies we're talking about in Kelowna.

5481             But as we look across the country whereas three, four, five years ago, it was considered that in most markets, basically the door was closed, we are now finding that if we start regauging things and moving com to where pat is around and here in Ottawa, for example, there is a number of things going on to change the pattern so that we can approve service across the system, we are finding that new frequencies are coming available.

5482             I raised the subject of second adjacency, obviously CORUS is a big radio player as it got some trepidation with the notion of opening that up, but the fact of the matter is and going to Mr. Cassaday's point about comparing ourselves to the American markets, virtually every market in the United states has considerably more radio service because they've opened up to second adjacency and I understand that we have some technical reasons why we have the system that we do.

5483             But all of which is to say there is more there and our view is that to the extent that we solve that what we consider to be an absolutely number one priority issue, which is saving news talk radio in Canada in terms of editorial diversity, in terms of local service.

5484             You know, CJOB in Winnipeg is the place where people go to if there is a flood or if the mosquitoes are being sprayed that night by chemicals, whatever, it's the place we go to and CKAC in Montreal, CJRC here in Gatineau.

5485             We need to find a way to preserve that and I'll mention a couple of other stations that we don't own like CJOD and CFRB, just to be balanced.

5486             COMMISSIONER ARPIN:  Obviously.  Well, I think it's a good question that needs to be looked at, but there surely will be other forum to deal with that.  It's not only a matter of diversity of voice here.  It's also a matter of making use of ‑‑ making an efficient use of spectrum.

5487             To come back to your example in the U.S., there is much more less powerful FM radio stations in the U.S. than there are here in Canada than there are in some markets in the U.S.  There are numerous situations where the FM station doesn't cover the full market.  It only covers a part of the market, so there is ‑‑

5488             It's a slightly different situation and use of the spectrum in a very different manner than we do use in this country.

5489             So, it's surely a matter for further consideration.

5490             In your written submission, you have said and you discussed the matter with Ms Cugini that new licensees should keep their format for the first term of their licence.

5491             There have been other interveners who have said that all the format should be frozen in a given market at the time there is a call for application, so that the applicants who have done their market studies based on a situation, they arrive at the hearing where the void that has been identified, but an applicant has been filled in the meantime by one of the incumbents.

5492             Do you have any views on that proposal?

5493             MR. CASSADAY:  They are comparing notes here.  My view is that you can't do that and let's say, for example, a incumbent is in the midst of considering a change in format from country to rock and then there is a call for new applications, is that person going to be put on ice for several years?  I don't think so.

5494             I think what we're trying to do here is in a competitive process where an applicant is successful in acquiring a licence because they have offered a diverse programming choice, that they should be committed to do it.  I don't think that the incumbents should be restricted to any lack of mobility, so we can ‑‑

5495             MS COURTEMANCHE:  Well, I was just going to say it's exactly the situation we're facing in Kelowna.

5496             We responded to the call by offering a news talk format because at the time that we applied, that format had been vacated by a particular radio group which I won't name.  So, we thought, here we go, we've got a format that we can fill.

5497             Well, guess what?  Last week, another radio group, an incumbent decided to fill that format.

5498             Now, we are still going to the hearing because we're convinced that we are going to do a product that's different and that's going to, you know, very well serve the community.  So, we hope that the Commission will see favourably on that.

5499             But, yes, we are facing that situation right now and we accept that the incumbent could do that and could do that in the future.

5500             COMMISSIONER ARPIN:  Now, in your oral presentation this morning, at top of page 8, you're talking about an experiment in the digital world, radio world.  And you are saying that you can develop value added elements that will entice Canadian super interest.

5501             Are you talking about using the L band here or is it other digital services that you have in mind?

5502             MR. MAAVARA:  Well, as you are aware, Commissioner Arpin, the question of whether it's going to be L band or something else is still somewhat up in the air.  IBACUS had taken further steps in the U.S., we're watching that carefully.  Our engineers are literally out.

5503             Jack Hepner who is our lead engineer sends me e‑mails quite often in the middle of night, he is out somewhere in a farmer's field listening across the board or with his device, to see how the Iboxing is working.  So, we're closely looking at that.

5504             If we could find a way to make the DAB, the traditional conversation we've had in Canada to find a way to make that work, then we would certainly explore that as well.

5505             COMMISSIONER ARPIN:  Okay.  Thank you very much, Mr. Chair.

5506             THE CHAIRMAN:  Michel?

5507             COMMISSAIRE MORIN:  Oui.  On est ici sur un forum, enfin une audience sur la diversité.

5508             Au Canada, on a vu au cours des dernières années que la radio commerciale fait de mieux en mieux et il y a beaucoup plus de licences aussi qui ont été émises.

5509             On a la radio commerciale, on a la radio communautaire aussi et j'aimerais vous demander ce que vous pensez de l'idée que vous puissiez contribuer ‑‑ c'est une proposition de l'Association des radiodiffuseurs en radio communautaire au Québec ‑‑ que vous puissiez contribuer un demi pour cent non pas de vos profits, mais de vos revenus à la création d'un fonds pour faciliter la télévision... pas la télévision, pardon, la radio communautaire.  C'est une proposition qui est devant nous.

5510             Alors. j'aimerais vous demander, enfin, qu'est‑ce que vous pensez de cette proposition et est‑ce que, vraiment, vous avez été approché par eux aussi en ce qui concerne la mise sur pied de ce fonds‑là?

5511             Mme COURTEMANCHE:  Conseiller monsieur Morin, non on n'a pas... premièrement en réponse à la question : est‑ce qu'on a été approché par le groupe de la radio communautaire, la réponse est non.

5512             Je pense que de commencer à imposer une taxe supplémentaire justement pour s'assurer que cette voix en particulier soit sauvegardée, je pense qu'on ne serait pas d'accord.

5513             Mais je pense que l'alternative, c'est d'avoir justement ce regroupement‑là, de faire une proposition concrète au niveau de quelle sorte de financement est‑ce qui serait recherché et pour quelles fins on les utiliserait.

5514             Et on a, vous savez, différents moyens, soit le développement du contenu canadien ou même au niveau des bénéfices tangibles, si le Conseil voyait que ça serait utile d'utiliser une portion de ces argents‑là justement pour les migrer vers ces groupes‑là, ça serait...

5515             Et avec une indication claire de votre part, je pense que ça serait une meilleure façon de traiter avec la problématique que de tout simplement utiliser un chiffre comme ça et pour lequel on n'a pas nécessairement justifié le chiffre sur une base économique et de la façon... on n'a pas justifié clairement pour quelle initiative ces argents‑là seraient utilisés.

5516             Ça fait que je pense qu'il y a d'autres alternatives dans le système qui nous permettraient d'adresser si, en effet, il y a un manque à gagner et puis comment est‑ce qu'on pourrait le cibler.

5517             Vous savez, dans vos propositions ou votre politique sur le contenu du développement canadien, vous avez des règles très précises.

5518             Auparavant, on parlait du développement de talents canadiens et c'était beaucoup plus flou.  Je vous dirais qu'il y avait des argents qui allaient pour l'appui des arts de la scène ou d'autres choses, qu'il y avait des objectifs, c'est clair que c'est culturel, mais que ces initiatives‑là ne finissaient pas avec un développement d'un contenu qui serait, lui, entendu à la radio.

5519             Ça fait que vous avez ciblé, vous avez dit, non.  Ces argents‑là, on veut vraiment que ça soit utilisé pour le développement du contenu à la radio.  Ça fait que si vous pensez que ce serait... aussi il y aurait soit subventionner, je ne sais pas, des émissions qui seraient, eux autres, livrées par la radio communautaire ou d'autres choses.

5520             Je pense qu'il y a moyen de se parler puis d'engager la discussion, mais juste de dire c'est 0.5 de vos revenus, on n'a pas justifié ça d'une façon économique, j'ai de la difficulté avec ça.

5521             Je pense qu'on devrait regarder un projet très concret et regarder selon les argents qui existent comment est‑ce qu'on pourrait financer des propositions qui seraient acceptables.

5522             Et je voudrais savoir que le Conseil a regardé à la proposition de la radio communautaire et a dit : oui, on a regardé ça, on trouve que ça a du bon sens, ça réalise les objectifs de la Loi sur la radiodiffusion et maintenant regardons comment est‑ce que, à l'intérieur des argents qui sont déjà disponibles, on pourrait financer ces initiatives‑là.

5523             Je pense que ce serait une façon plus pondérée et réfléchie de faire l'exercice.

5524             THE CHAIRMAN:  Okay.  Thank you very much for your intervention.  We will take a 15 minute break now.

‑‑‑ Recessed at 1014 / Suspension à 1014

‑‑‑ Resumed at 1033 / Reprise à 1033

5525             THE CHAIRPERSON:  Madam Boulet.

5526             THE SECRETARY:  Thank you, Mr. Chairman.

5527             We will now proceed with the presentation of the Writers Guild of Canada.  Ms Maureen Parker will introduce her panel, after which you will have 10 minutes for your presentation.

5528             Ms Parker.

INTERVENTION

5529             MS PARKER:  Thank you.  Good morning, Mr. Chairman, members of the panel and Commission staff. 

5530             My name is Maureen Parker and I am the Executive Director of the Writers Guild of Canada.  To my left is Rebecca Schechter, President of the Writers Guild and to my right is our Policy Consultant, Robert Armstrong of Communications Media Inc.

5531             The Writers Guild of Canada is a national association representing more than 1,800 English‑language professional screenwriters who are Canada's voice in entertainment programming.  We believe that a strengthened CRTC policy on ownership concentration is absolutely necessary.  The growing market power of certain broadcasting owners should not negatively affect the fulfilment of the Commission's objectives as set out in section 3 of the Broadcasting Act.

5532             Ultimately, the Commission must ensure that there is a wide diversity of broadcast programs available to the Canadian public.  One of the Broadcasting Act's overwriting policy objectives is to ensure the availability of Canadian content for Canadians.  Without appropriate safeguards media consolidation can potentially reduce the Canadian content available as new media conglomerates seek to realize cost efficiencies by broadcasting the same programs across a multitude of stations and networks.

5533             Up to now CRTC decisions have attempted to deal with this phenomenon without clear guidelines on some issues.  The present hearing is an excellent opportunity to establish general rules that will improve predictability regarding the Commission's decisions relating to the diversity of voices. 

5534             The WGC has formulated a simple basic rule with four criteria that could be applied in all situations involving ownership concentration with a view to ensuring a wide diversity of programming.  A diversity of programming choices will ensure that the various broadcast services are not simply bland copies of one another.  And most importantly, it will ensure that the Canadian broadcasting system reflects and serves Canada's very communities.

5535             The WGC is seeking safeguards and guidelines that will protect diversity without unduly hampering a healthy marketplace.  We believe that programming diversity can be preserved if the CRTC applies the following four criteria.

5536             First, each application should have a net positive effect on the use of Canadian creative resources in the creation and presentation of original programming in the broadcasting system, with particular attention to Canadian drama.  Any transfer of ownership should be evaluated by the Commission in light of its overall contribution to this policy objective drawn from the Broadcasting Act. 

5537             Each ownership transfer would then increase or at least maintain the total volume of original Canadian programming including drama across the broadcasting system.  While broadcast ownership groups understandably seeks to realize savings by spreading costs over a larger station group, these savings must not be generated at the expense of the overall volume of original Canadian programming.

5538             Second, each application should have incremental tangible benefits based on a program expenditure requirement for Canadian priority programming.  The Commission's existing policy requires that tangible benefits should be incremental to the broadcasting system and not simply a transfer of resources from one undertaking to another. 

5539             By providing a standard of measurement the introduction of program expenditure requirements for the over‑the‑air television services would help to ensure that tangible benefits related to the ownership transfers are truly incremental.

5540             Third, each application should have separate and autonomous program acquisitions, program scheduling and program management in the two entities, as well as separate licence fee negotiations and contracts.  This will help to establish separate and autonomous program schedules, distinctive branding and provide Canadian viewers with clear programming alternatives.

5541             Fourth, each application should have an applicant who has the financial capacity and business plan necessary to ensure the economic viability of the new entity to be required.  Licensees who cannot sustain their operations impose a costly burden on creators, producers, the CRTC, and the entire broadcasting system.

5542             Rebecca.

5543             MS SCHECHTER:  Thank you, Maureen.

5544             In addition, we would like to address some of the specific issues raised by the Commission its notice of public hearing.  The CRTC should retain its existing policy of allowing no more than one over‑the‑air television station in one language in a given market and should only make an exception where particular circumstances warrant.  The Commission's so‑called twin sticks policy is one of the basic tools that protects programming diversity at a local level.

5545             The Commission's policy of allowing no more than one television owner in one language in a given market should also be applied in a more general way to the ownership transfer of speciality and pay television services.  As the digital universe unfolds, industrial concentration and economic competition issues will directly affect discretionary services as well. 

5546             However, the CBC's proposal on this issue is unacceptable.  Instead, there should be a general policy preventing ownership of multiple specialty and pay services in the same genre.

5547             BDUs should also be subject to safeguards with respect to common ownership.  These safeguards should include a requirement to operate independent, legally distinct companies.  Considering the growing extent of cross‑media ownership and vertical integration in Canada, the equitable access of programming services to BDUs is a continuing concern.  Not only are safeguards necessary, including the Commission's rule that requires a BDU to offer five related services for each affiliated Category 2 service offered, but BDUs should be subject to structural safeguards as well.

5548             Safeguards are also necessary to ensure a strong Canadian independent production sector in regard to the vertical integration of television production companies and television programming licensees.

5549             Recent CRTC decisions require television licensees to acquire no less than 75 per cent of their original first‑run Canadian content from independent producers.  This rule should be applied generally in regard to the production and broadcast of priority programs.

5550             The CRTC's benefits policy was designed to ensure that any transfer of ownership, subject to certain qualifications, is accompanied by benefits for the Canadian broadcasting system as well as for Canadian listeners and viewers.  The benefits policy was not designed specifically to address the diversity of voices issue.  That being said, it can be used as a tool to support diversity. 

5551             In event that a particular transfer of a television ownership poses a potential risk to the diversity of voices in the system and the Commission determines that the transfer is appropriate nevertheless, the benefits policy can serve to compensate, in part, for the increased risk to diversity by increasing the value of the benefits package above 10 per cent.  The WGC supports the continued application of this policy.

5552             In a separate document sent to the Commission last week the WGC responded to the Commission's call for comments on the potential public disclosure of selected financial information from over‑the‑air broadcasters.  The WGC considers that, at a minimum, such disclosure should include that portion of the annual returns and financial statements of each individual over‑the‑air broadcaster down to and including profits before interest and taxes.  This is consistent with the CRTC's current treatment of specialty and pay licensees. 

5553             Complete public disclosure is fundamental to the public hearing process so that interveners, including the WGC, can effectively analyze and comment upon proposed ownership transfers, their impact on the diversity of voices in the Canadian broadcasting system and other regulatory issues.

5554             Maureen.

5555             MS PARKER:  Mr. Chairman, several major players have told you that there is no need to re‑examine the Commission's current policies concerning the diversity of voices.  As with most of the interveners in this proceeding, we do not share this opinion.  This view belongs almost exclusively to media companies that own important parts of our broadcasting system and have a vested interest in the status quo.

5556             The WGC is in favour of adopting a few simple regulatory rules with regard to the diversity of voices issues.  However, any simple new rule should cover issues the Commission has not yet addressed explicitly.  The new rules should be supplemental to the Commission's existing regulatory framework, including the case by case approach, and should not be used to replace the existing framework.  The case by case approach is essential to allow interveners to provide input on vital decisions of public interest.

5557             Any new rules must be carefully formulated to have a meaningful impact on the diversity of voices issue.  The large media groups want an end to regulation and want the CRTC to adopt general rules that are ad hoc and so lenient as to be in effect nonbinding.  In the absence of existing policies and a case by case approach, such rules would result in the rubber‑stamping of virtually all applications for ownership transfer.

5558             On the other hand, if the Commission decisions related to ownership transfers were made up using the existing framework and the case by case approach while applying the WGC's four criteria and the other suggestions in our written submission we are confident that Canadians would be able to enjoy a wide variety of programming regardless of the ownership structure of the Canadian broadcasting system.

5559             We thank you for your time and we would be pleased to answer any questions you may have.

5560             THE CHAIRPERSON:  Thank you very much.

5561             You have been hearing the submissions over the last two and a half years, and I gather you don't accept the arguments from most media companies that this is a very dynamic industry, it faces huge competition, especially from new media, and therefore there is a necessity for certain financial size and clout in order to survive.  And only if they have that size and clout can they produce the necessary Canadian content and the further the objectives of the Broadcasting Act.

5562             What you suggest here is a whole series of additional rules over and above the existing ones.  How do you explain this very great divergence between your views and that of traditional media companies?

5563             MS PARKER:  Well, first of all, I want to say that we are not anti‑consolidation, that is not our position.  We do believe that there are certain synergies that are brought about by larger organizations. 

5564             However, we do think there has to be a series of checks and balances in a system and you currently have some of those in place in your existing framework, but we think they have to be supplemented with a few things.  And I think that that is increasingly obvious, because there isn't enough diversity on our TV screens and that is a problem that needs to be addressed.

5565             Now, I know that this is a go‑forward hearing, but looking at what is currently happening we can see right now a decrease in the available original Canadian content on these broadcasting stations, so I think that this has to be addressed.

5566             THE CHAIRPERSON:  Okay.  Your suggestion separate and autonomous program acquisition, program scheduling, program management in the two entities as well as separate licence fee negotiations and contracts.  Translate that into an actual case where you have a merger why does merger make sense?  Because of synergies and cost savings, those are the two main issues.

5567             It seems to me that you have cut out a huge amount of cost savings by insisting as a separate.  What would be the incentive for merger if we adopted this rule?

5568             MS PARKER:  Well, I think that there are a number of other synergies.  What we are trying to prevent and trying to ensure is that there is that there is some balance in the system. You know, those particular criteria, those pieces of the puzzle, program management, program acquisition, separate scheduling, we will ensure that there will be some original Canadian programs on our broadcasters, on our networks.  Without that what you are going to see are increasing numbers of repeats.  We already have repeats in our system.

5569             But I can give you an example of an actual program if that would help.  We currently had a program produced out in Vancouver by some Canadian writers, directors, performers, producers and it has appeared on the CTV Network, it has appeared on The Comedy Channel, and now it is on the A‑Channel.  And this is one program being endlessly repeated, so that means a couple of things.  But basically, where there was an opportunity for some original programming, that opportunity has disappeared.

5570             THE CHAIRPERSON:  Is this the only way to achieve that goal?  That is a rather drastic remedy.  If repeat is the issue that you are worried about, insisting on separate licence fee negotiations, that is the only way to get there?  Are there not less intrusive, less drastic means to get there?

5571             MS PARKER:  You know, I was listening to the CFTPA yesterday from our hotel room, and I think that one of the things that is happening with respect to licence fee negotiations is the blanket licence fee.  There has been a change in the way the system is operating.  And the blanket licence system basically means that a broadcaster is acquiring all the rights in a program for a seven‑year period. 

5572             Previously, what happened in our system is that there were successive windows, that you would tie up the rights for two years, maybe three years, then you would sell it to perhaps one of the specialty channels and there would be another bundle of rights.

5573             So what is happening is that without checks and balances in the system it is swinging too far one way.  I mean, there is no possible way that we can have original programming and that there is balance in the system if one broadcaster who holds all of the negotiating power is able to command an unlimited licence for all types of uses over every platform.

5574             THE CHAIRPERSON:  Okay, thank you.

5575             Rita, I believe you have some questions.

5576             COMMISSIONER CUGINI:  Thank you.  I am just going to follow‑up on that one point, which is your third recommendation.

5577             Let us take even two OTA services within the same ownership group actually competing with each other for programming as opposed to being complimentary and providing that kind of variety across their television services. 

5578             In other words, you know, if Global is going to be negotiating separately for a program than E Channel, as it is now called, what advantages does that accrue to the broadcaster and to the viewer?  Because instead of scheduling with each other, they are going to be scheduling against each other and I just don't see what the advantages are to that.

5579             MS PARKER:  Well, I understand your point on that one.  I suppose the way we are looking at it is that it is separate scheduling but, of course, with informed information as to what your partner is doing with respect to that.  It is separate, but it is not ignorant of what is happening in the rest of the system.

5580             Is there anything I would add to that in terms of scheduling?

5581             MS SCHECHTER:  I think that what we are getting at here is to keep alive as many of what you might think of as commissioning editors, which are sort of our network development executives, as possible.  So that what happens when you get a merger between CTV and CHUM is we lose one of the places we can go to pitch our ideas and have one fewer potential access to getting our voice heard on the media. 

5582             And we think that, when the stations merge, we want to preserve as much as possible the diversity of development executives or commissioning editors, which is what they are to us, so that we can have more than two or three of ‑‑ you know, the number of people who select what gets on air shrinks and shrinks and shrinks. We feel there should be a protection against that.

5583             COMMISSIONER CUGINI:  And we have heard the argument before, that as consolidation increases it means that there are fewer doors on which producers can knock.  But to steal a term from another issue, why isn't it advantageous for the producer to do one‑stop shopping where it goes to one entity and can negotiate over‑the‑air rights, specialty rights, internet rights, do it in one‑stop pitching as opposed to shopping?  Why isn't that advantageous to the producer?

5584             MS SCHECHTER:  Recently, I know someone who is working in Los Angeles with a project, trying to get it pitched, and the agent has brought it to about 15 different entities, studios, what they call pods, etc. There is a huge field there of people who could potentially compete over one idea.  And so, you know, the one‑stop shopping, it may be advantageous when you are doing a contract, but ultimately, you know, I would say the more potential commissioners you have of your ideas the greater your bargaining power.

5585             MS PARKER:  And also what it would mean, Rita, is that it would mean a yes or a no.  So if there was only one gatekeeper and you had worked for years on developing a series or a pilot, it is a yes or a no, and where do you go then?  You know, we need to have some alternatives in the system.

5586             COMMISSIONER CUGINI:  Okay, thank you.  Your first recommendation, that it have a net positive effect on the use of Canadian creative resources, how would we measure this?  Would we measure this on a market by market basis, the incrementality, or do we measure it on a national basis?

5587             MS PARKER:  I think there are a couple of things that we would look at.  We would look at the volume of production, the we would look at the number of people working, those would be just two ideas off the top of my head.  We could look at that in greater detail.  We do think everything has to be incremental. 

5588             We have been struggling over the last couple of years, as you know, in terms of a decrease in production, particularly for Canadian drama, even with the benefits package in place.  So we believe that we need some sort of starting standard of measurement from which then we can compare and that is why we consistently bring up the need for expenditure requirements.

5589             COMMISSIONER CUGINI:  And this would be applied to both over‑the‑air and speciality?

5590             MS PARKER:  Well, specialty already has program expenditure requirements, so it would really just be over‑the‑air.

5591             COMMISSIONER CUGINI:  Okay.  One question I had on the last sentence on page 5 of your oral presentation. 

"Should be a general policy preventing ownership of multiple specialty and pay services in the same genre." (As Read)

5592             If I understand this correctly, what you are saying is Corus, for example, who was just up, they have specialized and children's programming on the specialty side.  Should we fix a percentage of how many children's services Corus is allowed to own and, by the same token, should we fix a percentage of how many drama channels somebody else should own?  Is that what your recommendation is boiling down to?

5593             MS PARKER:  Well, that is what we are getting at.  And the reason behind that and, you know, we will look at giving you something more specific if at all possible, but what we are pointing out is a problem.  And the problem is that if one media entity owns specialties or pays of the same genre, then there is really no competition.  Again, it becomes an issue of original versus repeats and we see that as a real problem in the system.

5594             COMMISSIONER CUGINI:  Ms Parker, I think you may have anticipated what I am going to say next, because such a recommendation has the potential to have an incredible number of layers to it.  Let us take children's programming, for example.  Is it children's programming that is preschool to age five?  Is it is children's programming that is then six to 12?  Is it animation?  Is it live‑action children's programming?  Is it drama?  Is it educational programming?  How are you going to define that?  And for each program category, you have the same number of layers. 

5595             Maybe you might want to take this under advisement and perhaps, in response by October 5, come up with a measurement tool for us in order to evaluate this recommendation.

5596             MS PARKER:  And I am certainly not an expert in any of this, but aren't there currently programming categories?  Couldn't we group according to those?

5597             COMMISSIONER CUGINI:  There are program categories, but if that is what your recommendation is then we will look at it in that way.

5598             MS PARKER:  Okay.  We will look at getting something to you.

5599             COMMISSIONER CUGINI:  And then perhaps you could come up and maybe you have a suggestion for a percentage as to what that cap should be?  You have heard others, the CBC in particular, gives us a number of 33 per cent of specialty services overall, Pelmorex said that perhaps we could look at the U.S. model, and they came up with a 39 per cent cap.  It is a bit of a wavy line but, you know, they drew a line. 

5600             Your recommendation is obviously preferable to capping in absolute numbers the number of specialty services an entity can own?  In other words, if we were to say to Corus you can't own more than 33 per cent of specialty services going forward, period, is that ‑‑

5601             MS PARKER:  Sorry, and your question is do we prefer our way?

5602             COMMISSIONER CUGINI:  Yes.

5603             MS PARKER:  Yes.  Yes, we do, because we do believe that that is not going to provide us with enough diversity in the system.  Currently, there are 418 licensed services, 33 per cent gives anyone a very very large share.  And if they are all in the same genre, we don't see how that is going to encourage diversity.

5604             COMMISSIONER CUGINI:  Okay.  But the point is that 33 per cent wouldn't all necessary be in the same genre.

5605             MS PARKER:  But I think that is what we are trying to workout.  You know, we have listened to the CBC's position this week and, you know, I don't know that it is fully fleshed out, I think there a lot of questions.  It is certainly an idea, but we do see some holes in it and that is why we are just presenting a little alternative.

5606             COMMISSIONER CUGINI:  As a follow‑up to that, if we were to implement a cap on simply the number of services that any one entity can own, why do you not think it is in the best interest of that entity to provide as much diversity within that percentage in order to garner the largest possible audience?  If they were to report their audience numbers on a cumulative level across those speciality services, why would it not be in their best interest to provide as much diversity in terms of plurality of content?

5607             MS PARKER:  Well, you know, I would like to believe that it would be in their best interest, but unfortunately I don't think that experience has shown us that and I would just use CSI as an example. 

5608             And I am just simply saying that a program like that would pop up on every possible channel at all times of the day.  And I think when there are costs involved and savings to be had that there will be a loss in terms of diversity and, therefore, I think there has to be some regulatory protection to ensure that that doesn't occur, because I don't think it will happen on its own.

5609             COMMISSIONER CUGINI:  So are you therefore advocating that we should perhaps also implement some kind of limit on programming overlap ‑‑

5610             MS PARKER:  Yes.

5611             COMMISSIONER CUGINI:  ‑‑ amongst speciality services?

5612             MS PARKER:  Don't we already have that in place in terms of genre, exclusivity?

5613             COMMISSIONER CUGINI:  Well, we will discuss that later.

5614             MS PARKER:  Yes, I believe that is coming up ‑‑

5615             COMMISSIONER CUGINI:  Yes, that is coming up.

5616             MS PARKER:  ‑‑ in January.

5617             COMMISSIONER CUGINI:  You talk about BDU safeguards and common ownership.  And I just want to clarify, in your written submission:

                      "Since the Commission does not seem to have a general policy concerning common ownership of BDUs, BDUs should be subject to safeguards with respect to common ownership, such as those relating to structural separation set out in Decision CRTC‑1999‑169, that are described as follows in the Broadcasting Decision 2002‑84." (As Read)

5618             You are aware that 2002‑84 essentially replaces 1999‑169?

5619             MS PARKER:  I think Robert should answer this one.

5620             MR. ARMSTRONG:  Yes, Commissioner Cugini, we are aware.  Our feeling was that the descending opinion that was written by Commissioner Noël in that decision was very convincing.

5621             COMMISSIONER CUGINI:  But this isn't the forum in which we would address reverting back to a previous decision.

5622             MR. ARMSTRONG:  Well, we are not suggesting, we simply point to that descending opinion and, in fact, the previous decision as an example of structural separation, the kind of separation that could take place.  We are not suggesting that you rollback that specific decision, but rather that the elements that were set out in the 1999 decision provide a basis for a policy that could provide some form of structural separation.

5623             COMMISSIONER CUGINI:  Then why do you not believe that the safeguards in 2002‑84 are not sufficient?

5624             MR. ARMSTRONG:  All I can say is we were very convinced by the descending opinion and that you should reread the descending opinion and you will see that the arguments are all there.

5625             COMMISSIONER CUGINI:  Okay, thank you.  Just one more point of clarification, Ms Schechter, in the section that you read this morning on page 6.  Recent CRTC decisions require television licensees to acquire no less than 75 per cent of their original first‑run Canadian and that this rule should be applied generally in regard to the production and broadcast of priority programs.

5626             Are you saying we should have two rules, plus 75 per cent of priority programming?

5627             MS SCHECHTER:  I don't think so.  I think what we are saying is that that rule was applied in specific decisions and we would like it if it became a general policy ‑‑

5628             COMMISSIONER CUGINI:  Okay.

5629             MS SCHECHTER:  ‑‑ so not on a case by case.

5630             COMMISSIONER CUGINI:  That is why it is good to clarify.

5631             Top of page 7, again, of your oral presentation, in the event that a particular transfer of television ownership poses a potential risk to the diversity of voices in the system, you are suggesting that perhaps the benefits package could be above the 10 per cent.  Critics of this proposal may say that you are advocating that broadcasters or BDUs, whoever might be involved in a transaction, are buying their way into the system to get around the rules and it will do nothing to promote diversity in the system.

5632             MS PARKER:  Well, I think that each case is specific and has to be examined along those lines.  There may be cases if the market is relatively small and the acquired entity is facing financial difficulty.  I think these are the things that the Commission has to look at.  I certainly know that we have come across this ourselves and we felt, in a recent case, that there were a couple of decisions that enabled us to support two stations in one market, and one of those had no programming overlap.

5633             So I don't think that you can look at it just in isolation, it is not a money issue solely.  We are, as you know, of course most concerned about original programming, original Canadian programming and we felt that that was a benefit that would outweigh the other risks.

5634             COMMISSIONER CUGINI:  So if we were to rewrite that sentence we would add; "on a case by case basis with appropriate safeguards?"

5635             MS PARKER:  Yes.

5636             COMMISSIONER CUGINI:  Okay.

5637             MS PARKER:  Thank you.

5638             COMMISSIONER CUGINI:  Thank you, Mr. Chairman, those are my questions.

5639             THE CHAIRPERSON:  Okay.  Are there any other questions?

5640             Thank you very much for your presentation.  Madam Boulet, who is next?

5641             THE SECRETARY:  Merci Monsieur le Président.

5642             I would now invite the Directors Guild of Canada to come forward.

‑‑‑ Pause

5643             THE SECRETARY:  Mr. Alan Goluboff, sorry if I don't pronounce it properly, will be introducing his panel, after which you will have 10 minutes for your presentation.  Please go ahead.

INTERVENTION

5644             MR. GOLUBOFF:  Thank you.  Good morning, Mr. Chair, members of the Commission and staff. 

5645             My name is Alan Goluboff and I am President of the Directors Guild of Canada.  With me today is Tim Southam, a leading Canadian director and a member of the Directors Guild.  Tim has won many awards for his work and his shows have garnered exceptional ratings on Canadian television networks.

5646             Our colleague Monique Lafontaine was planning to be here, but has taken ill and sends her regrets to all.  That said, Tim and I are very pleased to be here today to provide you with our comments.

5647             In your opening remarks on Monday you indicated there were three areas of interest for you in this hearing.  We are here today to speak to you about the second one, namely the diversity of programming choices.  Within that framework we will focus our attention on the decline in the amount of original scripted Canadian drama on our airwaves and the ongoing diminishment of that key voice if measures are not taken to stem the decline.

5648             MR. SOUTHAM:  As a relative newcomer to your hearings, I was surprised to find that the word voice had not been defined in a proceeding about diversity of voices, and I am told that it does not appear in the Broadcasting Act either, so I offer you the perspective of a Canadian director.

5649             Drama is a voice, a diversity of dramatic productions is a diversity of voices, Canadian drama is a particular voice.  High‑end Canadian drama is a particularly powerful voice that reflects Canadians to themselves.  A reduction or elimination in the quality or quantity of Canadian dramatic productions equates to a reduction in the number of voices in our system.

5650             At the last CTV licence renewal hearings Trina McQueen noted that:

                      "Most of the viewing to television is in the dramatic genre, that is what people love to see on television.  In general, folks love a good story, they love an imaginary story and that is what they want from television." (As Read)

5651             Year after year we have evidence of strong viewer demand for Canadian drama, yet Canadian broadcasters are reluctant to commission Canadian drama.  Why is that? 

5652             When I put myself in the shoes of a broadcaster I realized right away that the core issue is not demand, but cost.  With an hour‑long TV magazine costing about $25,000 and the licence fee for an hour of Canadian drama costing more like $150,000 would I as a national broadcaster voluntarily spend 600 per cent more on a drama than I am spending on a magazine show to achieve even a 20 per cent hike in ratings?  Business logic says, no.  From a Canadian broadcaster's perspective the economies of airing an American drama are also much more favourable.

5653             We believe that regulations should only be imposed when necessary, and that is to correct a market anomaly.  We also believe that this is such a situation.  One regulation which would go a long way to preserving a major Canadian voice is one that imposes a minimum broadcaster expenditure on Canadian drama across both specialty and conventional television licences.

5654             Lest we be accused of micromanagement, we feel that it is crucial to emphasize that the word drama captures a multitude of programming options.  Not only is drama as diverse as the stories it tells and the themes and cultures it explores, but the term also captures a wide range of discreet products, including one‑hour and half‑hour dramatic series, one‑hour and half‑hour comedy series, television movies, dramatic miniseries, feature films and internet programs.  All these products can be deployed according to the best judgment of the broadcasters.

5655             By its very nature drama also moves with the times, constantly updating itself to reflect the prevailing strands of our complex society.  We are not arguing for a set of products on the verge of obsolescence.  We are arguing for a Canadian version of the most popular entertainment format of all time increasingly absent from Canadian airwaves simply for reasons of economies of scale.

5656             Ours is a community of talent on the verge of disappearing even though our primary product, drama, is at an all time high in popularity worldwide.  We are asking that the same managed approach, which has secured a broadcast sector in our small country against all market logic, also address anomalies which are leading to the disappearance of a major collection of voices in our country despite clearly demonstrated viewer demand.

5657             MR. GOLUBOFF:  Now, that the incentive plan for Canadian drama is essentially dead, as noted in the Dunbar/Leblanc report, we think the Commission can safely conclude that you just cannot overcome the economic disincentives to the production of Canadian drama with incentives, they do not work.  We need the Commission to state simply and clearly that broadcasters have an obligation both to fund and to air a certain amount of this targeted type of programming.

5658             We understand that it has taken so long to get to this point that conventional broadcasters will now plead poverty.  In the last round of licence renewals you will recall that they argued that incentives were the way to go and that the Commission just needed to trust them.  The results of the last seven years speak for themselves. 

5659             We think the answer lies in the part of the Dunbar/Leblanc report which recommends harmonizing across different types of television. We plan to bring a proposal to the Commission on October 9 when we file in the first round of comments relating to the BDU, specialty, pay hearing.

5660             While details are still being finalized, we can tell you that we are looking at expanding the notion of a station group to embrace a company's other holdings and not only its conventional stations.  But the critical concept is that more money, and we mean new money, is required in fewer targeted areas. 

5661             The Canadian drama sector is in deep trouble.  It needs the Commission to utilize its full toolkit of regulatory measures, it needs exhibition and expenditure conditions, it needs benefits packages that are truly incremental, it needs a CTF dedicated to 10‑point drama and only to 10‑point drama, and it should certainly include public disclosure of broadcasters expenditures on Canadian programming, especially Category 7 programming as occurred at the last round of licence renewals in 2001.

5662             The DGC will be making more fulsome submissions on this subject on October 5. While we realize that you will be dealing more specifically with this issue in forthcoming hearings, there are several points of intersession with this diversity of voices proceedings given its emphasis on ownership. 

5663             First, transfer benefits on ownership changes have been all that kept the drama creation industry alive in Canada over the last licence term while broadcasters were reducing dramatically their year over year spending on it.

5664             Second, in theory, consolidation should actually help in the creation of more drama as it allows the creation of larger Canadian broadcasting entities.  In theory, with larger and more diverse platforms these larger broadcasters should be more capable of both exhibiting and financing Canadian drama.  Regrettably, unless required as a condition of consolidation, it has been proven that this will not happen and eventually the transfer benefit monies run out.

5665             To be clear, DGC is not opposed to consolidation.  For purposes of financing Canadian drama it is preferable to have larger pools of capital even if it results in fewer doors to knock on for that elusive green light.  But consolidation has to come with the requirement to fund and exhibit more Canadian drama.

5666             In summary, this is a hearing about diversity of voices.  We urge the Commission not to lose sight of Canadian drama as a voice.  While that voice is growing weaker and fainter every year, it is still capable of being resurrected if there is a willingness on your part to believe in the sector.  Otherwise, Canadian audiences will lose this voice and the talented Canadian crafts people capable of making these productions will move on and seed the last remaining shelf space in this genre of programming to their American counterparts.

5667             We thank you for your attention and, of course, we will be pleased to answer questions.

5668             THE CHAIRPERSON:  Thank you very much for your presentation.

5669             You say on page 3, "we believe that regulation should only be imposed where necessary, that is to correct a market anomaly."  This is sort of slightly different from the normal phraseology which says that you should regulate where there is a market failure (i.e. where the market does not produce the most competitive result).

5670             I assume you chose this expression on purpose.  What do you consider a market anomaly?

5671             MR. GOLUBOFF:  We did choose the wording specifically and Tim can certainly comment on it.

5672             MR. SOUTHAM:  Well, I suppose what we are saying as directors and as a guild is that we note that while demand is demonstrable the supply isn't there and we are scratching our heads wondering why.  We are trying to put ourselves in the positions of the suppliers, the broadcasters in answering that question.

5673             I think the word market failure, given the performance of the broadcasters in drama over the last seven years, is perfectly acceptable.  Anomaly is a polite way of putting it, given that we are not the people making those decisions.

5674             But what we note is that, despite ongoing demand and a clear response through ratings and surveys, every time a Canadian drama is made, or at least on a sufficiently high percentage, that, nonetheless, supply continues to dwindle and we consider that to be at least an anomaly, if not a failure.

5675             THE CHAIRPERSON:  You are making some very categoric statements saying there is Canadian demand and if ever produced it is demonstrated.

5676             Do you have some studies or some background material to support this?

5677             I mean, I don't know whether they are right or wrong, it is just that categorically it is as you stated it's as a given, that is why I am asking the question.

5678             MR. SOUTHAM:  We will provide the titles of the shows that BDM indicates are garnering numbers.  You've heard the titles of the shows over the years in any case.

5679             THE CHAIRPERSON:  Yes.

5680             MR. SOUTHAM:  I can also provide plenty of anecdotal evidence and the numbers that I've been told.

5681             We'd like to say that demand is demonstrable because to constantly say that Canadians ought to have drama is kind of a bothersome point of view, and we believe the demand is demonstrated through the ratings and also through all other fora;  for instance, chat rooms, blogs, the amount of activity that is generated around certain shows, particularly programs which are topical or news related, dramas which relate to real‑life events.

5682             I'll point simply to CTV's extremely successful series of television movies torn from the headlines where ratings have been consistently high.

5683             But we'd be happy to tabulate those and send those forward.

5684             THE CHAIRPERSON:  The second point you see is you raise the whole issue of funding and benefits and the issue raised several times by my colleague, Commissioner Langford, that benefits are sort of feast or famine, you know.  If there's a mega deal there, a huge deal and if there is no deal there are no benefits, et cetera, and it is very tough for you as an industry to live on the uncertainty of funding, et cetera.

5685             On the assumption, if we do not have mega deals coming in the next two years or something like that, at some point in time we have to think of another source of funding other than...

5686             Do you have any suggestion, ideas on that?

5687             MR. GOLUBOFF:  Well, certainly it's something we have harped on in this room for the past 10 years, and that's expenditure rules, and there needs to be money and commitment imposed by ‑‑ you know, a commitment by the broadcasters to spend money, a percentage of their revenue on Canadian    drama.

5688             The benefit transfer moneys, which have been hugely, you know, beneficial to our industry and we know we can't rely on it because, as you say, there may not be any more huge acquisitions and, therefore, future transfer payments.  It's not a way to run an industry and it's not a way to sustain it, there has to be sustainable, ongoing funding and commitment from the broadcasters.

5689             The broadcasters, in our view, have never shown any commitment, though they continue to say, you know, see what we can do.  We don't believe that there's a business model that suggests that they should spend money on Canadian drama and that's why we feel that there's a need for the Commission to act.

5690             I hate to, you know, to go back 10 years, but you've heard it from us many times in a variety of forums here and in Banff, et cetera.  There needs to be regulation that commits broadcasters to spend a certain percentage of ongoing money devoted to high priority programming; i.e., drama.

5691             THE CHAIRPERSON:  Percentage of the total expenditure or percentage in comparison to American spending on American productions?

5692             MR. GOLUBOFF:  No, I don't think that we in any way want to suggest that we should be spending what Americans spend on their programming, I mean ‑‑

5693             THE CHAIRPERSON:  No, no, no, what the Canadian broadcaster spends on American production.  I mean, are you trying to establish relativity or are you trying to establish an absolute portion of expenditure?

5694             MR. GOLUBOFF:  I think we're talking about an absolute percentage of gross revenue, not ‑‑ I mean, you can't compare to a CBS that might spend, you know, have a licensing fee of 70 per cent of a production.  I mean, we know that our broadcasters are not in that position to do that.

5695             THE CHAIRPERSON:  No, let me state it again differently.

5696             Are you saying absolute amount?  I thought you were driving at saying, you know, for every dollar you spend on American programming, you should spend a dollar on Canadian or you should spend 80‑cents on Canadian or $1.10, or whatever it happens to be.

5697             You are not thinking of relativity along those lines?

5698             MR. GOLUBOFF:  No, we're not ‑‑ and if, Tim, you want to come in ‑‑ no, that's not what we're suggesting, no.

5699             MR. SOUTHAM:  No, the persistent request has been a percentage of gross revenue and the reason for that, again, is to try to stay out of the management side of things so that if revenue were to go up the Canadian drama share would go up.

5700             So, the number has been seven per cent of gross revenue.  It provides what we believe to be fair flexibility and also a fair request for a cultural good or for even a good that maybe in high demand but too expensive to produce willingly.

5701             THE CHAIRPERSON:  Okay, thank you.

5702             Ron, do you have some questions?   

5703             COMMISSIONER WILLIAMS:  I do.  Thank you, Mr. Chair.

5704             Good morning, Mr. Goluboff, Mr. Southam.

5705             On the first day of this hearing the CAB in their presentation said diversity is alive and well in Canada, consolidation does not negatively affect diversity, international models are not appropriate and that the CRTC should confirm and revalidate our current approach to diversity and that no new rules were necessary.

5706             What is the single largest challenge to the creation of high end drama production as envisioned by your group?

5707             MR. GOLUBOFF:  Money, a commitment of appropriate resources to producing competitive programming in this country and until there is a commitment from the broadcasters, which we don't believe there ever will be because it doesn't make economic sense for them, as Tim pointed out, to spend money when they can buy or produce very inexpensive programming and fill the requirements.

5708             So, unless this Commission is willing to regulate the broadcasters to spend a certain percentage of their gross revenue on quality programming, competitive programming, because we're not talking ‑‑ you know, Canadians want competitive programming, Canadians are not interested in watching second‑rate programming and, therefore, they will tune into a program that is on the air, the bulk of which is foreign programming, primarily American programming.

5709             Canadian programming to be on the air has to be competitive.  To be competitive, you've got to spend money.  And in this country, as in most countries outside of the United States and India, you know, there is regulation to help and to nurture indigenous programming, to produce programming at a level that the public are willing to tune into in big numbers.

5710             And there have been ‑‑ and Tim mentions, and there have been successes and there are corporate players in this country that are committed to producing quality programming ‑‑ there's certainly producers in this country that have a great desire, along with the creative community, to produce quality programming and we know that we are capable of doing that.

5711             That said, unless the broadcasters are ‑‑ unless the Commission commits the broadcasters to putting appropriate amounts of revenue resources to this kind of programming, it's...

5712             You know, there can be a hundred broadcasters out there or there can be one mega broadcaster out there.  So, this is a hearing about consolidation.

5713             I mean, certainly I think I would like to see many broadcasters in this country, but the world is changing and, therefore, you know, the number of broadcasters is being reduced for all kinds of business reasons, I'm told.

5714             But if that large ‑‑ if there was only one or three large broadcasters left in this country but they were pouring appropriate amounts of revenue money into the production of programming, there would be a diversity of voices, there would be a quality and a quantity of programming available to Canadians and that is a diversity of voice, in our view.

5715             So, it's not just the consolidation, they still have to produce     programming, they have to be committed to producing programming and there's been no indication, as long as I've been sitting here for eight years, of a commitment from the broadcasters to produce quality programming on an ongoing basis.

5716             COMMISSIONER WILLIAMS:  Thank you for  that.

5717             In your written presentation you took us through the English over‑the‑air expenditures on drama and a decline, I guess, I think you went as far back as 1998 where 73‑million was being spent or 5.1 per cent.

5718             MR. GOLUBOFF:  Mm‑hmm.

5719             COMMISSIONER WILLIAMS:  And then later it dropped to 4 per cent or 62‑million that following year, and then most recently in 2006 down to 40‑million or 2.3 per cent and that would be even including a 20‑million or 50 per cent of that figure including ‑‑

5720             MR. GOLUBOFF:  Benefit.

5721             COMMISSIONER WILLIAMS:  ‑‑ CTV transfer benefit.

5722             MR. GOLUBOFF:  Mm‑hmm.

5723             COMMISSIONER WILLIAMS:  In the face of declining over‑the‑air expenditures on drama, how have your members continued to survive?  Has the specialty channel sector been able to pick up some or all of the shortfall?

5724             MR. GOLUBOFF:  No, not in the least.  My membership is working more and more and more for less because the programming that is being produced on the specialty side, though some of it is certainly notable and commendable, it is produced at a lower cost and, therefore, the squeeze on, you know, to those of us that participate in that end of production.

5725             So, people, you know, are working more for less, I mean, and that may be the way of the future.  It's certainly not something that, you know, we're obviously going to encourage, we want to encourage greater expenditures.  I mean, that decline in that simple ‑‑ you know, those few numbers that you presented, I mean, it doesn't bode well for an industry that Canadians I think take, you know, pride in and certainly those of us, the 55,000 of us in the unionized sector of our industry take great pride in.

5726             So, this is not a small industry, we all know that.  Just in our world of dramatic production, primarily dramatic production is what we're talking about, though we certainly represent many other types of production.

5727             It's ‑‑ I mean, it hasn't been easy, that's all.  I mean, you know, but it hasn't been easy in a lot of industries in this country.  I'm not ‑‑ you know, we're not here to cry the blues about making less money.  Certainly when we work we ‑‑ you know, we're compensated well comparatively to the rest of the, you know, Canadians.

5728             So, I'm not ‑‑ we're not here to complain about that in any way.

5729             COMMISSIONER WILLIAMS:  In your written presentation as well you stated, since the consolidation horse is out of the barn in many cases, what is important is the contribution to the system to be made by each one of the consolidated entities.

5730             Can you tell us, do you see this as a one‑time contribution at the time of consolidation, or is it the percentage ongoing opportunity you put before us?

5731             MR. GOLUBOFF:  You know, there's many questions we can answer and there are many questions I hesitate to answer, you know, because both Tim and I are directors ‑‑ and, Tim, you can certainly comment if you wish and unfortunately, as I said, Monique, can't be here ‑‑ so there's some more detailed questions I would rather not respond to, but go ahead, Tim, if you feel...

5732             MR. SOUTHAM:  It's our view that over the last seven years without the benefits there would have been virtually no work, and so we will never mount an argument against the benefits, the transfer benefits.

5733             Intellectually they're less appealing than an ongoing mandated commitment to a percentage expenditure off gross revenues, but intellectually is one thing and the realities facing us is another.

5734             What the two approaches have in common is they're both mandated.  There's not a hint of voluntary expenditure ‑‑ meaningful voluntary expenditure in either scenario.

5735             COMMISSIONER WILLIAMS:  Okay.  The Directors' Guild has stated that the Commission should consider increasing the current five per cent Canadian programming requirement on BDUs to six per cent and that some of these funds should be used for new media programming initiatives.

5736             This is ‑‑ I guess, from five to six is almost ‑‑ or, yeah, almost a 20 per cent increase.  Do you think that's a fair increase?

5737             MR. GOLUBOFF:  Again, I think what we're suggesting is that any ‑‑ we should not be deflecting revenue, we should not be taking revenue from one type of production to another.

5738             The new media concerns which everyone ‑‑ you know, it comes up with everybody that sits here, the concerns about new media and I think ‑‑ we're saying that there should be new money, not divert money from existing types of production.

5739             So, no, I don't think that it's unfair.  If new media is as large a concern as certainly the broadcasters suggest that it is and is going to become, then resources, again, have to be devoted to that type of production and it shouldn't be taken away from the ongoing types of production that have existed to date.

5740             I mean, still Canadians are tuning into conventional broadcasting in numbers, I mean, I don't know where it is, but conventional broadcast viewership has not declined, it has remained fairly flat I think for a number of years; people in this country are still watching television.

5741             So, whatever ‑‑ where all this concern is about new media I think is yet to be proven, in our view, but it should be new money devoted to areas of new media whatever those forms of new media might be.

5742             COMMISSIONER WILLIAMS:  You stated earlier that to rely on the market or even the good faith and intentions of broadcasters would not be sufficient because history has demonstrated time and time again that there wouldn't be adequate support for Canadian drama.

5743             Could you elaborate a bit on that, please?

5744             MR. SOUTHAM:  Everyone in the Director's Guild, particularly directors who work with production executives, and indeed their own managers, I find that they have enormous good will with regard to what we do and what they are undertaking as commissioning producers.

5745             It is our belief therefore that what they are facing on a quarterly basis is a scenario where it is uneconomic for them and therefore counter‑intuitive given their training and their mandate to take expensive projects to their boards over and over and over again.

5746             We believe that what we are engaged in is in fact a little bit too expensive for our little country.

5747             However we feel that it is a public good and we also feel that there is demonstrated demand. In other words, a viewer watching the show will like it a lot and in large numbers but is unaware of what it costs everyone in the system to make it.

5748             So the question then is:  Do we want it or do we not?  Do we want drama, Canadian drama, or not?

5749             And what we are saying is:  The business picture of the economic scenario for drama is not great.

5750             In other words, in our small economy, it is slightly outsized.  It is too expensive.

5751             How do we then take a look ‑ how do we then induce it?

5752             We are not saying that the broadcasters can't afford to do it.  We are saying that there are ‑ their inclination will not be automatically to do it given cheaper alternatives.

5753             We believe that they can afford to make it and, if mandated to do so, will do a good job, and have done so ‑ you know, generally have done so, particularly in the last decade.

5754             As directors, we feel involved with a good and competitive product, when it is made.

5755             COMMISSIONER WILLIAMS:  If this product is as good and competitive than higher quality products, dramatic production, could it not attract higher advertising rates and increased revenues, perhaps?

5756             What is in the experience of some of these dramatic productions in terms of earning power for those, assuming that ‑

5757             MR. SOUTHAM:  Our instinct is that, given the cost of making drama, any marginal increase in ratings to those shows still don't provide enough of an incentive to engage in making the shows.

5758             And therefore when magazines became sufficiently popular and when the cost of acquiring U.S. programming became less expensive than producing a fully fledged Canadian drama, the natural tendency of the commissioning broadcasters was to favour both of those types of programming if they were allowed to by the rules, which post‑1999 they were.

5759             COMMISSIONER WILLIAMS:  OK.  Thank you, Mr. Chair.  That concludes the line of questioning.

5760             THE CHAIRPERSON:  Thank you.

5761             Stuart, you have one more question?

5762             COMMISSIONER LANGFORD:  Yeah.  Just one really small question.  It is more curiosity than anything, but I think it does go to your problem.  I hope it does.

5763             If you produce a product that doesn't make it on the big conventional screen, so, you know, if Corner Gas fails rather than succeeds, is there a market for it with other services or is it just dead?

5764             MR. GOLUBOFF:  I would say that there is a market on the other services because the other services have smaller overhead and smaller viewership and still have a demand for product.

5765             So, no.  I don't think we would believe that a program is dead.  I mean, lots of shows are not hits but continue to have a certain amount of life left in them through the system.

5766             COMMISSIONER LANGFORD:  So, in a way, these new big, consolidated companies should be more courageous because it is not all in one roll of the dice.

5767             If they can't put it on, if it just doesn't quite make it, audience perception, on their conventional service, because most of them now have specialties, they have got another place to recover their costs.

5768             MR. GOLUBOFF:  Well, to recover some of their costs, certainly.

5769             Still, the numbers suggest that Canadians are watching and tuning in, you know, to the conventional broadcasters.

5770             But certain numbers are on the rise, as I understand it, on the specialty side.

5771             So, yeah.  I mean, the bottom line is the I, you know, certainly believe that there is life after CTV or CanWest Global, you know.

5772             MR. SOUTHAM:  As you know, in the U.S., there are actually working models very much to that effect where cable outlets will scoop up failed shows and put them on air to good effect for themselves.

5773             Of course, they are purchasing them at bargain basement prices.

5774             And the question really is:  What investment would trigger that show?

5775             And the investment has to be a scenario where the network feels it is going to make money on its channel.

5776             So, you know, it is a fire sale.

5777             COMMISSIONER LANGFORD:  But because our networks now have quite strong stables of specialties, they in a more comfortable position than the Americans in sense.  They have got a second window.

5778             MR. SOUTHAM:  I don't know.

5779             I do think however ‑ what we face all the time is there is a threshold under which shows suddenly don't look competitive to a Canadian viewer.

5780             We all know that.

5781             We know what the lighting looks like, the acting.  Everything gets not good enough.

5782             And so, our main concern, and unfortunately sometimes it means there is a trade‑off on the diversity ‑ on the diversity equation is:  What does it take?  How much money do we need to become competitive?

5783             And we do believe it is money.

5784             I think that we have sufficiently trained cadre of professionals now that, given the resources and given a good idea, the show will look and feel and smell competitive to a Canadian viewer.

5785             It is when things drop below that threshold that we start looking wrinky dinky then.

5786             And therefore, for us, as directors, the Directors' Guild of Canada, we are very, very focused on that threshold.

5787             And I don't think the specialty channels are necessarily equipped either in the first instance or even as an after‑market to necessarily consistently generate that level of quality in the higher cap shows.

5788             COMMISSIONER LANGFORD:  OK.  Thanks.  Thanks very much.

5789             THE CHAIRPERSON:  Michel?

5790             COMMISSIONER MORIN:  Yes.  You are saying that, except India and the United States, most of the countries have some rules to protect their national productions.

5791             I would like to ask you:  Could you give us some more examples of those rules that are stronger in other countries than the one you are proposing?

5792             MR. GOLUBOFF:  I am certainly not going to give that today because I don't have it in front of me, nor am I going to suggest that I am wise enough to speak to it.

5793             But I can certainly make sure that those views that will back up and support what I have just said will be passed on to you or presented to you at subsequent hearings.

5794             And there is a multitude, I know, coming up, and I am not sure which one is which.

5795             But certainly we can get that information to you.

5796             THE CHAIRPERSON:  Okay.

5797             Thank you very much.  Those are all of our questions.  Thank you for your appearance.

5798             MR. GOLUBOFF:  Thank you.

5799             THE CHAIRPERSON:  Madame Boulet, who is next?

5800             LA SECRÉTAIRE : Merci, Monsieur le Président.

5801             J'inviterais maintenant le groupe d'intervenants suivant à se présenter : l'Association québécoise de l'industrie du disque, du spectacle et de la vidéo, l'Association des producteurs de films et de télévision du Québec, l'Association des réalisateurs et réalisatrices du Québec, la Société des auteurs de radio, télévision et cinéma et l'Union des artistes.

‑‑‑ Pause

5802             LA SECRÉTAIRE : J'inviterais maintenant madame Anne‑Marie Des Roches à nous présenter les représentants des associations, après quoi vous aurez dix minutes pour votre présentation.

5803             Madame Des Roches ?

INTERVENTION

5804             MME DES ROCHES : Merci.

5805             Monsieur le Président, Monsieur le Vice président, Mesdames et Messieurs les commissaires, bonjour et merci de nous accueillir.

5806             Cinq associations, représentant une grande partie des artistes et artisans de la production télévisuelle au Québec, ont décidé de présenter un mémoire conjoint sur cet enjeu fondamental de la diversité des voix dans l'application de la Loi sur la radiodiffusion.

5807             Il s'agit de : l'ADISQ dont les porte‑parole ne peuvent être présents aujourd'hui en raison d'une rencontre internationale sur la diversité culturelle; l'APFTQ, l'Association des producteurs de films et de télévision du Québec, représentée par sa directrice générale adjointe Brigitte Doucet; l'Association des réalisateurs et réalisatrices du Québec, l'ARRQ, représentée par sa directrice générale Lise Lachapelle, à l'extrême droite ‑ pas d'extrême droite; la Société des auteurs de radio, télévision et cinéma, la SARTEC, représentée par son président Marc Grégoire, à ma gauche; et moi‑même, Anne‑Marie Des Roches, de l'Union des artistes, directrice des affaires publiques.

5808             Nous sommes accompagnés de Pierre Trudel, professeur titulaire au Centre de recherche en droit public de la Faculté de droit de l'Université de Montréal et rédacteur de notre mémoire, qui se joindra à nous pour répondre à certaines de ces questions.

5809             Comment faire en sorte que le système canadien de radiodiffusion reflète la pluralité de la population et conserve aux auditoires un véritable accès à une diversité de voix ?

5810             En assurant d'abord les équilibres entre les détenteurs des pouvoirs de créer, produire, programmer, diffuser et distribuer des contenus.

5811             En radiodiffusion, le maintien de ces équilibres est mis au défi par la tendance à la constitution d'* entreprises regroupées + exerçant le contrôle effectif sur un ensemble de médias.

5812             Une tendance que le CRTC remet peu en question en autorisant la plupart du temps les transactions qui augmentent le niveau de concentration et de propriété multiple et en ne prescrivant que quelques mesures pour pallier les dérives trop manifestes.

5813             Pourtant, le contexte exige la mise en place de mécanismes appropriés pour assurer effectivement la diversité des voix.

5814             Il nous apparaît impérieux de limiter le rythme d'accroissement de la concentration et d'encadrer les pratiques.

5815             Plus le Conseil permet la concentration de la propriété, plus il doit en contrepartie, mettre en place les balises garantissant une réelle diversité des voix.

5816             Sinon, il ne joue pas le rôle que lui confère la Loi sur la radiodiffusion.

5817             Brigitte ?

5818             MME DOUCET : Les principes relatifs à la diversité des voix découlent de la politique canadienne.

5819             Et plusieurs règlements et politiques du CRTC ont été conçus à cet effet.

5820             Ainsi, c'est parce qu'elles sont contrôlées ici que les entreprises de radiodiffusion sont en mesure de contribuer efficacement à la promotion de notre culture.

5821             L'exigence de la diversité des voix est conséquente avec la Convention sur la protection et la promotion de la diversité des expressions culturelles, dont le Canada s'est fait un ardent promoteur.

5822             Et le CRTC ne peut d'ailleurs faire abstraction des principes qui y sont consignés.

5823             Mais la multiplication des canaux de diffusion rendue possible par la numérisation garantirait‑elle désormais le niveau recherché de diversité et rendrait‑elle la réglementation moins nécessaire ?  Certainement pas.

5824             La tendance chez les entreprises regroupées ne va pas naturellement vers une plus grande diversité des contenus ou des points de vue.

5825             Sans réglementation appropriée, elles pourraient intégrer leurs fonctions de production et de diffusion et réduire les possibilités d'accès aux plateformes de diffusion pour l'ensemble des créateurs et producteurs de contenus.

5826             Sans réglementation, rien ne garantit que la multiplication des canaux de diffusion sera accompagnée d'une multiplication du contenu national et de sa présence sur l'Internet ou les autres médias comme les téléphones portables.

5827             D'ailleurs le peu d'exigences du CRTC à l'endroit des services numériques de catégories 2 et 3 et son refus de réglementer l'Internet n'aident en rien à garantir la présence de contenus canadiens sur les nouvelles plateformes.

5828             Dans un monde de plus en plus globalisé, le caractère national du système de radiodiffusion doit être maintenu et le contrôle des entreprises de diffusion et de distribution doit demeurer entre des mains canadiennes.

5829             Il s'agit de maintenir une prise sur ce secteur‑clé de l'économie et de notre identité et cela doit s'appliquer à toutes les composantes de l'industrie. 

5830             Pour certains, les émissions peuvent désormais être produites et acheminées par une variété de voies et circuler dans des environnements de moins en moins susceptibles d'un contrôle au niveau de la diffusion et de plus en plus régis par les choix que fait l'individu.

5831             Ce qui rendrait désormais impossible d'appliquer une réglementation fondée sur des objectifs culturels comme ceux énoncés dans la Loi sur la radiodiffusion.

5832             Pourtant, les évolutions technologiques ne font pas disparaître les défis à l'origine des encadrements actuels.  Il faut un cadre de réglementation novateur apte à refléter le nouveau contexte de la radiodiffusion.

5833             Devant l'effacement des frontières entre les médias et singulièrement entre un média réglementé comme la télévision analogique et non‑réglementé comme l'Internet, il faut un cadre réglementaire qui tienne compte des stratégies prévisibles des entreprises.

5834             Il faut assurer que les exigences découlant de la politique de radiodiffusion soient équitablement respectées dans l'une et l'autre des plateformes de diffusion.

5835             C'est un mythe de croire que l'Internet et les nouvelles plateformes ne peuvent être encadrées.

5836             Ouvrons ici une parenthèse : nous apprécions que le Conseil ait récemment initié un processus d'analyse des nouveaux médias qui permettra sans doute de réviser l'exemption de réglementation pour l'Internet.

5837             Nous souhaiterions que ce processus soit le plus transparent possible et qu'il suscite la participation de toutes les parties concernées, notamment le secteur de la musique qui n'est pas représenté au groupe de travail alors qu'il a été le premier touché par le développement des nouveaux médias. Fermons la parenthèse.

5838             M. GRÉGOIRE : Nous croyons que la politique de soutien à la production des contenus doit graduellement s'étendre à l'ensemble des plateformes significatives tel Internet.

5839             Tout comme les politiques sur la propriété des entreprises doivent s'adapter aux nouveaux environnements et qu'un marché des droits spécifique au Canada doit être maintenu.

5840             L'Internet devient désormais une composante du système de radiodiffusion.

5841             La réglementation devrait encadrer les pratiques des groupes majeurs en conséquence.

5842             Concentration horizontale, intégration verticale et convergence économique, d'une part ;  interrelations croissantes et complémentarité entre les secteurs de la télécommunication, de la publication, de la radiodiffusion et de l'Internet, d'autre part.

5843             Les mêmes joueurs économiques peuvent être actifs dans tous ces secteurs et la réglementation doit les encadrer globalement puisque c'est là que se posent les défis de la politique de radiodiffusion et celui de la diversité.

5844             De plus en plus, les productions sont élaborées pour un ensemble de lieux de diffusion et cela doit se refléter dans les obligations des entreprises à contribuer à la production nationale.

5845             Notre système de radiodiffusion a besoin de ressources additionnelles.

5846             Il faut rechercher ces fonds là où sont consommés les contenus audio et vidéo.

5847             Il faut que les nouveaux lieux de diffusion contribuent au financement de la production canadienne.

5848             Pour une entreprise intégrée ou propriétaire de multiples plateformes, la réglementation doit reposer sur une analyse de la performance de l'entreprise sur l'ensemble desdites plateformes.

5849             La concentration de la propriété fait qu'un très petit nombre de décideurs sont en position de régir l'accès aux lieux de diffusion des contenus.

5850             Au‑delà des questions relatives à l'information et à l'indépendance journalistique, c'est désormais l'ensemble de la programmation qui suppose des choix éditoriaux qui, effectués dans le contexte d'un groupe dominant, peuvent avoir des conséquences majeures sur la diversité.

5851             La réglementation doit garantir que les choix éditoriaux sont effectués uniquement sur la base de critères professionnels et ne permettent pas de préférence indue ou d'exclusion systématique.

5852             Plus grande est la concentration, plus il importe de réglementer de façon à promouvoir des facteurs d'équilibre capables de garantir une diversité effective des vues.

5853             Lorsqu'on parle de diversité des voix, il faut également entendre diversité régionale.

5854             Or, les politiques des dernières années ont permis à quelques grands groupes de concentrer leur production dans les grands centres.

5855             Il y a de moins en moins de diversité, par exemple, entre les programmations des stations de Montréal et celles des autres régions possédées par une même entreprise.

5856             La concentration des entreprises compromet la diversité des lieux de création.

5857             Y a‑t‑il encore de la place pour des productions différentes, plus marginales, quand on voit que même les séries jeunesse ou les documentaires trouvent difficilement preneur chez les diffuseurs privés ?

5858             Sans réglementation, est‑il réaliste d'espérer qu'une entreprise regroupée ouvrira ses multiples plateformes à une diversité de contenu ?

5859             Nous en doutons.

5860             Plus on accepte de concentrer la propriété et les pouvoirs de décider, plus il faut garantir que les décisions seront prises suivant des critères et une éthique d'équilibre conformes à la Loi sur la radiodiffusion.

5861             Par conséquent, il faut imposer des exigences de transparence et obliger les entreprises à rendre compte périodiquement de leurs pratiques.

5862             En ce sens, nous appuyons fortement la divulgation des informations financières par groupes de propriété pour les services de radio et de télévision en direct et nous suggérons de faire la même chose pour les entreprises regroupées.

5863             MME LACHAPELLE : Comment mettre en valeur ‑ pardon.

5864             Comment mettre en ouvre un ensemble de principes visant à garantir une réelle diversité des voix au sein du système de radiodiffusion ?

5865             La réglementation développée par le CRTC sur la propriété contribue à mettre en oeuvre plusieurs principes de la Loi.

5866             Mais la concentration de la propriété a atteint des niveaux tels que des mesures d'encadrement sont nécessaires pour garantir que les choix des groupes sont cohérents avec les exigences de la politique de radiodiffusion.

5867             Les entreprises regroupées jouent un rôle majeur dans la plupart des secteurs de la radiodiffusion et leurs stratégies sont fonction d'une variété de plateformes.

5868             Pourtant, la réglementation ignore les réalités de la convergence. Elle porte peu attention aux pratiques des groupes consolidés et s'applique de façon sectorielle aux entités qui détiennent les licences : cadre de réglementation pour la télévision en direct, pour les services spécialisés, pour les entreprises de distribution, pour la radio, et cetera.

5869             Devant les tendances à la concentration et la convergence croissante des multiples environnements de diffusion, il importe de faire évoluer la réglementation.

5870             Actuellement, la réglementation sectorielle permet aux entreprises regroupées de jouer sur plusieurs tableaux.

5871             Elle leur permet d'invoquer le caractère déficitaire d'une entreprise, mais donne en même temps la possibilité de pratiquer des inter‑financements laissant craindre que les bénéfices tirés des activités réglementées puissent être crédités aux secteurs non réglementés.

5872             Pour prévenir l'avènement d'un système de radiodiffusion à deux vitesses : l'une réglementée et l'autre non tenue de respecter les objectifs de la politique canadienne de radiodiffusion, il faut assurer une supervision adéquate des entreprises regroupées.

5873             C'est pourquoi il importe d'encadrer le petit nombre  d'entreprises regroupées et d'assurer le développement du système canadien de radiodiffusion en les réglementant au moyen de licences de réseaux.

5874             L'objet de la réglementation du Conseil serait les pratiques et politiques que ces entreprises développent et appliquent à l'égard de l'ensemble de leurs activités ayant un rapport avec les objectifs de la Loi.

5875             Le Conseil serait ainsi en mesure d'examiner leurs plans de développement et encadrer leurs pratiques pour assurer le respect du principe et de ‑ du principe de la diversité des voix.

5876             Par cet encadrement, le Conseil pourrait s'assurer que les avantages résultant des niveaux accrus de concentration bénéficient au système de radiodiffusion.

5877             Il disposerait d'un mécanisme réglementaire lui permettant d'observer réellement l'évolution des entreprises regroupées et des leviers propres à les amener à orienter leur développement selon les principes de la Loi, plutôt qu'en fonction des seuls impératifs de rendement des actionnaires.

5878             MME DES ROCHES : Le maintien d'une véritable diversité des voix dans notre système de radiodiffusion commande une attitude rigoureuse à l'égard de la concentration. Et si la tendance demeure, il faut ajuster l'approche réglementaire afin de refléter les situations engendrées par le phénomène.

5879             Avec la convergence des univers médiatiques, il y a des interrelations croissantes entre les secteurs de la télécommunication, de la publication, de la radiodiffusion et de l'Internet.

5880             La réglementation du CRTC doit encadrer ces ensembles globaux puisque c'est à ce niveau que se posent les grands défis de la politique canadienne de radiodiffusion et singulièrement, le défi de la diversité.

5881             Pour relever ce défi, il faut, entre autres, garantir le contrôle canadien effectif sur les entreprises de radiodiffusion; assurer notre capacité de production et de diffusion de contenus reflétant les traits de notre culture; faire que les avantages découlant des regroupements soient réinvestis dans l'accroissement de la programmation nationale; s'assurer que les décisions et pratiques des groupes respectent les exigences de la diversité des voix.

5882             Il faut également que la réglementation favorise l'application des principes de la politique de radiodiffusion au niveau où se prennent effectivement les décisions d'affaires.

5883             C'est pourquoi le Conseil doit suivre plus efficacement les évolutions des entreprises regroupées en disposant d'une vue d'ensemble suffisamment large de leurs activités, et donc en les encadrant au moyen de licences de réseau.

5884             Nous sommes ouverts aux questions.

5885             LE PRÉSIDENT :  Merci.

5886             Ce sont des recommandations assez braves. Vous réalisez que nous n'avons pas le mandat statutaire pour faire beaucoup des choses que vous suggérez.

5887             Et j'espère que vous ferez la même présentation au Parlement parce que, je suis d'accord avec vous, la convergence, c'est un problème et on doit avoir une approche uniforme avec toutes les plateformes, et cetera.

5888             Il y a des plateformes que nous ne régulons pas. Il y a des plateformes où on a choisi de ne pas faire de réglementation. Il y a les autres où n'a pas l'autorité.

5889             MME DES ROCHES : Oui.

5890             Je pense qu'on s'entend là‑dessus. J'ai entendu les commentaires hier sur la presse, notamment.

5891             LE PRÉSIDENT :  Oui.

5892             MME DES ROCHES : Cela étant dit, l'Internet, il y a un mandat. Vous avez fait le choix ‑

5893             LE PRÉSIDENT : Oui.

5894             MME DES ROCHES : ‑ tout le monde peut changer d'idée ‑ à un moment donné de réglementer davantage.

5895             Cette décision‑là a été prise quand même il y a près de dix ans.

5896             Et depuis ce temps, les nouvelles technologies ont pris un essor considérable.

5897             Pour le reste de votre question, je vous ‑ je passerais la parole à Pierre Trudel, qui a conçu un peu ce concept‑là de licence réseau et qui connaît bien aussi les balises, les choses qu'on peut ou ne peut pas faire avec la Loi de la radiodiffusion.

5898             Pierre ?

5899             M. TRUDEL : Alors, il est vrai que la Loi sur la radiodiffusion n'a pas une application universelle, mais elle s'applique quand même à un ensemble extrêmement vaste, c'est‑à‑dire les entreprises de radiodiffusion.

5900             Les entreprises de radiodiffusion, c'est toutes les entreprises qui contribuent à acheminer les émissions vers le public.

5901             Et, la notion d'émission, bien, c'est à peu près ‑ à peu près tout, finalement, ce qui bouge. La notion d'émission est très large en vertu de la Loi.

5902             Par conséquent, le Conseil, en vertu de la Loi sur la radiodiffusion, à mon humble avis, dispose d'une marge de manouvre considérable pour appliquer les principes de la Loi sur la radiodiffusion à un vaste ensemble d'entreprises qui, de façon différente, il est vrai, mais de façon quand même de plus convergente dans beaucoup de cas, contribuent à acheminer les émissions par les nouveaux canaux que les nouvelles technologies rendent désormais disponibles.

5903             Et la Loi a été conçue, à mon sens, de façon beaucoup plus neutre, justement pour anticiper ces possibles développements techniques et pour permettre d'assurer l'application des principes de la Loi sur la radiodiffusion indépendamment des plateformes techniques dans lesquelles ces émissions pourront un jour être proposées aux Canadiens.

5904             LE PRÉSIDENT :  Je comprends bien que, ce que vous suggérez, c'est vraiment une philosophie à adopter pour nous.

5905             L'application de cette philosophie, si ne nous l'acceptons pas, sera un peu difficile dans les diverses parties du marché des télécommunications et de radiodiffusion parce qu'il y a des choses que nous pouvons réglementer et il y en a d'autres que nous ne pouvons pas réglementer.

5906             Mais vous dites aussi :

5907             *Il nous apparaît impérieux de limiter le rythme d'accroissement de la concentration et d'encadrer les pratiques. +

5908             LE PRÉSIDENT : Ce matin, nous avons ici entendu monsieur. de Corus.

5909             MME DES ROCHES : Cassiday.

5910             LE PRÉSIDENT : Monsieur Cassiday nous dit que la prochaine vague de concentration va venir dans 24 à 36 mois, que, pour le moment, on a une pause.

5911             Mais il prévoit qu'on va avoir une deuxième vague de concentration.

5912             Qu'est‑ce que nous pouvons faire pour limiter le rythme d'accroissement de la concentration, comme vous le suggérez ?

5913             Est‑ce que vous suggérez que nous déclarions un arrêt à la concentration ou que ‑ je ne suis pas exactement clair.

5914             Qu'est‑ce qu'est l'application pratique de votre suggestion ?

5915             MME DES ROCHES : Bon. On ne l'a pas faite en fonction des prochaines vagues qui s'en viennent, qu'on attendait d'ailleurs ‑ qu'on attend, par ailleurs.

5916             Là‑dessus, c'est clair que, bon, vous avez mentionné plus tôt cette semaine des balises qui pourraient être mises en place pour voir avec la nouvelle concentration quelles sont les parts de marché, le nombre de propriétés qu'on peut avoir dans le même marché.

5917             On n'a pas étudié ça vraiment, mais la façon dont on voit que ça pourrait fonctionner, c'est qu'il faudrait que le gouvernement ait une politique claire en termes de concentration des entreprises.

5918             Ensuite, que le Bureau de la concurrence puisse filtrer. Le Bureau de la concurrence, lui, a le mandat, justement, de regarder la part des journaux, la part des radios, des placardages publicitaires, et cetera.

5919             Donc, il y aurait un premier ‑ un premier filtre, si vous voulez, de balises là‑dedans. Et ensuite, le CRTC regarderait les conditions de licence imposées aux entreprise de radiodiffusion et de télécommunications qui sont en place pour pouvoir promouvoir l'émergence de contenu canadien et s'assurer qu'il y a une diversité des voix.

5920             Alors, pour se préparer à la prochaine vague, il faut vraiment que ça parte du haut et que là où vous ne pouvez agir ‑ sur les journaux, par exemple ‑ le Bureau de la concurrence peut le faire. Il y a une politique claire.

5921             Et ensuite, quand le Conseil examine l'ensemble de ‑ je ne sais pas, moi, je dis Quebecor parce que, les journaux, ils vont être impliqués là‑dedans.

5922             Le CRTC tiendra quand même compte des propriétés des quotidiens et des hebdomadaires de TVA, de Quebecor. Il ne les réglementera pas, mais il devra en tenir compte, de voir que c'est un enjeu, c'est un facteur économique, c'est un intrant, dans cette affaire‑là.

5923             C'est un peu comme ça qu'on le voyait.

5924             LE PRÉSIDENT : Madame Noël

5925             CONSEILLERE NOEL:  J'ai peu de questions.

5926             J'essaie de comprendre comment on en est arrivé à cette notion de réseau. Réseau d'un paquet de choses différentes, si j'ai bien compris. C'est presque de la salade de fruits.

5927             J'ai été voir la référence à l'Avis public 1986‑355 du 22 décembre 1986, mais ce n'est pas une décision, ça. C'est un appel aux observations dans notre jargon nouveau. On appelait ça un appel aux observations.

5928             C'est des questions qui son posées à l'industrie.

5929             Est‑ce que vous avez regardé ‑ avant de nous parler de cet Avis public, qui est une série de questions posées à l'industrie, est‑ce que vous avez les réponses qui ont été apportées et la décision qui en a résulté ?

5930             Parce que vous semblez fonder votre le pouvoir que le CRTC aurait de créer des réseaux d'amalgames de toutes sortes de catégories d'entreprises sur cet Avis public.

5931             M. TRUDEL : Oui. En fait, outre cette référence à un Avis public, le CRTC, dans sa décision du 17 octobre 1980, a également exploré la notion de réseau.

5932             Il avait, entre autres, à l'époque, mentionné que la définition du terme réseau en vertu de la loi, la même définition, a été maintenue dans la Loi de 1991.

5933             Le Conseil, dans la décision que je mentionne ici, la décision CRTC 80‑704 du 17 octobre 1980.

5934             Alors, à cette époque, le Conseil disait que la Loi prévoit une définition plus large du terme `réseau' que celle de la simple acceptation courante du terme, de sorte que celui‑ci ne désigne pas seulement les dispositions relatives à la programmation où il y a délégation du contrôle, mais aussi d'autres arrangements relatifs à la distribution de la programmation.

5935             Le Conseil souscrit à ce point de vue, compte tenu de l'emploi du terme `comprend', à l'article 2 de la Loi, qui signifie que `réseau' ne se limite pas à la description qui suit.

5936             En outre, cette conclusion repose sur la directive comprise dans l'alinéa 3 (j) de la Loi voulant que la réglementation et la surveillance du système de la radiodiffusion canadienne soit souple et s'adapte aux changements qu'il était impossible de prévoir au moment de l'adoption de la Loi dans les années 1960.

5937             Le Conseil estime que l'on doit considérer que son mandat de surveiller et de réglementer le système de la radiodiffusion canadienne englobe la distribution d'émissions mettant en cause les entreprises de radiodiffusion et les initiateurs de programmations, ce qui donnerait les mêmes résultats que ceux obtenus par les réseaux traditionnels qui détiennent une licence et sont soumis aux règlements du Conseil.

5938             CONSEILLERE NOEL : Mais ‑

5939             M. TRUDEL : Et, si on avait le temps, il y avait d'autres décisions où le Conseil revient toujours ‑

5940             CONSEILLERE NOEL :  Mais elles sont antérieures à ce questionnement‑là.

5941             Alors, après le questionnement de 1986‑355, est‑ce que le Conseil est arrivé à des conclusions qui permettraient d'étendre la notion de `réseau' à un ensemble aussi large que celui que vous proposez ?

5942             M. TRUDEL : C'est que la notion de `réseau', ce n'est pas le Conseil qui l'étend. C'est la Loi qui prévoit une notion large.

5943             Le Conseil ne fait que constater que la Loi donne à la notion de `réseau' une conception très large, qui essentiellement revient à dire que le Conseil a le droit, et même l'obligation, de surveiller et de réglementer toutes les entreprises, quelques soient leurs organisations, quelque soit leur fonctionnement, qui contribuent à la diffusion ‑ directement ou indirectement à la diffusion d'un programmation, d'un ensemble d'émissions au public canadien.

5944             Alors, cette interprétation, le Conseil en a pris acte dans les décisions que j'ai mentionnées, et la Loi n'a pas changé depuis. Et, donc, il n'y a aucune raison de penser que cette interprétation n'a plus raison d'être.

5945             Au contraire, elle a probablement davantage raison d'être dans le contexte d'évolution et de diversification que connaît actuellement le système canadien de radiodiffusion.

5946             CONSEILLERE NOEL :  Dans le contexte où on essaie de simplifier la réglementation et de la rendre facilement prévisible, pouvez‑vous me montrer, me démontrer, comment fonctionnerait votre projet de réseau ?

5947             Disons, par exemple, ‑ prenons un exemple hypothétique, mais très concret ‑ que nos amis de Quebecor Média décident de s'intéresser à l'achat d'une station de radio.

5948             Est‑ce qu'il faudrait, par exemple, que le Conseil examine tout ce que fait Quebecor Média, Quebecor World, notamment au niveau de l'Internet, du portail Canoë, de la câblodistribution, de la téléphonie (parce que ça se promène sur le même réseau), de ce que TVA peut offrir au niveau de la télévision conventionnelle, des publications de magazines, des éditeurs de livres (ils ont également des compagnies qui éditent des livres, de la télévision spécialisée (ils ont des canaux spécialisés), des journaux ?

5949             Je veux dire :  Qu'est‑ce qu'il faudrait qu'on fasse si, tout d'un coup, ils décident de racheter CKAC, par exemple ?

5950             MME DES ROCHES : Je vais commencer et puis Pierre Trudel terminera.

5951             En fait, philosophiquement, la manière qu'on est parti dans l'élaboration de ce projet‑là, philosophiquement, on le regardait un peu comme a eu lieu les renouvellements de Radio‑Canada. OK ? En 1999.

5952             Le renouvellement de Radio‑Canada. On a regardé CBC Radio, Radio 1, Radio 2, Radio‑Canada, la télévision française, RDI.

5953             On les a tous regardés ensemble.

5954             Alors, on commence par ça. Ça, ça entraîne ‑

5955             CONSEILLERE NOEL : Oui, mais vous êtes dans un autre secteur d'activité.

5956             Là, on touche à peu près tout ce qui se fait sur la planète.

5957             MME DES ROCHES : Mais, ça, ça fait partie du contexte dans lequel la licence ‑ il va avoir une licence réseau pour les entreprises de radiodiffusion là‑dedans.

5958             Mais, dans l'examen de l'ensemble des activités de Quebecor, par exemple, c'est sûr qu'il va falloir qu'on regarde un peu ‑ on ne peut pas faire semblant qu'ils n'ont pas les journaux et puis qu'ils n'ont pas les magazines.

5959             Sur le plan juridique, cela est. Philosophiquement, c'est de le regarder ensemble, OK, et de faire ‑

5960             CONSEILLERE NOEL : Mais vous êtes d'accord que, quand on est face à une demande, on le regarde. On regarde l'ensemble.

5961             Mais comment voulez‑vous encadre ça dans des règles ?

5962             MME DES ROCHES : Je passe la parole à Pierre Trudel.

5963             M. TRUDEL : En fait, la façon de s'y prendre, c'est : d'abord, d'identifier les activités des entreprises regroupées qui concernent les objectifs de la Loi sur la radiodiffusion; interroger l'entreprise regroupée sur ses stratégies, ses approches, à l'égard de sa contribution à l'accomplissement des objectifs de la Loi sur la radiodiffusion; indiquer comment l'entreprise s'y prend et comment elle entend continuer de s'y prendre pour accomplir ou contribuer à accomplir ces objectifs‑là; le cas échéant, s'assurer que cette entreprise regroupée est pourvue des balises et des encadrements appropriés.

5964             Par exemple, s'agissant, par exemple, de l'étanchéité des salles de rédaction, un des problèmes qui a souvent été signalé, pour prendre simplement celui‑là, c'est la très grande difficulté d'appliquer cette règle parce qu'on ne parvient ‑ en fin de compte, l'entreprise ‑ il peut y avoir une entreprise non directement réglementée par le Conseil qui est impliquée.

5965             Par exemple, entre le Journal de Montréal et un réseau de télévision appartenant à la même société, il devient difficile d'imposer des exigences imposées par le Conseil à une entreprise de presse.

5966             Cela dit, rien n'interdit de s'assurer, pour le Conseil, que l'entreprise regroupée qui possède à la fois le journal et l'entreprise de télévision fasse en sorte que l'étanchéité soit effectivement respectée.

5967             L'entreprise regroupée, en tant que holding, dispose généralement des leviers et des possibilités pour assurer qu'on applique efficacement une règle que le Conseil a jugé à‑propos d'appliquer, pour prendre cet exemple.

5968             Alors, voilà des exemples de possibilités.

5969             Essentiellement, les entreprises regroupées de facto sont impliquées et viennent régulièrement devant ce Conseil pour le renouvellement des licences des entreprises qu'elles possèdent.

5970             Elles ne viennent pas de façon directe, mais elles y viennent de façon indirecte.

5971             Essentiellement, ce qu'il s'agit de faire, c'est que, périodiquement, ces entreprises viennent dire devant le Conseil de quelle façon elles entendent accomplir leur mission en fonction des objectifs de la Loi sur la radiodiffusion.

5972             Autrement dit, comment entendent‑elles utiliser le pouvoir considérable qu'on leur a attribué en détenant la propriété d'un ensemble assez vaste d'entreprises dont un grand nombre sont régies par la Loi sur la radiodiffusion ?

5973             Comment ces entreprises entendent‑elles orienter leurs activités et leurs stratégies de façon à être plus efficacement contributrices à l'accomplissement des objectifs de la Loi ?

5974             CONSEILLERE NOEL : Je n'ai pas d'autres questions.

5975             LE PRÉSIDENT : Merci beaucoup pour votre intervention.

5976             Je crois que nous sommes exactement à terme.

5977             Je vous remercie pour votre présentation.

5978             Madame Boulet, when do we get back here?

5979             LA SECRÉTAIRE : We will come back at 1:15 p.m.

5980             LE PRÉSIDENT : Thank you.

5981             LA SECRÉTAIRE :  Thank you.

‑‑‑ Recessed at 1208 / Suspension à 1208

‑‑‑ Resumed at 1320 / Reprise à 1320

5982             THE CHAIRPERSON:  Here we go again.  It seems to me that it was only two weeks ago that you were in the same seat.

‑‑‑ Laughter / Rires

5983             THE CHAIRPERSON:  Madam Boulet?

5984             THE SECRETARY:  Thank you, Mr. Chairman.

5985             Mr. Richard Hardacre will introduce the panel on behalf of ACTRA.

5986             You will have ten minutes for your presentation, Mr. Hardacre.

INTERVENTION

5987             MR. HARDACRE:  Thank you, Madam Boulet.

5988             Thank you and good afternoon, Mr. Chairman and Commissioners.  It is a pleasure to see you again, some of you for the first time.

5989             My name is Richard Hardacre.  I was a professionally trained working actor.  I trained at the national theatre school, l'École nationale de théâtre, in Montreal, and I was very happy at the time to receive a bursary to cover my tuition from the arts councils of Quebec, Ontario and Canada.  So I have a great debt that I owe to my country culturally.  It established my career.

5990             I want to say to start with that I feel a great obligation to that debt, to our country's culture.  I have thus chosen to pursue my career in Canada.

5991             I am the elected National President of ACTRA, the union representing the interests of performers in film, television, sound recordings, radio and new media, other than in the French language.

5992             Kim Hume, on my left, is ACTRA's Director of Public Policy.  I expect you will see a great deal of Ms Hume in the coming weeks and years.

5993             We are joined, as well, by Gary Neil, ACTRA's Policy Advisor.

5994             Members of ACTRA are English‑speaking artists, whose performances entertain, educate and inform Canadians and global audiences throughout the world, through the most powerful media that currently exist, and we are always pleased to have this chance to speak with you about the concerns of our 21,000 members of ACTRA, who live and work in every corner of this country.

5995             Personally, I am quite pleased to see the Commission again.  Thank you.

5996             As we consider the issues in the Commission's Public Notice on Diversity of Voices, we need, first of all, to state that we fully support all efforts to ensure that there is a diversity of editorial content in Canadian media.

5997             ACTRA also fully supports policies that ensure that Canada's minority communities ‑‑ First Nations, women and people with disabilities ‑‑ are properly reflected in the broadcasting system as owners, managers, key creative personnel, and certainly in on‑air programming.

5998             But, for ACTRA, the central issue at stake in these hearings is the following:  How do we ensure that media concentration contributes to bringing more Canadian programming choices and increasing the supply of high‑quality Canadian fiction programming?

5999             Mr. Chairman, indeed, it has only been two or three weeks since I last spoke to the Commission in this room about the precipitous decline in the level of production of English Canadian television drama, programs and series that has occurred since the television policy decisions made in 1999.

6000             Ever since then ACTRA has urged the Commission to reintroduce expenditure requirements and other rules to ensure that broadcasters help develop, sufficiently promote, and appropriately schedule Canadian dramatic programming.

6001             We were, therefore, honestly, quite heartened last week to receive the Review of the Regulatory Framework for Broadcasting Services in Canada, a study commissioned by the CRTC and written by Messrs. Dunbar and Leblanc.

6002             We have some questions about the bulk of that report, and we will withhold comment until we have had a chance to fully digest it, and to consider its recommendations in light of the Commission's Public Notice concerning broadcasting distribution undertakings and discretionary programming services.  However, we will, if we may, comment on the section of the report which addresses Canadian content, because of its relevance to this Diversity of Voices process.

6003             Dunbar and Leblanc state:

                      "We do not disagree with the conclusion that market forces alone are unlikely to achieve the policy objectives set forth in the Broadcasting Act."

6004             They also note:

                      "The available information also strongly suggests that the existing regulatory incentives and obligations with respect to English‑language Canadian drama are not effective."

6005             Recommendation 6.1 in the report is this:

                      "We believe it is imperative to develop more targeted and effective measures to incent the exhibition of Canadian content during peak viewing periods where market forces will not achieve this goal.  Consideration should be given to targeting peak programming obligations to a narrow class of programs, such as drama, which are not adequately supported by the marketplace, and imposing targeted exhibition obligations which require television services to broadcast a minimum number of hours of these types of Canadian programs between 7 and 11 p.m., during each six‑month period over the course of a licensee's broadcast year, to ensure that they will be exhibited during months when Canadians are watching significant amounts of television."  (As read)

6006             Mr. Chairman, other than noting our slight disquiet that the authors have creatively adapted the noun "incentive" into a verb ‑‑ "incent" ‑‑ ACTRA agrees wholeheartedly with this recommendation.

6007             When they discuss programming expenditure requirements, Dunbar and Leblanc also point out that, due to the application of the Commission's benefits policy, there is no consistency in the application of expenditure requirements to licensees, and that is what brings us to today's hearing.

6008             In our written submission, ACTRA urges the CRTC to establish a new standard for all future tangible benefits packages, which are required to be paid, as we all know, when licences are transferred from one owner to another.

6009             Point 1 on this is that the appropriate percentage of tangible benefits must be calculated on the full value of the transaction, with no discounting for debt acquired, no discounting for assets to be divested, and no discounting for inherited benefits obligations.

6010             And, Point 2:  a minimum of two‑thirds of total benefits should be allocated to a 10‑point Canadian drama programming priority, programming produced independently of the broadcaster.

6011             Our argument about Point 1 is based on the market, since all of these factors are taken into account by the buyer and seller when they make their deal.

6012             The benefits should be based on the full value of the regulated assets, since this is fixed and public.

6013             And I understand that the CRTC is already very close to agreeing with us on this first point.  We ask you now, in light of your own report, to consider joining us in the second recommendation.

6014             Please allow me to briefly address why we insist on 10‑point drama.  We do this for three reasons.

6015             Number one, we maintain that Canadian actors are among the best in the world.  We produce very fine actors in this country.  That is widely acknowledged.

6016             For example, in the early days of the Stratford Festival, in the fifties and sixties, we used to import British performers by the dozens to play the leads.  We no longer do that, and, still, our festival maintains its position as one of the world's finest Shakespearean festivals.

6017             In television, when we are given a chance ‑‑ and some recent examples are Corner Gas, Slings and Arrows, Degrassi The Next Generation and Trailer Park Boys ‑‑ we consistently demonstrate that Canadian actors are superb at what we do, and we can carry the lead in successful series.

6018             This, I point out, is the case in spite of somewhat bizarre protests of a certain cable baron that the highly successful Trailer Park Boys should not perhaps be receiving any support in the industry, in spite of the fact that it is broadcast and making tons of money on one of the cables that comes from this very gentleman.

6019             But I diverge.  I'm sorry.

6020             I will be in Los Angeles next week.  We have an event in L.A. next Tuesday, Mr. Chairman.  We will be hosting a reception for some of the finest actors in Hollywood.  They are ACTRA members, Canadians all, many of whom would love a chance to return home to do good quality work.

6021             Our colleagues who are writers and directors are also among the best in the world.

6022             Again, why 10‑point drama?  Television doesn't need stars; television makes them.

6023             In a July article in the industry magazine "Playback", entitled "Fewer Cancon Points Won't Equal More Eyeballs", industry journalist Mark Dillon points out this fact ‑‑ and he uses top U.S. shows as examples.  He could have looked to the U.K. or other countries for other examples.

"Good television is made when a good story is well told."

6024             Further on our point of 10‑point drama, we believe that Canadian tax dollars should not be used to hire second‑rate foreign actors.

6025             On average, English‑language Canadian broadcasters put up only 18.4 percent of the costs of a television production.  Independent producers, therefore, must rely on public funds and other support programs, including tax credits, the CTF, provincial funds and other sources, to mount and develop these productions.

6026             It is unconscionable to permit scarce public funds to be used to hire second‑rate actors from another country, but that's all Canadian producers would be able to afford, given that the average production budget of a Canadian drama show is only a fraction, less than a tenth of its American counterpart.

6027             I need to reiterate, Mr. Chairman and Commissioners, that the benefits packages alone, we don't believe, will reverse the decline in television drama, since they are time limited and modest when compared to the scope of the problem.

6028             The Commission, we feel, still needs to reintroduce overall spending and scheduling requirements for all broadcasters, and some of these things have now been recommended to you by the Dunbar and Leblanc report.

6029             We obviously don't have time in this brief opening statement to review all of the recommendations we have put forward in our reply to the Public Notice, but let me state, please, that we urge the Commission to continue to regulate ownership in the public interest, as required by the Broadcasting Act.

6030             While we need financially strong broadcasting groups to maximize resources for Canadian content, we must ensure that there is real competition in every part of the broadcast system.

6031             While strong distribution companies are necessary so we can continue to invest in the technologies required to communicate across this vast nation, we also need choices for consumers.

6032             Of all the ownership matters the Commission is considering, perhaps the greatest concerns we have are around vertical integration.  The integration of distributors and broadcasters raises issues of access for programmers and for viewers, and the integration of broadcasters and producers raises issues of preferential treatment.

6033             In our view, strong rules for vertically integrated entities, including preventing them from developing in the first place, if that is necessary, are essential as we move rapidly into the era in which our home theatres and computers will be fully integrated.

6034             This concludes my opening remarks.  I thank you, Mr. Chairman and Commissioners, and we would be delighted to respond to any of your comments or questions.

6035             THE CHAIRPERSON:  Thank you very much for your presentation.

6036             First of all, with respect to your disquiet about the word "incent", while you were speaking I was looking online, and the Oxford Dictionary carries it as a verb now.

‑‑‑ Laughter / Rires

6037             THE CHAIRPERSON:  I guess you and I belong to the generation when it was still a noun.  It is now a verb.

6038             MR. HARDACRE:  Thank you.  I must get a new Oxford Dictionary.

‑‑‑ Laughter / Rires

6039             THE CHAIRPERSON:  All kidding aside, I read your submission with great interest.

6040             You were here, or, if not, you heard online the proposal by the CBC and the three rules they suggest.  It is simple and straightforward in their view that nobody should own three outlets in the same market ‑‑ radio, television and newspaper; no single owner should have more than 33 percent of specialty services; and thirdly, in no market should one person own more than two BDUs.

6041             What do you think of those suggestions?

6042             MR. HARDACRE:  I, actually, would like to ask Gary to respond.  He observed the hearings with the CBC.

6043             MR. NEIL:  Thank you, Mr. Chairman, and thank you, Richard.

6044             We have, in fact, stated at some point that we support the first recommendation of the CBC that there should be no more than two out of three from the three principal media.

6045             We also take the position with respect to No. 3 that we do not see any reason that there should be a further concentration of BDUs.

6046             The one in the middle is the one that is perhaps most interesting.  We have, of course, taken the position in our written brief that we favour appropriate limits on the ownership of specialty and digital services, but we really wonder where this particular figure has come from.  Where is the empirical evidence to show that it is an appropriate figure?

6047             Even in the hearings here, Mr. Stursberg admitted that, in some senses, they had pulled the figure from the air, that it could have been 25 percent, it could have been 40 percent.