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:

CanWest MediaWorks Inc. (CanWest), on behalf of Alliance

Atlantis Communications Inc. (Alliance Atlantis) /

CanWest MediaWorks Inc. (CanWest), au nom d'Alliance Atlantis

Communications Inc. (Alliance Atlantis)

HELD AT:                              TENUE À:

Conference Centre                     Centre de conférences

Outaouais Room                        Salle Outaouais

140 Promenade du Portage              140, Promenade du Portage

Gatineau, Quebec                      Gatineau (Québec)

November 20, 2007                     Le 20 novembre 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

CanWest MediaWorks Inc. (CanWest), on behalf of Alliance

Atlantis Communications Inc. (Alliance Atlantis) /

CanWest MediaWorks Inc. (CanWest), au nom d'Alliance Atlantis

Communications Inc. (Alliance Atlantis)

BEFORE / DEVANT:

Konrad von Finckenstein           Chairperson / Président

Elizabeth Duncan                  Commissioner / Conseillère

Len Katz                          Commissioner / Conseiller

Michel Arpin                      Commissioner / Conseiller

ALSO PRESENT / AUSSI PRÉSENTS:

Jade Roy                          Secretary / Secrétaire

Lyne Renaud                       Hearing Managers /

Rachel Marleau                    Gérantes de l'audience

James Wilson                      Legal Counsel /

Neil Campbell                     Conseillers juridiques

HELD AT:                          TENUE À:

Conference Centre                 Centre de conférences

Outaouais Room                    Salle Outaouais

140 Promenade du Portage          140, Promenade du Portage

Gatineau, Quebec                  Gatineau (Québec)

November 20, 2007                 Le 20 novembre 2007

- iv -

           TABLE DES MATIÈRES / TABLE OF CONTENTS

                                                 PAGE / PARA

INTERVENTION BY / INTERVENTION PAR:

ACTRA National                                    266 / 1544

Insight Production Company Ltd.                   298 / 1723

Tricon Films & Television                         305 / 1750

Aboriginal Peoples Television Network             307 / 1763

Innoversity                                       316 / 1794

Barna-Alper Productions                           321 / 1814

Canadian Film and Television Production           336 / 1890

  Association

Canadian Association of Film Distributors and     360 / 2015

  Exporters

Manitoba Motion Picture Industry Association      364 / 2042

Writers Guild of Canada                           380 / 2143

Alberta Motion Picture Industry Association       407 / 2289

REPLY BY / RÉPLIQUE PAR:

CanWest MediaWorks                                428 / 2413

                  Gatineau, Quebec / Gatineau, Québec

‑‑‑ Upon resuming on Tuesday, November 20, 2007

    at 0833 / L'audience reprend le mardi

    20 novembre 2007 à 0833

LISTNUM 1 \l 1 \s 15341534             THE CHAIRPERSON:  Let's proceed.

LISTNUM 1 \l 11535             Madam Roy.

LISTNUM 1 \l 11536             THE SECRETARY:  Good morning, everyone.

LISTNUM 1 \l 11537             I would like to remind you that simultaneous interpretation is available.  The English interpretation is on channel 7.  L'interprétation française se trouve au canal 8.

LISTNUM 1 \l 11538             We will now hear the presentation of ACTRA National.

LISTNUM 1 \l 11539             Please introduce yourself and your colleagues.  You will then have 10 minutes for your presentation.

LISTNUM 1 \l 11540             Thank you.

LISTNUM 1 \l 11541             THE CHAIRPERSON:  Madam Roy, I thought you had another announcement to make.

LISTNUM 1 \l 11542             THE SECRETARY:  Yes.  After all of the intervenors' presentations, we will ask CanWest to come forward.  The panel will have questions for you, and we will ask for a response after lunch.

LISTNUM 1 \l 11543             Thank you.

INTERVENTION

LISTNUM 1 \l 11544             MR. HARDACRE:  Thank you.

LISTNUM 1 \l 11545             Good morning, Mr. Chairman and Commissioners.  It's a pleasure to see you again.  And thank you to the Commission Staff for your thorough preparation of these proceedings.

LISTNUM 1 \l 11546             My name is Richard Hardacre.  I am a professional Canadian actor and I am the elected President of the Alliance of Canadian Cinema, Television and Radio Artists.

LISTNUM 1 \l 11547             I have with me a few colleagues.  Kim Hume, on my far left, is ACTRA's Director of Public Policy and Communications.

LISTNUM 1 \l 11548             Garry Neil is ACTRA's Policy Advisor.

LISTNUM 1 \l 11549             And we are joined today by legal counsel, Mr. Robert Buchan and Ms Anne Tardif, from the law firm of Fasken Martineau DuMoulin, who assisted, also, our Coalition of Canadian Audio‑Visual Unions to research and prepare its interventions.

LISTNUM 1 \l 11550             I am pleased, quite sincerely, to have this chance to bring to this hearing the concerns of more than 21,000 members of ACTRA, performers who live and work in every corner of this country.

LISTNUM 1 \l 11551             ACTRA members are English‑speaking artists whose performances in film, television, sound recordings, radio, and new media entertain, educate and inform Canadians and global audiences.

LISTNUM 1 \l 11552             ACTRA members are proud to count ourselves among the Canadian creative resources that broadcasters are required by the Broadcasting Act to make maximum use of in their programming content.

LISTNUM 1 \l 11553             Together with other Canadian creators, including script writers, directors and technicians, we created the Coalition of Canadian Audio‑Visual Unions as a vehicle through which we can pursue our common public policy interests.

LISTNUM 1 \l 11554             That's who we are.

LISTNUM 1 \l 11555             It is the shared concerns of Canadian creators that I will first speak about.

LISTNUM 1 \l 11556             As we stated in our written comments, ACTRA supports the intervention of the CCAU on the issues of foreign ownership and control in the regulatory process in this proceeding.

LISTNUM 1 \l 11557             We also support CCAU's supplementary comments filed on October 10.

LISTNUM 1 \l 11558             Mr. Chairman, in my recent presentations before this Commission, and in various other public fora, ACTRA has concentrated its work on seeking to correct the serious deficiency in the production and availability of high quality Canadian television dramas.  ACTRA believes that the issue of foreign ownership is inextricably linked to this drama issue.

LISTNUM 1 \l 11559             The provisions of the Broadcasting Act are quite clear.  In Declaration 3(1), Canada's "Broadcasting system shall be, effectively, owned and controlled by Canadians."

LISTNUM 1 \l 11560             In ACTRA's view this is a cornerstone of Canadian broadcasting policy.  Ensuring Canadian ownership of cultural sector firms, including broadcasting, cable and film distribution companies, is fundamental to ensuring that the Canadian public will have access to Canadian stories, to music, to dance and to the arts in every cultural industry.

LISTNUM 1 \l 11561             Increased foreign control of broadcasting would damage our cultural sovereignty, deepen the crisis in Canadian drama, and potentially jeopardize Canadian content rules.

LISTNUM 1 \l 11562             ACTRA and the CCAU are convinced that the present application must be denied.

LISTNUM 1 \l 11563             If the Commission were to approve it, Goldman Sachs and its affiliates, which are non‑Canadian, would obtain overwhelming control in fact of both Alliance Atlantis and the existing television business of CanWest that is to be contributed to CW Investments Corporation, referred to in the application as "Joint Co."  This would be in violation of the Act and the Order‑in‑Council direction to the CRTC on the ineligibility of non‑Canadians.

LISTNUM 1 \l 11564             The de facto control results primarily from the strategic direction for the regulated businesses that Goldman Sachs and its affiliates have imposed upon CanWest under the terms of the agreements filed in this proceeding.

LISTNUM 1 \l 11565             The de facto control exists notwithstanding the mechanisms used by CanWest and Goldman Sachs to provide Canadians with legal control of the day‑to‑day management of Joint Co. and its subsidiaries.

LISTNUM 1 \l 11566             No amount of tinkering, layering, manoeuvring or, indeed, the smoke and mirrors of who sits on and what is discussed at a reporting committee will resolve the fundamental problem of the de facto control held by Goldman Sachs and its affiliates.

LISTNUM 1 \l 11567             We have reviewed the August 20th and October 22nd replies to the interventions filed by CanWest MediaWorks.  We do not agree with most of the arguments made in the replies on the issue of control in fact, and we believe further that CanWest either misstates or misunderstands some of the practices of the CRTC and Industry Canada with respect to control in fact.

LISTNUM 1 \l 11568             We refer you to the Industry Canada document provided by the Directors Guild of Canada, which we understand to be a more accurate statement of the approach taken by that department.

LISTNUM 1 \l 11569             We also understand this to be the approach taken, as well, by yourselves, the Commission.

LISTNUM 1 \l 11570             Mr. Chair, while we believe firmly that the Commission must deny the application, we realize that this is our only opportunity to comment upon it, and in the few remaining minutes I would like to deal with the issue of the proposed benefits package.

LISTNUM 1 \l 11571             Our written intervention addresses this matter at some length.

LISTNUM 1 \l 11572             ACTRA acknowledges that in its reply of August 20th, CanWest made several improvements to its benefits package.  The first of these is to commit that 84 percent of its on‑air programming benefits will be produced by independent producers.

LISTNUM 1 \l 11573             The second is to commit that 60 percent of its drama benefit would go to 10 Point Productions.

LISTNUM 1 \l 11574             And the third is to commit that all of the pilot projects will be drama.

LISTNUM 1 \l 11575             Indeed, we welcome these improvements, but we still believe that the benefits package falls short of what is needed.

LISTNUM 1 \l 11576             We believe that this continues to be insufficient for an acquisition with the scope of this one.

LISTNUM 1 \l 11577             In our written submissions and in our oral comments in recent public hearings, and again today, we call on the CRTC to establish a new standard for all future tangible benefits packages that would provide:  (1) that the appropriate percentage of tangible benefits must be calculated on the full value of the transaction, with no discounting for debt acquired, assets to be divested, or inherited benefits obligations; and (2) that a minimum of two‑thirds of total benefits should be allocated to 10 Point Canadian drama programming, produced independently of the broadcaster.

LISTNUM 1 \l 11578             We will make no comment about how the current application lives up to the first point, since we note that the CFTPA has put forward a proposition that the benefits package should be based on a transaction value of $1.446 billion, which includes the Alliance Atlantis Communications' minority stake in regulated assets.

LISTNUM 1 \l 11579             With respect to our second point, ACTRA is proposing that CanWest be required to reconfigure its benefits package to ensure that of the $136.9 million, at least $91.3 million should be allocated to 10 Point drama programs and series that are produced by independent Canadian producers.  This would include projects at the development phase, since CanWest has now allocated all of it to drama.

LISTNUM 1 \l 11580             I realize that you have heard our arguments about why this new standard is essential ‑‑ essential for cultural and economic reasons ‑‑ so I will not repeat those arguments today.

LISTNUM 1 \l 11581             What I will do, however, is to note that since this application was filed, and revised, and then revised again, the CRTC has received the study it commissioned from Messrs. Laurence Dunbar and Christian Leblanc.  Those authors remind us that market forces alone are unlikely to achieve the policy objectives of the Broadcasting Act, and specifically highlight that drama is a category of programming that is not adequately supported by the marketplace.  Their words ‑‑ "not adequately supported by the marketplace."

LISTNUM 1 \l 11582             As an actor, I have to raise my opposition to the figure of $13.5 million that CanWest is proposing to direct to building what the application refers to as a star system.

LISTNUM 1 \l 11583             We desperately need a star system in Canada to help build the profile of our terrifically talented performers, to help them become the household names that their work deserves.  But let us not kid ourselves; the profile of Canadian actors is not raised by funding campaigns of billboards and red carpet launches on which no Canadian actors appear.  There simply must be a significant volume of Canadian production first in order to have stars.

LISTNUM 1 \l 11584             This benefits money should be redirected to the development and broadcasting of 10 Point, high quality, Canadian drama programming.  If you build that, then you can develop the star system.

LISTNUM 1 \l 11585             Finally, we join with the chorus of intervenors to urge the Commission to reject the self‑serving proposal of CanWest to spread the benefits over a period of 10 years.  CanWest should be required to fulfil its obligations over the next 7 years, or sooner, like all others who provide tangible benefits to the Canadian broadcasting system.

LISTNUM 1 \l 11586             I will conclude by dealing with the issue of the proposed drama benefit.

LISTNUM 1 \l 11587             ACTRA reiterates its written submission that CanWest's proposal to allocate $55 million to drama in its overall benefits package is, in fact, modest.

LISTNUM 1 \l 11588             Mr. Chairman, English‑language, over‑the‑air, private broadcasters spent only $40 million on Canadian dramas in 2006.  All broadcasters together spent perhaps 12 times this amount on imported American dramas, programs which they showcase and broadcast at times when the largest audiences and the largest advertising dollars are available.  They marginalize Canadian dramas on their schedules.

LISTNUM 1 \l 11589             In the face of this massive and unconscionable deficit, the proposal, as part of the benefits package, to spend $5.5 million in each of the next 10 years on drama is insignificant.  I think we are being charitable even to call it modest.

LISTNUM 1 \l 11590             Thank you, Mr. Chairman and Commissioners.  We look forward to answering your questions.

LISTNUM 1 \l 11591             I would like to say in closing that I speak here as a Canadian actor, but I also have 21,000 members who look to our union to do the right thing for Canadian workers and Canadian culture.  Many of our members are members of the Order of Canada and Officers of the Order of Canada, people whose names you may know ‑‑ people like Gordon Pinsent and Fiona Reed, and many, many others.  These performers did not gain their membership in the Order of Canada by working on productions that were American, and they did not become Canadian performers to work on productions by companies that were controlled by Wall Street.

LISTNUM 1 \l 11592             I thank you for your time.  We are fully prepared to answer your questions.  To assist in that, I will be inviting Mr. Robert Buchan and Ms Anne Tardif to address matters that you may have dealing with the issues of foreign ownership and control in the regulatory process.

LISTNUM 1 \l 11593             Thank you.

LISTNUM 1 \l 11594             THE CHAIRPERSON:  Thank you.

LISTNUM 1 \l 11595             On the last point you just made, saying that the famous Canadian actors do not work for companies controlled by Wall Street, is that really the issue?

LISTNUM 1 \l 11596             Is it not the issue whether somebody produces Canadian drama, employs Canadian actors, meets the 10 Point requirement?

LISTNUM 1 \l 11597             Whether the money comes from Wall Street or from Bay Street, does that really make a difference?

LISTNUM 1 \l 11598             MR. HARDACRE:  It would make no difference if the original producers are interested in doing Canadian stories.

LISTNUM 1 \l 11599             I had the benefit of living in New York City myself and working there.  I have an American mother.  I lived there for four years, in Los Angeles for four years.  I never found any producer interested in doing a Canadian story in all that time I was there.

LISTNUM 1 \l 11600             I don't mean to be cute about that but I would expect that controlling interests are interested in seeing stories that would maximize or production that would maximize advertising revenue and perhaps that is all.

LISTNUM 1 \l 11601             THE CHAIRPERSON:  Okay.

LISTNUM 1 \l 11602             MR. NEIL:  Mr. Chairman, just on this point I acknowledge that there are no statistics from the film and television production industry but if you look at the book publishing industry and if you look at the sound recording industry in Canada, you have overwhelming evidence that the Canadian companies are the ones which produce the Canadian authors, the Canadian writers and the Canadian musicians and singers.

LISTNUM 1 \l 11603             In the book publishing industry, for example, and I am just going off the top of my head, about 80 percent of the Canadian author titles are produced by the Canadian industry, which only controls about a third to 40 percent of the marketplace.  So there is strong evidence from other cultural industries that Canadian owners are the ones who are far more likely to produce the Canadian content.

LISTNUM 1 \l 11604             THE CHAIRPERSON:  Yes, but let's stick to this industry.  Book publishing is a much smaller industry.

LISTNUM 1 \l 11605             You want capital to invest in Canada, play by Canadian rules, produce Canadian content.  Obviously, that is also the aim of this Commission.

LISTNUM 1 \l 11606             I just wondered whether it really makes a difference to you what the origin of the money is.  You assume because it is foreign it will reluctantly play by Canadian rules and, as you suggested, will really have audiences in mind, Canadian audiences, and that is where sort of the rubber hits the road, if I understand you correctly.

LISTNUM 1 \l 11607             MR. HARDACRE:  Yes.

LISTNUM 1 \l 11608             THE CHAIRPERSON:  Okay.

LISTNUM 1 \l 11609             Now, coming back to your opening statement, it is the same thing I heard from the Directors Guild.  You make this categorical statement that:

"Legal control of day‑to‑day management of Joint Co. subsidiaries rests with Goldman Sachs.  No amount of tinkering, layering or manoeuvring will resolve the fundamental problem of de facto control held by Goldman Sachs and its affiliates." (As read)

LISTNUM 1 \l 11610             Spell this out to me.  Yesterday I didn't probe on it but now you made a second statement a second time of saying what is really ‑‑ what is the root the all this?  Is it the equity?  Is it the 35 versus 65 percent that is really the key to all of this in your mind?

LISTNUM 1 \l 11611             MR. HARDACRE:  Please, Robert.

LISTNUM 1 \l 11612             MR. BUCHAN:  Yes.  Mr. Chairman, it is the same point that we tried to make yesterday, that it isn't what some people refer to as de jure control and that is why the reference to tinkering or layering and this is all of those questions, the indicia of operational control and how far the minority shareholder protections can extend and everything.

LISTNUM 1 \l 11613             In the Coalition's intervention we did not rely on or as I said yesterday, I think, we didn't think there was a gotcha provision in there or some bright line that we could find.  We don't take a position with regard to those measures and you are reviewing some of them with the applicant and ask him to look at the role of the review committee and to try to get a definition of material and whatever.

LISTNUM 1 \l 11614             The fact that it was 65 percent is the second aspect of it.  It comes from ownership rather than from the control and it is the focus on ownership and the fact that 65 percent of the equity of the company will be owned by Goldman Sachs.

LISTNUM 1 \l 11615             When there is 65 percent ownership it has been found by others in the past that a degree of control comes with the ownership.  That is why I think yesterday we made reference to the decision in the Canadian Airlines case, a reference where increases above 25 percent of such shareholdings become of increased importance in determining where control in fact lies.

LISTNUM 1 \l 11616             My understanding of this Commission's past practice is that there was always concern expressed when shareholdings got above 40 percent in the hands of one foreign shareholder, whether control could be exercised indirectly through the ownership block when there was one dominant shareholder and dominance started to be sensed at the 40 percent level.

LISTNUM 1 \l 11617             Here we have 65 percent.  I know there is an exception on the record, the Persona case.  Until all of the publicity surrounding this transaction became public, very, very few people had ever heard of the Persona case or knew what it was about.

LISTNUM 1 \l 11618             Really, what it was about, as you know, was cable systems in small communities in dispersed areas in Canada that were failing and about to go under and they had an American strategic investor that was available and came in and filled the gap.  There wasn't a public hearing.  There was very little attention given to it.

LISTNUM 1 \l 11619             Persona is now back in the hands of Canadians but that, I think, was looked upon by people in the industry as an anomalous situation where failing small cable companies in dispersed communities were saved in the short term.

LISTNUM 1 \l 11620             But this is Canada's second largest private broadcasting undertaking betting the farm with 65 percent non‑Canadian ownership in the hands of one company.

LISTNUM 1 \l 11621             THE CHAIRPERSON:  Let me put the question the other way around.  What would it take to save this transaction, in your view, to make it acceptable?

LISTNUM 1 \l 11622             MR. BUCHAN:  I think I should ‑‑ we have been asked to advise the Coalition.  To explain our position, I am not going to totally equivocate because I will come to ‑‑ but we advised that it is difficult to get into tinkering or doctoring the proposal of someone else, particularly as complex a commercial arrangement as this is, and that it ought to go back to the parties to bring forward an application that satisfies the Commission and what we believe to be the direction to the Commission with regard to foreign ownership.

LISTNUM 1 \l 11623             So not to get into suggesting specific measures and certainly not in the day‑to‑day level but there are members of the Coalition, and I know you will hear from one ‑‑ I won't speak for ACTRA but I know there is another one that would be prepared to say it has to be below 50 percent.

LISTNUM 1 \l 11624             Now, they are working on ‑‑

LISTNUM 1 \l 11625             THE CHAIRPERSON:  I thought you were here in support of ACTRA.  So is that ACTRA's position?

LISTNUM 1 \l 11626             MR. BUCHAN:  No, I am not speaking for ACTRA, I am speaking for the Coalition.  Because ACTRA is a member of the Coalition, the Coalition filed the brief with regard to foreign ownership issues.

LISTNUM 1 \l 11627             THE CHAIRPERSON:  Mm‑hmm.  So are you getting two kicks at the can?

‑‑‑ Laughter / Rires

LISTNUM 1 \l 11628             MR. BUCHAN:  No.  You may see me later in the day but ‑‑

‑‑‑ Laughter / Rires

LISTNUM 1 \l 11629             MR. NEIL:  He will change his tie.

LISTNUM 1 \l 11630             MR. BUCHAN:  I just want to be clear that we are not prescribing the fix.  We are not saying that it can't be fixed but there are members of the Coalition who believe that if it were below 50 percent, closer to the 46 and two‑third percent level that is often quoted as being the allowable level of equity, but bearing in mind that this is all held by one company, I am not on record as making that recommendation.

LISTNUM 1 \l 11631             THE CHAIRPERSON:  What does ACTRA have to say on this?

LISTNUM 1 \l 11632             MR. HARDACRE:  Yes.  Thank you for the opportunity.

LISTNUM 1 \l 11633             I would like to just ‑‑ because we have the ability to have our opinion quite clear.  We are very satisfied with the current level allowed for foreign ownership, the current practice, which is in the 46 percent, 46.something percent level.

LISTNUM 1 \l 11634             I would like to elaborate further.  Mr. Chair, you did ask a question about our quite dramatic statement and about our alarm at the overwhelming control.

LISTNUM 1 \l 11635             I refer you to the July 31st media release from CanWest Global Communications.  We read it quite carefully.  On page ‑‑ I believe it is the fourth page of the release.  Now, this is acknowledging that we knew nothing about the confidential matters of the deal until this release came out and gave us a few more bits of information.

LISTNUM 1 \l 11636             So on the fourth page of the release, just before the area that is in italics, there is a clause starting "The shareholders' agreement" and it says:

"The shareholders' agreement will also contain typical minority shareholder protections for the benefit of Goldman Sachs, including restrictions on the incurrence of additional debt by CW Investments and its subsidiaries and other transactions outside the ordinary course of business, in each case without the unanimous approval of the Board of Directors of CW Investments.  CanWest will agree to similar restrictions in respect of the operations of its Canadian television business." (As read)

LISTNUM 1 \l 11637             It goes on.  But that phrase "CanWest will agree to similar restrictions in respect of the operations of its Canadian television business," this tells us that control does not necessarily rest in CanWest, it rests in a tower in Manhattan.  It is their statement, sir.

LISTNUM 1 \l 11638             So I would like to just answer your question more with that.  Thank you.

LISTNUM 1 \l 11639             THE CHAIRPERSON:  Okay.  We have heard a lot about the fact, you know, we all share the same objectives.  We want to see the Broadcasting Act put into practice.  We want to see the Canadian broadcasting system reflect Canada.  We want to see a lot of Canadian production, a lot of Canadian drama.  That was all said.

LISTNUM 1 \l 11640             A lot of people appearing before us say you need players of size in order to do that in this modern world.  If you want to compete, especially thanks to our neighbours to the south, we need healthy, large companies.

LISTNUM 1 \l 11641             I gather you feel the company that is about to be created here, for which they are seeking approval, would not fit that bill, that it just would be too tied up, too leveraged to its American majority equity partner/minority voting control partner so as to make a contribution; is that the bottom line?

LISTNUM 1 \l 11642             MR. HARDACRE:  Yes.

LISTNUM 1 \l 11643             THE CHAIRPERSON:  Okay.  Thank you.

LISTNUM 1 \l 11644             Commissioner Duncan, you have some questions?

LISTNUM 1 \l 11645             COMMISSIONER DUNCAN:  Actually, Mr. Chairman, I read very carefully the submission of ACTRA and I read the responses from CanWest and I think they did respond, as you indicate in your comments today, to a lot of your concerns.

LISTNUM 1 \l 11646             And I have no further questions.  I think it all revolves around this control, in fact.

LISTNUM 1 \l 11647             Thank you.

LISTNUM 1 \l 11648             THE CHAIRPERSON:  Vice‑Chairman Arpin.

LISTNUM 1 \l 11649             COMMISSIONER ARPIN:  Well, I will have a question on benefits.  The usual policy for benefit packages is that the benefits shall apply to the bought organization.

LISTNUM 1 \l 11650             Now, in the package that Global presented to us yesterday ‑‑ and when I'm hearing your earlier presentation today, you don't seem to make that differentiation that ‑‑ particularly when you're dealing with 10‑point drama, are you dealing with 10‑point drama on Showcase or are you dealing on 10‑point drama all over the property of CanWest?

‑‑‑ Pause

LISTNUM 1 \l 11651             MR. HARDACRE:  Sorry, we will respond.  I would actually like to ask Mr. Neil to give you that response.

LISTNUM 1 \l 11652             Thank you.

LISTNUM 1 \l 11653             MR. NEIL:  We have ‑‑ we are pretty aggressive in saying that two‑thirds of the complete benefits package ought to go to Canadian television drama, 10‑point television drama.  We understand, and we fully support, that normally in transactions the benefits relate to the purchased assets rather than to the purchaser's assets.

LISTNUM 1 \l 11654             And of course we want to see as much drama as possible on Showcase and History television and so on, and some of the properties clearly will be directed there.  But we also understand that the bigger issue, the bigger problem is over‑the‑air television, and so if some of those properties also show up on CanWest Global we would be happy.

LISTNUM 1 \l 11655             COMMISSIONER ARPIN:  Thank you.

LISTNUM 1 \l 11656             That was my question, Mr. Chairman.

LISTNUM 1 \l 11657             THE CHAIRPERSON:  Vice‑Chairman Katz.

LISTNUM 1 \l 11658             COMMISSIONER KATZ:  Thank you, Mr. Chairman.

LISTNUM 1 \l 11659             I want to follow up on one question that the Chairman asked and then ask one of my own as well.

LISTNUM 1 \l 11660             It appears to many people that CanWest is bidding the farm on this transaction.  What makes you think you are in a better position to dictate the way the transaction will flow or to deny this transaction when Mr. Asper and CanWest is literally putting up his entire corporation for this transaction?

LISTNUM 1 \l 11661             MR. HARDACRE:  Can you just give me a second, please?

‑‑‑ Pause

LISTNUM 1 \l 11662             MR. HARDACRE:  Just I wanted to make sure my conscience was speaking the right way to me.

LISTNUM 1 \l 11663             We are interested in seeing Canadian companies be successful and we don't wish to see Mr. Asper or the company fail.  It's not ‑‑ it's not a question of us attacking a philosophy that's there.  What we do not want to see is a major interest that is non‑Canadian controlling a company that is one of our great and largest private broadcasters, and we would like to see the deal structured in such a way that that does not happen.

LISTNUM 1 \l 11664             COMMISSIONER KATZ:  Having the deal structured in such a way that does not happen is what everybody would like to see.  I think what I heard ACTRA say is you want this deal to be scuttled and another one to be created at some point.  What is the difference?

LISTNUM 1 \l 11665             The question first that the Chairman asked is how do we make this deal work; what would it take?

LISTNUM 1 \l 11666             MR. HARDACRE:  M'hm.

LISTNUM 1 \l 11667             COMMISSIONER KATZ:  And what I think I heard you and some of the other folks say is this deal will not work, deny this deal.

LISTNUM 1 \l 11668             MR. HARDACRE:  Yes.

LISTNUM 1 \l 11669             Go ahead, please.

LISTNUM 1 \l 11670             THE CHAIRPERSON:  Just the point of deny this deal because ‑‑ that was my last question to you ‑‑ you feel it's solely because he cannot live up to the object of the Broadcasting Act.  And I mean I go from the assumption he is a business man.  He wants to succeed and he knows what his obligations are and he will try ‑‑ he will fulfill them.  I mean, he walks into this with his eyes wide open so that's why Vice‑Chairman Katz' question.

LISTNUM 1 \l 11671             You know, why do you feel this doesn't make ‑‑ he is making an obviously grievous error if the assessment is correct.

LISTNUM 1 \l 11672             MR. HARDACRE:  Please, Bob.

LISTNUM 1 \l 11673             MR. BUCHAN:  I would just like to say, Mr. Chairman and Mr. Katz, that when we undertook this mandate on behalf of the coalition one of the things we asked at the outset was:  Do the coalition members have a preference for one potential buyer of Alliance Atlantis broadcasting assets over another?  Is it the intention of the coalition members to block the sale to CanWest?

LISTNUM 1 \l 11674             And the answer was "No, that wasn't the objective."  The answer was, "We want to intervene on the issue of benefits, of course, but we also are very concerned about ‑‑ on the foreign ownership and control aspect" and that's the only part we were asked to advise them.

LISTNUM 1 \l 11675             But all the members said the same thing; the objective is not to block the sale to CanWest.  It's to make sure that the Canadian ownership and control provisions of the Broadcasting Act under the direction of the Commission are adhered to.

LISTNUM 1 \l 11676             So it isn't a question of wanting ‑‑ on the part of the coalition on the ownership and control aspect of the application to block the sale to CanWest.

LISTNUM 1 \l 11677             COMMISSIONER KATZ:  As a follow up, Mr. Buchan, I think you mentioned the Persona situation as well and I believe your final words were, "Persona is back in the hands of Canadian industry".

LISTNUM 1 \l 11678             Isn't that what CanWest is doing here as well?  What they are trying to do is work out a deal within the confines of the Broadcasting Act that ultimately they can buy back themselves and have it totally Canadian in four years or six years?

LISTNUM 1 \l 11679             MR. BUCHAN:  Yes, Mr. Katz, certainly it is.  But there is quite a distinction I think in the case of Persona, as I read the record.

LISTNUM 1 \l 11680             And I think that in the reply of CanWest that Commissioner Duncan just referred to it ‑‑ it's a very thorough reply and attached to it there is a little postscript as to why the Persona situation isn't a good precedent.  But there is a fairly accurate, I believe, description of the Persona case and as of July 31st, whatever that year was a couple of years ago, because they were outside of their debt covenants and were going under, the company was going to go into receivership and into bankruptcy.  And the Hicks Muse people came along and they were able ‑‑ they had a deal.  They had a proposed deal that was negotiated basically with the Commission.  It wasn't in a public hearing and a decision was rendered.

LISTNUM 1 \l 11681             But Alliance Atlantis isn't facing bankruptcy.  Alliance Atlantis isn't about to go dark and Alliance Atlantis is a programming undertaking.

LISTNUM 1 \l 11682             Now, I know there is no distinction in the law between a broadcasting distribution undertaking and a programming undertaking, but in terms of magnitude and role and function it's not a very apposite precedent, and I think the applicants even agree with that and attach a special attachment to their reply to say so.

LISTNUM 1 \l 11683             THE CHAIRPERSON:  But the logical abstract from what you just said is you want to see it.  You seem to have different rules for broadcasting and programming operations and distribution operations.

LISTNUM 1 \l 11684             MR. BUCHAN:  No, it doesn't necessarily ‑‑ I know that's been suggested to you.  That's not part of our position.  I am saying the law says that they are both broadcasting undertakings whether a programming undertaking or a distribution undertaking.  But it may have been a factor that influenced the Commission to take what some people consider to be an anomalous situation with regard to the Persona decision in allowing 65 percent of equity in the hands of a non‑Canadian to be approved, because of the nature of the undertakings at the time and the fact that it was going into receivership.

LISTNUM 1 \l 11685             All I'm saying is that in this case Alliance Atlantis certainly is not facing receivership.

LISTNUM 1 \l 11686             THE CHAIRPERSON:  Okay.

LISTNUM 1 \l 11687             Commissioner Duncan.

LISTNUM 1 \l 11688             COMMISSIONER DUNCAN:  I just want to just focus in just on that one line, and that is probably a little repetitive of everything that you have already heard, but no amount of tinkering, layering or manoeuvring will resolve the fundamental problem.

LISTNUM 1 \l 11689             As a lawyer are you suggesting that the Commission is not going to be able to address this then, that we are not going to be able to come up with a solution that we can be satisfied with?

LISTNUM 1 \l 11690             MR. BUCHAN:  Well, I think the intent of that line was to suggest that within the ‑‑ call the de jure control element on the question of how many members on the board of directors, the role of the programming committee, all of those various ‑‑ we think ‑‑ personally, I will say we have respect for friends on the other side who have done this job and it's been well lawyered in that respect.

LISTNUM 1 \l 11691             We think that the issue is the foreign ownership and the direction.  And it's the ownership side of it and not the control side.  So we don't think that just by fixing up the programming committee or fixing up a definition or creating a definition for what constitutes material ‑‑ that's the reference of the tinkering.  It goes back to the issue of ownership.

LISTNUM 1 \l 11692             COMMISSIONER DUNCAN:  So in your view then, if I understood what you said, ownership around 46 percent would be satisfactory to you?

LISTNUM 1 \l 11693             MR. BUCHAN:  That's the position.  Well, I think each of the members of the coalition may feel a little differently on that but ‑‑

LISTNUM 1 \l 11694             MR. HARDACRE:  For us the answer is "yes".

LISTNUM 1 \l 11695             THE CHAIRPERSON:  But that's ‑‑ isn't that a somewhat dangerous path to go.  That means you are really saying control and everything depends on equity ownership.  What about if there is a huge debt and you need the equity and there is a large debt, does it fit?

LISTNUM 1 \l 11696             I mean, isn't the whole idea of looking ‑‑ what is the totality of the interests held by non‑Canadians and to what extent does that interest allow them to influence the operation, the strategy and the management of the corporation?

LISTNUM 1 \l 11697             MR. BUCHAN:  Of course, it does.  And that ‑‑ and one of the reasons, and I guess this provides me with a bit of an opportunity to refer to this document that we attached to the intervention which is the document of Industry Canada that was reissued in August of this year, the CPC‑2‑0‑15.  It was reissued in August and some of us in the industry wondered why was it reissued at the time that it came out?

LISTNUM 1 \l 11698             I don't know whether government cooperates or talks or whatever, but I think Industry Canada reissued this document because a former official of Industry Canada was giving an interpretation that was put on the record of these proceedings as to how Industry Canada deals with equity and debt.

LISTNUM 1 \l 11699             And I can only ‑‑ I will go right to the heart of it, which is at page four where Industry Canada says what Industry Canada looks at when it is trying to determine Canadian ownership and control.  And the first thing, the first bullet at the top of page four says:

"The percentage of share holdings by Canadians and non‑Canadians."

LISTNUM 1 \l 11700             It doesn't refer ‑‑ there is no distinction made between voting and non‑voting shares in that bullet.  There is no ‑‑ going down the bullets to the end it's a source of debt and equity financing.

LISTNUM 1 \l 11701             So, the source.  Now, of course they have to look at the debt because the debt may have covenants attached to it.  They look at a lot of other things, a lot of other agreements, like, whether something could be buried in the trade mark agreement or in another related agreement sometimes these control provisions are shuffled off into, as you know.

LISTNUM 1 \l 11702             I mean, the Commission has looked at all these agreements on transactions of this kind.  It's to determine overall the control.

LISTNUM 1 \l 11703             And in the direction to the Commission it's whether ‑‑ the operative words are:

"...whether on the basis of personal, financial, contractual or business relations or other considerations relevant to determining control other than beneficial ownership and control of voting shares."  (As read)

LISTNUM 1 \l 11704             MR. BUCHAN:  Because they've dealt with the beneficial ownership of voting shares above in the strictly control provisions.

LISTNUM 1 \l 11705             So, we think that at the level of 65 per cent...

LISTNUM 1 \l 11706             Someone asked me yesterday after we had intervened:  "Well, what's the difference between ownership and control?"  And I tried to explain it again to this person and the same ‑‑ and I won't repeat myself ‑‑ and he said:  "Well, didn't they say that 65 per cent of this is going to be owned by Goldman Sachs, by one shareholder?"  I said:  "Yes, that's true."  And he said.  "Well then, don't they own the company?"  And I said:  "Well, that's what we think, they own the company."

LISTNUM 1 \l 11707             THE CHAIRPERSON:  Okay.  Thank you very much for your intervention.

LISTNUM 1 \l 11708             COMMISSIONER DUNCAN:  Mr. Chairman, can I just ask another question?

LISTNUM 1 \l 11709             THE CHAIRPERSON:  Sorry, yes.

LISTNUM 1 \l 11710             COMMISSIONER DUNCAN:  Can you just explain to me, if they have 65 per cent of the shares but they don't have 65 per cent of the vote and it comes to a vote, how can they control the vote, assuming the debt covenants don't play into it?

LISTNUM 1 \l 11711             I just don't understand how that works.

LISTNUM 1 \l 11712             MR. BUCHAN:  Well, Commissioner Duncan, what our position is, is that on a day‑to‑day operations of the company CanWest, the Canadians, will control the day‑to‑day operations.

LISTNUM 1 \l 11713             But the arrangements, these complex arrangements have been put in place and they're not complex just for the sake of being complex, they're complex because you're dealing with the most successful, sophisticated investment bank in the world, you know, 20,000 employees, they know what they're doing and they're assured that in 2011 they're going to get their guaranteed rate of return.

LISTNUM 1 \l 11714             They've put arrangements in place that are quite complex, and we feel it's a bit like Gulliver in the Land of the Lilliputians, that CanWest is tied down and they can maybe blink their eyes and move around if that's operational control in the short term, but to get to where they want to be in 2011, to get themselves back to 50 per cent or more of the issued equity of the company, they've got very little room for manoeuvre.

LISTNUM 1 \l 11715             COMMISSIONER DUNCAN:  Thank you, Mr. Buchan.

LISTNUM 1 \l 11716             Mr. Chair.

LISTNUM 1 \l 11717             THE CHAIRPERSON:  Thank you for your presentation.  We will go to the next intervener, Madam Roy.

LISTNUM 1 \l 11718             Thank you very much.

LISTNUM 1 \l 11719             THE SECRETARY:  I will now call Insight Production Company Ltd., Tricon Films & Television, Aboriginal Peoples Television Network, Innoversity and Barna‑Alper Productions to appear as a panel.

‑‑‑ Pause

LISTNUM 1 \l 11720             THE CHAIRPERSON:  Okay, Madam Roy.

LISTNUM 1 \l 11721             THE SECRETARY:  We will start with Insight Production Company Ltd.  Please introduce yourself and you will then have 10 minutes for your presentation.

LISTNUM 1 \l 11722             Thank you.

INTERVENTION

LISTNUM 1 \l 11723             MR. BRUNTON:  Well, thank you very much.  Thank you, Mr. Chair and Commissioner.  I would like to thank you for the opportunity to speak today.

LISTNUM 1 \l 11724             I would like to speak in support of Global's acquisition of Alliance Atlantis from my perspective as a television producer in Canada.

LISTNUM 1 \l 11725             Insight and Global have a long history, probably going back some 20 years.  I would say that more than any other company Global has helped put my company, Insight, on the drama map, not just here in Canada but around the world, from co‑ventures in the very beginning with Home Box Office to dramas like Ready Or Not that have been seen in over 40, 50 countries around the world.

LISTNUM 1 \l 11726             This relationship goes back many, many years and the dramas that we've produced by large for Global have been 10 out of 10 dramas.  Most recently we produced a TV series called Falcon Beach, it's now seen in about 100 territories around the world, it's just launched in the BBC in the U.K.

LISTNUM 1 \l 11727             And certainly one of the things that I wanted to speak about today is that if, in fact, this acquisition of Alliance Atlantis had occurred a couple of years ago it's quite possible that my TV series, my drama, Falcon Beach, might still be on the air.

LISTNUM 1 \l 11728             And part of that relates to the notion of how shows in the future, if this deal went through, could potentially migrate from one channel to another.

LISTNUM 1 \l 11729             And one of the difficulties that we had with our show, Falcon Beach, was competing against the very, very stiff competition from the United States, television shows like the OC, were put up against our program, and having the opportunity for a potential second window for the sponsors involved and everyone involved on channels like Showcase for example, in my opinion, could have possibly been the hail Mary that that show needed to continue to keep going in Canada.

LISTNUM 1 \l 11730             And so, you know, I really think that in this day and age when we Canadian producers are fighting this avalanche, this tidal wave of publicity and promotion that comes across the border, that to have big, strong Canadian media companies with a lot of platforms that can fight back and use those platforms for advertising and promotion of the television shows that we produce would have a huge positive impact on my business.

LISTNUM 1 \l 11731             In the past year our company has produced a show called Deal Or No Deal Canada for Global, I think one of the highest rated Canadian television shows of the year.

LISTNUM 1 \l 11732             We just are in the midst of completing and delivering a show called Are You Smarter Than A Canadian Fifth Grader, which is presently on the air at Global.

LISTNUM 1 \l 11733             And we presently have a TV series on air on Slice at Alliance Atlantis and it is called Project Runway Canada.

LISTNUM 1 \l 11734             In the cases of both Are You Smarter  Than A Canadian Fifth Grader and Project Runway Canada, both those shows right now would enormously benefit by this potential acquisition.

LISTNUM 1 \l 11735             Project Runway Canada I think is a terrifically produced show, I'm extremely proud of it.  Could that show take advantage of the multiple platforms that this deal would produce?  Would I love to have a second window broadcast on E! or Global?

LISTNUM 1 \l 11736             Would I love my promos to run for my show across the presently owned Global platforms including Global itself which has access to huge audiences to potentially drive those viewers back to Slice?

LISTNUM 1 \l 11737             Would the on‑air promos that exist that are supported by L'Oreal who are one of our advertisers seen across multiple platforms benefit L'Oreal who are helping to pay for the program in a huge way?

LISTNUM 1 \l 11738             So, certainly one of the things that I feel is that, you know, this potential deal has got huge synergies for a producer like myself and there are many, many ways that I could see very selfishly how Insight Productions could take advantage of the opportunity of having these various platforms and the opportunity for my shows to migrate around the circle of assets that Global would control.

LISTNUM 1 \l 11739             You know, the world is changing so quickly.  You know, I see my kids watching television in a way that I could never have imagined.  You know, they have their iPod in one ear and they've got their lap top on their laps and they may be ‑‑ instead of watching traditional television, they may have a DVD of their favourite TV show that they bought at Rogers that they used to watch on CTV or Global or the CBC.

LISTNUM 1 \l 11740             And, you know, the access of the Hollywood content through the Internet and through the video stores and all of these things are a concern to those of us who produce Canadian content and it's a real worry.

LISTNUM 1 \l 11741             And, so, certainly this notion that big, strong Canadian companies that can compete from an advertising and promotions perspective that could compete in the new media world, that can compete against what is an increasingly difficult thing to regulate, which is the wave of American content, you know, crashing across our borders.

LISTNUM 1 \l 11742             And, so, I really, really strongly support the notion that we should be building really strong Canadian media companies.  And I've proposed this idea not just here for the first time and I'd like to see all of our companies as big and strong and robust as they can be, you know.

LISTNUM 1 \l 11743             And to this notion of living in isolation, almost every one of the shows that we produce that are dramas have foreign investment that's necessary.  So, I think that that's an important thing to consider as well, that Falcon Beach with all of the support from all of the arenas in Canada still couldn't have gotten finance without a big strong international distributor that was involved.  It was impossible to finance it here in Canada.

LISTNUM 1 \l 11744             So, I just would like to say that I think that the foundation of the future of this country has to do with having strong, powerful media companies that have a lot of platforms to repurpose our Canadian content in a bunch of different ways.  I think that the notion of content migrating from cable, when they are ready, to conventional and from conventional and second windows on cable and all these things give us a chance to get our shows to more eyeballs in Canada, and that is why I really think a deal like this makes sense, very selfishly for a producer like myself.

LISTNUM 1 \l 11745             The one other comment that I wanted to make, because I have been hearing a little bit about this with the ACTRA presentation, this notion of ten out of ten drama, the Canadian dollar is soaring right now.  Runaway productions from the United States is shrinking and it will shrink dramatically.  I think that all of the organizations should rethink the notion of six out of ten drama.  Every one of the U.S. networks are considering it as an option right now.  The whole idea of a Canadian program being simulcast on a Friday or Saturday night on a U.S. network I think is an option that we should all be considering and looking at.  It is a little bit off topic, but I just wanted to put that on the table as it relates to the benefits package.

LISTNUM 1 \l 11746             Thank you very much for the opportunity to speak today.

LISTNUM 1 \l 11747             THE CHAIRPERSON:  Thank you very much.

LISTNUM 1 \l 11748             THE SECRETARY:  Thank you.

LISTNUM 1 \l 11749             Now we will hear Tricon Films & Television.  Please introduce yourself and you have ten minutes.

INTERVENTION

LISTNUM 1 \l 11750             MS GORFOLOVA:  Thank you.

LISTNUM 1 \l 11751             Honourable Commissioners, honourable Chair, thank you for letting me speak here.  It is strange because we are the first people to actually speak in support of this deal here.

LISTNUM 1 \l 11752             I have founded the Tricon Films and Television in 2000.  It was actually based on a commission from Alliance Atlantis, who has been my longest client.  Tricon Films and Television produces what we call lifestyle reality television, which I know not many people are not all that in favour of.  But over the seven years, we started with a commission of 13 episodes for life network at that time, and three years later it went to 169 episodes and sold in the majority of countries around the world.

LISTNUM 1 \l 11753             Seven years later we have grown from a small production company to a production company that produces hundreds of hours of television a year.  We produce for almost every broadcaster in Canada.  We produce for U.S. broadcasters as well.

LISTNUM 1 \l 11754             But 90 per cent of our programming does sell internationally.  The majority of our programming has also sold to the United States.  So, I am not here to brag about what we do, but it is just to show that lifestyle television, reality programming is watched and we should be proud of it in many ways.

LISTNUM 1 \l 11755             When we got our first commission from Alliance Atlantis, it was kind of the beginning of the lifestyle reality television's run, and all the specialty channels have been in support of this type of programming.  They have pretty much built their specialty channels on this kind of programming.  They have come a long way.

LISTNUM 1 \l 11756             In the beginning there was very little support even from Alliance Atlantis to these specialty channels, and we have seen a significant difference over the seven years.  The first year we were deregistering our RRSPs to pay our people because we couldn't get paid for six months, and it just doesn't happen these days because there has been more resources put behind these channels, but there are still limits, and that is what brings me more into discussing of why we are in support of this deal.

LISTNUM 1 \l 11757             As John said, and we are probably going to be speaking of exactly the same thing, CanWest brings a terrestrial channel and it brings terrestrial viewers, which brings vertical integration.  It does bring larger commissions to programming that we do.  It gives us bigger opportunities to produce better programming.

LISTNUM 1 \l 11758             Over the last few years, the majority of shows that I have got a commission in Canada for, especially for smaller specialty channels, I had to find a gap financing either from a foreign broadcaster or private funding or whatever there is, to be able to produce these shows.  All these shows do very well on the Canadian network later and, as I said, sell internationally.  So there is a risk diversification.

LISTNUM 1 \l 11759             But it would be great for us to be able to produce bigger shows.  It would be great to see them on several channels in Canada.  It would be great to see advertising for your show on different networks.  I think that is the bottom line of why I am in support of this.

LISTNUM 1 \l 11760             Thank you.

LISTNUM 1 \l 11761             THE SECRETARY:  Now we will hear Aboriginal Peoples Television Network.  Please introduce yourself and you have ten minutes.

LISTNUM 1 \l 11762             Thank you.

INTERVENTION

LISTNUM 1 \l 11763             MR. LaROSE:  Merci.

LISTNUM 1 \l 11764             Mr. Chair, Mr. Vice‑Chair, Commissioners and staff, my name is Jean LaRose.  I am the chief executive officer of Aboriginal People's Television Network, and I am an Abenaki citizen of the Odanak First Nation.

LISTNUM 1 \l 11765             I am appearing before you today to express APTN's support for the application by CanWest to acquire the broadcasting companies of Alliance Atlantis Communications Incorporated.  Over the past decade CanWest has made significant contributions to APTN, in particular, and to the aboriginal community.

LISTNUM 1 \l 11766             CanWest has consistently demonstrated its commitment to enhancing the role of aboriginal peoples in the Canadian broadcasting system.  CanWest supported APTN's original licence application more than eight years ago, the only broadcaster that did so, I might add.

LISTNUM 1 \l 11767             Together, we established a CanWest APTN production fund from the benefits package arising from the WIC acquisition in 2000.  Most recently, we have worked together in an alliance to broadcast the National Aboriginal Achievement Awards.

LISTNUM 1 \l 11768             CanWest is building on that long history of support with the proposed benefits package that is part of this application.  Approval of this application will ensure that programming will continue to be produced that will appeal to viewers of both APTN and CanWest television and specialty networks.

LISTNUM 1 \l 11769             We are particularly pleased that CanWest has once again committed to devote considerable funds to the production of aboriginal drama programs.  As the Commission is well aware, drama is one of the most popular forms of television programming and it plays a critical role in ensuring that the stories of aboriginal peoples are effectively told from their own perspective and in their own words.

LISTNUM 1 \l 11770             It is an unfortunate reality of life that high quality drama programming is extremely expensive and the expense is often prohibitive, particularly for aboriginal producers.  That is why the APTN aboriginal drama project proposed by CanWest is so important.  The $2 million that CanWest has set aside for drama productions that will be aired on APTN in the first broadcast window and hopefully on CanWest for the second window or shared window reflects the company's ongoing commitment to develop programming that is attractive to both of our audiences.

LISTNUM 1 \l 11771             The fund will be used for productions that will be of interest for both broadcasters and our audiences.  This programming will contribute to reducing stereotypes and will help build bridges between aboriginal communities and the rest of Canada.

LISTNUM 1 \l 11772             The Canadian broadcasting system has produced only a small amount of high quality programs featuring aboriginal talent, both on screen and behind the scenes.  In our view, the limited knowledge that the general population in Canada has regarding aboriginal peoples can in part be traced back to the fact that Canadians have had very little exposure to First Nations, Inuit and Métis characters through the programming they watch on their television sets, and the exposure they do have is more often than not through the lens of a news camera.  The whole picture is not seen.

LISTNUM 1 \l 11773             This is starting to change with the broad reach of services like APTN and the contribution that a number of broadcasters like CanWest are making to the production of drama programming by aboriginal producers.

LISTNUM 1 \l 11774             CanWest's proposal to contribute this funding to independent aboriginal producers is also important because it will foster the development of aboriginal talent within the broadcasting industry in Canada.  The aboriginal producers that will receive this funding will use aboriginal writers, directors, actors and other key personnel to work on these productions.  This funding will create new opportunities for aboriginal individuals that would probably not otherwise be available.

LISTNUM 1 \l 11775             APTN is also very pleased that CanWest continues to see its relationship with APTN as a partnership that can benefit broadcasters.  By granting APTN the first window broadcast rights to this drama programming, CanWest recognizes that APTN is playing a leading role in presenting images of aboriginal peoples in television and in ensuring that First Nations, Inuit and Métis peoples are able to tell their stories to their own communities and to mainstream Canadians.

LISTNUM 1 \l 11776             The fact that CanWest has indicated that its service will receive the second broadcast window will further ensure that programming created by aboriginal producers will reach a wider Canadian audience.  In this respect, we would note that there are natural affinities between some of the Alliance Atlantis specialty services that CanWest is seeking to acquire and APTN that will allow us to develop vibrant and interesting Canadian dramas that will be attractive to Canadians from all walks of life.

LISTNUM 1 \l 11777             In addition to the APTN aboriginal drama project, CanWest is also committed to contribute funds to several other initiatives that will provide much needed support and assistance for aboriginal individuals who are interested in working in the broadcasting industry.

LISTNUM 1 \l 11778             For instance, CanWest has committed to contribute $190,000 over seven years to the Canadian council for aboriginal business, which is the country's leading non‑profit organization dedicated to promoting the full participation of aboriginal peoples in the Canadian economy.  CanWest is proposing to develop, in partnership with CCAB, a much needed scholarship program for aboriginal film and television students enrolled in the post‑secondary institution.

LISTNUM 1 \l 11779             CanWest is also proposing to contribute $500,000 to the National Aboriginal Achievement Foundation in support for the foundation's industry in the classroom series called Taking Pulse.  We believe this initiative, which will consist of developing a high school curriculum and video that will target aboriginal youth, will play an important role in the development of the next generation of aboriginal producers and broadcasters.

LISTNUM 1 \l 11780             APTN is considering airing these productions once the series is completed both as an educational tool, but most importantly, as a vehicle to reach out to our youth and present them with career opportunities they may not have considered.

LISTNUM 1 \l 11781             Another benefit directed towards the aboriginal community is the proposal to contribute money to the Imaginative Film and Media Arts Festival.  This is an international festival that celebrates the latest work by aboriginal peoples in film, video, radio and new media.  Financial contributions to the festival will help ensure that the talents of Canada's aboriginal peoples are showcased and recognized.

LISTNUM 1 \l 11782             I would also point out that CanWest has proposed a number of other benefits that, while not directly going to APTN or an aboriginal organization, are designed to promote and encourage diversity in the Canadian broadcasting system.  That initiative will certainly be of assistance to aboriginal peoples.  We fully support CanWest's efforts to provide funding to support under‑represented groups in Canadian society.

LISTNUM 1 \l 11783             These initiatives reinforce and clearly give life to the spirit and intent of the Broadcasting Act and the CRTC's vision for diversity in the system.

LISTNUM 1 \l 11784             In our view, the financial contributions that CanWest has proposed as part of these benefits should be recognized by the Commission in the broadcasting industry as one of the key positive outcomes associated with ownership transactions like these.  These transactions allow broadcasters like CanWest to grow and consolidate their media holdings, which then gives them the resources that others like APTN can leverage.

LISTNUM 1 \l 11785             APTN has, on several occasions in the past, acknowledged that larger broadcasting entities are necessary in Canada to meet the challenges of new technologies and audience fragmentation.  We recognize that it is important for Canada to have large robust media companies.  It is equally important, however, for the Commission to ensure that smaller independent broadcasters, particularly those that are operated by or for under‑represented groups, continue to be able to make significant contributions to fulfilling the objectives of the Broadcasting Act.

LISTNUM 1 \l 11786             One key way to do this is to make sure that the smaller broadcasters like APTN have the resources in terms of finances and talent necessary to continue to provide audiences with vibrant and compelling programming.

LISTNUM 1 \l 11787             As I stated in past appearances before you, I believe that the Commission must allow the development of a strong industry to face the challenges of global competition, while using its regulatory and policy powers judiciously to ensure that the Canadian content element in the industry is never lost.

LISTNUM 1 \l 11788             Over the years, CanWest has demonstrated that it is committed to working with APTN and with independent aboriginal producers to support the production of programming that meets the needs of the aboriginal community in Canada and also speaks to the wider Canadian audience.

LISTNUM 1 \l 11789             The support that CanWest has provided to APTN and aboriginal peoples in broadcasting through its contribution to the CanWest APTN production fund, its broadcast of the National Aboriginal Achievement Awards and our collaboration on the dramatic series RenegadePress.com is evidence of the strong commitment.

LISTNUM 1 \l 11790             APTN supports CanWest's application to acquire Alliance Atlantis and the tangible benefits package proposed in that application.  We believe that the financial commitments and initiatives outlined by CanWest will provide significant support to APTN and aboriginal peoples involved in broadcasting.

LISTNUM 1 \l 11791             I thank the Commission for this opportunity to appear at this hearing in support of CanWest, and I will be pleased to answer any questions you may have regarding your intervention.

LISTNUM 1 \l 11792             THE SECRETARY:  We will now hear the presentation from Innoversity.  Please introduce yourself and you have ten minutes.

LISTNUM 1 \l 11793             Thank you.

INTERVENTION

LISTNUM 1 \l 11794             MS REYES:  Thank you.

LISTNUM 1 \l 11795             Good morning, Commissioners.  My name is Cynthia Reyes.  I am Chair of Innoversity.

LISTNUM 1 \l 11796             Innoversity was founded in winter of 2000 by two veteran media professionals ‑‑ I am one of them ‑‑ in response to what we saw as a great lack of cultural diversity of people with disabilities and other people from minority groups, both in the workplaces and in the content of Canadian broadcasting, and particularly in mainstream broadcasting at the time.

LISTNUM 1 \l 11797             Today we support organizations such as APTN, the proposed Canada 1 TV, and we support major broadcasters who are making very serious efforts to increase the cultural diversity and the participation of under‑represented groups in their workplaces and in their content.

LISTNUM 1 \l 11798             I am here today to speak in support of the application.

LISTNUM 1 \l 11799             Innoversity holds an annual summit.  Last year we had over 1,000 people attending the summit.  The purpose of the summit is primarily to bring together people from under‑represented groups with broadcasters.  A lot of education happens.  Executive training is held for broadcast managers, and career training; training in how to pitch projects for air and for film are held at the summit each year.

LISTNUM 1 \l 11800             A lot of good has come out of it.  A number of people have gotten jobs, internships and other opportunities or have developed their program ideas that were pitched at the summit.

LISTNUM 1 \l 11801             Last year we also launched the media access and participation project which is called MAPP for short, which is dedicated to helping people with disabilities to find their place in the media sun.  I suppose you all know that people with disabilities are having a very hard time.  Many of them live below the poverty line and even if they get the training, their unemployment rates are extremely high in this country, so much so that a friend of mine who is an advocate for people with disabilities in the media is threatening to apply for refugee status in Britain, where apparently people with disabilities who have media experience have a much easier time both as citizens and as professionals.

LISTNUM 1 \l 11802             MAPP has been working with broadcasters such as CanWest and Alliance Atlantis and others to help educate media managers and to help to educate people with disabilities about career opportunities.

LISTNUM 1 \l 11803             We also co‑produce a program called Through Our Eyes arts initiative, which helps grades 7 and 8 students, particularly students from under‑represented groups, blacks, Vietnamese, Asian people of various kinds, aboriginal people, all kinds of people, and primarily living in disadvantaged communities, for these children to learn about television and film.  We trained them in production skills.  They produced a total of seven short films, and they have been chosen for many film festivals around the world in the last year.

LISTNUM 1 \l 11804             It has been a delight for us to see these children.  There are 25 of them taking part in the program, and we asked them before this program did you ever consider a career in the media.  All but one said no.  Today, the majority of them are considering it and our challenge will be how to encourage others like them and encourage them as they move forward through high school and college to continue in this path.

LISTNUM 1 \l 11805             We support CanWest's application because for several years both CanWest and Alliance have played strong roles as partners and sponsors of the Innoversity creative summit.  Alliance Atlantis has been one of the sponsors of our pitch competition, the lifestyle category, training and offering development contracts to people with good ideas for any one of the Alliance Atlantis channels.

LISTNUM 1 \l 11806             CanWest Global has helped Innoversity to develop the first national annual media career fair in the country.  In fact, largely with the help of CanWest last year the career fair was a huge success.

LISTNUM 1 \l 11807             We hope that becoming a larger organization means that CanWest will bring greater strength and breadth and heft to Innoversity and help us to realize our mutual goals.  In fact, we strongly expect this, and I have served notice on my colleagues at CanWest that we hope that this is an opportunity for them to expand their involvement with Innoversity.

LISTNUM 1 \l 11808             Today, as we look around the media industry, we see that strides have been made in reflecting a greater diversity of the population of our country on the front lines of broadcasting, but certainly not even in the middle levels of management.  People of colour, aboriginal people, people with disabilities, internationally trained professionals, immigrants, are left out of those ranks.  We all know they are left out of the ranks of the ownership by and large, but we would like to see them far better represented through the ranks of the mainstream media.  The time has come, and quite frankly, in my opinion, passed, and I think we have to learn from the lessons of integrating women which were primarily white women, white, able‑bodied women in the media industry, we have to apply that now to other under‑represented groups of today.

LISTNUM 1 \l 11809             This is why I think it is so important that CanWest continues as a partner to us in the annual media career fair, to help to introduce these under‑represented groups to different opportunities in the media.  If you are not from a media family or you don't have a neighbour or a friend or someone that you know well who is from the media, chances are you will not consider it at all as a future career.  As we have learned and relearning from Through Our Eyes program, that kids start to think about careers in grades 7, 8 and 9 and, as I mentioned earlier, only one of 25 students in the Through Our Eyes program had even remotely considered media as a career, and then had no idea what it involved and how they could get there.

LISTNUM 1 \l 11810             So, we are looking forward to working in partnership with the expanded CanWest, and to achieve our mutual goals.

LISTNUM 1 \l 11811             Thank you.

LISTNUM 1 \l 11812             THE SECRETARY:  Thank you.

LISTNUM 1 \l 11813             Now we will hear Barna‑Alper Productions.  You have ten minutes.  Please introduce yourself.

INTERVENTION

LISTNUM 1 \l 11814             MR. BARNA:  I am Laslo Barna.  I am delighted to be here.  Thank you very much for the opportunity.

LISTNUM 1 \l 11815             First and foremost, I would like to congratulate you on your new logo.  I hope it is a new logo, and I am not out of line.  Let me tell you why I like it.  Because my father had a furniture store on St. Laurent in Montreal and his motto was "All roads lead to Barna and Barna."  If I interpret the arrows properly, all roads lead to the CRTC.

LISTNUM 1 \l 11816             THE CHAIRPERSON:  The logo is not new.  We are just displaying it more prominently.

LISTNUM 1 \l 11817             MR. BARNA:  All right.  Certainly my road has led over and over to the CRTC, which is actually quite wonderful.  Years back ‑‑ I know I am taking away from time ‑‑ I erroneously enrolled at Simon Fraser in the communications program thinking that it was a film making program.  They lectured us to death about the CRTC, and I thought what on earth do I have to do with the CRTC.  So it was not a wasted education.

LISTNUM 1 \l 11818             Our company has been around for 30 years, and for 30 years I have been intertwined with the CRTC, and I have made many appearances here.  By and large, I have had a really good experience, as I watched the broadcast spectrum expand and grow and change.  I am not a person who is afraid of change.

LISTNUM 1 \l 11819             Because I am one of the older guys now in the room, I would like to remind the Commission how it used to be in the old days, like in the early eighties, you had two phone calls to make.  You could call the CBC and you could call the National Film Board, and if they weren't hiring, you could go back to bed for a year.  Things have gotten better.

LISTNUM 1 \l 11820             I came here in support of the original licences for the Alliance family initially for Discovery Channel.  As a result of the growth in the broadcast spectrum, we were able to build an interesting, viable, healthy company.  We ended up making hundreds of hours of programming in history, in science, in drama series, in movies.  We did over 90 episodes of Da Vinci's Inquest and Da Vinci's City Hall.  We did 54 hours for Global Television, a show called Blue Murder, a mystery series.  I have done movies on Milgard, on Sue Rodriques, on Shaina Twain.  We are about to release a film on Céline Dion.

LISTNUM 1 \l 11821             Some of the programming I am most proud of is programming that we did for the History Channel.  A series called Turning Points of History, which enabled us to do an anthology series that enabled us to do great Canadian historical events by some of the best film makers in this country.

LISTNUM 1 \l 11822             so, what do I think about this transaction?  First, I have to tell you that I am filled with a little bit of regret.  I am filled with regret because the Alliance Atlantis folk did a hell of a good job with the networks.  They fostered creativity, innovation.  They supported us with dollars.  There were no hassles.  They made the right choices.

LISTNUM 1 \l 11823             There was a tremendous pressure, for instance, to make the History Channel a war channel, and they resisted that.  They always put more than was merited in terms of what they were getting back, and I know there was internal bookkeeping to make things same, but they did a good job.  Of course now they hand over a legacy that I would like to see protected.

LISTNUM 1 \l 11824             We do many history programs.  We just won the Donald Brittain Gemini for a show called Fatherland.  We did a feature documentary, which was a precursor to our feature film Shake Hands With The Devil called The Last Just Man for the History Channel.

LISTNUM 1 \l 11825             Unusually the History Channel people said, you know what, one hour is not enough time to give to Romeo Dallaire; the General deserves more time.  It's unprecedented when a network not only asks you to expand a program, but they put the money behind it, and they did.

LISTNUM 1 \l 11826             But change happens.  You know, I had a tremendous allegiance to the original Discovery family led by Trina McQueen.  When it went to CTV, my heart was in my throat.  It was going into a much larger corporation.  Since then, we have gone on to do hundreds of hours for the Discovery programs.

LISTNUM 1 \l 11827             So, in the end, I have to conclude that change is challenging, it is inevitable, and positive.

LISTNUM 1 \l 11828             Let me talk a little bit about CanWest.  They are no strangers to me.  Probably over a decade ago ‑‑ well, I don't know if I should mention this ‑‑ the first person I met that was related to CanWest was David Asper because he happened to be the lawyer for David Milgard.  So I had this inadvertent entry into the Asper domain, which I enjoyed very much.

LISTNUM 1 \l 11829             But then we developed a series, a mystery series which was immensely successful, the Blue Murder series, and like John said, we sold into 52 different countries.

LISTNUM 1 \l 11830             I know there were some tough times, and I know that some people were unhappy that there wasn't enough Canadian programming, but in the past couple of years at CanWest, all that has changed.  They are a major source of documentary film making.  They support Canadian programs.  Falcon Beach was one of them.

LISTNUM 1 \l 11831             I want to take a minute and talk about a program that completely took me by surprise.  They ordered a show from us called Da Kink in my Hair.  It is a show that was adopted from a stage play, a fringe festival play.  It is about a black hairdressing salon.  They came to me to produce this show.  I want to point out to the Commissioners, this was done on real money.  CanWest at this point is disadvantaged in terms of the CTF envelopes, and they reached into their pockets to make the show happen, because they believed in it.

LISTNUM 1 \l 11832             Let me just say, in the course of doing this show, in the course of trying to put shows on diversity that involved diversity together, and I have been doing this for very many years, this is the first broadcaster that has stepped up to the plate on principle, with money, with patience, with support, with advertising, to make it a success.

LISTNUM 1 \l 11833             Indeed, it has been very, very successful.  The measure of their support for this show can be seen in the Eaton's Centre, where there's a full electronic billboard singing its praises.

LISTNUM 1 \l 11834             There is another little ‑‑ and I will try to hurry up ‑‑ advantage to CanWest Global/Alliance Atlantis.  Mergers are really, really tough.  You bring together two different cultures.  Barbara Williams, Christine Shipton have a wealth of understanding and experience of the Alliance Atlantis Broadcast Group.  I have known both of them for over a decade.  I know the extent to which they are committed to making things happen.  I know that their track record, their understanding puts them in a great position to do something that is complimentary rather than detracting.

LISTNUM 1 \l 11835             I have had many conversations with them.  I expect that the CanWest team will not be minimizing, will not be taking away from, but will be adding to the immense success that Showcase, that Splice, that History, that Food have become.

LISTNUM 1 \l 11836             I just have two other observations.  I want to talk a little bit about the benefits package.  I think it is great

LISTNUM 1 \l 11837             THE REGISTRAR:  I am sorry, but you have about 30 seconds left.

LISTNUM 1 \l 11838             MR. BARNA:  I just want to point out, I am 59 years old, so this ten‑year business is way too long.  It should be really five years actually, but if you let them get away with seven, that would be good.

LISTNUM 1 \l 11839             What else do I say in 30 seconds?  I want to say I want to take a chance with them.  All companies are under tremendous pressure from their shareholders, and CanWest is no different, but I think the company has the integrity, they have the vision, and that is why I am standing in support of their application.

LISTNUM 1 \l 11840             Thank you.

LISTNUM 1 \l 11841             THE CHAIRPERSON:  Thank you very much for your interventions.

LISTNUM 1 \l 11842             I just have one question, Mr. Brunton.  You spoke about the soaring loonie.  I do not quite understand what is the implication there?

LISTNUM 1 \l 11843             MR. BRUNTON:  The only point I was making is that in regard to runaway production, that fuels a huge sector of the production community in Ontario and certainly in B.C., and to some extent also in Halifax and Montreal, that the advantage of producing runaway shows in Canada is diminishing quickly and, at the same time, the appetite for co‑ventures with American broadcasters is increasing.

LISTNUM 1 \l 11844             So, I am just saying that the opportunity to make some compromises from our ten out of ten position to some six out of ten productions I think is good timing because part of what we need to do is support our production community from coast to coast, and a lot of those people are going to be out of work pretty soon with the dollar, if it remains at this level.

LISTNUM 1 \l 11845             THE CHAIRPERSON:  Thank you.

LISTNUM 1 \l 11846             Commissioner Katz, you had a question.

LISTNUM 1 \l 11847             COMMISSIONER KATZ:  Thank you, Mr. Chairman.

LISTNUM 1 \l 11848             I have a question for all of you actually.

LISTNUM 1 \l 11849             We have heard a lot about the nature and the source of the financing of this transaction.  I guess I want to ask each one of you whether you believe the nature and the source of financing for this transaction will have any influence or impact on the production of Canadian programming in Canada?

LISTNUM 1 \l 11850             MR. BARNA:  Whenever you go borrow money from anybody, there is tremendous impact.  Whether, as the Chairman pointed out, it is the Royal Bank or whether it is Goldman Sachs, there is certainly cause to worry.

LISTNUM 1 \l 11851             I would say that all of our colleagues share the concern that there is a pressure on all of the companies, CTV included, to make the bottom line.  If you were to ask me am I worried that Goldman Sachs, in particular, is going to be in charge of the programming?  No.  But if you were to ask me is there a tremendous pressure to pay off the debt?  Yes.

LISTNUM 1 \l 11852             But I want to point out that we support this transaction.  We are just independents.  We are not powerful on one‑on‑one negotiations.  We are going to have to rely on the CRTC to put those safeguards in that we have become accustomed to.  We are not able to make those decisions in terms of how money is moved around in corporations.

LISTNUM 1 \l 11853             So, am I particularly concerned?  I am concerned in the same manner that any large corporation ‑‑ they are large.  Astral is large, Corus is large, CTV Globemedia, they are huge.  They are in debt, some of them.  Even if they are not, they have to meet their bottom line, and it tends to impact on the programming.

LISTNUM 1 \l 11854             MR. BRUNTON:  As Barna said, we have been accustomed for many years and certainly the timing of my career matching up with Telefilm, and we were in a period in our early careers where there were two phone calls to make.

LISTNUM 1 \l 11855             I guess we have become accustomed to, in many ways, the CRTC protecting us by the rules and regulations that they have put in place as it relates to quotas about Canadian content and all of those things.  So, regardless of where the debt exists, there is still a sense on my part, that whether it is Goldman Sachs or the Royal Bank, they are still going to have to rise up to the rules and regulations that you set forth for the Broadcast Act and so on and so forth.

LISTNUM 1 \l 11856             So, when you are in the tight squeeze and ad revenue starts to shrink and all those things, there is all sorts of mechanisms that people have to take into consideration when they run their business, and I don't know how dramatically that changes when there is very, very clear rules and regulations that are laid out as to what the responsibilities of Canadian broadcasters are as it relates to Canadian content and other aspects of our world.

LISTNUM 1 \l 11857             So, that is certainly something that I have considered.  It is a big world now.  It is a very competitive world.  As these companies get bigger and bigger and bigger, where are the sources of potential investment?  So, you know, in many ways we have put our businesses in your hands to protect us from these things, and you have very effectively over the course of my career, which spans almost 30 years.

LISTNUM 1 \l 11858             THE CHAIRPERSON:  Any other comments?  Mr. LaRose.

LISTNUM 1 \l 11859             MR. LaROSE:  Not more, except to say that most First Nations peoples probably would be in the position to say we are not familiar with borrowing because that is not something that was very open to us until recently.  But certainly as I mentioned earlier, and as my predecessors here have said, the scope of how business is being run now has changed tremendously.  A lot of our corporate sector is getting incredible investment from outside this country to generate their growth, generate their expansions.

LISTNUM 1 \l 11860             So, I think what we are seeing in the broadcast sector is no different than what we are seeing in the mineral sector, what we are seeing in the resources sector.  The role, then, comes back to you, the regulators to ensure that there is a balance between what the expectation of Goldman Sachs may be down the road, as well as what your role as regulators to ensure that the industry can do.  It will boil down to the policies and procedures that you all impose on this deal.

LISTNUM 1 \l 11861             THE CHAIRPERSON:  Thank you.

LISTNUM 1 \l 11862             Commissioner Arpin, did you have a question?

LISTNUM 1 \l 11863             COMMISSIONER ARPIN:  My question is directed to the three producers that we have here at the table.

LISTNUM 1 \l 11864             The current policy for benefits didn't always state that the money, the onscreen money has to go towards the acquired organization.  The way I am hearing your support intervention, it seems to me that you don't mind if it goes to Global rather than to the former Alliance Atlantis services.  Am I correct?

LISTNUM 1 \l 11865             MR. BRUNTON:  I certainly don't.  I really do think that in the development of a program, quite often a program can start on cable and get its sea legs and get its act together, get its writing team operating, get its cast operating properly.  Sometimes that takes a little bit of time.

LISTNUM 1 \l 11866             Then there is a point where something could break out and it can break out from cable and really become a successful conventional.

LISTNUM 1 \l 11867             I think the reverse can be the case as well.  I cited Falcon Beach, a drama series that we produced, and we really benefitted by having a second window.

LISTNUM 1 \l 11868             So, I think that there is a real possibility in this world, and we want and need as many platforms as possible, including broadband and including digital and all of these kinds of things.  So, the more platforms we can get for our content, the better.  I think that it is kind of gray, and from my perspective as a producer, I wouldn't necessarily take a prejudice over Global versus Alliance Atlantis.  There are advantages for shows to be launched on both channels, personally.

LISTNUM 1 \l 11869             MR. BARNA:  Some time ago I had an idea.  Of course, unless we get a reality show going called Trading Places, and you guys become independent producers, and we become commissioners ‑‑ not a bad idea!  Just six months.  Would that make Parliament to sign up?  Anyway...

LISTNUM 1 \l 11870             I thought all these benefits packages ‑‑

LISTNUM 1 \l 11871             COMMISSIONER ARPIN:  It will not be able to work for the following five years.

‑‑‑ Laughter / Rires

LISTNUM 1 \l 11872             MR. BARNA:  I gave thought to the notion that the benefits packages in general, not this benefit package, ought to go to the third party organization generally pooled under Telefilm or under the Canadian Television Fund.  By the way, to CanWest's credit they established a fund, I forget which transaction, it was out west, it was a $35 million promotion fund that was open to all broadcasters, and then CTV came in and CTV sort of nationalized their money and they used it internally.

LISTNUM 1 \l 11873             I think that opportunity has been lost.  If at some point in some future transaction we were to consider these moneys going to some third party administration to bolster the entire broadcasting system, that would be attractive.  Obviously it is not on the table here.

LISTNUM 1 \l 11874             I can't imagine a situation like ‑‑ I mean, what are we talking about, going to Alliance versus to CanWest.  I think it is going to be an integrated operation.  It just doesn't make any sense to me how it is, like, you know, it will sit on one side and it will be firewall protected.  It just will call for abuse of that fund.  So, I am quite happy with the way that the package, in that regard, has been put together.

LISTNUM 1 \l 11875             I just want to say, I know it is not part of the question, I am not crazy about the Canada focus ‑‑

LISTNUM 1 \l 11876             THE CHAIRPERSON:  Your time is up.  You can't slide one in the back door.

LISTNUM 1 \l 11877             COMMISSIONER ARPIN:  Mr. LaRose, out of the $136.9 million, they will allocate $2 million for aboriginal drama.  Over a seven‑year period, that is an average of plus or minus $300,000.  Is that sufficient to sustain aboriginal drama?

LISTNUM 1 \l 11878             MR. LaROSE:  The thrust behind it, when I raised it with CanWest, was that we would use that, and we are expecting them to also put something, to develop a drama series and then trigger both of our envelopes, either the aboriginal language envelope for us, or the CTF envelope for them.

LISTNUM 1 \l 11879             If we were to partner in that fashion, I believe that we can generate a drama series.

LISTNUM 1 \l 11880             COMMISSIONER ARPIN:  That $300,000 is incremental to your broadcast performance involved, both organizations?

LISTNUM 1 \l 11881             MR. LaROSE:  That is what I am hoping how it will work, yes.

LISTNUM 1 \l 11882             THE CHAIRPERSON:  Thank you very much for your presentation.

LISTNUM 1 \l 11883             I think we will take a ten‑minute break, Madam Roy.

LISTNUM 1 \l 11884             THE SECRETARY:  Thank you.

LISTNUM 1 \l 11885             We will be back at 10:20.

‑‑‑ Recessed at 1009 / Suspension à 1009

‑‑‑ Resumed at 1020 / Reprise à 1020

LISTNUM 1 \l 11886             THE CHAIRPERSON:  Madam Roy.

LISTNUM 1 \l 11887             THE SECRETARY:  We will now hear the presentation from the Canadian Film and Television Production Association.

LISTNUM 1 \l 11888             Please introduce yourself and your colleagues and you will then have ten minutes to make your presentation.

LISTNUM 1 \l 11889             Thank you.

INTERVENTION

LISTNUM 1 \l 11890             MR. MAYSON:  Thank you.

LISTNUM 1 \l 11891             Mr. Chair and members of the Commission, my name is Guy Mayson, and I am president and CEO of the Canadian Film and Television Production Association.

LISTNUM 1 \l 11892             With me today are four prominent Canadian producers and distinguished staff member.

LISTNUM 1 \l 11893             Sandra Cunningham to my immediate right, president of Strata Films in Toronto, is Chair of the CFTPA board.  She is a co‑producer of such Canadian features as The Statement, Being Julia, Where The Truth Lies, and, most recently, Fugitive Pieces, and the theatrical feature length documentary "27".

LISTNUM 1 \l 11894             Ira Levy, of Breakthrough Films & Television of Toronto is a past Chair of the CFTPA and co‑chair of our Broadcast Relations Committee.  Among the programs he has executive produced are Atomic Betty, The Adventures of Dudley The Dragon, Kenny Versus Spenny, and the documentary series Little Miracles and King and Country.

LISTNUM 1 \l 11895             Julia Keatley, president of Keatley Entertainment of Vancouver, is the co‑creator and executive producer of the drama series Cold Squad and Godivas.  Julia co‑chairs our Broadcast Relations Committee and is another past Chair of the association.

LISTNUM 1 \l 11896             Last but not least, Kevin Tierney, president of Park Ex Pictures in Montreal who is co‑chair of the CFTPA's Feature Film Committee.  Kevin produced and co‑wrote Canada's most successful Bon Cop Bad Cop.  His television productions have been nominated for 11 Emmies and 23 Geminis.

LISTNUM 1 \l 11897             Also with us today is Mr. John Barrack, the CFTPA's national executive vice‑president and counsel.

LISTNUM 1 \l 11898             The CFTPA represents almost 400 companies that create, finance, produce, distribute and market feature films, television programs and interactive content for new digital platforms.

LISTNUM 1 \l 11899             The producers on our panel is here to share with your their experiences in creating quality original Canadian television programs and films and to discuss the impact that approval of this transaction could have in how they and their colleagues do business.

LISTNUM 1 \l 11900             Sandra.

LISTNUM 1 \l 11901             MS CUNNINGHAM:  Thank you, Guy.

LISTNUM 1 \l 11902             Mr. Chair, Commissioners, the CFTPA's support of this application is conditional.

LISTNUM 1 \l 11903             First, the CRTC must be fully satisfied that effective ownership and control of the undertakings being acquired is, and will continue to be, in Canadian hands.  This is the first principle of Canada's broadcasting policy set out in the Act and is fundamental to ensuring Canadian broadcasting remains Canadian.  Without such assurance, you cannot approve this transaction.

LISTNUM 1 \l 11904             There was much debate surrounding this issue yesterday, and some further discussion today.  The Commission has been very vigilant in identifying the risks associated with the control provisions imposed on CanWest by Goldman Sachs, specifically limitations on increasing the debt, the requirement to maintain a high EBITDA, and ensuring that a minimum rate of return is achieved.

LISTNUM 1 \l 11905             Our remaining concerns are:

LISTNUM 1 \l 11906             That CanWest establish a Terms of Trade Agreement with the CFTPA on behalf of independent production companies;

LISTNUM 1 \l 11907             That CanWest maintain distinct programming executives and strategies for the AAC specialty services;

LISTNUM 1 \l 11908             And that it file a revised benefits package acceptable to the Commission.

LISTNUM 1 \l 11909             CanWest has provided virtually no information about its future plans for the Alliance Atlantis specialty services.  These include the Canadian success stories Showcase, History Television, the Independent Film Channel, Slice, HGTV and a host of other specialty services.

LISTNUM 1 \l 11910             The privilege of holding multiple licences for television services constitutes an enormous public trust.  Relative to its peers, CanWest's record of funding and presenting Canadian priority programming is woeful.  An analysis of Global's report to the CRTC detailing its independent production activities over the past five years indicates that its average licence fees constituted a meagre 9 percent of the total production budgets for independently produced priority programming.

LISTNUM 1 \l 11911             CanWest must contribute much more to the development, creation, scheduling and promotion of original Canadian programming in the genres of drama, documentary and feature film, the very kinds of programming that the Alliance Atlantis channels have championed since their inception.

LISTNUM 1 \l 11912             While the goal of trying to build Canadian hits is laudable, the synergies suggested by CanWest yesterday have the potential to turn the benefits for the specialty services effectively into a pilot program for CanWest conventional television networks.  At the same time, this raises the spectre of a reduction in shelf space for original Canadian programming on the conventional networks.

LISTNUM 1 \l 11913             Kevin.

LISTNUM 1 \l 11914             MR. TIERNEY:  Thank you.

LISTNUM 1 \l 11915             Theatrical feature films have long been recognized as being a powerful force in society.  They make important contributions to the cultural lives of Canadians.

LISTNUM 1 \l 11916             Last year the government, in response to the report of the Standing Committee on Canadian Heritage concerning a new feature film policy for the 21st Century, stated:

"Film is one of the most effective forms of cultural expression, and Canadians believe that it is important that Canadian films be available in movie theatres and on television in Canada."

LISTNUM 1 \l 11917             The English‑Canadian film industry faces huge challenges.  Our biggest challenge is securing financing to develop, produce and promote quality Canadian feature films.  Around the world, television broadcasters like the BBC and Channel 4 in the U.K., and Canal Plus in France, play a critical role in the financing, distribution and broadcasting of domestic theatrical films, but this is not the case in Canada.

LISTNUM 1 \l 11918             The lack of creative and financial cooperation between the theatrical and broadcast markets makes Canada a rather sad anomaly in the world, and represents a serious barrier to success for Canadian movies.

LISTNUM 1 \l 11919             You need only look at the tremendous box office success of a movie like "Trailer Park Boys", which first saw life as an original Showcase production, to understand the potential that flows when producers, distributors and broadcasters work collaboratively.

LISTNUM 1 \l 11920             In Quebec there is clear evidence that audience success increases exponentially when the various segments of the industry work together.  This is an important element not only for great box office success, but TV ratings as well.

LISTNUM 1 \l 11921             Without specific commitments by Canadian television broadcasters to provide support for this sector, we are deeply concerned that what is already a paltry contribution to Canadian theatrical features will continue to dwindle away until it is virtually non‑existent.  We implore you to take a more active role to address this.

LISTNUM 1 \l 11922             The CRTC granted Showcase and Independent Film Channel licences for very specific reasons that must not be forgotten.

LISTNUM 1 \l 11923             Thank you.

LISTNUM 1 \l 11924             Ira.

LISTNUM 1 \l 11925             MR. LEVY:  Thank you, Kevin.

LISTNUM 1 \l 11926             Our written intervention was quite clear on the CFTPA's views concerning the valuation of the transaction, and the amount of benefits that should be payable.  We stated that CanWest should offer a tangible benefits package valued at no less than $142.2 million, as opposed to the $136.9 million that was proposed.

LISTNUM 1 \l 11927             We were also blunt about our concerns with some of the benefit initiatives that were being proposed.

LISTNUM 1 \l 11928             We recommend that 28 percent of the benefits should be deemed inadmissible, as they are directed to supplementing in‑house programming initiatives pertaining to the Global Television stations.

LISTNUM 1 \l 11929             The news and public affairs and the star system initiatives proposed by CanWest are directed to its own conventional television assets rather than the AAC channels it is proposing to acquire.

LISTNUM 1 \l 11930             We recommend that you require CanWest to file a revised benefits package that redirects $34 million in expenditures to scripted drama and other priority programming, including theatrical feature films and documentaries, as well as new media content.

LISTNUM 1 \l 11931             Should you determine that the value of the regulated assets is worth more than the amount that CanWest has put forward, we ask that all additional benefits be allocated to these purposes.

LISTNUM 1 \l 11932             And we firmly believe that when benefits are self‑administered, the easiest way to ensure incrementality and transparency is to require that all of the programming benefits are allocated to unaffiliated, independently produced programming.

LISTNUM 1 \l 11933             We also recommended that the benefits be payable over no more than five years.  Our reason for this is that the business arrangement underlying this transaction culminates in 2011 or 2013.

LISTNUM 1 \l 11934             If CanWest is prepared to enter into a $1.4 billion transaction as a means of growing its business, it should be prepared to commit to greater expenditures to support the development, licensing and promotion of original Canadian programming.

LISTNUM 1 \l 11935             Julia.

LISTNUM 1 \l 11936             MS KEATLEY:  Thank you, Ira.

LISTNUM 1 \l 11937             We consider that the performance‑driven model of the CanWest‑Goldman Sachs arrangement will be a major factor in CanWest's programming strategy and spending over the next four years.  This is why we have asked you to pay careful attention to CanWest's Canadian and foreign programming expenditure ratios.  You must ensure that the proposed business arrangement does not provide an incentive to CanWest to decrease its Canadian programming expenditures.  You can do so by imposing expenditure requirements as Conditions of Licence at licence renewal.

LISTNUM 1 \l 11938             CanWest's reply to our intervention addressed a couple of specific concerns that we raised in our intervention.  CanWest claimed not to understand why it should be required to maintain separate programming executives with decision‑making power at the AAC specialty services, saying that:

"A decentralization of programming strategies would effectively obviate the possibility of a cohesive strategic direction."

LISTNUM 1 \l 11939             While at first blush this might sound attractive, it has the potential to become our worst nightmare.  Without separate programming management there will be fewer opportunities for independent producers, decision‑making power will become overly concentrated, and there will be a propensity to license fewer Canadian programs with the cost amortized over more broadcast outlets.

LISTNUM 1 \l 11940             Differentiated programming, separate decision‑making and program budgets are a means of ensuring program diversity and channel distinction.  This is why we keep emphasizing the importance of the creation of original Canadian programming.  It is also why we recommend that the Commission investigate the terms of any program supply agreements between CanWest and Goldman Sachs, which proposes to purchase AAC's catalogue of Canadian programming.

LISTNUM 1 \l 11941             CanWest has said that a greater scale would give them greater program buying power.  This greater buying power must be devoted to original Canadian production.  We want assurance that a steady supply of Canadian catalogue content will not divert funds from the creation of original Canadian programming.

LISTNUM 1 \l 11942             John.

LISTNUM 1 \l 11943             MR. BARRACK:  Thank you, Julia.

LISTNUM 1 \l 11944             Mr. Chairman and Members of the Panel, a transaction such as this gives rise to greater business and economic pressure to maximize return on investment.  This has consequences for the independent production sector in such areas as buying practices and the acquisition of program rights.

LISTNUM 1 \l 11945             Faced with the reality that both CanWest and Alliance Atlantis, independent of one another, have some of the most aggressive rights acquisition practices in our sector, safeguards and, specifically, terms of trade are vital to rebalancing the producer‑broadcaster relationship.

LISTNUM 1 \l 11946             CanWest's application talks specifically about improved promotional and viewing opportunities and an integrated approach to new and traditional media.  It talks about the development, exhibition and promotion of Canadian content across multiple genres, and an improved ability to access audiences on multiple regulated and unregulated viewing platforms.

LISTNUM 1 \l 11947             When coupled with CanWest's emphasis on achieving synergies as between its own and the AAC assets, the situation goes from bad to worse.

LISTNUM 1 \l 11948             Accordingly, we are asking you to impose the negotiation of substantive terms of trade between CanWest and the CFTPA as a condition of approval of this transaction.

LISTNUM 1 \l 11949             MR. MAYSON:  We ask the Commission to send a clear message to CanWest about the obligations it will be expected to fulfil in return for the privilege of being granted ownership of additional specialty television services.

LISTNUM 1 \l 11950             We want to see evidence that this particular broadcaster makes original Canadian programming its number one priority.

LISTNUM 1 \l 11951             To this end, we want to see appropriate incremental benefits dedicated to a distinct programming strategy for the Alliance Atlantis specialty channels in drama, feature film and documentary programming underpinned by terms of trade.

LISTNUM 1 \l 11952             Thank you for your attention today. We would be pleased to answer any questions.

LISTNUM 1 \l 11953             THE CHAIRPERSON:  Thank you for your presentation.

LISTNUM 1 \l 11954             First of all, about the terms of trade, as you know, the Commission has several times expressed its support for such an idea and has urged the industry to negotiate, and specifically put an expectation in the Rogers' approval that such a thing should be negotiated.

LISTNUM 1 \l 11955             So when I read here you saying, "We are asking you to impose the negotiation of substantive terms of trade between CanWest and CFTPA as a condition of approval of this transaction," what do you have in mind?

LISTNUM 1 \l 11956             Is what we did in Rogers good enough, or do you expect more, and, if so, what?

LISTNUM 1 \l 11957             MR. MAYSON:  I appreciate the comment, Mr. Chair.  I think what we are looking for here is a signal, because we are dealing with a group of very important specialty channels, that that would be included in the terms of trade discussions.

LISTNUM 1 \l 11958             I think we are looking for a signal that CanWest thinks that's a good idea.

LISTNUM 1 \l 11959             THE CHAIRPERSON:  I understand your emphasis on original Canadian production, and I understand your thinking that a simple way of ensuring incrementality is to suggest that everything has to be negotiated with independent producers on the benefits,  but I am somewhat perplexed by the idea of having separate programming for the specialty channels and the network.

LISTNUM 1 \l 11960             Presumably, some of the reasons for any merger are synergies and cost savings.  Another one, of course, is the cost benefit of ideas, of talent, et cetera.

LISTNUM 1 \l 11961             Just before you came up, Mr. Barna said:  If you tried to artificially separate them, it won't work.  They are going to use their creativity to spend the money where they want to.

LISTNUM 1 \l 11962             Words to that effect.  That's not exactly what he said.

LISTNUM 1 \l 11963             How do you see us imposing that, and why do you feel that would be effective?

LISTNUM 1 \l 11964             Because surely, in one corporation that is exactly what is going to happen, you will want to spend the money where you think it best and it will be spent in the CanWest empire, no question about it, because they have to spend the benefits.  But whether it is spent here or there, why do you feel that makes such a great difference?

LISTNUM 1 \l 11965             MR. MAYSON:  I think our big concern in all of this, in the whole consolidation world that we are living in, and we have always been very careful in terms of couching our comments on consolidation that we don't want to see a diminishment of opportunities.

LISTNUM 1 \l 11966             I think there is always a danger in a transaction such as this for ‑‑ while we understand the synergy arguments and we understand that there are efficiencies to be had, there is a huge concern in the production sector that that suddenly means fewer opportunities and that is our fundamental worry.

LISTNUM 1 \l 11967             That is why we think if you have a distinct programming strategy for a number of different specialty channels with distinct mandates you can address that directly.

LISTNUM 1 \l 11968             THE CHAIRPERSON:  Isn't that somewhat synthetic?  I mean do you really think that if we impose that and they do it you will have truly substantively different considerations being made by two programming committees within the same company?

LISTNUM 1 \l 11969             MR. MAYSON:  I would only say that I think you can guarantee that by ensuring that there is a distinct programming strategy with distinct budgets and decision‑making.

LISTNUM 1 \l 11970             Do you want to jump in on that?

LISTNUM 1 \l 11971             MS CUNNINGHAM:  Yes, just one point from the feature film world.

LISTNUM 1 \l 11972             CanWest Global does not have a history of purchasing or pre‑buying feature films at all and yet both Showcase and the Independent Film Channel have had strong reputations of programming and that has something to do with why they existed but also with who was doing the programming and it is the knowledge of the people.

LISTNUM 1 \l 11973             I think CanWest ‑‑ I know it was pointed out on the previous panel by producers that Barb Williams and Christine Shipton have a knowledge of the world ‑‑ they are two people.  They don't necessarily control their budgets.  In our experience, more people with distinct tastes allows for more diverse voices to be heard.

LISTNUM 1 \l 11974             This came up at a previous hearing with the CTV hearings that we were at, and in fact in meetings that we had with them, they acknowledged when they were considering how they would approach the branding of the CHUM specialty channels that there was a need to have distinct programming voices.

LISTNUM 1 \l 11975             THE CHAIRPERSON:  That last point, that is exactly what ‑‑ if they think that is the way to grow their business, to have distinct programming for different channels, they will do it because it makes good sense.  But us imposing it, that was exactly the point I was hooking into.

LISTNUM 1 \l 11976             CTV testified, yes, they would do it and they justified it because they thought they thereby could broaden their reach.  I would hope CanWest does the same but my question was really ‑‑ I can understand what you want.  I just wonder whether it is going to be really workable and will have the desired result that you want, in effect, more doors to knock on.

LISTNUM 1 \l 11977             MR. TIERNEY:  I just think it would be a shame to see Showcase be turned into a farm team for Global.  I mean that is essentially what I gather from the application, is that this supposed synergy is really creating a triple A team, to use a baseball metaphor, and I don't think that that is necessarily a route that we would want to see it go.

LISTNUM 1 \l 11978             THE CHAIRPERSON:  Yes, I concur, obviously.  It would be a shame.  I also wonder whether it would be good business to do that.  I think it would surely lead to an audience loss.

LISTNUM 1 \l 11979             MR. TIERNEY:  I disagree.  I mean I think ‑‑ what is good business?  Good business is providing Canadian audiences with a diversity of programming and not homogenizing the whole system.

LISTNUM 1 \l 11980             So in this asset acquisition, I think it is important that they be reminded that the traditions, that the original licences granted to the Independent Film Channel, to Showcase, that there was thought and time and a certain kind of sensibility that was imposed on those licences and I don't think that they can just be simply eradicated in a transfer of assets.

LISTNUM 1 \l 11981             THE CHAIRPERSON:  Okay.

LISTNUM 1 \l 11982             MS KEATLEY:  Just to add to that.

LISTNUM 1 \l 11983             We do think that within a large broadcast universe there is an overall synergy and certainly the team that is in place with Barb and Christine is a great team and there will be an overall vision that will flow from that but the individual teams that run the channels ‑‑ and in fact both Barb and Christine came from the Alliance Atlantis world originally and know that extraordinarily well.

LISTNUM 1 \l 11984             So it is really looking at ‑‑ I think from our perspective in representing the whole independent production community, we don't want Showcase to suddenly become Global II.  I think it is really that kind of a rebroadcast network or something like that and it is not to our colleagues Mr. Barna and Mr. Brunton ‑‑

LISTNUM 1 \l 11985             We all want our shows to be seen on more or less, you know, by more Canadians, in more avenues, in different platforms.  I don't think anyone is ever talking about that.

LISTNUM 1 \l 11986             What we have always talked about is that we should also be paid for it.  It shouldn't always become part of this greater group, which is essentially, to a certain degree, where we have had fears where this has been going and it has been happening with other amalgamations of broadcast groups.