ARCHIVED - Transcript, Hearing 7 May 2013
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Volume 2, 7 May 2013
TRANSCRIPTION OF PROCEEDINGS BEFORE THE CANADIAN RADIO-TELEVISION AND TELECOMMUNICATIONS COMMISSION
Application by Astral Media Inc. for authority to change its effective control, and control of its licensed broadcasting subsidiaries, to BCE Inc.
Hôtel Gouverneur Place Dupuis
1415 Saint-Hubert Street
7 May 2013
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.
Canadian Radio-television and Telecommunications Commission
Application by Astral Media Inc. for authority to change its effective control, and control of its licensed broadcasting subsidiaries, to BCE Inc.
Romy Ochmann St-JeanLegal Counsel
Rachel MarleauHearing Manager
Hôtel Gouverneur Place Dupuis
1415 Saint-Hubert Street
7 May 2013
- iv -
TABLE OF CONTENTS
PAGE / PARA
1. PIAC/CAC/COSCO/NPSCF/OC390 / 2282
2. Rogers Communications Inc.442 / 2551
3. Suzie McNeil489 / 2827
4. The Quebec English-language Production Council498 / 2890
5. Performing Arts Lodges Vancouver534 / 3110
6. Alliance of Canadian Cinema, Television and Radio Artists546 / 3187
7. TELUS Communications Company564 / 3297
8. Alliance des producteurs francophones du Canada611 / 3590
9. Youth eMage Jeunesse Inc.624 / 3655
- v -
PAGE / PARA
Undertaking423 / 2447
Undertaking610 / 3584
--- Upon resuming on Tuesday, May 7, 2013 at 0902
2275 LE PRÉSIDENT : À l'ordre, s'il vous plaît.
2276 Donc, Madame la Secrétaire.
2277 LA SECRÉTAIRE : Merci. Bon matin.
2278 We will now proceed to Phase 2, in which interveners appear in the order set out in the agenda to present their intervention.
2279 For the record, the Commission has been advised that Blue Ant Inc. and Directors Guild of Canada, listed on the agenda, will not be appearing at the hearing.
2280 We will now start with the presentation by the Public Interest Advocacy Centre.
2281 Please introduce yourself and your colleagues and you have 10 minutes for your presentation. Thank you.
2282 MS LO: Thank you.
2283 Good morning, Mr. Chair, Mr. Vice Chair, Commissioners of the panel and CRTC staff. My name is Janet Lo and I am Legal Counsel with the Public Interest Advocacy Centre, or PIAC.
2284 On my left is John Lawford, Executive Director and General Counsel at PIAC.
2285 Today we are appearing before you on behalf of PIAC, the Consumers' Association of Canada, the Council of Senior Citizens' Organizations of British Columbia, the National Pensioners and Senior Citizens Federation, and Option consommateurs.
2286 With us is Dr. Dwayne Winseck, on my right, Professor at the School of Journalism and Communication at Carleton University and lead researcher in the Canadian Media Concentration Research Project.
2287 Bell and Astral claim that their proposal will result in only "very minor incremental changes" to market shares and that the main opposition to their application comes from their broadcasting distribution competitors.
2288 But we are here today, speaking on behalf of consumer and public interest groups, to oppose this second proposal for Bell to acquire Astral Media.
2289 And we note that other public interest groups on the written record of this proceeding, such as CIPPIC and OpenMedia.ca, also oppose the transaction.
2290 We do not believe that this proposed acquisition of Astral by Bell -- even with the proposed divestitures and safeguards -- is in the public interest and we urge the Commission to deny the application.
2291 Bell's version of the public interest envisions a bigger Bell that provides more Bell services and content to consumers on Bell platforms -- or on a competitor's platform, but at Bell's price and on Bell's terms. But we believe that Canadians and the public interest deserve better and that more is not always better.
2292 We believe that the public interest in reviewing a merger proposal, such as the one before us, lies in maintaining -- and where possible, enhancing -- a healthy diversity of voices and ensuring strong competition between players in the broadcasting system.
2293 In defining the public interest, the needs and expectations of Canadians as citizens and consumers must be key considerations. Our groups have appeared before you in previous proceedings emphasizing the need for more affordable access and more flexible choices for television services. In our view, the market is not meeting the consumer expectation for choice, flexibility and affordability, and this application does not promise to better meet these consumer needs either.
2294 The public interest test is a high standard -- as it should be -- and we do not believe that the proposed transaction meets this high bar. When the Commission denied the last proposal by Bell-Astral, the Commission considered the concerns related to competition, ownership concentration in television and radio, vertical integration and the exercise of market power to be "very substantial and fatal to the application." We believe the same concerns remain with the present application and they are substantial.
2295 This transaction reduces the diversity of voices in the private element of the Canadian broadcasting system by eliminating Astral, the largest remaining independent broadcaster. The transaction also further concentrates an already heavily concentrated market by increasing Bell's size and earmarking divestitures for another large vertically integrated player.
2296 Moreover, this transaction prevents effective competition from delivering the affordable choice and flexibility that Canadians deserve -- the same choice and flexibility that the Commission in 2011 expected vertically integrated entities to make significant strides towards.
2297 Even though the incremental viewing and revenue shares of the proposed Bell-Astral arguably fall within the thresholds outlined by the Commission's Diversity of Voices policy, Bell's already significant position and the level of concentration in the broadcasting industry raise significant policy concerns that require further scrutiny by the Commission.
2298 Dr. Winseck will explain the results of his revenue analysis.
2299 DR. WINSECK: Good morning.
2300 Assessing media concentration is not an easy task. It's also one that is full of controversy. To do so, researchers in the International Media Concentration Research Project have adopted a standard method and use revenue as our base because it makes comparisons across media, time and with the rest of the world easier and more reliable.
2301 My analysis examines four broadcasting submarkets: radio, conventional television, pay and specialty television, and total television. I do so for English- and French-language markets and for Canada as a whole. I also examine the evolution of revenue shares in these markets over time.
2302 The data shows that the impact of the proposed Bell-Astral merger will be most significant in the following five areas:
2303 - the national radio market;
2304 - the English-language radio market;
2305 - the national pay and specialty television market;
2306 - the English-language pay and specialty television market; and
2307 - in particular, the French-language pay and specialty television market, where Bell's market share would rise from 27 percent to 59.2 percent following the acquisition of Astral.
2308 The concentration ratio of the top four firms and HHI scores in any market are also very important metrics to assess the cumulative market share of firms in each market and to evaluate media concentration trends over time.
2309 Based on 2012 revenue data, the CR4 and HHI scores in all broadcast product markets show a highly concentrated tight oligopoly, with a few qualifications for radio. The proposed Bell-Astral transaction will result in a significant increase in the CR4 and HHI scores, especially in pay and specialty television in the English-language, French-language and the Canadian market as a whole.
2310 Lastly, media concentration researchers also study concentration trends for the broader "network media ecology" which accounts for all telecom, media and Internet holdings under common ownership.
2311 Seen in this light, Canada already has the highest cross-media ownership concentration levels amongst the 28 countries studied by the International Media Concentration Research Project, a ranking that will only be solidified if this deal goes through. Bell-Astral's revenue share in the French-language market according to the network media ecology measure would also be 40 percent, nearly double that of its nearest competitor, Québecor, which is at 20.9 percent.
2312 MS LO: The ownership concentration that Dr. Winseck describes is the exact opposite of the competitive market that Canadians deserve. Concentrated broadcasting markets in the hands of a tight oligopoly of vertically integrated players are not in the public interest, especially as these players do not typically pass on efficiencies to Canadian consumers.
2313 Moreover, vertical integration has not produced more vigorous competition, either through pricing or packaging innovations, in the retail distribution market. These large players continue to increase prices in the retail market, and competitive intensity is dampened by the bundling of television services with other communications services.
2315 M. LAWFORD : Bonjour.
2316 Bell a fait valoir que « le marché francophone tirera parti d'une concurrence qui se fait attendre depuis trop longtemps. » Cependant, cette concurrence a un coût immense, soit l'élimination du plus grand radiodiffuseur indépendant restant -- Astral. Nous continuons d'être sceptiques face aux promesses selon lesquelles l'intégration verticale apportera plus de concurrence au Québec.
2317 Grâce à cette transaction, Bell fera l'acquisition de la part importante qu'Astral détient dans les services de télévision payante et de télévision spécialisée, un marché dans lequel Québecor a peu d'actifs (seulement 19,3 pour cent du marché). Après cet achat, Bell contrôlera 59,2 pour cent du chiffre d'affaires. Ce niveau de contrôle par Bell ne sera pas bénéfique pour les consommateurs.
2318 While we are pleased to see an appropriate contribution to the tangible benefits package for the Canadian Broadcasting Participation Fund, we oppose the funds set aside for the "consumer education" component of the benefits package. In our view, these funds would likely be channelled to create descriptive products rather than to truly address consumer concerns about choice and affordability.
2319 Thus, we suggest that the Consumer Education component be rolled into the Broadcasting Participation Fund and earmarked to fund consumer research to define what Canadians need to achieve real empowerment as consumers and citizens in the broadcasting retail market.
2321 MS LO: Finally, we are not satisfied that the safeguards proposed by Bell and Astral will be sufficient to address the impact of a larger Bell in the Canadian broadcasting system. In our view, Bell's proposed conditions of licence will not guard against Bell's incentive and ability to act anti-competitively by requesting commercially unreasonable rates or imposing restrictive conditions that undermine a competitor's ability to offer better prices or innovative packages.
2322 We do not believe Bell and Astral have met their burden to propose workable safeguards; therefore their application should be denied.
2323 The Commission must properly safeguard and promote healthy, fair and vigorous competition in local retail markets that will benefit consumers. The trend of increasing BDU pricing, which has outpaced CPI, suggests that the current level of competition is insufficient to protect consumers. Moreover, the current level of concentration among a few vertically integrated entities has not translated into significant strides that ensure greater consumer choice and flexibility in television services. Allowing broadcasting markets to become even more concentrated with larger vertically integrated players like Bell is not in the public interest and, thus, the proposed application should be denied.
2324 Thank you for the opportunity to present this morning. We would be pleased to answer any questions.
2325 THE CHAIRPERSON: Well, thank you very much for your presentation.
2326 Before I start asking questions, I was wondering, because I have read your written intervention carefully and I was wondering if there was anything that you heard yesterday that would bring you to modify or nuance your original written presentation
2327 MS LO: No.
2328 THE CHAIRPERSON: Okay. That's clear.
2329 I will start off with Dr. Winseck.
2330 And thank you for the study. Too few people -- and I thank PIAC as well and the Coalition you represent for adding that kind of evidence to our file. It's very useful.
2331 Dr. Winseck, I was wondering if there was anything in your professional view about the specificity of the Canadian marketplace that would explain, other than regulatory authorities that have recurred over time, but the specificity of our country and its reality that would lead us to be higher than otherwise?
2332 I'm thinking here about issues around a rather large land mass, our proximity to a very prolific exporter of cultural content and our proximity to that, and the fact that we have two important linguistic groups to be served, two linguistic markets, plus a multiplicity of multicultural and ethnocultural diversity in our system.
2333 So I was wondering if that might be part of the driver here.
2334 Use your microphone, please.
2335 DR. WINSECK: Okay. Excuse me.
2336 MS LO: It's still not on.
2337 DR. WINSECK: Let me get this technology in order here. There, it seems like we have --
2338 THE CHAIRPERSON: Oh, don't worry. We did two weeks of hearings and people that are in broadcasting would forget to turn on their microphones.
2339 DR. WINSECK: Of course one of the things with this international media concentration research project is both to adopt a standard measure, but also not to use it as a sledgehammer so you iron out all the differences between countries. So obviously there are significant differences in Canada, the language, geography, small size next to the U.S., of course these are very significant ones.
2340 I would counter that or add two points to that.
2341 My first would be, Canada actually has a surprisingly large media economy relative to the rest of the world, all right, so ninth largest in the world, it puts us in the same range as countries like South Korea, Spain, not massive countries, but countries that have done okay on the international market and carved out their own special spots, especially Korea these days.
2342 The second thing I would look at is, instead of looking across space I would look across time and when we look across time what we see actually is that in Canada we have had moments where competition is much more robust than it is now. I would say that we are -- actually the problem that I'm seeing is that we are coming out of one of those periods where competition seemed to have been getting a bit of a grip -- I mean the trends are a little hard to describe just in this context, but my point being, basically we have seen increasing competition and that has now taken a U-turn. We are seeing it in radio, there has been a kind of a steady downward decline, all right, so looking across time.
2343 THE CHAIRPERSON: Well, you mentioned population differences, could it not be argued that we have managed to have as much strength in the communication sector and diversity of voice, notwithstanding the large mass, the very fractioned linguistic markets and regional markets as well, and a relatively small population compared to some of the other jurisdictions you mentioned, precisely because we have allowed more consolidation to cross-finance, in a sense, to get that result. In other words, it may have been the price to pay to achieve other public policy objectives.
2344 DR. WINSECK: Yes. Again, I think these are very real considerations, so I wouldn't ignore them, but one of the things about the measure I use, the HHI, is it catches the number of players within an industry sector and when you use the method that I do that builds up across sectors you can see that on that measure there have been times when we have seen more players, a lot more players than we see now, and it's that shrinking and the disappearance of players that I think is a worrisome trend.
2345 So we have had, throughout the recent decade -- I'm not talking about some golden age in the distant past, I'm talking in the recent decade up until 2088-1009 where the number of players was increasing substantially and it was showing up in the HHI score by lowering it, all right. That's a measure, that's a reflection of the underlying heterogeneity, if you will, of the market competition.
2346 THE CHAIRPERSON: I don't know if you have the chart you have on page 53, it's Chart 21 I believe, it's "Cross Media Ownership/Vertical Integration Ratios, Canada in a Global Context".
2347 DR. WINSECK: Yes.
2348 THE CHAIRPERSON: If I read correctly this bar chart, it seems to me that if one looks at it we are seeing perhaps a trend across jurisdiction, perhaps at a different level, but it seems to me that there are in 2008/09 columns -- I'm referring to countries other than Canada because those are the only two where we have data -- you have more data on the Canadian chart -- but there seems to be an increase in most of those jurisdictions, or many of those jurisdictions, of higher levels of concentration.
2349 Am I reading that correctly or not?
2350 DR. WINSECK: I read the evidence as being a little bit more mixed and then I read this in conjunction with the broader literature. So the broader literature suggests a decline, but this right here, I would have to check on what the averages are. I can check. There is an underlying average available and I could check that for you to see what the general trajectory is there.
2351 THE CHAIRPERSON: But if I bring you more specifically to jurisdictions that are more like us, western democratic economies, and less so emerging economies like Finland, Sweden, Australia, the U.K., the United States, wouldn't you agree with me that -- the Netherlands -- that the tendency is to the rise rather than to decrease? France, same thing?
2352 DR. WINSECK: Yes. So I'm looking at Finland, Sweden, Australia, United States --
2353 THE CHAIRPERSON: The U.K. --
2354 DR. WINSECK: Yes.
2355 THE CHAIRPERSON: -- France.
2356 DR. WINSECK: Yes.
2357 THE CHAIRPERSON: I mean these are countries we generally compare ourselves to --
2358 DR. WINSECK: Yes.
2359 THE CHAIRPERSON: -- in all kinds of international comparisons.
2360 DR. WINSECK: Yes, agreed. Relevant comparables.
2361 So my answer would be there -- I mean if we start out at France I mean we are at the opposite end of the scale so it's a large increase from a small base. And then moving back over to get to the cluster down at the other end where vertical integration levels are higher, I would say that the U.S., it's a very modest increase; United Kingdom more significant, again still lower than Canada.
2362 The point being, all these are lower than Canada, the increases. I would have to look a little -- I'm looking, just a quick scan, though, suggests that the increases tend to be lower except for Finland, Spain, United Kingdom are seeing similar increase. That's what I'm reading out of a quick scan kind of on the precise ones.
2363 THE CHAIRPERSON: Right.
2364 In the context of this global study, are people concluding, apart from regulatory reasons or regulatory permission -- I don't think it's a regulatory requirements, which is a different thing -- this tendency seems to be hand-in-glove, isn't it, to greater consolidation and convergence of -- not consolidation, convergence of technologies that make this sort of a strategy a business strategy in a digital environment; is it not?
2365 DR. WINSECK: I think that the dominance of that kind of thinking is waning. I think that kind of thinking no longer has a -- is no longer the dominant view and I think at the very least we can say that is now much more open for contestation with the past decade a few years behind us. In fact, many people now are writing about deconvergence.
2366 THE CHAIRPERSON: Right.
2367 DR. WINSECK: Okay? And there are many ways of bringing together these various areas that obviously do function together well, network infrastructure and devices and content and the digitization, and so forth. That doesn't mean they have to be under common ownership.
2368 What we have learned in a lot of examples, whether it's AOL, Time Warner, AT&T, the old AT&T that, you know, blew itself up, Vivendi, Bell CTV1, you know, convergence isn't a recipe for success. So there is new literature on deconvergence. A scholar in our field has just wrote a major study called "Deconvergence" and I would recommend it as a kind of compendium of most recent thinking.
2369 THE CHAIRPERSON: Right. And no doubt some of the business reasons why TELUS and other distributors in Canada decided not to own programming services, but the fact remains, isn't that largely a question of a business strategy? It may be the correct one or the wrong one, but should we be the second guessers of a business strategy as opposed to looking at it from a regulatory perspective and reaching the public interest objectives?
2370 In other words, we shouldn't re-question whether somebody -- it may be your view, I don't know if it is -- that a converged strategy doesn't make sense anymore, but the fact is that some people have chosen that route, and we should be agnostic in terms of that route, but try to make sure that the public interest is, nevertheless, achieved.
2371 DR. WINSECK: I am sure you have a difficult spot to weigh these competing things, but I also think that the Commission has an obligation to make sure that the entities that are running the media in this country aren't kind of blowing up their bottom line. If they are blowing up their bottom line, they can't serve the public interest very well, and I think we have seen enough of that in the past decade.
2372 THE CHAIRPERSON: So you think we should be concerned about second-guessing?
2373 DR. WINSECK: I think that financial viability has always been a standard that you have used, and I think a harder look at the financials of these companies, and whether or not they are built on sustainable models or some kind of speculative -- but I don't want to get into finances, that's --
2374 THE CHAIRPERSON: Right.
2375 Your study talks about the Herfindahl-Hirschman Index, which obviously everybody then calls the HHI index, for obvious pronunciation reasons, and then there is the CR4 index, the 4-firm concentration ratio index, and you point out that this is the approach that the Department of Justice in the United States uses to review certain transactions in that jurisdiction.
2376 In your view, is that model, as valid as it may be on its own, consistent with the framework that we have put in the Diversity of Voices Policy?
2377 And if it is consistent, how do you mesh them, because at first blush they seem to be quite different.
2378 DR. WINSECK: I think it's a method that is complementary to what you have in the DOV Policy.
2379 The DOV Policy, obviously, relies upon the single snapshot measure and thresholds. But you have the other policy considerations aspect there, and you have also shown yourselves able to encompass other things.
2380 So I think, yes, it works -- it can work well.
2381 MS LO: If I may, Mr. Chair, one thing we noticed when we looked into the history of the Diversity of Voices test was that the Diversity of Voices test was taken from -- when you looked at it, the Competition Bureau had contributed to that proceeding, and the Competition Bureau had suggested its banking thresholds, which look at, for example, the concentration of 4 firms in the banking sector, which is, I believe, where the 35 percent threshold came from.
2382 But the 4-firm threshold behind banking is at 65 percent, which is why we had asked Dr. Winseck to provide his views on CR4 specifically, and how it can help the Commission understand concentration in the industry.
2383 THE CHAIRPERSON: Right. But we should be concerned, shouldn't we, as regulators, to make sure that we don't change frameworks in midstream?
2384 It is true -- and we restated it in our October decision -- that policies are not, per se, binding. In fact, we would probably commit an error of law if we applied them in a binding way.
2385 But the general analytical framework, in fairness, should have some consistency, and I am concerned that the HHI and CR4 analyses may not be part of our framework.
2386 So I am trying to get your help to understand, if I were to apply them, how I wouldn't be offside.
2387 MS LO: We do think that they could fit within the framework as another policy consideration.
2388 In reading Decision 2012-574, the Commission said that it would consider multiple indicators of market power, and we do think that one indicator of market power is how concentrated a market is.
2389 So, if you look for metrics of how concentrated a market is, academics, and people who study that area, look at metrics such as CR4 and HHI to see how concentrated the market is, which tells you how many players are in that market and how they can exercise market power either independently or in concert.
2390 THE CHAIRPERSON: So, in your view, it is consistent with our framework.
2391 MS LO: That's right.
2392 THE CHAIRPERSON: Okay.
2393 At paragraph 51 of your written intervention, you refer to the fact that the Competition Bureau has reviewed this under the Competition Act, and you state: "The competition law may not be the most appropriate tool to ensure Diversity of Voices in the media market or to deal with social policy concerns raised by media concentration in particular."
2394 Could you expand on that, and what you mean exactly by our, I guess, additional role as the CRTC?
2395 MS LO: The merger reviews occur in parallel. You have your own jurisdiction to examine this particular proposal.
2396 In reading the Competition Act, we understand that their test is whether the merger "substantially lessens or prevents competition."
2397 So they have to look at not only whether competition is prevented, but whether it is prevented to a level that is substantial.
2398 Whereas we read your test as whether the transaction is in the public interest, which, in our view, gives you greater latitude to consider the broader policy objectives of the Broadcasting Act -- the social objectives, the economic objectives -- which, in our view, is a higher standard than that of the Competition Bureau.
2399 THE CHAIRPERSON: Is that a latitude or a duty?
2400 MS LO: I'm sorry, we believe that you do have a duty under the Broadcasting Act to make your decision in the public interest, in accordance with the social objectives and policy considerations.
2401 THE CHAIRPERSON: And some of those considerations that are not pure competition law considerations would be what, for instance, in your view?
2402 MS LO: The public interest principles that we think are important are, for example, whether Canadians will have access to content in a way that is affordable, in accordance with section 3(1)(t)(ii) of the Broadcasting Act, and whether those innovations will flow as per section 3(1)(t)(iii) of the Act.
2403 We believe that access and affordability are key, and we also think that you have an obligation to look at whether choice and flexibility in the marketplace are at the level that you would expect, consistent with the Broadcasting Act.
2404 THE CHAIRPERSON: Right. It is interesting that you raise issues of flexibility and choice, because I was going to ask you a question on precisely that.
2405 Particularly at paragraphs 70, 71 and 72 of your written presentation, you clearly say that you think -- and it would appear that it is similar to what we are hearing more broadly, both inside and outside of hearing rooms -- Canadians are expecting greater flexibility and choice.
2406 But I put it to you that refusing this transaction won't improve that situation. It may not assist in getting us further from that, but it doesn't actually, per se -- a denial -- get us closer to having more flexibility and choice.
2407 In other words, the status quo currently, with a denial, is still potentially, or arguably, a situation of not ideal flexibility and choice for Canadian subscribers.
2408 MS LO: In our view, this transaction could worsen flexibility and choice, by delivering more market power, more assets, more concentration into the hands of a single player.
2409 And I note that a number of its competitors -- especially the independent competitors, I think, are who we are quite concerned about -- have expressed their concerns about their ability to innovate in the marketplace by providing that greater choice and flexibility that consumers are expecting.
2410 So we are very concerned that this transaction, if approved, will actually worsen the level of choice and flexibility in the marketplace, and that is the basis upon which we are asking you to deny it.
2411 THE CHAIRPERSON: Right. But the fact that it might make it worse -- what you are arguing might be worse -- we are not actually making it better, and perhaps another approach should be used to make the whole system better, as opposed to what you are dealing with.
2412 It seems like a blunt tool to reach objectives, which I am not disputing. You are putting forward the thesis that Canadians want more flexibility and choice, but surely we have other tools at our disposition in the regulatory toolkit to achieve those ends.
2413 MS LO: We do agree, we do think that you have other regulatory tools in your kit to deal with this problem.
2414 We are quite concerned, however, that if you approve this transaction -- we have heard rumblings in the market of Bell, for example, asking for a broadcasting policy direction to give more credence to market forces, and we are concerned that it increases Bell's --
2415 Bell may not want those tools to be exercised elsewhere. So, if you were to approve this transaction, and we were to rely on other regulatory tools to get the choice and flexibility that we want, we are not sure that we would be successful in that.
2416 THE CHAIRPERSON: Right. You may have seen that in our three-year plan we are intending to start a conversation with Canadians on television, and presumably one of the outcomes of that could be a new framework.
2417 MS LO: We certainly hope that there will be. I understand that there may be separate processes to achieve the choice of flexibility that consumers expect.
2418 However, just based on Bell's track record, in terms of the way they are currently packaging in the market, and the level of flexibility they are offering their own consumers, I guess, hopefully, you won't blame me for not having a lot of hope that Bell will necessarily provide that increased choice of flexibility.
2419 THE CHAIRPERSON: You are like the Cardinal who appeared in our hearing last week, his faith was elsewhere.
2420 Let me bring you to the area of proposed safeguards. You probably heard the exchange that I had with the panel yesterday on the fact that you and others have mentioned that putting the Vertical Integration Code as a broad condition of licence could, arguably, not be sufficient.
2421 I believe that that's your thesis, as well, that one needs more specific guidelines. Of course, we will be receiving the results of an undertaking tomorrow morning on this issue. As I announced yesterday, although we don't know the details right now and we'll see what comes in, there might be some further process on that in which you'll be able to participate.
2422 The fact remains that you were concerned about it, but you didn't yourselves go very far in proposing specific conditions of licence that would achieve the results you're worried a general condition of licence would not achieve.
2423 Do you have anything to suggest?
2424 MS LO: We didn't draft conditions of license because that's not our burden to meet. But I appreciate the question.
2425 A condition of licence in our view that would be effective has to be absolutely clear about what type of behavior would be unreasonable or, in the Commission's view, offside. That was our primary concern, is because the condition or because the code of conduct is currently drafted as "shoulds" there is no certainty that would be accorded to when behavior would actually be offside. We are also concerned about what type of behaviour would actually be commercially unreasonable.
2426 So one of the conversations that we've been having is if Bell owns so many services, if they have so much market power that they in effect set the rates, how can you actually establish that that is reasonable if there is no frame of reference, for example, as to what is fair market value or a commercially reasonable rate?
2427 So we hope that whatever Bell comes back with; (a) gives us that certainty in terms of, if the Commission is to enforce it there are some -- there is some understanding for the entire market and the entire industry to understand what type of behavior is clearly offside, and then; (b) what would help guide the frame of reference of commercial reasonableness?
2428 THE CHAIRPERSON: The challenge that BCE and other vertically integrated companies might arise in that sort of a more prescriptive framework, and I want to hear your views on this, one of the variants they may put forward is that in a very new environment -- we're talking about digital technologies that didn't exist a decade ago, new business models that are arising -- that from a competitive position of Canada versus other jurisdiction and from a broader economic perspective there is a risk if you are too prescriptive in frameworks, one would argue, that one might prevent innovation from occurring.
2429 You know, I sometimes think that we should as regulatory bodies take on the rules of the medical profession and also make sure that we do no harm through our actions. There is an argument to say that by being too prescriptive we might actually do competitive harm to the Canadian digital economy.
2430 MS LO: I actually think that because Bell is fairly significant in terms of the size of the entity, it is really important to have prescriptive requirements because if you don't there is a -- there won't be innovation by where we tend to see innovation which is smaller players, emerging players in our digital economy.
2431 So I think it's very important for the entire industry to have very clear rules, because if you don't put clear conditions of licence on Bell, the risk will entirely fall on the innovators to try to innovate better business models and Bell will use its entire advantage to squash that innovation which I know we've seen in other areas as well.
2432 So I would say that very clear prescriptive conditions of licence are actually important to protect innovation which would flow through to consumers.
2433 THE CHAIRPERSON: How do you deal with what they may be arguing, saying that it limits their innovation? I take your point that others will be able to innovate but they may be caught in a -- in French we call it a carcan -- a straitjacket that prevents them from evolving.
2434 MS LO: It's a very interesting argument because I don't think from experience consumers have seen Bell leading the charge of innovation. Certainly, we don't see them being leaders in innovation for packaging flexibility. We don't see them necessarily being innovators on OTT.
2435 For example, back to the Telecom side when we had OTT emerge they used their internet service to squash that innovation by imposing -- then it was caps.
2436 So I guess I don't necessarily believe that their incentive to innovate will be impeded by strict conditions of licence. They certainly have the ability and the incentive hopefully to meet their consumers by innovating.
2437 THE CHAIRPERSON: Okay.
2438 No, it's okay? All right.
2439 Another safeguard dealt with paragraph 115 of your written presentation, your intervention. You make a reference to tied selling. I've re-read the paragraph a couple of times and I'm having difficulty with it.
2440 Well, I'm at a loss to understand why you think the tied selling provision doesn't go far enough to ensure choice flexibility and affordability. And, sorry, a sub-question would be how would you modify to achieve that?
2441 MS LO: I'll have to think a little bit more on the sub-question.
2442 But to explain the intent of what we're speaking about, we were concerned in reading the Competition Bureau's consent agreement as well as the proposed wording by Astral on tied selling and conditions of licence that the conditions are always -- I have the quote:
"Does not prevent or limit the right or ability of a licensee to offer broadcasting distribution undertakings, multi service or other discounts, promotions, rebates or similar programs similar to wording every day or similar programs"
2443 I believe that what this is angled towards is the ability for Bell to say that we have made a reasonable offer because we've given you a high penetration reasonable rate, a reasonable rate based on high penetration whereas a standalone rate where it's not tied to any other service that may or may not be commercially reasonable.
2444 So we believe that the wording of "allowing other discounts, promotions or rebates or similar programs" allows them to say, "We did give you a reasonable -- a commercially reasonable offer because there was a lower rate for high penetration" which, in effect, restricts the flexibility and the choice that consumers want. It doesn't actually impose on Bell a requirement to offer a reasonable rate for the standalone service.
2445 THE CHAIRPERSON: And how does one fix it?
2446 MS LO: I'm thinking off the top of my brain but I might want to take a little bit more time on it, is you could just strike the "ability to offer the discounts, promotions and rebates". But I could take more time to think about how we could propose wording, if you wish.
2447 THE CHAIRPERSON: I'd be happy to give you a little bit more time but before the reply phase, if that's okay?
2448 MS LO: Yes. We could come back tomorrow morning.
2449 THE CHAIRPERSON: Tomorrow, tomorrow morning, please. That would be good. So that's an undertaking.
2450 My final question -- well, group of questions. I don't know if it will be one or several -- deals with the consumer education benefit. And I fully appreciate your making these points in the alternative, because your principle argument is that we should deny and therefore there wouldn't be benefits. But you're arguing so should we -- were we to allow benefits because the transactions approve how'd we roll out.
2451 If we were to address your concerns, what would we precisely require of this beyond it being integrated into the Broadcasting Participation Fund? I take it your view is that it should be a separate stream?
2452 MR. LAWFORD: If I may, our concern with the present Broadcasting Participation Fund, although it may be a good place to house this money for this purpose, is that that fund actually has -- you know the purpose of funding these sorts of intervention like when we're here.
2453 So this money that Bell is proposing, the $2.7 million for consumer education would have to go into the part of that fund that was segregated so that although they might share the administration the purpose was different. And the purpose would be consumer research, we said, rather than just descriptive products and that it was housed in there and it was independently run and there would be no interference. That was our vision of where it should go and why.
2454 Yesterday was the first time I heard Bell, Mr. Bibic, say that that's the format it should be in. We're not opposed to that, but we are dismayed to hear that no advocacy aspects at all.
2455 Because the idea would be there would be consumer research done out of that fund. Whether it gets used later in advocacy or not is not -- you know, it's not -- we don't think it should come with these strings attached that it could only be descriptive products for people so that they won't have any idea of -- consumers won't be able to use that information to empower themselves in the market.
2456 So with that qualification, if the fund were to reside in BPF but be separately segregated and there would be no condition that the research that was done with that money was ever used in advocacy, then we would be supportive.
2457 THE CHAIRPERSON: Because I see in paragraph 90 what you're saying is "We caution..." and I'm quoting here again:
"We would caution the Commission to ensure that the benefit does not enchain broadcasting consumers but rather seeks to empower them."
2458 So maybe I'm asking what consideration should we apply if we were to reshape this benefit to achieve that end, setting aside governance, because I think that's almost a secondary issue where you put it and how. I'm thinking more about objectives.
2459 MR. LAWFORD: Yes. And I think we made it clear that in terms of empowerment consumers need knowledge. They need knowledge of the market. They need to know -- we need to do research on how consumers are interacting with that market.
2460 That information, that research is expensive, hard to do. Groups like ours don't have the money to do it without something like this.
2461 On that can be built then consumer empowerment tools. One of the things we suggested in our written remarks was a broadcasting cost calculator. Some folks, maybe Bell, might think that that's advocacy, but that's something that could be built out of a tool -- a tool that could be built out of the research that comes from this.
2462 THE CHAIRPERSON: But you're not suggesting just pure research?
2463 MR. LAWFORD: Well, that would --
2464 THE CHAIRPERSON: Surely, just research, if it's not to a purpose, might not achieve objectives.
2465 MR. LAWFORD: Well, the purpose that we are suggesting is consumer empowerment, by which we mean consumers can then be active participants in the broadcasting system, all aspects, cultural, but also in terms of getting better price and choice of the services that they subscribe to.
2466 MS LO: Mr. Chair, I think our primary concern was that if this fund is created it is because more media concentration is allowed in the market and we didn't think it would be useful to have purely consumer education products of you have two potential distributors in your market and here's where you go to sign up. We don't want descriptive products that are merely just telling consumers where they go to get television service for example.
2467 We do want to be able to come up with products or tools that actually help empower consumers, whether that's better understanding how they can exercise choice in the market and how, for example, maybe bundling works, things like that.
2468 But we were, I think, concerned in our conversations about it that that may be viewed by some companies as a form of advocacy.
2469 THE CHAIRPERSON: Right.
2470 Is there enough money involved to achieve that objective? In the sense that we know that Industry Canada a few years ago tried to do something similar in the cellular market. Markets, you know, when we think of our own personal markets where we live, we say, oh yeah, it's clear, but when you multiply that through all the diverse jurisdictions in the mix, you know, from Saskatoon to Edmonton and Moncton, I mean the multiplicity of offerings where the individuals live is quite astounding.
2471 MR. LAWFORD: But let's make a start and it's a good start, and once you have that ecology growing, because groups get involved, they start to research this area, academics look at it in Canada, it becomes self-propelling. So that money is definitely enough seed money to get this rolling.
2472 At the moment there is a dearth of this stuff. There is nothing in Canada going on with this area. Outside of what Dr. Winseck is doing, it's very, very difficult to find this information for consumers and there's very little, if you will, consumer empowerment ecology out there. So it would be a good start.
2473 THE CHAIRPERSON: Okay.
2474 Madame Lamarre.
2475 CONSEILLÈRE LAMARRE : Merci, Monsieur le Président.
2476 Ma question porte sur la télévision francophone.
2477 Au paragraphe 16 de votre présentation ce matin, vous faites remarquer que si on devait approuver la demande de transaction, Bell ferait l'acquisition de la part importante d'Astral dans les services de télévision payante et spécialisée, un marché dans lequel Québecor a peu d'actifs, seulement 19,3 pour cent du marché, et vous craignez que ça soit un niveau de contrôle qui ne soit pas bénéfique pour les consommateurs.
2478 Alors, je me permets de vous soumettre qu'on peut peut-être envisager la situation autrement. Si on approuvait la transaction, l'entité BCE-Astral, après la fusion, posséderait zéro pour cent du marché de télévision conventionnelle francophone, alors que Québecor y est le joueur dominant -- et je me permettrais même de dire Dominant, avec un « D » majuscule -- en télévision francophone.
2479 Qui plus est, Québecor a dans son portfolio de services spécialisés un service de sports, un service qui est jeune, on est d'accord, qui n'a pas encore fait sa marque dans le marché autant que RDS, mais tout de même, c'est là.
2480 Alors, pourquoi est-ce que la complémentarité des offres de services de programmation entre Québecor d'une part et l'entité BCE-Astral fusionnées d'autre part ne serait pas bénéfique à ce moment-là pour les consommateurs, d'autant plus que les deux entités offrent des services de distribution de radiodiffusion?
2481 M. LAWFORD : Donc, vous suggérez que les deux sont complémentaires, en fait, un peu?
2482 CONSEILLÈRE LAMARRE : Dans une certaine mesure, ils seront complémentaires, et pourquoi est-ce que ça, ça ne serait pas une situation qui serait bénéfique pour les consommateurs, d'autant que ce sont deux entreprises de distribution qui sont présentes dans le marché?
2483 M. LAWFORD : Bon, pour la première affaire, en éliminant un distributeur indépendant d'Astral, on ne voit pas comment ça va améliorer la situation au Québec.
2484 MS LO: I'm sorry, my French is not as good, so I will answer in English.
2485 Specialty services are quite valuable, in our view, and the level of control that Bell would have over, for example, Category A services, specialty services, is a concern for consumers and we think that will have real negative effects on the level of choice and flexibility that may be offered in the Quebec market.
2486 We've noted and our surveys have confirmed that consumers in Quebec currently enjoy a better level of flexibility and choice offered by their television service providers. They are allowed to pick and pay for services that they want to choose.
2487 If Bell controls more specialty services in Quebec, 62 percent of them, which in our view is a very high number for a single player to control, that does give Bell the ability to potentially change or diminish the level of flexibility and choice that is offered to consumers because they're able to do that at the wholesale level with conditions that are offered to their competitors.
2488 CONSEILLÈRE LAMARRE : Et vous ne pensez pas que la situation actuelle de Québecor dans le même marché, avec des services, dans une certaine proportion, différents, je le concède, vous ne pensez pas que ça, ça offrirait un équilibre dans le marché pour les consommateurs?
2489 MS LO: No. It may not show up as an effect immediately because Bell will move in, but we do think that in the long run, at least based on Bell's strategy in marketing the services it owns on the English side to English distributors, we believe that in the long run Quebec consumers may see as a result of this transaction less choice and less flexibility in the market and we have noted that those types of synergies in terms of better prices don't typically flow to consumers through vertical integration.
2490 CONSEILLÈRE LAMARRE : Je vous remercie.
2491 LE PRÉSIDENT : Madame Duncan en premier.
2492 COMMISSIONER DUNCAN: Thank you.
2493 I just have a quick question.
2494 It's clear your first position is you don't want us to approve the transaction. That's your position. But you talk about how the education fund could better suit the purpose that the transaction has proposed. So I'm going to safeguards now and you've undertaken for the Chairman to suggest wording for the COL that's being considered.
2495 What other safeguards do you feel that we should be putting in place that would give you more satisfaction?
2496 MS LO: That's a good question and we have thought about it.
2497 We believe that consumers need to see an effective and vigorous competition in the retail market, and if you approve this transaction, I don't think it will bolster consumer confidence in the level of vigorous competition that's in the retail market.
2498 And I'm not clear on whether it would be imposed as a safeguard to this transaction, but we do believe that a separate process is needed to ensure that there is competition in the market, and one thing that you may want to consider, for example, is BDU pricing and the choice and flexibility that we discussed earlier.
2499 In previous proceedings -- or in the vertical integration decision the Commission had suggested that they expect vertically integrated BDUs to make significant strides towards choice and flexibility. We're submitting that they haven't. And so in that decision you said that if you didn't see strides you would consider imposing obligations on the vertically integrated BDUs. So we would hope to see some obligations imposed on the BDUs.
2500 And we were quite surprised yesterday that when the Chairman put the question to BCE about prices that they said that prices probably would increase. They were not willing to make any commitments to consumers about those prices and I have noted in our submission that the prices have gone up at the hands of BCE twice in the last year, not just for its Fibe TV service but also for its Internet service and home phone.
2501 So I do think that there may be more obligations you need to put on the vertically integrated BDUs and I'm not sure if there is an ability for the Commission to impose obligations on Bell's BDU specifically in this proceeding but it may be something you want to consider, and as part of that process some information collection around the cost of basic service for television for consumers and whether it meets your objective of affordability under the Act.
2502 We floated the idea of wholesale rate regulation as well. If the specialty services in this country are owned in a very tight oligopoly that could potentially act in concert to keep those prices inflated, we wonder whether the Commission has a role to play in going back and regulating rates to ensure that competition is preserved at least at the wholesale level.
2503 And we did note, finally, functional and structural separation, which I understand that Bell has not proposed as part of this transaction, but we floated it merely as an idea that the Commission may want to consider. When these companies get too big, functional and structural separation, in our view, is not the best remedy but it can help safeguard some of the negative impacts of a transaction.
2504 COMMISSIONER DUNCAN: Such separation as that would probably come about as a follow-up hearing, a process down the road?
2505 MR. LAWFORD: Yes. I think that in our submission, Commissioner Duncan, we said that that's the last option after all of the other safeguards that you put in place are failing. There is market failure and abuse of -- price discrimination and abuses that are still happening despite the regulation being in place.
2506 So it is sometime down the road, yes, but it's worthy of at least gathering information so that were that necessary in the future you would have a record on which to consider it.
2507 COMMISSIONER DUNCAN: Thank you.
2508 Just on the prices increasing, you know, it's difficult to say prices should never increase, I mean prices increase on everything. That doesn't mean we have to accept that that's a given, but it's certainly what we see everywhere around us. Prices are always going up, I mean I can't -- so I just don't know.
2509 Because I think when you talk about prices going up you also at the same time have to consider reasons for the prices going up. I mean one can put more -- one aspect could be putting more money the bottom line, yes, but the other is developing new services, building new capacity. I mean just a price increase on its own I don't see as necessarily damning.
2510 I'm in Halifax, as I'm sure you know, and I think that their IPTV service is excellent, it's evolving, they are investing tons of money in Bell Aliant and I'm sure that would be the same in the Bell Vibe service.
2511 So I just don't to say on the face of it that a price increase for that is --
2512 MS LO: I understand your concerns.
2513 When we talk about price increases we look specifically at BCE's annual reports and its investor meetings and we note that when they tell their shareholders that they are increasing value to their shareholders, they are often saying that they are doing it because they are increasing revenues because they are locking in subscribers, they are bundling them into three services and they are increasing the subscription price for all three services. To me that's not competition, to me that's a competitor in the market who can price it at that level because they can price it at that level. That's not how competition is supposed to work and especially not how competition is supposed to work to benefit consumers.
2514 So I understand what you're saying and I do think that's how Bell tries to confuse prices are going up, prices everywhere are going up, but BDU prices are outpacing CPI, they are going up without any consideration of affordability, as we read affordability under the Broadcasting Act, and we also note that when the BDU's said they wanted vertical integration they said that one of the benefits of vertical integration would be synergies and efficiencies which would pass down to consumers through price savings and we haven't seen that.
2515 So if these are the promises they are making to the public, the public isn't seeing them deliver on the promises of better prices and I suppose that is really the message that we hope to leave you with today.
2516 COMMISSIONER DUNCAN: Okay. Thank you very much.
2517 Thank you, Mr. Chairman.
2518 THE CHAIRPERSON: Mr. Menzies, please.
2519 COMMISSIONER MENZIES: I just wanted to get your response on one thing.
2520 It's obviously a regulatory hearing and we are talking about the regulatory world and so your points are well taken, but in the real world don't consumers have more choice than they have ever had in history for content, and virtually all of the content that you can get from the major broadcasters, you can't go to their websites and you can watch for free? You can watch the news whenever you want and you can watch whoever's news whenever you want by going to their website.
2521 So I just want your response to that, because I mean we can't stop time and we can't freeze the world at a certain point and have the good points and the bad points, so I'm just trying to get how do we manage this regulated work in terms of the real world outside it and what your response is to competition in that sense?
2522 MS LO: It's an argument that is often raised, which is that there is more and more stuff online so isn't there more diversity.
2523 What we go back to is the importance of source diversity, which is what I believe that the Commission's diversity of voices test goes back to. So it's not just simply whether Canadians have access to a lot of different media, it's whether Canadians have access to a diversity of media that's owned by different corporate entities so that they could have different editorial opinions and benefit from access to those different editorial opinions.
2524 So that's sort of just to address the source diversity issue, but I also hear in your question you are wondering whether content is made online and whether that's ultimately better for consumers.
2525 COMMISSIONER MENZIES: Excuse me. Just to be more specific --
2526 MS LO: Sure.
2527 COMMISSIONER MENZIES: -- doesn't that provide competitive pressure in terms of pricing? If my cable bill gets too big, I just said "Enough" and I can still get information and content and that sort of stuff if it goes -- if my price point is $35 and it goes beyond $35, I say, "Fine, Netflix, OTA, Apple TV", whatever they want, and I go there.
2528 So there is an alternative for people to get information outside of the system. So doesn't that provide sufficient market force pressure to keep prices under control would be to question?
2529 MS LO: Well, if OTT was supposed to discipline prices, I'm afraid that we haven't seen prices come down for television services. So we are not seeing the BDUs necessarily responding to OTT and I have noted that previous Commission reports have suggested that OTT would be that price discipline, or it could be that price discipline and offer more choices in the market and we are still seeing BDU penetration at 89 percent, which suggests to me that Canadians do view a traditional BDU service, access to news probably, as an essential component of their connection to society.
2530 So I don't think that we can say that just because everything is online we don't need to worry about, you know, making sure that the regulated system is working.
2531 COMMISSIONER MENZIES: Thank you. I understand your position.
2532 LE PRÉSIDENT : Monsieur le Vice-président.
2533 CONSEILLER PENTEFOUNTAS: Merci, Monsieur le Président.
2534 Just put your ears on.
2535 Juste pour retourner sur la question sur le marché québécois, et ça fait suite à la réponse que vous avez donnée à ma collègue madame Lamarre, vous ne trouvez vraiment pas que l'ajout d'un autre joueur à force plus égale avec Québecor ne sera pas avantageux pour le consommateur, en fin de compte?
2536 COMMISSIONER PENTEFOUNTAS: And I say that because I'm trying to sort of follow your logic. You keep talking about how we need more competitive forces.
2537 Don't you believe that that would be advantageous to the Quebec consumer, to have that big player?
2538 MS LO: It puts a lot of faith in the ability of two players of equal size being able to -- or actually competing vigorously to serve the consumer. The problem is, when we have two players of equal size that's effectively a duopoly and does not necessarily drive benefits of competition, vigorous competition to consumers.
2539 COMMISSIONER PENTEFOUNTAS: As opposed to a monopoly that would be more advantageous to consumer?
2540 MR. LAWFORD: I don't believe that we think that the present market in Quebec is a monopoly now, you still have Astral, you still have Cogeco. So I don't believe that it's presently a monopoly.
2541 So what you are doing is you are definitely taking out an independent and you are definitely cementing in a duopoly structure with some minor players.
2542 So that is the consideration that we think doesn't often work for consumers and that's the concern we have I think.
2543 COMMISSIONER PENTEFOUNTAS: Thank you.
2544 Monsieur le Président...?
2545 THE CHAIRPERSON: Thank you very much. Those are our questions.
2546 But I will note that looking back at the hearing in September I'm happy and pleased to see the culture in the broadcasting industry has changed, because you are no longer testifying in an empty room.
2547 So thank you very much for being here.
2548 THE CHAIRPERSON: We will go to the next presenter, which is Rogers Communications.
2549 LE PRÉSIDENT : À l'ordre, s'il vous plaît.
2550 So please go ahead.
2551 MR. ENGELHART: Thank you, Chairman, Commissioners. My name is Ken Engelhart. With me today are, to my left Pam Dinsmore and beside Pam is Susan Wheeler, and to my right David Purdy.
2552 In October when the Commission denied Bell's first application to acquire Astral, it recognized that a combined company:
"... could threaten the availability of diverse programming for Canadians and endanger the ability of distribution undertakings to deliver programming at affordable rates and on reasonable terms on multiple platforms."
2553 The Commission went on to conclude that:
"... concerns related to competition, ownership concentration in television and radio, vertical integration and the exercise of market power are very substantial and fatal to the application."
2554 In our view, this second application raises the very same concerns in the English-language television market. The acquisition of Astral's premium pay television services will threaten diversity and endanger the ability of distributors to deliver programming to Canadians at affordable rates and on reasonable terms on multiple platforms.
2555 Prior to its first application, Bell Media refused even to offer us content from its specialty services for distribution on our VOD and online platforms.
2556 More recently, it has changed tactics. It has offered to provide multiplatform rights to specialty and conventional content as part of the TV Everywhere service.
2557 Contrary to Bell Media's suggestion, it is pricing that content at five to 10 times normal market rates, and well above what we currently pay other domestic and foreign suppliers.
2558 Bell Media used a similar approach for wireless content. It offered its BDU customers that content for a fee of $8 million, then it distributed it to its own Bell Mobile customers on an exclusive basis while it engaged in protracted negotiations with Rogers and TELUS and eventually offered it for a minimum guarantee of $3 million.
2559 In its evidence, Bell Media dismisses the suggestion that it has an incentive to withhold content from third-party distributors. Their evidence, however, including the study by David Reitman and Margaret Sanderson, is largely focused on the linear platform. While there may be little ability for Bell Media to withhold its linear content from large BDUs, the same is not true for its non-linear content. The cost of those non-linear rights is quite small and is dwarfed by the added revenues Bell receives from advantaging its own broadband, mobile and BDU subscriptions.
2560 Bell Media attempts to dismiss opposition to its proposed acquisition of Astral as coming from "a cluster of mostly large, very profitable" BDUs. However, these same BDUs are Bell Media's customers, each of whom has a direct relationship with Canadian viewers. If a broadcaster's customers are expressing concerns about its approach, that is strong evidence that the marketplace is no longer functioning as it should.
2562 MS DINSMORE: As Ken said, the offer we received from Bell Media for its TV Everywhere product will allow us to distribute its conventional and specialty content online and on mobile devices. But the fees Bell Media is demanding for accessing these multiplatform rights substantially exceed the rates we pay to other content suppliers.
2563 If we accept that offer, Bell Media will be rewarded with unreasonably high fees for its ancillary content. Our refusal, however, will mean that we face the prospect of not being able to offer our customers access to Bell Media's premium content and, as a result, we will be competing at a significant disadvantage against Bell TV and Bell Mobile on non-linear platforms. The company's approach to the market effectively undermines the ability of third-party distributors to serve their customers.
2564 This stands in stark contrast to the relationships we have developed with every other domestic and foreign broadcaster, including Astral, over the past decade. In almost every instance where we were launching a new service or proposing to offer content on a new platform, Astral provided its content to us on commercially reasonable terms. As a pure-play broadcaster Astral's motivation was clear and rational, it wanted to add value to its pay television services to protect and grow its linear business.
2565 Bell Media argues that it would approach the distribution of Astral's premium pay television content in the same way that Astral does today. We do not believe that.
2566 We have experience negotiating renewal agreements with services that were acquired by Bell Media. In each case, Bell Media sought to impose new, financially detrimental terms on us that would severely limit customer choice. We are concerned that in September 2015, when our current agreement with Astral expires, we will be denied the commercially reasonable rates and flexibility we currently have.
2567 Historically, we have been able to innovate by buying around Bell Media, building compelling content offerings including programming from Astral and other specialty broadcasters. TMN's movies and iconic series have been the cornerstone of new services, such as Rogers On Demand and Rogers Anyplace TV. If divestiture is not ordered, it will turn Astral from a partner to a competitor.
2569 MR. ENGELHART: We are concerned that Bell Media's strategies will only become more damaging if it is permitted to acquire Astral's English-language pay television services and that the Commission will not have the regulatory tools to address them in a timely manner.
2570 In saying this, we are not asking the Commission to review and vary the vertical integration framework or to renegotiate our carriage agreements, we are simply identifying the limits of that regulatory framework and asking you to recognize the negative impact Bell's approach to the market is having on consumers who are being denied the benefits of a properly functioning marketplace.
2571 We recognize that Bell Media has agreed to divest of a number of Astral's services. Most of those services, however, are joint ventures that would not significantly enhance Bell Media's ability to control content that attracts large audiences. It is Bell Media's proposed acquisition of TMN and TMN Encore that is the problem. These are premium services that hold the multiplatform rights to "must have" feature films and HBO series. They are the jewels in the Astral crown. We think it would be unwise to allow these services to be acquired by Bell Media.
2572 As the Chair has said, in this proceeding, the Commission's role is to determine whether this transaction is in the public interest. Weighing against this transaction, all of Bell Media's BDU customers are raising concerns about its position in the marketplace and the impact its approach is having on consumers. All of the millions of Canadians served by Bell's competitors will be denied timely and affordable access to cutting-edge products and services. This can only weaken the Canadian broadcasting system.
2573 Bell Media argues that it needs to own Astral to respond to the threat posed by Netflix and other over-the-top services. However, at the very high rates Bell Media wants to charge for TV Everywhere, only Bell's BDU, broadband and mobile businesses will be able to take advantage of it. That will mean that only Bell will be able to compete with Netflix and other unregulated content providers.
2574 As you are weighing the evidence in this proceeding, we urge you to decide in favour of more choice and innovation. We believe the public interest overwhelmingly favours divestiture of TMN and TMN Encore.
2575 Chairman, Commissioners we appreciate this opportunity to speak to you about the concerns raised by this transaction and look forward to answering any questions you may have.
2576 THE CHAIRPERSON: Thank you very much.
2577 Monsieur le Vice-président.
2578 COMMISSIONER PENTEFOUNTAS: Thank you.
2579 Good morning. It feels very groundhog day-esque. Some of the questions will probably be the same and some of the answers will probably be the same, but let's take a crack at it anyways.
2580 You know, Bell and Astral in its new proposal -- because Astral was presenting yesterday -- the market share went from 42 to 35 roughly. That is not sufficient, from what I understand. You would have accepted a higher market share had they divested of the pay TV services.
2581 Am I correct in making that assessment?
2582 MR. ENGELHART: I think that's fair.
2583 We said, last time and indeed the Commission said in its decision, the market share numbers -- the viewing share numbers are a guideline, the real issue is market power rather than market share.
2584 What you have is a vertically integrated distributor that already has the premium specialty content, the premium sports content, the premium conventional network, and now they are going to add to that the premium movie and pay network. So you have a lot of leverage in one vertically integrated carrier.
2585 COMMISSIONER PENTEFOUNTAS: Would you see similarities between a potential Bell Astral and a Shaw Corus?
2586 MR. ENGELHART: I will let David jump in, but let me go first.
2587 One of the differences between Corus is that the Shaw family, although they control it, has a very tiny ownership in terms of the total equity, so the people who run Corus more or less have a fiduciary duty to their minority shareholders. If they are trying to withhold content from other distributors in order to advantage Shaw and reduce their revenues, they are sort of in an awkward position as a company that has this huge, huge number of non-Shaw shareholders.
2588 So in theory one would expect Corus to behave in a more open fashion and that is what we see in the marketplace. They seem to be a more accommodating supplier.
2589 So I'm not prejudging any position that Rogers would take on increased ownership by Shaw or Corus, but that I think is a relevant consideration.
2590 COMMISSIONER PENTEFOUNTAS: I don't know if you want to chime in.
2591 MR. PURDY: Thank you, Mr. Vice-Chairman.
2592 Historically Corus has always been a willing participant on new platform innovation, even sometimes at the expense of the Shaw distribution business, so we have seen Corus time and time again give us access to their content in advance of Shaw being ready to have that same type of offering in the marketplace. So the empirical data would suggest that because of their minority shareholders they tend to be a little more open and freewheeling with the content and supporting their other distribution partners.
2593 I think the second distinction between a Shaw/Corus analogy would be they don't own sports.
2594 COMMISSIONER PENTEFOUNTAS: With the exception of the premium sports channel, they are similar in their holdings, in terms of their market share in terms of their --
2595 MR. PURDY: Well, neither Shaw nor Corus has an active sports offering in the marketplace and I know they are discussing launching a new channel.
2596 But I think what Ken alluded to earlier was a Bell/CTV has the number one broadcast network, the number one sports network, the number one specialty channel, and if they add TMN and the Movie Network to their stable, they would have the number one pay service in the marketplace.
2597 So it's a lot of dominance and market power for one group to have.
2598 COMMISSIONER PENTEFOUNTAS: I know you were in favour of the -- you presented a paper in favour of the Shaw Canwest Global acquisition. As a matter of fact I will just read a piece of that intervention.
"Shaw's acquisition of Canwest Global will allow it to become an even stronger integrated multiplatform communications company and will ensure a continuous, robust, sustainable competition in the national English-language television market in Canada."
2599 You continue to say that it will continue to contribute to the diversity of voices and perspectives in the system.
2600 And then you go on to say that the Commission has, on several occasions -- we are only back in 2010 here, by the way -- on numerous occasions in the past 15 years acknowledged the appropriate role of larger entities in the Canadian broadcasting system to ensure that they have the strength to support that system, and also enable them to counteract the influence of large U.S. programming conglomerates and to respond to competition from a series of unregulated new entrants.
2601 It applied to Shaw almost three years ago.
2602 I just want you to sort of expand on why it wouldn't apply, potentially, to a Bell-Astral -- documents signed by Phil Lind back in 2010.
2603 MR. ENGELHART: Sure. Look, we are not against vertical integration. We kind of invented it. So the idea that there are some synergies between content and distribution, we think, is fine, and we think that some added heft does help in dealing with some of the new platforms and over-the-top.
2604 We were also, of course, at a time, in 2010, where the over-the-air networks, Global and CTV, seemed to be daily screaming that they couldn't survive. So we thought that ownership by a vertically integrated company would help to stabilize them, and I believe it has.
2605 So it is really a matter of degree. Yes, some vertical integration is good. Yes, some heft is good. But there comes a point when -- you know, you have two things going on with Bell-Astral. If a standalone CTV that was not owned by Bell was buying Astral, you would go: Jeesh, that's a lot of consolidation. That's a big horizontal merger. Are we a little worried about that?
2606 And then you have, combined with that, the fact that Bell will own both, so you have all of those vertical integration concerns.
2607 So it really becomes a matter of degree. At some point you say: Because they are vertically integrated, they have the incentive to disadvantage their distribution competitors.
2608 And the Competition Bureau, in its decision, found that that incentive exists.
2609 And then you ask: Well, having got the incentive, do they have the ability.
2610 And, at a certain point, they do have that ability; at a smaller amount they don't have that ability.
2611 COMMISSIONER PENTEFOUNTAS: What has changed since 2010?
2612 You also talked about, in the document that we talked about, the OTT threat, so to speak. Is that no longer or less troublesome than it may have been in 2010?
2613 MR. PURDY: Thank you, Mr. Vice-Chairman. I think the primary difference that I see today, if we compare today to 2010, is that in 2010 digital rights, broadband, VOD and mobile rights were nice to haves, but they weren't must haves in terms of your product definition.
2614 Now, if you want to compete in the marketplace, you must have the multiplatform rights associated with the content.
2615 So we have kind of entered what I would characterize as a content cold war in the last 24 months, and it is really imperative that you have access to not just a linear signal, but broadband, VOD and mobile rights, the catch-up rights associated with that content.
2616 I think that is what has, maybe, raised the level of tension within the marketplace.
2617 The other big difference is that, certainly, over-the-top means that we are starting to see margin compression.
2618 I know, despite the testimony from this morning, that we are seeing an enormously competitive marketplace. Customers are being taken from cable to IPTV, and from IPTV to cable, and from satellite to cable. So there is a lot of competitive pressure in the marketplace, and that creates a real need to differentiate your product.
2619 I am being asked by my marketing and sales people: What can you get for me that the other guy doesn't have? Can you get me Blue Jays rights exclusive? Can you get me sports rights exclusive?
2620 The challenge that I think you see right now is that there is too much market consolidation on the broadcasting and specialty channel side, and if that content is not readily available on all platforms, I think that it will be an unfair advantage in the marketplace.
2621 COMMISSIONER PENTEFOUNTAS: And the safeguards -- when your marketing people ask for that, you respond: Sorry, I can't do that. The regulations are quite clear that everything has to be shared, and there are safeguards.
2622 You mentioned that you don't think that the safeguards are strong enough right now, and that there are no safeguards that can be imposed to remedy a failing in the market.
2623 MR. PURDY: I think the reality is that there are safeguards and there are remedies that we could avail ourselves of.
2624 COMMISSIONER PENTEFOUNTAS: Even on non-linear rights, right?
2625 MR. PURDY: There are, but it is a very cumbersome process and it takes a long time to go through.
2626 Whether it's Rogers or our competitor behaving badly, the reality is that you could enter the marketplace with an exclusive message, work the process, and achieve all the benefits of the campaign that you originally anticipated.
2627 You are only in market, typically, with a campaign for three months or six months.
2628 So the safeguards are there, and perhaps in the future we might avail ourselves of them, but I don't think they are a full remedy, and they certainly don't replace a well-functioning marketplace.
2629 Our belief is that a greater than 35 percent share of household tuning, especially when those assets are punching above their weight class, to use a sports analogy --
2630 COMMISSIONER PENTEFOUNTAS: In revenue.
2631 MR. PURDY: In revenue and in terms of the leverage that they create in the marketplace, both with advertisers and customers.
2632 We think that is problematic.
2633 And we are not asking for a divestiture of non-Astral assets, we are just saying that enough is enough, and Bell does not need to, nor should they acquire The Movie Network and --
2634 COMMISSIONER PENTEFOUNTAS: I understand. We will get to that, but speak to me about potential new safeguards that could be put in place -- head start, standstill --
2635 MR. ENGELHART: Sure. I don't want to minimize that the Commission has put safeguards in place, and I think that the vertical integration framework is pretty good. I think it serves a useful purpose, so don't get us wrong that we don't think safeguards have not been helpful.
2636 In fact, I think that the linear marketplace is working pretty well. You don't have complaints of "I can't get this content".
2637 The complaints are: Don't have enough packaging flexibility on linear, and don't have enough access to the multiplatform rights.
2638 COMMISSIONER PENTEFOUNTAS: But, Mr. Engelhart, you are a highly sophisticated, integrated, well-structure, intelligent company. You negotiate with other players in the Canadian industry. One would think that you would be able to come to terms.
2639 George Cope spoke yesterday about X number of billions of dollars, or hundreds of millions of dollars with one player, a certain amount with another player. You recently inked a deal where you are putting up close to $1 billion each, all things considered, at the end of the day.
2640 There is a give and take. Competition works that way, and negotiations work that way.
2641 MR. ENGELHART: You heard Mr. Crull yesterday describe the process by which they dealt with the CTV multiplatform rights. He said: When we acquired them -- whenever it was, three years ago -- we didn't make them available because we hadn't worked out the model.
2642 That's really what we are saying. Until Bell has worked out the model, you don't get the rights.
2643 The other thing he said was: We didn't have all the rights.
2644 Well, if you have the rights for 20 programs and you don't have the rights for the other 20 programs, why wouldn't you sell the rights for the 20 that you do have? Why would you wait for all 40 before you sell them?
2645 So their own evidence yesterday was: We just didn't make them available because we hadn't worked out the model.
2646 And then, last November, they did make a TV-everywhere offer, and Mr. Purdy can elaborate if you want, but it was somewhat lacking in details, and there was a price associated with it which was very, very high.
2647 COMMISSIONER PENTEFOUNTAS: But on the price being high, Mr. Engelhart, you can always come to the Commission. I know that you really have a problem with the timeline, and we can talk about the timeline. But if everyone has a product and everyone can launch the product on the same date, and we can ensure that, where is the problem?
2648 MR. ENGELHART: You are absolutely right that there are remedies available. The problems are, I guess, three. Number one is timing.
2649 The regulatory processes are many things, but they are not always fast. So your competitor is out in the marketplace with their offer, and you are either negotiating or availing yourself of the regulatory process, and they have an advantage.
2650 COMMISSIONER PENTEFOUNTAS: Mr. Engelhart, what if everyone had to be on the market at the same time?
2651 MR. ENGELHART: We have proposed in our evidence a safeguard. Now, we are not promoting that safeguard. We put it in our evidence as information for the Commission, if you really want to go down the safeguard path.
2652 What we said was kind of what you just asked, Vice-Chairman. If Bell has certain rights to wireless or to online or to on-demand, we can use them. We can get out in the market and use them.
2653 Now, there would still be an arbitration --
2654 COMMISSIONER PENTEFOUNTAS: If need be.
2655 MR. ENGELHART: -- and there would still be a rate setting, and that rate setting would be retroactive, and we would have to pay back to the very first day we used them, and we would sort of be incurring some risk, because we would be selling something to retail customers without knowing the wholesale price. But that way everyone would be out in the marketplace at the same time.
2656 So that is a safeguard that we have proposed to you.
2657 COMMISSIONER PENTEFOUNTAS: So there are safeguards out there.
2658 MR. ENGELHART: Now, that one sounds brilliant, the way I just said it, but --
2659 COMMISSIONER PENTEFOUNTAS: Everything that comes out of your mouth does.
2660 MR. ENGELHART: Yes, but it is kind of complicated in the real world. The underlying program rights supplier is saying: Wait a minute. I have security technology in place that every end user has to use and contract to.
2661 So when I say that Rogers is out there, I am speaking about something which sounds theoretically great, but has some real practical problems.
2662 I guess the bottom line of what we are trying to say to you today is: Safeguards are great tools for correcting structural problems in the market, but if you can order a divestiture and avoid the structural problem, why would you not do that?
2663 Why would you create a structural problem and then say: But we will put in a safeguard to fix it later.
2664 It doesn't seem like good public policy.
2665 COMMISSIONER PENTEFOUNTAS: We have kind of being doing that for a while now, but --
2666 COMMISSIONER PENTEFOUNTAS: Mr. Purdy?
2667 MR. PURDY: The only thing I would add, Mr. Vice-Chairman, is that a no-head-start rule in the digital realm, for lack of a better term --
2668 COMMISSIONER PENTEFOUNTAS: Yes.
2669 MR. PURDY: You know, while being brilliant --
2670 COMMISSIONER PENTEFOUNTAS: Theoretically.
2671 MR. PURDY: -- theoretically, it is difficult to execute.
2672 And, historically, the number one partner -- and I am not saying that we didn't have difficult negotiations and it wasn't challenging to get to common ground, but our number one partner in terms of new platform innovation was Astral. They were the cornerstone of our Rogers On Demand product when we rolled it out, and they were the cornerstone of our Rogers Anyplace TV product when we rolled it out, and they were 24 to 36 months ahead of Bell, in terms of their embracing of our Rogers Anyplace TV platform.
2673 COMMISSIONER PENTEFOUNTAS: Speak to me about some of the practical hurdles. If it is fine theoretically, what are the practical hurdles, firstly?
2674 Secondly, are you somewhat prejudging the behaviour of a Bell-Astral?
2675 You have no empirical evidence, save your experience with Bell thus far.
2676 MR. PURDY: Right.
2677 COMMISSIONER PENTEFOUNTAS: Let's speak to the hurdles first of all, the practical hurdles.
2678 Theoretically it sounds great; what are the practical hurdles?
2679 And some of those may be a timeline, and some of those we may have solutions for.
2680 MR. PURDY: Mr. Vice-Chairman, I will take a quick stab at it, and then I will let Mr. Engelhart comment.
2681 It is normally when we are in discussions that Ken and I talk about: Is this because Bell behaves badly, or is this because Bell behaves rationally.
2682 Our argument would be that Bell is not behaving badly. They are behaving in a rational way, in the sense that, if they have content that they control the rights for, and they can advantage both their media company and their distribution business simultaneously, it is rational to do so.
2683 In fact, it would almost be irrational not to exploit those rights in the way that we predict they would.
2684 The challenge we have is not that Bell is vertically integrated, the challenge we have is that Bell is getting over the 35 percent threshold, and that The Movie Network would just be the straw that breaks the camel's back.
2685 We have always been able to innovate around Bell's assets, and that has been the cornerstone of our strategy on innovation.
2686 COMMISSIONER PENTEFOUNTAS: We had a discussion last time, and you heard Mr. Cope again yesterday talk about how Bell has invested, or will potentially have invested $6 billion in content, and he needs every eyeball he can get, and he doesn't own all of them.
2687 We talked about that on linear rights, and we can also speak to that issue on the non-linear rights spending, if there is a difference.
2688 First of all, on linear rights, would you agree with the statement made yesterday that the interest of BCE shareholders is that everyone have access to that content, because they only have 2.3 million BDU subs, and you are at about the same rate?
2689 And I could go down the list -- Quebecor has 1.7, and Shaw has a couple of million as well.
2690 MR. ENGELHART: I think, for linear rights, he is correct that if you don't sell to all of the large BDUs, you have a problem, the equation doesn't balance.
2691 COMMISSIONER PENTEFOUNTAS: Was it your position that, with linear rights, there was an imbalance back in September?
2692 My recollection is that you felt that there was an imbalance there and that he didn't need all of the BDU households, that he could leverage the content against his own BDU interest.
2693 MR. ENGELHART: I think what we complained about at the last hearing was packaging flexibility.
2694 Mr. Cope is right, if you buy a service for $100 million, or $10 million, and Rogers is not a customer, you have a real problem in recouping your investment.
2695 But what we argued at the last hearing was that they were not letting us package flexibly. So I think that is where the issue is.
2696 Now, a question and a half ago you asked about problems that we had with safeguards, and I don't think we fully answered it. Do you want to carry on with this line, or do you want me to address that?
2697 COMMISSIONER PENTEFOUNTAS: No, we will get back to safeguards. Do you want to speak to me about non-linear rights, in the interest of --
2698 MR. ENGELHART: Sure. On non-linear rights, I don't think the equation is the same. Non-linear rights are cheaper, so Bell could afford to buy the non-linear rights and keep them just for themselves. So there is an ability to behave anti-competitively.
2699 Secondly, the incentive to behave anti-competitively is larger, because with linear rights, yes, if they withheld them they could sell more cable subscriptions, but with non-linear they can sell more broadband subscriptions, more cable subscriptions, and more mobile subscriptions.
2700 So it really is a great tool to differentiate all of those products in the marketplace at a relatively low cost.
2701 I think that is why, in the real world, we are seeing most of the problems in non-linear.
2702 COMMISSIONER PENTEFOUNTAS: But you do have safeguards on the non-linear rights as well.
2703 MR. ENGELHART: There are two issues, or there are at least two issues. One, which we talked about, is timing. How do you prevent them from getting out in the marketplace first.
2704 The other issue is that the safeguard is basically a final offer arbitration proceeding --
2705 COMMISSIONER PENTEFOUNTAS: At the end of the day, yes.
2706 MR. ENGELHART: -- where the Commission picks one or the other. And I agree that final offer arbitration is the right way to do it, but it's not the same protection as properly motivated players in a marketplace negotiating commercial agreements.
2707 It is as good a safeguard, probably, as you are going to come up with, and the example I would use, really, is from the CIDG proceeding, where the Commission picked one offer over another.
2708 The problem is, it is a little bit like voting, right? I like this party for their fiscal policies, but I don't particularly like their social policies, but I only can vote for this one or that one or that one.
2709 It's a similar thing with final offer arbitration, you end up picking one particular term sheet or offer, and it might not work as well as a proper negotiation.
2710 That is why, I think, as a result of the CIDG proceeding -- the parties are still complaining. Look, I still don't have packaging flexibility, even though the Commission found both offers to be reasonable.
2711 So the safeguards are good. They are the best, probably, that you can do, and they serve an important role in the marketplace, but it's not the same as a structural remedy. It's not the same as having Astral owned by an independent party that really wants to advantage all distributors equally. It's not the same.
2712 COMMISSIONER PENTEFOUNTAS: It may not be the same, and I am not going to argue that point. But in the case where, as you mention in your document, they are coming at you with a rate that is 5 or 10 times the norm, under an FOA structure, you would be in pretty good shape. It does keep the parties honest.
2713 MR. PURDY: I think, Mr. Vice-Chairman, that the challenge is around timing, and I think that Ken articulated it quite well.
2714 There is a process to avail ourselves of, but that process could take 6 months, 12 months, depending on how drawn out it is.
2715 We just bought Mountain Cable, and we paid $10,000 a subscriber for it, over $400 million, for an asset that has 40,000 subscribers.
2716 I would argue that a well-planned, well-orchestrated, multiplatform offering by our competitor that would give them a 6-month advantage could result in subscriber losses in the tens of thousands.
2717 So you are talking about hundreds of millions of dollars' worth of damage done before you can avail yourself of the safeguard or the remedy. That is our challenge.
2718 COMMISSIONER PENTEFOUNTAS: What would be an appropriate timeline to ensure that that doesn't happen?
2719 MR. PURDY: It would have to happen within days, if not weeks.
2720 COMMISSIONER PENTEFOUNTAS: Are we talking about the approval of the acquisition, or are we talking about --
2721 MR. PURDY: I am talking about remedying the fact that your competitor brought to market a multiplatform offering that you could not -- you were disadvantaged and weren't able to take advantage of.
2722 Think of multiplatform rights associated with a pay service. If our customers were denied access to the online or mobile extension of The Movie Network, and that resulted in a 10,000 or a 20,000 subscriber loss, you are talking about hundreds of millions of dollars' worth of shareholder damage.
2723 COMMISSIONER PENTEFOUNTAS: And back to our previous point, what if you all had to go to the market with the product at the same time? Where is the damage there?
2724 MR. ENGELHART: If there was a way to do it at the same time, that would help.
2725 The issues are, kind of, timing, which we have covered, the inherent limitations of final offer arbitration, which we have covered, and I guess the third one is brand new platforms.
2726 When David came up with the idea of Rogers On Demand online, everyone thought he was crazy, and several people said so.
2727 So, when you come up with a new platform, and you go to a supplier who, like Astral, is independent, they go: Well, sounds crazy, but let's talk. Maybe there's a buck in this for me. Let's work something out.
2728 If you go to Bell with a brand new platform, they are going to say: We haven't worked out the model yet, let's study it.
2729 So it's another variant on the timing issue. The timing issue is sort of: What if they offer their service and I am still negotiating.
2730 The third issue is: What if there is a new platform, and how do I convince a supplier who doesn't particularly want me to innovate to allow me to innovate.
2731 COMMISSIONER PENTEFOUNTAS: The VI horse has left the barn. You would agree with me on that?
2732 MR. ENGELHART: Yes.
2733 COMMISSIONER PENTEFOUNTAS: I am trying to cosy up to my colleague Menzies over there.
2734 We are not going to be able to put that toothpaste back in the tube, but at the end of the day, VI, but up until a certain point VI?
2735 MR. ENGELHART: That is exactly what we are saying. We are not here trashing all of the vertically integrated companies, and we think that your safeguards work. We are saying that there are limits, and at this point the evidence seems to us pretty overwhelming that we have reached that limit.
2736 COMMISSIONER PENTEFOUNTAS: On the acquisition of non-linear rights, couldn't you acquire those rights from Corus?
2737 MR. ENGELHART: For the movies?
2738 COMMISSIONER PENTEFOUNTAS: Yes.
2739 MR. ENGELHART: I don't think so. I think the country is sort of divided left and right.
2740 MR. PURDY: Yes, thank you, Mr. Vice-Chairman.
2741 The rights associated with the iconic HBO original series or Showtime original series or even the movies they would have -- TMN and HBO would have the eastern Canadian rights and Corus' pay service would have the western Canadian rights. You couldn't possibly acquire them.
2742 COMMISSIONER PENTEFOUNTAS: Even the linear rights -- the non-linear, sorry?
2743 MR. PURDY: No, I don't believe that HBO would allow for a competitor to the Movie Network or HBO Canada to secure non-linear rights.
2744 COMMISSIONER PENTEFOUNTAS: Okay.
2745 MR. PURDY: To the best of my knowledge, HBO hasn't even allowed for their library content to be made available to over-the-top providers.
2746 Showtime, I think, has made some deep library available to over-the-top SVODs in the Canadian marketplace. But my understanding is that HBO has not relinquished those rights.
2747 And certainly, the current -- you know, this season's Game of Thrones you couldn't secure the multiplatform rights directly from HBO.
2748 COMMISSIONER PENTEFOUNTAS: Now, you were talking about OTT threat and Netflix somewhere around -- the last we spoke they were you know, 1.2 and now they're probably about 2 million; in terms of Canadians subs they are coming up close to 30 million worldwide. We discussed market cap yesterday.
2749 How is your service coming along and how do you see competing with that giant? For the benefit of the Canadian system you heard the Bell/Astral proposition yesterday, the half that Mr. Engelhart spoke of is essential.
2750 MR. PURDY: Thank you, Mr. Vice-Chairman.
2751 My belief is that most major BDUs will roll out a Netflix-like competitor. The subscription video-on-demand product that was spoken of Illico has already offered it in this market. Comcast has rolled out their Streampix product and Verizon has rolled out their Redbox Instant product.
2752 So I believe it's common -- a common strategy for most large BDUs to figure out how to rollout products that allow customers to binge view. By binge view I mean watch an entire series over the course of a weekend or an all-you-can-eat library movie service. So I think that's going to be commonplace.
2753 I don't think you need to approve the transaction in its current form in order to have that competition in the marketplace. I think it's a bit odd that they would suggest that only they are going to compete with Netflix in this marketplace. We certainly plan on rolling out our own subscription products that will compete with Netflix.
2754 COMMISSIONER PENTEFOUNTAS: And given the fact that your subscription product would not have the means to produce if you follow the Netflix model, that $100 million house of cards type of programming, that premium programming, and all you can offer is library catch-up, can you still compete with that particular service?
2755 MR. PURDY: So certainly having iconic HBO-like series is helpful in terms of competing with Netflix. But today --
2756 COMMISSIONER PENTEFOUNTAS: Even if they're not on a first view but they're on a secondary and tertiary window?
2757 MR. PURDY: Exactly. Even if you go back to the previous seasons and the library rights associated with iconic series there is still value in those. However, Netflix doesn't have access to HBO content today.
2758 So there are lots of suppliers out there producing original series content. Our belief and intention would be to go after the stars in Encore and Showtime and anybody that's not locked down on an exclusive basis and secure that type of content. I think it's going to be common.
2759 The interesting discussion going on in the marketplace right now is are over-the-top SVODS buying content or producing content on an exclusive basis? If they do so then there will be a natural reaction. It would be logical that we would start to produce content for an over-the-top SVOD. We'd partner with perhaps a Comcast who has a Streampix product in the marketplace.
2760 COMMISSIONER PENTEFOUNTAS: Okay.
2761 MR. PURDY: Or other cable companies that are launching SVODS. Even an alliance with Illico, for example.
2762 So I don't believe that you need to approve this transaction in order to have a response to Netflix. I think the whole industry is going to respond to what is really a customary demand for an all-you-can-eat subscription product that allows people to binge view on all series and watch unlimited movies for a monthly rate.
2763 COMMISSIONER PENTEFOUNTAS: Okay. Thank you so much.
2764 THE CHAIRPERSON: Okay.
2765 I have a question for you with respect to a comment Mr. Cope made yesterday concerning, I think, The Movie Network. It's at paragraph 252 if you were in the room:
"Whether or not my competitors will say that at the hearing I don't know, but my instincts tell me they will even sleep better at night knowing that the movie assets are in the hands of BCE trying to acquire those assets to distribute to Canadians against some of the OTT providers."
2766 Okay. I'll ask you to reply to that in a second, although I suspect I know what you might be saying.
2767 But, more importantly, I think the argument is that in a more and more competitive rights acquisition marketplace with what some allege to be North Americanization of rights, the advent of new buyers that have sort of upset the windows market on feature-length films and other edgy content that is desirable by consumers, that it would be best that these assets be in the hand of an experienced undertaking with girth.
2768 MR. PURDY: Thank you, Mr. Chairman.
2769 When you run a distribution business in the current environment you sometimes feel like you're in a perfect storm. You have three main competitive forces affecting your business:
2770 One, piracy. So would I prefer that Bell have the assets as opposed to BitTorrent? Yes, because Bell will at least charge for them. Piracy is effectively free to the end-user and so that's a real problem.
2771 The second force you have is a reinvigorated IPTV competitor in the form of Bell.
2772 And the third force is over-the-top competition from what I say are legitimate providers like Netflix.
2773 But when you weigh the threats to your business, over-the-top is less imminent and less problematic than the vertically integrated Bell with too much consolidation of media power.
2774 So we believe that the shareholder value, the damage to our customers will be greater from Bell than it would be from over-the-top. Because they are able to -- when they differentiate and discount their video product they do it when they're going after a triple player or a quad play. It's very rare that they are acquiring a pure standalone television customer today. Mostly, they are trying to steal the entire household.
2775 So that's far more damaging for us than the cord shaving that would occur as a result of Netflix.
2776 THE CHAIRPERSON: Your position is that we should require the sale of TMN and TMN Encore. If I'm not mistaken, the value around that is quite substantial. But it's one thing to say that and it's another thing to help us sort of understand, is that a practical solution?
2777 Who else is in a position to buy those assets that isn't necessarily vertically integrated and creates the same sort of issues?
2778 MR. ENGELHART: Well, a couple of thoughts.
2779 As I said at the hearing last fall we would, although it may not line up perfectly with our current strategy, we would certainly at least take a look at TMN.
2780 Secondly, you know, you have some players in the market like Michael McMillan and others who might be interested.
2781 Thirdly, it's spinning off enough cash that you could get a new player into the market, a financial institution. I mean, they love going after assets that spin off so much cash that you can use that money to pay back the debt you used to buy them with.
2782 So it's enough of an economic engine and I'm pretty confident there will be a buyer.
2783 THE CHAIRPERSON: But here we are, a number of months later. You mentioned Mr. McMillan. I don't think he's decided to appear at the hearing. You say you might be kicking the tires if it were available. I mean, it's been some time and I'm not seeing that.
2784 And, yes, you can get a potential investor based on the cash flow to want to invest in it, but the reality is and remains, that the same preoccupation you need a certain level of experience to deal with that because it is, let's face it, mostly the Hollywood outputs that you're after.
2785 MR. ENGELHART: I guess, on your first point, it hasn't been offered yet. So you're not going to have anyone buying it yet. The Commission would have to order divestiture before people would take a good look at it.
2786 I guess the second point is back to the Vice-Chairman's questions. You know, we'd all have to come to grips with, well, is Corus an appropriate buyer? Because there you have the similar sort of vertical integration issues but maybe less so, for the reasons I explained. And to address your concerns, they are clearly an experienced member of the broadcasting industry who knows exactly that business because they're exactly in that business.
2787 So I don't know if you have to guarantee that Bell will have a perfect buyer, but I do think with the amount of money that that thing generates there will be a buyer.
2788 THE CHAIRPERSON: Okay. Your position is clear. Thank you.
2789 Commissioner Menzies?
2790 COMMISSIONER MENZIES: Okay. I just want to try to get my head around this issue that you raised.
2791 When you talked about the initial offer of product and your negotiations being five to 10 times the normal price and then you're articulating that as, you know, rational behaviour given the asset and there probably shouldn't be anything technically wrong with somebody trying to maximize the value of a valuable asset; in fact, they would probably be, according to their shareholders, behaving badly if they weren't doing otherwise.
2792 However, in my experience this seems to be a sort of new complaint. I'm trying to get my head around, if it's raised with us, I mean, what could we do about that?
2793 All we can do is control the assets. We can't control behaviour. We can't control the nature of relationships. We can't make people happy.
2794 And you listen to Bell. They seem to think everything is going fine, right? So where -- do you want us to focus our concentration solely on the assets then?
2795 MR. ENGELHART: I think the short answer is yes. So where you have the ability as you do at this critical juncture to control structurally the way the market is working, you should avail yourself of the structural remedy rather than let the market go structurally wrong and then fix it with a safeguard afterwards.
2796 You're absolutely right that rational corporations should try and extract the maximum return. The problem is that when a horizontally integrated broadcaster is combined with a vertically integrated distributor, you then have -- unfortunately part of the equation is, how do we advantage our own distribution services?
2797 The Astral people, the independent CTV, these are not charities. They wanted to maximize their returns and they did a pretty good job at it. But we were the goose laying the golden eggs. They wanted to keep us laying those eggs. They worried about our prosperity as much as they worried about their own. It's different when the supplier is vertically integrated.
2798 So there are safeguards that could address this problem. As the Vice-Chairman said, you could have a final offer of arbitration and you could compare the North American rates with the rates that Bell is proposing to charge and you could make a decision.
2799 What we're saying is, for the reasons I articulated in my discussion with the Vice-Chairman, that's not as good as a structural solution.
2800 COMMISSIONER MENZIES: What are the structural barriers or other barriers that prevent, for instance if the issue is Bell owns TSN which is the highest value sports property and TMN which is the highest value movie property and sports and movies are the two most popular entities?
2801 One might ask, why don't you make a better one, right? Why don't you invest and create and create a better, more equal sports network or a better or more equal movie network?
2802 Are there structural barriers in the way of that because normally innovation would be considered to be a solution to that?
2803 MR. ENGELHART: Sure. Let me take a stab. I notice David is starting to move around, so he'll want to add something too.
2804 But I guess two points that I would make.
2805 First of all, there are barriers. In some cases it's things like genre protection where the Commission has said you can't move into a certain area.
2806 In other areas it's things like incumbency. When you have -- when you're the incumbent in a thing like movies, you have relationships with the suppliers where you get first dibs and the second person who is coming along just has a very, very, very hard time breaking into the business because they have to pay so much for the content and they don't have any distribution.
2807 So it's a really, really tough business to break into. So there are those reasons why it's sometimes difficult to compete in the content businesses.
2808 But aside from that, from a public policy perspective, in some countries distributors absolutely do compete on the basis of content. One of them will go out in England and buy the soccer rights or the cricket rights. The other person doesn't have the soccer rights or the cricket rights. They get a good early jump in the marketplace.
2809 In Canada this Commission has always taken the view that that's not how we're going to compete because if you force everyone to get the same content then the only way to compete is on price, marketing and innovation. And this Commission has always sort of been of the view that it wants its distributors to compete on price, marketing and innovation and not on content.
2810 So from a public policy perspective it's not great if you just allow the distributors to try to get exclusive content.
2811 COMMISSIONER MENZIES: Have you had it covered? You stopped twitching?
2812 MR. PURDY: He did a very good job.
2813 COMMISSIONER MENZIES: Okay.
2814 Thank you for your answer.
2815 The sort of the last thing is, if your suggestion on TMN and TMN Encore were taken up, how does that make -- and you suggested you would look at it. One assumes other vertically integrated organizations would look at it.
2816 And assuming that's a likely outcome that somebody vertically integrated buys it, how does that make the world a better place for non-vertically integrated entities so they have Bell grinding them on TSN and they have VI X grinding them on TMN?
2817 On the face of it, that doesn't seem to make their world any better. It might make yours or it might not, whether you owned it or not.
2818 MR. ENGELHART: Well, I guess two points.
2819 One it might be bought by another independent like Astral who is trying to keep the distributors happy and doesn't have the vertical integration concerns.
2820 And, secondly, we have tried to demonstrate today and in our previous appearance, that other vertically integrated distributors, although they may have the same incentives as Bell, because they have a less extensive portfolio they don't have the same ability as Bell to favour their own services. So even if it was another vertically integrated competitor with the same incentives, by having a smaller portfolio they will be a more responsive supplier.
2821 MR. PURDY: And Mr. Commissioner, the only thing I would add to that is the 35 percent threshold was created before vertical integration was so omnipresent in the Canadian marketplace. The 35 percent threshold was from, I would say, a kinder, gentler time and not the current content Cold War with multiplatform rights being so heavily fought over that we see today.
2822 COMMISSIONER MENZIES: Thank you very much.
2823 THE CHAIRPERSON: Those are our questions and we're adjourned till 11:20.
2824 Merci, 11 h 20.
--- Upon recessing at 1107
--- Upon resuming at 1120
2825 THE SECRETARY: We will now hear the presentation of Madam Suzie McNeil.
2826 You have five minutes for your presentation. You may start. Thank you.
2827 MS McNEIL: Thank you.
2828 Mr. Chair and Commissioners, I'm Suzie McNeil. Hello and good morning. Thank you for giving me the opportunity to speak before you in support of Bell's acquisition of Astral.
2829 Firstly, there is a statement in Bell and Astral's application that I would like to read to you:
"Nothing makes Canadians prouder than seeing our artists succeed regionally, nationally and internationally. But artists need various support networks to launch careers, then thrive, then sustain their successes. Astral and Bell appreciate the struggles with which emerging artists contend, and we both have played an important role in showcasing their talents. Together, we are committed to doing even more."
2830 Now, these words aren't just words on a page. I am here today to tell you that they live by those words and they put them into action. It's a philosophy for them and not just lip service. Let me tell you how I know this to be true.
2831 Singing has been a major part of my life. Music has been my life since I was a baby. I grew up in Mississauga, Ontario. My first big break was on a show called "Rockstar INXS," a reality TV show that aired on Global in Canada. This led to me getting increased exposure in the Canadian music scene and getting signed to an independent music label. Since then I've released five albums.
2832 My first song, "Hung Up," got heavy rotation, initially by CHUM-FM in Toronto and several of their sister stations, which led to other radio groups playing my song.
2833 My second song, "Believe," is the song that really made a difference for me. It was the single that led to me win CHUM Radio's emerging artist award. I was the first artist to win this award in 2007. This program is great! It's guaranteed airplay, guaranteed promotion, which gives you the spotlight on you for the month.
2834 But it didn't just end there for me. After that my song performed well and airplay has continued to this day. Even though I am no longer considered "emerging," Bell Media Radio still supports my music to this day as well.
2835 Many more doors opened for me after this. I was nominated for a Juno, "Believe" became Bell's fundraising song for Own the Podium for the 2010 Vancouver Olympics and I was selected to perform at the closing ceremonies as well. "Believe" was the theme song for "The Biggest Loser" for years, was featured on "Beauty and the Geek," "Oprah" as well as many other TV spots.
2836 Bell has continued to support me through Fanfest at Canadian Music Week. It's a premier Canadian showcase attended by Canadian and international delegates.
2837 MuchMusic has also provided me with promotion and with airplay and I've been a beneficiary of MuchFact.
2838 As an artist, I can tell you that this transaction means more than a lot to the music community. Significant benefit dollars will result from this transaction and they will enable more artists like me.
2839 In particular, the development of my career was greatly helped by FACTOR and Starmaker. Like any other artist in Canada, I rely on these funds to pay the big costs of touring, production, making music videos, et cetera. If this funding didn't exist, I don't know many Canadian artists or record companies that would be able to break artists and build the profile necessary to have a successful career in this country.
2840 FACTOR and Starmaker will see their budgets increased greatly thanks to the benefits package proposed by Bell. Without this benefit money, many voices will not be heard, and, to be quite honest, we run the risk of our industry becoming extinct.
2841 Bell's other proposed initiatives, including their "Breakthrough Canada" series and their Emerging Artist Development Program, are also key to supporting and promoting our great Canadian music industry.
2842 In conclusion, I have seen firsthand how the power of airplay, supported by promotion, can boost an artist's profile. That's why Bell's proposals, including a guaranteed level of airplay for emerging artists and the expansion of the Emerging Indie Artist Initiative, plus the nearly $50 million they are directing to the support of the music industry, are a big lift for Canadian artists, and without, I think Canadian artists would be extinct, not only on the world stage but in Canada because of the saturation of the U.S. culture.
2843 For these reasons, Bell's acquisition of Astral is in the interest of Canadian artists.
2844 Thank you and I would be pleased to answer any questions.
2845 THE CHAIRPERSON: Thank you very much, Ms McNeil. It's great to see artists and creators at our hearing because actually that's what it's all about, isn't it?
2846 MS McNEIL: Yes.
2847 THE CHAIRPERSON: Ms Duncan will have some questions for you.
2848 COMMISSIONER DUNCAN: Well, first of all, welcome and congratulations on your success.
2849 MS McNEIL: Thank you.
2850 COMMISSIONER DUNCAN: I did google you on the Internet since I'm not exactly in the right time zone or age bracket or whatever.
2851 COMMISSIONER DUNCAN: I'm very impressed with all your successes.
2852 MS McNEIL: Thank you very much.
2853 COMMISSIONER DUNCAN: And of course, I'm very familiar with "Believe."
2854 First of all, we greatly appreciate, as the Chairman said, you taking the time to come and appear before us. It is great to see that these programs pay off.
2855 I know one time, years ago, one of the concerns was accessibility to some of these funds, and obviously you've been able to access them, but is it difficult for artists to actually find a way to get the funds through the application processes? Are those --
2856 MS McNEIL: No, I'd say that it's not, especially, you know, when you're involved with a record label, because they're very sort of clear-cut, laid out processes that you can go through.
2857 I do also believe that you have to, you know, make sure that you live up to all the requirements. So if anything, my answer would be, you know, sometimes that's difficult if you don't. But they're all there and, you know, the funds are always distributed every cycle.
2858 I'd say the answer is, you know, they are accessible for us, which is -- they've been amazing.
2859 COMMISSIONER DUNCAN: So is it easy for a first-time artist, a new person? Because you've obviously learned the ropes, but when you first start out you may not have a record label, so you may not have somebody to give you the guidance to get access to these funds. Would you say that's not an issue today?
2860 MS McNEIL: Yes, accessing them is easy. Getting -- sort of learning the ropes around the actual application is probably the only thing that is a challenge, but I think that's because they don't -- they need to be careful where they allot their money and make sure that, you know, this is something worth funding.
2861 COMMISSIONER DUNCAN: And I noticed your comment about Astral -- or the suggestion that between Astral and Bell they would be promoting a second artist. And so that is going to be in the CHR, is it?
2862 MS McNEIL: A second artist?
2863 COMMISSIONER DUNCAN: Yes, the second.
2864 MS McNEIL: Did I say that? In the quote, you mean?
2865 COMMISSIONER DUNCAN: No. In your application.
2866 MS McNEIL: Oh, my second song?
2867 COMMISSIONER DUNCAN: Yes. They're going to promote two emerging artists per month. The first one was --
2868 MS McNEIL: Right. Yes.
2869 COMMISSIONER DUNCAN: So now it's going to be in a different category. Rock category, is it?
2870 MS McNEIL: Yes.
2871 COMMISSIONER DUNCAN: Okay.
2872 MS McNEIL: It's CHR and Hot AC, I believe.
2873 COMMISSIONER DUNCAN: Okay. Well, we have that anyway.
2874 MS McNEIL: All right. Yes.
2875 COMMISSIONER DUNCAN: But you're certainly supporting that because it worked for you?
2876 MS McNEIL: Absolutely. It worked through and through. You know, I've been lucky and I attribute my career in Canada to that.
2877 COMMISSIONER DUNCAN: Well, I'm sure to have that many radio stations playing your music for one month --
2878 MS McNEIL: Exactly.
2879 COMMISSIONER DUNCAN: -- as a minimum, that would be --
2880 MS McNEIL: Yes.
2881 COMMISSIONER DUNCAN: -- a great send-off.
2882 MS McNEIL: And then you also get to see how it reacts and you get a really fair shot.
2883 COMMISSIONER DUNCAN: Very good. Thank you very much.
2884 Those are my questions, Mr. Chairman.
2885 THE CHAIRPERSON: Thank you very much, those are our questions, and continued good luck in your career.
2886 MS McNEIL: Thank you, everyone.
2887 THE CHAIRPERSON: Thank you.
2888 So we will now hear from the Quebec English-language Production Council. Would you please come up?
2889 THE CHAIRPERSON: Welcome, gentlemen. Good to see you again. I think you know the drill, so please go ahead.
2890 MR. SAXE: Thank you. It's nice seeing all of you again too.
2891 Good morning and we would really like to thank the Commission for the opportunity to present the Quebec English-language Production Council's views on this important subject.
2892 My name is Gary Saxe, I'm Co-chair of the QEPC and an organizer with ACTRA Montreal. Next to me is Kirwan Cox, who is the Coordinator of the QEPC.
2893 Unfortunately, my co-chair Janis Lundman, who's of Back Alley Productions, a producer of "Bomb Girls," "Durham County," is busy producing in Toronto, so wasn't able to make it here today.
2894 The Quebec English-language Production Council represents both producers and unions. We are an industry association that is working to increase English-language audiovisual production in Quebec.
2895 As we pointed out to you at the first Bell-Astral hearing, our members represent what not-too-long-ago was the largest English-language production centre in Canada. Montreal has been the training ground for thousands of highly regarded film professionals going back to Gordon Sparling, whose wonderful films were made at Associated Screen News.
2896 Built in the Roaring Twenties, ASN was once Canada's largest production studio before being purchased by Harold Greenberg and the company that became Astral. Sitting next to the Vendome metro, that historic building is now filled with condos.
2897 More recent graduates of the Montreal...
2898 THE CHAIRPERSON: Slow down your pace. It will help the interpreters.
2899 MR. SAXE: Oh!
2900 THE CHAIRPERSON: Yes. Thank you very much.
2901 MR. SAXE: Excuse.
2902 More recent graduates of the Montreal production industry include David Cronenberg, Ivan Reitman, Robert Lantos, Jay Baruchel, and of course William Shatner.
2903 Unfortunately, today's Montreal film industry is a shadow of its former self. Over the last decade we have seen our production fall by roughly 50 percent. This decline has been exacerbated by provincial government policy that disadvantages English production. If these trends continue, English-language production in Quebec risks completely disappearing.
2904 However, all is not yet lost. Our predicament is beginning to be recognized and we are seeing a change in the federal environment.
2905 Last summer, the Federal Court decided that the Official Languages Act has concurrent jurisdiction with the Broadcasting Act. This Court indicated that the CRTC needs to support the development and enhance the vitality of the official language minorities in its decisions.
2906 In December, under the leadership of its new Chair, the CRTC took a major step in that direction with its decision to support Rogers' application to establish an English-language Montreal station. As part of that purchase, Rogers agreed it would maintain English-Quebec production at a minimum of 3 percent of its national independent production budget. We are very happy with this precedent.
2907 Yet, most independent television production needs more than tax credits and broadcaster licence fees. It also needs the Canada Media Fund. Unfortunately, the CMF never accepted the jurisdiction of the Official Languages Act, nor recognized us as an official language minority. Over the past decade, our percentage of the CMF English envelope fell from 15 percent to 5 percent.
2908 We filed a complaint with the Commissioner of Official Languages against the CMF and the Department of Canadian Heritage. In January of this year, we received Mr. Fraser's decision. He said we were correct in all of our complaints.
2909 As a result, the Canada Media Fund has now established an Anglophone Minority Fund, similar to -- but, unfortunately, much smaller than -- its longstanding Francophone Minority Fund.
2910 I should mention that today is the deadline for applications, which explains why some of the producer members of the QEPC aren't here right now.
2911 The CMF did consult us in the design of this new fund and, for the first time, CMF policies are starting to address our needs.
2912 At this hearing, we now turn to Bell Media and its responsibilities to the official language minority in Quebec. It is a responsibility they have not fulfilled. We hope this Commission will now set a minimum standard for official language minority productions that Bell Media must meet.
2913 First, Bell's tangible benefits.
2914 We wish to congratulate Bell for deciding that it will re-establish a development office in Montreal. We quote from their brief that they will put "significant development resources in Montreal and a senior development officer will be based there to be the main contact point for English-language producers in the province of Quebec."
2915 This is not the first time they have put a development officer here. CRTC approved the transfer of CFCF-TV to CTV in 2001 subject to $14.2 million in tangible benefits over five years. That included $5.6 million for a CTV Signature Presentation series plus a Montreal-based development officer with a development budget of $50,000 per year in 2001 dollars.
2916 In our experience the development officer was helpful while he or she lasted, but the programming budget dedicated to Quebec independent production was the key benefit. CTV promised to spend $1.25 million per year in licence fees in Montreal over five years.
2917 MR. COX: Despite these tangible benefits, we found that over the ten years from 2001 to 2010, CTV spent over $960,000 per year or 2 percent of its total independent production budget in Québec. This was a much lower level of Québec production than Global or CBC commissioned during this period.
2918 I should also mention in 2010 the statistics stopped, the independent statistics stopped, but in 2011 and 2012 we had no CTV production in Québec. And we did have a project -- or we do have a project in 2013 called Played, which Bill referenced in their response, which they pointed sought a co-production with Québec, but we wanted to mention it's actually being shot in Toronto. So even though it's co-production with a Montréal company, it's not here, it's going to be in Toronto.
2919 Today the tangible benefits of this Astral transaction do not identify any independent production funding for the official language minority in Québec. We do not know what the "significant development resources" are, and we don't know if they will surpass the promises made in 2001.
2920 We request that the CRTC require at least 10 percent of tangible benefits allocated to English production be spent in Québec.
2921 Second, the CRTC's regional "market presence" policy.
2922 Bell said that the CRTC regional production policy based on "market presence" is not, quote, "Current Commission policy", unquote.
2923 We believe Bell is mistaken. Let us quote from the CRTC's 2010 group-based broadcast decision:
"The Commission continues to be of this view, and expects the major television groups to commission programs of national interest from all regions of Canada, engaging in levels of production activity that are commensurate with their presence in their respective markets."
2924 That decision is current Commission policy. Furthermore, the CRTC did not reject its policy in its 2011 licence renewal of CFCF and CTV, as Bell contends. The CRTC did not enforce this policy at that time. We hope that now, the CRTC will apply its "market presence" regional policy at this hearing.
2925 Third, Bell's track record.
2926 Bell says its track record commissioning independent Québec programming for all its channels is higher than it is for CTV alone. While CTV has spent 2.3 percent of its total independent production expenditures over ten years in Québec, Bell Media says it has spent over 4 percent for all its channels in the last five years.
2927 We cannot analyze this percentage, nor put it into context, because Bell and the other broadcast groups no longer submit this financial data to the CRTC. As we stated in our intervention, we believe this is an oversight that is contrary to Commission policy, and needs to be corrected as soon as possible. We request that you do so. Without such information, policy-makers are blind.
2928 That said, Bell also states that its track record commissioning programming from independent producers in Québec, or anywhere else, is not an issue at this hearing.
2929 We beg to differ. We believe that the impact of this transaction on the official language minority of Québec is an issue. We also believe that impact cannot be understood without considering the track record of Bell.
2930 Finally, Bell's intangible benefit.
2931 We ask the Commission to consider its mandates, its policies, and the track record of the applicant in its decision at this hearing.
2932 Considering Bell's history and its current market presence in English Québec, we request that the CRTC require that Bell Media commission at least 10 percent of its total annual independent English programming expenditures in Québec. We see this as an intangible benefit of this transaction because this benefit would not involve an actual increase in Bell's program expenditures.
2933 Thank you.
2934 THE CHAIRPERSON: Well, thank you, gentlemen, and we of course understand perfectly well that some of your members have competing priorities and that's entirely understandable.
2935 Commissioner Menzies, please.
2936 COMMISSIONER MENZIES: Thank you. And, yes, it's good that if somebody couldn't make it it's because they were doing work someplace else.
2937 We're familiar with each other, but a couple -- so some of these questions are important just to put on the record so the record knows who you are even though we might. So don't respond badly if that happens.
2938 But the first question is Bell said yesterday that it was comfortable with the way things are going, that it does work with English independent producers in Montréal and that it doesn't see any need for a requirement in terms of that. You obviously have a different opinion on the requirement, but do you -- is work being done with Bell CTV by your independent producers right now, your members?
2939 MR. SAXE: Well, the problem is that of the -- they have dominant market share here. There's a longstanding policy of, you know, trying to spend market presence, and they haven't lived up to it with the -- from the statistics we're able to access. It's only 2 percent of their spending on independent production happens here. We were very happy a few years ago when there was someone working on development here and there was some very good feedback from some of the producers who met with them, but the big thing is having someone here who's going to have power to green light things and a budget to spend on production here. And it hasn't been enough, it hasn't been comparative certainly to CBC or to any of the other channels, who have sometimes tiny market presence here.
2940 COMMISSIONER MENZIES: So what you want a specific amount budgeted for you and then you would create content based on that budget, rather than creating content and pitching for a budget elsewhere?
2941 MR. COX: Yes, that's right. It's -- I think the record -- using CTV as an example because we do have the stats on CTV and we don't on everybody else, all the other channels they have. But with CTV, as I just mentioned to you, for the last three years there have been no productions in Québec with the one exception of Played, which is actually being made in Toronto. And there's nothing with a co-production and production being made in Toronto. But if that is the only production of a conventional channel or a conventional network that has 60 percent of the market in Montréal in English, then we feel there's a problem. And we're happy that Bell doesn't feel there's a problem and doesn't need any minimums, that our opinion is obviously different.
2942 COMMISSIONER MENZIES: Okay. Thank you.
2943 Can you explain to us, please, the link between the health of your association and its members. And I think you indicated 2500 members, the economic health of that association, and the cultural health of the English OLMC. I mean, we always do consider the OLMC, but I need to know what the linkage is between your specific association and its members and the overall cultural health of the OLMC.
2944 MR. SAXE: Well, our association is a coalition. It's -- we represent performers, directors, technicians, and producers of all sorts of sizes, from biggest producers in Canada to small ones, IMAX producers, all kinds are members of our association. The -- you know, it's hard to find the number of -- the actual number of people that we represent, but these are people who work in the English language cultural industry all over. And the more that production leaves Québec, the more Québec producers, actors, directors, technicians and others, and service providers leave as well, harming our local industry and its ability to continue and to thrive.
2945 COMMISSIONER MENZIES: Sure. I understand the industrial --
2946 MR. SAXE: Okay.
2947 COMMISSIONER MENZIES: -- context. What I'm trying to do is bridge the gap between the specific industrial context and the cultural life of non-members, the cultural life of Anglophones living in Québec. What is it that you do that sustains and enriches their culture?
2948 MR. COX: I think --
2949 COMMISSIONER MENZIES: Some for instances of work that you do in response and your relationship with the larger community outside of your industry.
2950 MR. COX: I think that if you look at the question of Anglophones graduating from university in Montréal, for example, and where they see their future, they're going to mostly, increasingly leave the province because they don't see a future there inside of Montréal because the work doesn't appear to be there. If they want a job in a cultural industry, then they have to go somewhere else and that's a problem, and that's a problem for our future as a community.
2951 The other side of it is that we feel that having cultural work, where people hopefully can see themselves on the screen, is quite important. And for Anglophones, that's difficult, as I'm sure anyone in any region of this country can talk about. That, sure, we see ourselves as living in Los Angeles or we see ourselves as living in Toronto or maybe Vancouver, but we don't see ourselves living in a lot of other places, with some increasing exceptions. Unfortunately those exceptions don't seem to exist in Montréal. And so it is important that all across the country people are able to see themselves.
2952 In terms of the official language minority community that operates in English, that lives in English in Québec, we're under increasing pressure in terms of our society and in terms of our lives. And therefore, we have to look to a large degree to the federal government and to the federal cultural institutions to be able to support us operating and living in Québec.
2953 And another point that I think is important to point out, that we have pointed out to you in the past, is that at a provincial level there are a lot of roadblocks and there is a disparity between what exists in terms of support for French language production versus English language production, and that two level disparity doesn't exist anywhere else in the country in terms of French production in B.C. or French production in Ontario, et cetera. And so, therefore, we have to depend on you to provide that support at the federal level. And when it comes to CTV and it comes to Bell, they are an extremely important part of the Québec media landscape and we need more from them. Their commissioning here is extremely poor, as we have indicated to you.
2954 COMMISSIONER MENZIES: Okay. Can you give me -- thank you very much for that. Can you give me a couple of examples of work that's been done recently that's -- uniquely tells the stories of the Québec English language minority?
2955 MR. SAXE: Actually, just as we're going through it, I want to go back a little bit. You asked for examples earlier of --
2956 COMMISSIONER MENZIES: Yes.
2957 MR. SAXE: -- how this harms not just the industry --
2958 COMMISSIONER MENZIES: It's the same question I asked.
2959 MR. SAXE: Okay. Well --
2960 COMMISSIONER MENZIES: I'm still looking for the answer.
2961 MR. SAXE: -- harms the culture for people outside just the people working in the industry. And those people that leave Montréal are creators. These creators are now creating things elsewhere not reflecting our cultural locally. I'll give you an example of someone who swam against the stream, Jay Baruchel. He's a well-known performer, who has worked on a lot of U.S. films. He's decided, whether it's in his financial interest or not, to be located here in Montréal. As a result, he's able to work on films like The Trotsky, and he's right now in a play Sherlock Holmes at The Segal Centre. That adds a lot to the cultural integrity and cultural advancement of the arts of the English community here, English language minority community here. Those examples are hard.
2962 William Shatner rarely comes here for -- to work in production, and the other people do. Just as examples, it's harder and harder for artists to stay here in Québec, English language artists, I should say, in film-television, that type of production, to stay here as more and more production goes out and earlier in their career. So performers in their 20s might move to Toronto, Vancouver, L.A. and not stay here because there's less production here. Those people will be, you know, writing place in the future, directing all sorts of production in the future. So it's a cyclical downward spiral that we're in if we do not have a thriving industry here that we're hoping to get back to.
2963 COMMISSIONER MENZIES: I understand that --
2964 MR. SAXE: I understand your question. I want to address it.
2965 COMMISSIONER MENZIES: I'm just looking for, like, a couple of films --
2966 MR. SAXE: Okay.
2967 COMMISSIONER MENZIES: -- that have been done that (indiscernible).
2968 MR. SAXE: Robert Lantos has produced a feature film based on a Mordecai Richler book --
2969 COMMISSIONER MENZIES: Yes.
2970 MR. SAXE: -- about three years ago.
2971 COMMISSIONER MENZIES: Yes.
2972 MR. SAXE: The name escapes me.
2973 MULTIPLE SPEAKERS: Barney's Version.
2974 MR. SAXE: Barney's Version, there it is. And so Robert Lantos came from Toronto back to Montréal, because he's from Montréal if you exclude Hungary.
2975 COMMISSIONER MENZIES: Yes.
2976 MR. SAXE: And now he did the film and now he's back in Toronto, but it was a film located because of Richler in Montréal.
2977 18 to Life, to use another example, is a TV series that was done in Montréal but it was not located in Montréal because the producer was told not to do it, not to locate it in Montréal because the broadcaster is in control. And the broadcaster of that particular series apparently felt, okay, they didn't -- for whatever reason they didn't want it located in Montréal.
2978 The problem that we have here is a problem that is very familiar elsewhere in English Canada and that is that the economic system is such that making a film or a TV series, identifiably located in a particular location, until very recently was considered impossible. And now, thanks to St. John's or thanks to some other projects that have been done it seems a little bit less impossible. However, there are so few of these series done in Montréal that we haven't had a chance to catch up. We did with one feature film. And hopefully if there are more TV series, maybe because there is the money here and the money has to be spent here, then we feel that the -- that the question, the cultural question you're raising will be dealt with.
2979 COMMISSIONER MENZIES: Okay. Thank you. I think that answers that question.
2980 In paragraph 31 of your written presentation you take the position that the benefits from this transaction, were it to be approved, should be spent within five years, whereas Bell has been looking to delay it and they have a different point of view. And they're -- the reasoning for theirs is that there's lots of money out there already and it would be prudent, which on the face of it doesn't sound terribly unreasonable, maybe it is, maybe it isn't, but it's acceptable but it's not unreasonable to -- there's reason for the argument anyway. Why do you differ? Why do you think there's -- it should be spent now?
2981 MR. COX: They had a five year window to spend certain tangible benefits starting in 2001 and it seemed that some of those benefits stretched on for about 10 years without being spent, completely spent.
2982 COMMISSIONER MENZIES: So for you it's a trust and credibility issue?
2983 MR. COX: Well, there -- we trust and we love Bell like everyone, but sometimes if you look at their track record you -- it does raise questions.
2984 The other reason for worrying about it is while Toronto is overloaded with production and can't absorb it all and has to push back the time, in Montréal we're not so lucky. And so, we're saying, gee whiz, rather than push it back because, you know, money is being spent in Toronto for the next three years, we would like to suggest that money should be spent here, where we're not overly whelmed.
2985 COMMISSIONER MENZIES: I understand your argument on that. Thanks.
2986 MR. SAXE: I'd like to add just one comment to that. Part of our problem is we really need sort of an energy injection right now. We're very happy to have gotten the -- from CMF a special fund dedicated to our needs. And if we could compress in a few years the -- those benefits in the industry here, we could do more for building it up so it's a bigger amount each year so it's easier to have more production going sooner to help us rebuild our industry here, as opposed to smaller amounts spread out over a longer period of time.
2987 COMMISSIONER MENZIES: Okay.
2988 MR. SAXE: We just think that would be more advantageous to grow and to enhancing the vitality of our industry here.
2989 COMMISSIONER MENZIES: Understood. Thank you.
2990 In paras. 32 and 43 of your written, you ask for 10 percent of total English language on-screen benefits. How did you come to the 10 percent figure?
2991 MR. COX: Well, the way we came to the 10 percent in terms of independent production is because the percentage of viewers that CTV has in Québec is about 11 percent of the CTV network. That's the CFCF's share of the CTV network. And if you have market presence and you're saying, as you've done, you know, in a number of different documents, that the production level should roughly match the market presence value, then what we're saying is market presence is about 11 percent but we're not greedy; all we want is 10 percent.
2992 COMMISSIONER MENZIES: Okay. I understand.
2993 MR. COX: What we have now is 2 percent and we feel there's a heck of a way to go between 2 and 10.
2994 COMMISSIONER MENZIES: Okay. I understand. How much would that amount be incremental to the volume of business your members do right now? In other words, how much -- do you have -- would that increase the volume of business you have by 2 percent, 10 percent, 20 percent, 30 percent? How much business? Do you have some -- give us some sense of are you a 50 million dollar industry a year, are you a hundred million dollar industry a year? What sort of a boost or --
2995 MR. COX: We're -- okay.
2996 COMMISSIONER MENZIES: -- (indiscernible)?
2997 MR. COX: If you counted all independent production, we're around 150 to 175 million dollar a year industry now. We used to be higher, but now that's roughly the level we're at. To go from 2 percent to 10 percent would mean that CTV would be going from roughly $1 million a year in expenditures, licence fees, up to about 4 or $5 million a year. That's not the total budget in (indiscernible).
2998 COMMISSIONER MENZIES: But that would be a sort of 2 or 3 percent increase, somewhere in that range?
2999 MR. COX: Well, that would trigger, you know, CMF money, tax credit money and other kinds --
3000 COMMISSIONER MENZIES: Right.
3001 MR. COX: -- of things, so it's not... But when you're talking about 1 to 4 million of licence fee increase and an industry that's 150 to 175 or more million dollars, you can see it's absorbable.
3002 COMMISSIONER MENZIES: Yes. Thank you.
3003 Just in terms of that, you talk being a 150 to 175 million dollar industry and I am conscious of the fact that nobody ever says what enough is. So what do you think the number would be for your industry in Québec to be sustainable? Would 200 million be the comfort level where you were ideally not seeking subsidy or with subsidy? Well, obviously in film there's always subsidy, but 200, 250 million? What's a healthy -- what do you think a healthy figure is for you guys?
3004 MR. COX: I would say that we would like to be where we used to be, and about 10 or 12 years ago it was $300 million.
3005 COMMISSIONER MENZIES: Okay. Thanks.
3006 MR. COX: And at that level everyone was happy. We probably wouldn't even show up to your meetings. We'd leave you alone.
3007 COMMISSIONER MENZIES: All right.
3008 MR. SAXE: In fact, we didn't show up back then.
3009 COMMISSIONER MENZIES: Okay. I was going to ask you about sustainable talent development, but I think you've answered that. Thank you. Those are my questions.
3010 LE PRÉSIDENT : Monsieur le Vice-président.
3011 CONSEILLER PENTEFOUNTAS : Merci, Monsieur le Président.
3012 Just to -- you spoke about a 60-percent market share of the English market in Montréal at CT-- that's CFCF's market share. You also mentioned 11 percent of -- would that be conventional television --
3013 MR. COX: Yes.
3014 COMMISSIONER PENTEFOUNTAS: -- for CTV coast to coast? Would that include CTV 2?
3015 MR. COX: No. As a matter of fact, we have a footnote.
3016 COMMISSIONER PENTEFOUNTAS: Mike.
3017 MR. COX: Oh, sorry. We have a footnote, which we kindly put at the foot of our document. I think it was our -- yeah, our original document footnote number 14. We used the TV Bureau's TV Basics 2012 - 2013 hours viewed on CFCF is a percentage of CTV excluding CTV 2 fall 2010 and fall 2011. And the answer was 10.7 percent in the fall of 2010, 10.9 percent in the fall of 2011. So it's here.
3018 COMMISSIONER PENTEFOUNTAS: Okay. Why do you have to take off your glasses to read it and I've got to put mine on? Anyway, that's a different question.
3019 COMMISSIONER PENTEFOUNTAS: The 4 million --
3020 MR. COX: I have a different optometrist than you do.
3021 COMMISSIONER PENTEFOUNTAS: Yeah, yeah. I don't know.
3022 The 4 million potential per annum spent from the Bell-Astral transaction, how much would that trigger in all?
3023 MR. COX: Probably 12 --
3024 COMMISSIONER PENTEFOUNTAS: When you add tax credits and CMF. About 12 (indiscernible)?
3025 MR. COX: 12 million.
3026 COMMISSIONER PENTEFOUNTAS: And you're telling us 12 years ago it was a 300 million dollar industry?
3027 MR. COX: Right. We have a ways to go. So we if we had 12 million --
3028 COMMISSIONER PENTEFOUNTAS: In year 2000 dollars you were at 300 million and -- and 2013 you're 150?
3029 MR. COX: Right. Roughly.
3030 COMMISSIONER PENTEFOUNTAS: Okay. Well, thank you so much.
3031 THE CHAIRPERSON: In answer to Commissioner Simpson's question, you -- sorry, Menzies. Sorry about that, Peter. All the hearings follow and they don't always look alike. So you based your 10 percent number on viewership and I was wondering why you wouldn't have considered based on revenues out of the assets, the revenues, the properties received in --
3032 MR. COX: Are you talking about the tangible benefits?
3033 THE CHAIRPERSON: No, the benefits -- the revenues out of the CTV properties.
3034 MR. COX: What we were talking -- well, we should probably include more than CTV, but we don't have the statistics so we don't know.
3035 THE CHAIRPERSON: Okay. Without you being able to make the calculation, why would --
3036 MR. COX: That's no fun.
3037 THE CHAIRPERSON: But we have access to those. Would it not make more sense, notionally because it's about spending, that you use dollars as opposed to viewership to arrive at a percentage?
3038 MR. COX: So you are saying that the definition of market presence instead of being viewership should be dollars?
3039 THE CHAIRPERSON: Well, in terms of diversity of voices, we obviously use tuning, but in other cases we have used revenues as a base to create obligations.
3040 MR. COX: We used two 10 percents. One had to do with tangible benefit 10 percent and we were using the total of English expenditures of any type and saying, okay, 10 percent of that.
3041 The other 10 percent, which we call intangible benefits -- and lawyers might jump on that, but we won't discuss that --
3042 THE CHAIRPERSON: Right.
3043 MR. COX: -- is the 10 percent that we feel should be ongoing based on an ongoing policy that the CRTC has had over many different transactions and has not applied in this case. We would like to see it applied, that's 10 percent.
3044 If you want to use the 10 percent in terms of the value of CTV, okay, because it's easier to do that because CTV has an asset located in Montreal which is CFCF. When it comes to national networks like Bravo or like Discovery or something like that, then maybe what you would have to do is take the revenues that Bell gets from those properties based in Quebec and say, okay, you know, what's the percentage of that.
3045 So it's possible, but without having access to the numbers it's hard for me to discuss it.
3046 THE CHAIRPERSON: You can still have a view on the principle without necessarily doing the calculations, because --
3047 MR. COX: Our principle is --
3048 THE CHAIRPERSON: -- we want to have a principled discussion, not an outcome discussion, don't we?
3049 MR. COX: Our principle is extremely principled and it's the maximum revenue possible under the circumstances.
3050 THE CHAIRPERSON: Indeed.
3051 MR. SAXE: If I could add to that, I think in our internal discussions we have always just considered reading the phrase "market presence" is viewership. If the CRTC was to clearly -- not that it's your fault for not, whatever -- clearly defined "market presence is this", then we would probably have based it on whatever the actual definition is.
3052 We believe in that principle of market presence and spending commensurate with the market presence.
3053 THE CHAIRPERSON: Right. It's just that spend obligations on the independent production sector in the group licensing has tended to be linked to expenditures --
3054 MR. COX: Okay.
3055 THE CHAIRPERSON; -- and therefore, you know, more of a dollar calculations than an audience calculation.
3056 MR. SAXE: As you know, we have commented frequently on the problem we have with statistics, or the lack of them, and so really desperately hope that we will get at least the statistics we used to have in terms of independent production -- we hope you will reinstate this -- but we would like to get in any statistics as possible --
3057 THE CHAIRPERSON; Right.
3058 MR. SAXE: -- so that we can talk to you in a way that says, "Ah, now we know what the reality is more or less and therefore we feel whatever, X or Y".
3059 THE CHAIRPERSON: Right. You are just going to have to trust us at this stage and that's why I wanted a more principled answer without you necessarily knowing exactly what the math would turn into.
3060 You said that you wanted to rebuild the industry and in a sense my understanding of this area over a number of decades is that to rebuild an industry before you put money into production you have to put money into development.
3061 What's your view on that?
3062 There may be perhaps a more important need of putting development money in the hopper so that that would, in a couple of years' time, lead to productions.
3063 MR. COX: Development obviously comes first before the production. It's very important to have development money.
3064 If a broadcaster has to spend, let's say X production dollars, then they will start putting development money in their own course in order to try and have productions which will be as good as possible when they end up having to spend the production dollars.
3065 If they have development dollars that they have to spend with no production dollars afterwards, then there is always the fear that they will say, "Okay, great, we have done our development dollars in Montreal and now we will, you know, go elsewhere, we will do something else with the production dollars."
3066 The real problem for development is there has to be cash money involved. Just simply saying we are going to put somebody located in an office in Montreal, they are not going to have any cash dollars that they are in charge of and so therefore they will help facilitate faxes or whatever back to Toronto where the green lights will be done and, you know, they will have coffee and they will do all kinds of nice things in Montreal and that's great, but if they don't have responsibility for a set amount of money, then it's going to be a problem.
3067 That happened in 2001, where there was a person assigned in Montréal, but they also had a set amount of money that was their responsibility. It was very small, it was $50,000, but to our knowledge right now there is not even $50,000.
3068 THE CHAIRPERSON: Right. My question was more if you were going to come to the table and say, "Well, we want, you know, some protected guarantees" why wouldn't you divide the available money into, in part development money, which is hard money, to help the projects develop, and production and then you divide that up accordingly?
3069 MR. COX: You have negotiated very well and we accept your point.
3070 THE CHAIRPERSON: Okay.
3071 MR. COX: If you are going to give us $4 million we will take some of it in development money.
3072 THE CHAIRPERSON: So it would make sense to you in a normal development cycle that you would have some development money up front?
3073 MR. COX: Yes.
3074 THE CHAIRPERSON: Okay.
3075 Now, you have made this point about disparity of the Quebec tax credit in the past and correct me if I'm wrong, it's my understanding that the Quebec tax credit system -- not the federal one, but the Quebec one -- gives a boost to French-language production, but the English-language production gets a similar tax credit -- maybe not identical, maybe a little less advantageous than another jurisdiction, but it is comparable to most other provinces, is it not?
3076 MR. COX: I think the point that we try and make is that French-language drama production in Quebec gets a bonus, as you say, so therefore it gets a 5 percent net benefit in terms of the overall amount that they can get from the Quebec tax credit. English-language production is disadvantaged.
3077 THE CHAIRPERSON: Well, it's not advantaged, does it mean it gets disadvantaged is my question.
3078 MR. COX: Well, I would like to say that if one is not equally advantaged one is selectively disadvantaged and, you know, obviously from the Quebec Government's point of view is, there is a baseline of tax credit and then they build on top of it and, gee whiz, they are not building anything for English-language production and that's the way it goes.
3079 The English-language level in Quebec is comparable across the street to various other jurisdictions to a greater or lesser degree depending on what Ontario is doing somewhere else. We found out three or four years ago that when the domestic tax credit in Quebec was raised, as it was, Ontario immediately matched it.
3080 THE CHAIRPERSON: Right.
3081 MR. COX: So therefore in some ways it's very hard to outpace Ontario because they are going to deliberately make sure they match everybody, at least match us. Then the problem becomes, okay, they match us, but the bonus continues, so they matched what's going on, but then the bonus goes up higher.
3082 THE CHAIRPERSON: Right. But my point is, if you compare your productions and the tax structure compared to other provinces -- perhaps not Saskatchewan for obvious reasons -- but other provinces in terms of creating the budgets and production budgets, you are not disadvantaged for English-language production, you are just not as advantaged as French-language production?
3083 MR. COX: That's right. And we feel that that is a disadvantage and that it doesn't exist anywhere else in Canada. In no other provincial jurisdiction is the official language minority production disadvantaged or lacking in advantages compared to the majority language production in those provinces.
3084 THE CHAIRPERSON: Well, we won't compare notes with French language OLMCs, I think they would disagree with you on that score in terms of how much benefit they get in those jurisdictions.
3085 MR. COX: We are not comparing ourselves. Our situation is completely different. We would be the first to say that.
3086 THE CHAIRPERSON: Yes. And we are looking at it differently, including the fact that French-language OLMCs may be found in nine provinces and three territories, whereas in your case the entire production -- English-language OLMC community is here; correct?
3087 MR. COX: Yes.
3088 MR. SAXE: Yes. They are very different challenges between the two different official language minority groups.
3089 Our only point was, in Quebec if the language of your production is French you get more tax credits, if it's in English it's less.
3090 There are other things like caps on SODEC spending, there are other ones like that, it's just to the point there are challenges here that people don't see as readily and they are very different. It is very, very challenging to be a French-language producer in the rest of Canada and we just tried to make that point.
3091 THE CHAIRPERSON: Vice-Chair...?
3092 COMMISSIONER PENTEFOUNTAS: Just to clarify one thing.
3093 Production money ensures development money, but development money comes far from ensuring production money.
3094 Is that what I understood?
3095 MR. SAXE: Yes.
3096 MR. COX: Yes, that's what I would say.
3097 COMMISSIONER PENTEFOUNTAS: So if you had your druthers in a perfect world you would rather have it all in production money?
3098 MR. COX: If there were an obligation that was defined in terms of production money we feel the development money would naturally have to precede it and would be budgeted by the broadcasters accordingly.
3099 If, however, the obligation is strictly defined as development, that's great, because it's better than what we have now, but it doesn't follow that production will happen.
3100 COMMISSIONER PENTEFOUNTAS: Okay. And if you want to base spend on revenues, you don't have a problem with that, just to follow-up the Chair's point, assuming it's north of 2 percent?
3101 MR. COX: Assuming it's north of 2.3 percent, yes.
3102 COMMISSIONER PENTEFOUNTAS: Okay. Thank you.
3103 THE CHAIRPERSON: Thank you, gentlemen.
3104 Those are our questions.
3105 MR. COX: Thank you.
3106 THE CHAIRPERSON: We will not do the other presentation before the lunch break, which is the Performing Arts Lodges Vancouver, please.
3107 MR. SAXE: Thank you.
3108 THE SECRETARY: Please introduce yourself and you have 10 minutes.
3109 THE CHAIRMAN: So welcome and please go ahead, after turning on your microphone, please.
3110 MR. DOBBIN: Good morning, Mr. Chairman, Mr. Vice-Chairman, members of the Commission, my name is Michael Dobbin. I appear here before you today as a representative of PAL, the Performing Arts Lodges of Vancouver.
3111 I bring greetings to you from Mr. Tony DuMoulin, the Volunteer President of our Society, who is unable, unfortunately, to be here today.
3112 In his stead I am here, also as a willing volunteer and, as it happens, I am a proud and grateful resident of PAL Vancouver. I am one of some 125 people who are privileged to form a dynamic community unlike any other, and to live in a unique building which is the envy of other artists and purpose-built social housing experts from across our nation.
3113 Everyone at PAL Vancouver has a story to tell and I want you to meet some of my neighbours. So if I could direct your attention to the monitors we will show a short video.
--- Video presentation
3114 MR. DOBBIN: As my colleague and neighbour said, we are fortunate to live in modest, safe, clean and affordable housing development in a lovely part of the city. And we are not tucked into a back corner of town either, we are right in the centre in the thick of things in downtown Vancouver's Coal Harbour.
3115 As Judy said, we have a beautiful rooftop garden unlike any in the area and, on the same rooftop, we have a 150-seat fully equipped theatre facility that allows our residents to continue to hone their creative skills, to perform for the public, to create, to share innovation and learning together and with younger artists and to celebrate the joy of being pioneers in the performing arts and allied craft industries which enrich the lives of Canadians.
3116 I serve as the President of a subsidiary organization, the PAL Studio Theatre Society, which assumes responsibility for the operation of this theatre in sky, not only for the residents of PAL but also for the enjoyment of people from our neighbourhood, for the larger artistic community of which we are a part, and for the broader public of Vancouver.
3117 PAL Vancouver is, at its core, a testament to the fortitude and determination of a few people who garnered support from across the Vancouver community, to look out for the long-term welfare of Canadian performing artists, designers, directors, writers, producers, and so on.
3118 The creative people who reside at PAL Vancouver have spent their careers in dedication and service to others and, ironically, because of this service many of them have found themselves in circumstances that too many artists all too often find themselves in Canada, not able to provide financial security for themselves in their senior years.
3119 PAL Vancouver is in fact a bit of a miracle and, as you have just seen in the video, a genuine lifesaver for people.
3120 As brilliant as the concept for this miracle building was, and as dynamic as its first seven years of existence have been, our model is not perfect and we are now in need of rethinking our ways of doing business in order to protect the integrity and financial security of the project for the near and long-term future.
3121 Phase one of that plan is to establish a strong and enduring endowment fund.
3122 We are grateful that PAL has been chosen to speak to the Bell, Astral application today and if this application is approved we believe that there is much good that will be accomplished for our performing arts pioneers if the amendment which we have proposed allows PAL Vancouver to be added and included in the roster of social beneficiaries from this proposed transaction.
3123 I was gratified yesterday to hear Commissioner Menzies ask whether or not the applicants would be open to some redistribution of their social benefits package and the answer to that I heard was yes.
3124 I wish to stress that PAL Vancouver is a not-for-profit social housing provider, but there is absolutely no money underwriting the operation of our building from any level of government.
3125 I am one of what's called a PAL partner. We are 12 anchor life-lease holders whose participation helped to secure the original financing for the building, but over 100 of our units are rentals and over 80 percent of the people living in PAL receive rental assistance. Unlike what my neighbour and colleague called "subsidized rent", we like to use the words "rental assistance", because that's what it is and governments are not involved. The total sum of that rental assistance is raised by the Board of Directors of our society on an annual basis solely from fund-raising activities.
3126 PAL Vancouver is a Chapter of PAL Canada and to my knowledge it is the only one of our seven sister Chapters that does not receive government assistance for the operation of their buildings.
3127 As you can imagine, there is a growing level of donor fatigue when our board continues to solicit year-in and year-out for ongoing financial contributions from the relatively few generous donors we treasure.
3128 PAL Vancouver seeks to establish some new mechanisms to ensure sustainability. A sizeable endowment fund will assist in securing the the rental assistance that most of our renters require, and once it's in place will allow our Board to focus on raising money for expansion of programs and service to those living at PAL, as well as creating additional housing units for those on our extensive waiting list.
3129 At present, all of the Board's energy goes towards raising funds necessary for our rental assistance and that must change.
3130 If you know anything about the complexities of raising money for non-profit arts organizations, you will know that building an endowment fund is never easy. You will also know that building an endowment fund begins with a major lead contributor. Having this single lead contributor nearly always makes the difference between the success and failure of a campaign.
3131 It's for this significant reason that we are petitioning you today. From the social benefits package we are asking that $1 million be carved out in order to create the lead contributor we require in order to establish and name our new endowment fund. With this lead providing the incentives we need, the endowment fund campaign can flourish and we believe we will secure the future of PAL Vancouver and its current and future residence.
3132 I trust that you found our written intervention to be clear and concise and that my presence here today may have illuminated some of the other issues addressed therein.
3133 Yesterday we heard a lot about youth, emerging artists, Indie artists and developing artists. Our proposal -- our intervention asks that those who in their day were the youth and emerging artists of Canada and who have contributed so much to where we are today be considered.
3134 Another important statistic you should know is that 80 percent of PAL Vancouver residents have worked -- or continue to work in radio, television and film.
3135 There is much more that I could say about Pal and the many issues that one can draw from our submission, but I'm conscious of the time so I would be happy to answer any questions you may have.
3136 THE CHAIRPERSON: Thank you very much.
3137 Commissioner Duncan...?
3138 COMMISSIONER DUNCAN: Welcome, Mr. Dobbin, and thanks for making the trip from Vancouver to Montreal. We are all happy to come to Montreal, but it's a long ways.
3139 MR. DOBBIN: You can thank my fellow Board Member who gave me his points.
3140 COMMISSIONER DUNCAN: They come in handy.
3141 I do have a few questions. I thought your operation -- the video was very nice and I thought it was an interesting concept. I wasn't aware of this type of a lodge.
3142 I'm interested to hear today, you said there are seven others across Canada similar?
3143 MR. DOBBIN: There are seven Chapters of what is called PAL Canada. Most of them don't actually have a building yet. Vancouver is seven years old, Toronto is about nearly 20 years old. There is a new one has just opened in Edmonton; Stratford has one and they are expanding theirs. There is a Chapter in Calgary, Winnipeg, Halifax and I think that's it.
3144 COMMISSIONER DUNCAN: I am from Halifax and I didn't realize.
3145 MR. DOBBIN: They are working at it.
3146 COMMISSIONER DUNCAN: Yes, okay. That's great. I think it sounds wonderful, and a wonderful environment for the people living there.
3147 I was wondering, first of all, if you have had any discussions with the people at Bell or Astral.
3148 MR. DOBBIN: About being part of the endowment fund? No.
3149 COMMISSIONER DUNCAN: No. Okay.
3150 I also was wondering how you arrived at the figure -- I had written down $1.5 million, but --
3151 MR. DOBBIN: It's $1 million and 50, actually.
3152 COMMISSIONER DUNCAN: I see that, yes. How did you arrive at that number?
3153 MR. DOBBIN: By multiplying it out over five years, the original ask.
3154 Of course, we would like it all at one time, but we would be happy to take it over five years.
3155 To be the lead donor, it would make a huge difference if the contribution came in one piece, and we would be willing to name the endowment fund the Bell Endowment Fund in return for that gesture.
3156 COMMISSIONER DUNCAN: Okay. I understand how you arrived at it. It is a large portion. How much is your whole endowment fund?
3157 Did I read in your submission that the whole amount of the endowment fund will be $3.5 million?
3158 MR. DOBBIN: A minimum of $3.5 million. We really need $5 million, but the Board has bitten off as big a chunk as they think they can chew for the moment, and $3.5 million is the minimum that we are after, and the campaign will be launched very soon, with honorary chairs that are about to be named.
3159 COMMISSIONER DUNCAN: You just mentioned that about 80 percent of the residents are people who have worked, or still work, in the industry. I am just wondering, the other 20 percent would be...?
3160 MR. DOBBIN: The way the building is structured, like any social housing project in Canada, but particularly in B.C., there is a formula that says how many units have to be subsidized, and in B.C. the formula is that 40 percent have to be subsidized and 60 percent can be at market rate, or what they call near market rate.
3161 In our case, 80 percent are in the category that are eligible for subsidy and 20 percent are paying what is called near market rate, and those are people who are still working or who have had careers at a higher income level than others and can afford to pay the near market rate.
3162 COMMISSIONER DUNCAN: I think it's very interesting. Most of my questions were just concerning that. I think, as you say, your submission is very clear.
3163 It was interesting to read the attachment on Judy Ginn Walchuk, and I see that she is in the picture.
3164 MR. DOBBIN: That is Judy that you saw.
3165 COMMISSIONER DUNCAN: Yes, I saw her there.
3166 MR. DOBBIN: Judy is a famous Canadian, whose career and health took a turn at about the same time. So her story is fascinating and moving.
3167 What you saw in the pictures with her are the lamps that she makes. She moved from singing to making lamps for Hollywood stars, and Vancouver predominant citizens as well, some of which are in her own apartment.
3168 COMMISSIONER DUNCAN: Interesting. Very nice.
3169 I don't think I have any other questions. Again, I appreciate you coming.
3170 Some of my colleagues may have questions, but I think your presentation was clear.
3171 MR. DOBBIN: Thank you.
3172 THE CHAIRPERSON: It was very clear.
3173 I just have one question. Sometimes we face difficult decisions. The question would be: Why this as opposed to something else?
3174 A number of people could come to this hearing and say: There is this pool of money available and it's for us.
3175 Historically we have tended to look at what the applicant brings to the table, and we are not a grants and contribution agency.
3176 So why your particular idea as opposed to somebody else's?
3177 MR. DOBBIN: That is a very good question. I will try to answer it from my own point of view, because I wasn't part of the conversation that decided, at the first instance, to make this submission.
3178 I believe it probably has mostly to do with the fact that we are talking about the living heritage of the business, and there is a lot of talk about putting money into development and into new and evolving and emerging projects, and no conversation, at any level, about putting money into the living heritage of our business.
3179 PAL Vancouver seized this opportunity to make this request because we believe that that is a very important part of where legacy funding should reside.
3180 THE CHAIRPERSON: Understood. Thank you very much for answering our questions and for participating in our hearing.
3181 MR. DOBBIN: Thank you.
3182 THE CHAIRPERSON: It is now 12:30 or about, so let's take an hour break.
3183 Donc, nous ajournons jusqu'à 13 h 30.
--- Upon recessing at 1229
--- Upon resuming at 1334
3184 THE CHAIRPERSON: Order, please.
3185 We will now hear the next presenters, which is a group from ACTRA.
3186 As you know, we ask you to present yourselves for the purpose of the transcript. Please go ahead.
3187 MS LAWRENCE: Thank you. Sitting in on these proceedings the last couple of days, much has changed since my father was Vice-Chairman of the CRTC.
3188 Thank you very much for hearing us, Mr. Chair, Mr. Vice-Chair, Commissioners and Staff. My name is Cary Lawrence and I am a professional actor and a member of the National Executive of ACTRA, the Alliance of Canadian Cinema, Television and Radio Artists.
3189 With me today is Jacob Leibovitch, our National Director of Research, and Marit Stiles, our National Director of Public Policy and Communications.
3190 We represent 22,000 professional English-language performers, members of ACTRA.
3191 We are here to talk about the prospect of allowing Canada's leading vertically integrated media company to become even bigger.
3192 This is the second time, in less than a year, that we have appeared in front of the Commission to speak about the merger between BCE and Astral Media, two of the largest companies in Canada's recorded media industry.
3193 We are glad to see that BCE has taken to heart many of the concerns raised by industry stakeholders after their last attempt to acquire Astral's broadcast assets was denied. The previous hearings brought out many, united in their passion for the health of Canada's broadcasting sector.
3194 Passion is something that actors understand very well. We bring passion to the roles that we inhabit, and to the projects that we love, which is why it's heartening to see so many other intervenors whose own enthusiasm for Canadian culture has led them here, not to contradict or obstruct, but to help build and develop something truly special that defines who we are as Canadians.
3195 ACTRA supports the Astral application made on behalf of BCE, albeit with several key conditions. There continue to be areas where we feel that BCE could do more to live up to its responsibilities.
3196 There is no question that a robust, vibrant and independent media system is vital to Canada's cultural and economic future. And as the gatekeepers of the Broadcasting Act, we rely on the Commission to find a balance between serving and protecting the market and promoting Canada's cultural objectives.
3197 BCE is already the largest vertically integrated media company in the country. Should this transaction be approved, it will get even bigger, and it will accomplish what no other vertically integrated media company in Canada has yet to achieve, a large, a very large, footprint in both official languages.
3198 Standing still in Canada's competitive broadcasting sector is courting disaster. The landscape is simply changing far too rapidly. Over-the-top services like Netflix and Apple TV, innovative video-on-demand options, and a seemingly endless array of new and innovative apps allow Canadians unprecedented freedom when it comes to consuming the content they crave.
3199 This plethora of choice is great for Canadians, but presents a distinct challenge for businesses trying to craft a winning business model in the aftermath of the digital revolution.
3200 In order to avoid obsolescence, these organizations have to adapt and grow their offerings to Canadians -- innovating and reinventing themselves in order to stand apart from their competitors.
3201 In this context, it is no surprise that BCE would want to acquire Astral Media's assets. Astral's English and French-language specialty TV and radio assets already make the company one of Canada's largest and most influential broadcasters. When added to Bell's own considerable broadcasting resources, it will further develop a telecommunications giant whose influence is felt across the entire sector.
3202 This proposed transaction is nothing less than a watershed moment for the Canadian broadcasting landscape. Approving this transaction will have a significant cultural and economic impact, transforming how Canadians access and consume the content they love so much.
3203 Given the stakes, and the magnitude of the transaction, it is important that the Commission conduct a fulsome examination of a wide range of factors before ruling on Astral Media's application.
3204 To that point, it is worth noting that even though it is only five years old, the CRTC's Diversity of Voices Policy was conceived at a time when a transaction of this size was virtually unthinkable.
3205 To the independent players in the system, this kind of media concentration continues to be an area of concern. While the focus of that policy is to maintain diversity in editorial content, we believe that diversity should also be promoted within entertainment and scripted programming.
3206 Four massive corporations control the majority of Canada's cable, satellite, Internet and wireless services. That's it, just four. These corporations possess a disproportionate amount of power over what we watch and how and when we watch it.
3207 And, unfortunately, Canadians are only able to access a handful of Canadian-produced dramas across a multitude of these services.
3208 That's not diversity, that's a recipe for devaluing one of your -- our -- most valuable resources -- new, original and distinctive Canadian dramas.
3209 The capability of vertically integrated entities to distort the marketplace through their sheer size is undeniable.
3210 Thankfully, BCE's decision to divest itself of a handful of its radio and specialty television services demonstrates that they are listening to the concerns of the sector when it comes to the company's percentage of the market share.
3211 We have witnessed the unease that vertically integrated entities create in the broadcasting system. There is a perceived power imbalance as smaller operators protest the difficulty in getting their larger counterparts to deal with them fairly.
3212 We can't roll back the clock; vertically integrated broadcasters are here to stay. But we can ask the CRTC to keep a close eye on how these companies conduct themselves.
3213 If the Commission does approve Astral's application, the end result will mean one less door for independent producers to knock on, and fewer opportunities for them to sell their products.
3214 MR. LEIBOVITCH: Good afternoon. BCE's proposed public benefits package is in line with what ACTRA expects from a transaction of this size. ACTRA appreciates that BCE has proposed television and radio benefits packages representing the full 10 percent and 6 percent of the respective assets.
3215 And, on the whole, we find the proposed allocation of these monies to be consistent with the Commission's policy on public benefits.
3216 We are happy to see that the self-serving capital expenditures and personal pet projects masquerading as public benefits are no longer a part of this application.
3217 However, we do have some concerns regarding the revised valuation of Astral's assets. The revised valuation report claims that the overall value of the transaction is essentially unchanged. This is in spite of the fact that several underlying elements of the proposed transaction are significantly different.
3218 Given the complexity for determining a fair assessment, ACTRA defers to the expertise of our colleagues at the Canadian Media Production Association to help nail down the proper methodology for arriving at an accurate valuation of this transaction.
3219 ACTRA submits that the suggested timeline for the payout of the public benefits is not ambitious enough. BCE's proposal that benefit funding not begin until 2017 is unacceptable. After all, if BCE is able to reap the rewards of Astral's broadcasting assets right away, why must the recipients of public benefit monies wait an additional four years before they receive the same consideration?
3220 We are also concerned that a seven-year period to spend public benefit monies is too generous. Past practice has been for benefits to be paid within the timeframe of the broadcasting licence. To remain consistent, BCE should be required to spend the public benefit monies within five years.
3221 MS LAWRENCE: The Canadian broadcast and media production sectors have enjoyed a renaissance in recent years, due in no small part to the public benefit monies that have flowed into the industry as a result of acquisitions such as this one. If BCE craves to be the largest Canadian vertically integrated media company, then they must prove their worth by investing in and promoting Canadian content as well.
3222 For a Diversity of Voices, for giving Canadian audiences a distinctive alternative to homogeneous U.S. programming, and for good business reasons, Canadian broadcasters need to recognize the opportunities available to them by licensing and airing more original, distinctive Canadian drama. In order to stand out in a global media landscape, Canadian broadcasters need to adapt and grow their entertainment offerings to Canadians to stand apart from their global media competitors.
3223 And what a great time for a broadcaster to step up and license and air more Canadian drama when Canada's independent creators are being recognized for producing world-class programming.
3224 Thank you again for having us here today to present, and we are happy to answer any of your questions.
3225 Et comme mon beau-père disait souvent, Vive le Canada!
3226 LE PRÉSIDENT : Merci. Merci beaucoup pour votre présentation.
3227 Commissioner Menzies will be asking you some questions.
3228 COMMISSIONER MENZIES: Thank you. I am curious to know, while you mentioned in your oral presentation concerns, or an acknowledgement of some of the changes anticipated by a transaction of this size, you don't seem to share the concerns of PIAC or -- I mean, you are supportive of it, so I am curious to know why you don't share the concerns of PIAC and others regarding the concentration of ownership, structural potential for anti-competitive behaviour, and restricted consumer choice.
3229 It is a "why not" question, rather than a "why". I could rephrase it into a "why", but I think you get what I am saying.
3230 MS LAWRENCE: You are asking why --
3231 COMMISSIONER MENZIES: You said in your oral presentation that there would be one less door for independent producers to knock on, for instance.
3232 MS LAWRENCE: Yes. I think it is sort of a fait accompli that this is going to happen, eventually.
3233 COMMISSIONER MENZIES: Oh, that's news to us.
3234 MS LAWRENCE: I think, instead of trying to pedal backwards, we want to embrace what may happen, but at the same time keep in mind that, for us, our cultural content -- Canadian culture -- is first and foremost.
3235 So, if they can guarantee that that will stay in place, then all power to them.
3236 COMMISSIONER MENZIES: What would be the short-term economic impact on your membership if the transaction were approved, with the level of tangible benefits more or less the same?
3237 What does that mean economically to your membership?
3238 MR. LEIBOVITCH: Sorry, just to clarify your question, you are saying that if the deal is approved by the Commission and the tangible benefit money is to flow right away, or do you mean with the delay --
3239 COMMISSIONER MENZIES: Okay, let's use that.
3240 What I am trying to get at is: How much skin do you have in this game?
3241 MR. LEIBOVITCH: Well, certainly, if the Commission approves the deal and the tangible benefit money flows immediately, that is going to mean additional funding for the independent production of Canadian content.
3242 COMMISSIONER MENZIES: Right, but how much money? How much of that would find its way to your membership?
3243 You don't have to know, I am just curious to know if you have done an economic impact analysis for your membership.
3244 MR. LEIBOVITCH: No, we haven't.
3245 COMMISSIONER MENZIES: Okay. Thank you.
3246 On the short versus the long term, why do you prefer that the money be spent, or the tangible benefits be allocated immediately, or more or less immediately, as opposed to, for instance, being revalued in 2017 dollars in the future?
3247 MS LAWRENCE: Well, if I may, we are promotionist and we want to continue the trend by -- we want to keep the industry moving forward and if there's monies to be had now, we would like to have a hand at it right away so that we can continue. Because right at the moment we're creating demand and we would like to continue that demand by creating --
3248 COMMISSIONER MENZIES: Sure. I understand that. But do you not worry that it might be better to pace the money out into the future sort of? What happens five years from now? Are we just --
3249 MR. LEIBOVITCH: Yes. I think it's based along some of the same logic that Bell and Astral are putting forward. You know, Astral talks about the fact that even though they're capitalized at $2.7 billion they're not large enough to compete in the Quebec market in terms of purchasing power for some of the licences.
3250 I think that, you know, the more money that's available, the more development of Canadian content that happens sooner rather than later helps to showcase that talent that our members bring to the table and the other creative producers in Canada bring to the table. It helps to create brands and brand loyalty that will carry into the future.
3251 Waiting five years for that money to become available to put those productions into development and showcase them to Canadians, to us, doesn't have a benefit in the here and now. We're competing against very major players south of the border and we need to have additional capacity to compete on that level.
3252 COMMISSIONER MENZIES: Okay. So what I'm understanding from what you both just said is that it would be better -- your analysis and position is that it would be better to have as much money as possible as soon as possible to build the best foundation, which would then take care of the future itself?
3253 MR. LEIBOVITCH: That's right.
3254 MS LAWRENCE: If I could just add a word in your sentence?
3255 COMMISSIONER MENZIES: Yes, sure.
3256 MS LAWRENCE: It's to continue. We're doing it now. We are in the midst of developing but we want to continue that development. By stopping, by arresting that development, that movement forward, we will only take three steps backwards.
3257 I mean, I'm sure you know the expression, "If you build it, they will come." Well, if you allowed us to write it and produce it, they will watch it. But we have to continue creating and producing these products so that we get a bigger audience and so we get it out there, we get it out there airwaves.
3258 COMMISSIONER MENZIES: Okay. Give us some for instances of what you might do that you won't do now, because I mean, some might argue that with a 30-percent Canadian program expenditures dedication that there's plenty happening already and sort of what will you do that's more?
3259 MS LAWRENCE: Well, that 30 percent is -- sorry, I didn't --
3260 COMMISSIONER MENZIES: No, go ahead.
3261 MS LAWRENCE: That 30 percent has a lot to do with reality-based TV shows. We're talking about Canadian drama, stories --
3262 COMMISSIONER MENZIES: Well, there is a PNI expectation too for them.
3263 MS LAWRENCE: Hopefully.
3264 COMMISSIONER MENZIES: Well, there is in the licensing in terms of --
3265 MS LAWRENCE: Yes. Yes. But what we're seeing in general is not Canadian-based stories. We're seeing a lot of fillers, if you will, and I think what we're seeing a trend of in Toronto and in Vancouver and a lot here in Montreal is the development of stories, television series, feature film that are indigenous to Canada. So we don't have to go south of the border and get a name to come on up here. We have our own people that we can -- our own stars that we can spotlight.
3266 So I'm just saying I think there's a lot of ideas out there, there's a lot of want and a lot of we want to produce this, but there's not enough backup support.
3267 COMMISSIONER MENZIES: Okay. I understand. Thanks.
3268 Is part of your concern with, I think kicking the can down the road is the way you put it, have to do with past expenditures, in terms of that, and could you just articulate that a little bit?
3269 MR. LEIBOVITCH: Yes. Certainly, Bell's track record in the past has shown that all the benefits money that they've committed to spending has not been spent, and so we are afraid that that will happen again if the Commission doesn't mandate that they spend those monies within a certain timeframe, in this case five years.
3270 COMMISSIONER MENZIES: Okay.
3271 What would be your position on the idea of having the tangible benefits that we're talking about paid earlier or paid coincidental with an approval but redirected to the French market?
3272 Because the Bell position is that there's more than enough in the English market right now and there's an argument that shows in past transactions that the English market has benefited more than -- Shaw-Global, for instance -- than the French market. So what would be your position on that idea?
3273 MS LAWRENCE: Well, if I may, from a Montreal perspective of being -- working here in Montreal, I don't see that as the case at all. We're not getting -- ACTRA in Montreal doesn't see any of the funding. It goes straight to the French side.
3274 And also, I will say that at the moment, just down the 401, there's a lot of people out of work right now, a lot of directors and actors. So I don't -- for the minute, it's not a -- I don't think English entertainment is getting more airtime or monies than French.
3275 COMMISSIONER MENZIES: Okay. I'll take that as a no.
3276 MS LAWRENCE: No. Exactly, yes.
3277 COMMISSIONER MENZIES: While you're on that though, what is the trending like for your membership? Is there more work, less work? They're making more money, less money? What do the past two or three years look like for you?
3278 We had the English production community in earlier and they talked about having a $300-million industry 10 years ago and now a $175-million industry. From your members' perspective, is life getting better, worse, indifferent, boring?
3279 MS STILES: It really depends on what part of the country you're talking about.
3280 COMMISSIONER MENZIES: Okay.
3281 MS STILES: In our case what we found is that yes, we have seen some increase in our members' work opportunities and earnings under the Independent Production Agreement, which is mostly film and television independent production. However, it's pretty concentrated.
3282 We haven't seen that kind of growth across the country, certainly, some areas of this country, Saskatchewan, even in Vancouver, where we've seen the industry really slide.
3283 And so actually, you know, in Toronto we've seen some increase but it still hasn't quite picked up to the point that we had previously been at. We're still looking to grow more.
3284 For most performers, their lives still -- their income level is still very lumpy and the opportunities are very few still.
3285 COMMISSIONER MENZIES: When you refer to the point that you were previously at, what point would that be?
3286 MS STILES: I think, you know, there was a real bump in, I guess, the late nineties obviously.
3287 Again, in Toronto we have seen an increase in the number of series being produced. So it has employed a lot more of our members. But at the same time, unfortunately, we've seen, again, production really decline quite dramatically in other parts of the country.
3288 COMMISSIONER MENZIES: Okay. Thank you.
3289 You make a reference in your written submission to mandating service-by-service reporting on CPE and PNI, and I read that as sort of across the industry or that you wanted that but I'm not sure this would be an appropriate venue for that.
3290 So are you just referring to this as a condition of approval for Bell?
3291 MR. LEIBOVITCH: That's correct, yes.
3292 COMMISSIONER MENZIES: Okay. Thank you. Those are my questions.
3293 THE CHAIRPERSON: Thank you very much. Those are our questions.
3294 So we will now proceed with the next presenter, which is TELUS.
3295 I would ask you to come up, please.
3296 THE CHAIRPERSON: So welcome, Mr. Woodhead and your colleagues. Please go ahead, using the usual format. Thank you.
3297 MR. WOODHEAD: Thank you, Mr. Chairman.
3298 Good afternoon, Mr. Chairman and Commissioners. TELUS is pleased to be provided with this opportunity to further expand upon the concerns we have expressed in our written submission regarding Bell's acquisition of Astral Media.
3299 My name is Ted Woodhead and I am Senior Vice-President, Federal Government and Regulatory Affairs for TELUS.
3300 With me to my right are:
3301 - Ann Mainville-Neeson, Director, Broadcast Regulation; and
3302 - Clément Audet, Vice-President, Consumer Solutions for the Quebec Region.
3303 To my left are:
3304 - David Fuller, Senior Vice-President and Chief Marketing Officer; and
3305 - next to him, Blair Miller, Vice-President, Content.
3306 When the Commission denied Bell's first application to acquire Astral Media last year, it noted that "a transaction of this magnitude would adversely affect competition and diversity." Nothing has changed in this regard. The divestitures proposed in this second iteration of the Bell-Astral acquisition do not alter the significance of this transaction for the communications industry in Canada, whether measured by viewership, revenues or number of Category A services.
3307 If this transaction is approved, Bell will still become the largest television content aggregator, the largest radio operator, and one of the most significant advertising suppliers, over and above being Canada's largest telecommunications provider. This would have a significant effect on the industry and most importantly on consumers.
3308 As we have noted in our written submission, concentration of programming services coupled with vertical integration with distribution networks affects more than just the broadcasting sector; it also affects the telecommunications sector, including wireline and wireless services.
3309 TELUS is very concerned that Bell will use its significant power over content and advertising to raise prices for competitors, who will either pay the supra normal fees or be weakened in the competitive marketplace by not being able to offer the same robust offering of content to consumers.
3310 This strategy might be win-win for Bell, but it weakens competition and thereby stifles innovation, and ultimately, worst of all, it is harmful to consumers who lose-lose by either paying higher prices for access to the content they want to watch or are unable to get the content they want from the provider of their choice.
3311 The current vertical integration framework is insufficient to handle any significant increase in market power by any of the vertically integrated players. We've experienced this firsthand. There are some serious gaps in the framework, which we detail in our written submission.
3312 Not all of the examples we have raised relate to Bell but the point of raising them is that Bell would face the same incentive and be provided with the same opportunity. Bell relies on the VI framework to dismiss any concerns relating to the incentives and opportunity for anti-competitive behaviour. In the circumstances, it is relevant to call into question the efficacy of the current framework in dealing with the current level of vertical integration.
3313 The gaps and weaknesses of the current VI framework will need to be fixed regardless of the outcome of this hearing but in the event that the Commission considers it appropriate to approve this revised transaction, it must address the concerns with the VI framework through additional conditions of licence specific to Bell.
3314 Moreover, Bell's proposed acquisition of Astral raises additional issues which aren't covered by the current VI framework. Access to advertising by competitors to Bell, especially in the highly competitive wireless services market, is a significant issue for TELUS. Bell's control over television advertising, radio advertising and out-of-home advertising raises significant concern for a competitor to Bell's own services.
3315 TELUS notes in particular that Bell and Astral radio properties controlled more than 80 percent of TELUS' radio advertising spend last year. Without any rules in place to ensure fair access to advertising availabilities on radio and TV, Bell could act on the incentives to overprice, thwart or devalue advertising by its competitors.
3316 Access to advertising on broadcasting platforms is all the more important when you consider that Bell would also control Astral's significant out-of-home advertising portfolio.
3317 The concerns relating to the potential for anti-competitive conduct are very real. While we won't rehash the arguments we presented in Round 1 of Bell's proposal to acquire Astral, it remains true that the concerns expressed by a number of parties are not remedied by Bell's revised proposal in this second attempt.
3318 We heard Mr. Cope and Mr. Crull indicate yesterday that at no time was Bell Media found to have sought commercially unreasonable terms or behave anti-competitively.
3319 TELUS considers it important to put on the record of this proceeding that the main issue which was brought to arbitration between Bell and TELUS in 2011 related to Bell's request for a minimum penetration guarantee or a revenue level for TSN, both of which would have forced TELUS to repackage TSN out of its current discretionary sports package on Optik TV and into the basic package, removing choice that subscribers to Optik TV were already enjoying.
3320 Such minimum penetrations and revenue guarantees which force a service into the basic package is something that the Commission specifically identifies as a commercially unreasonable term in the Code of Conduct.
3321 Moreover, as the negotiations and dispute resolution for the renewal of the 29 specialty services owned by Bell Media were running their course, Bell denied access to some of the signals to TELUS, depriving Optik TV subscribers of the HD upgrades of some specialty services and RDS2 for many months.
3322 TELUS, as part of the Canadian Independent Distributors Group, filed a complaint of undue preference with respect to this abusive conduct by Bell but the Commission never ruled on this complaint, instead closing the file as having been resolved by the final offer arbitration process. Bell is now relying on these procedural aberrations to justify that no further safeguards are necessary to protect competition or consumers.
3323 Bell continues to seek commercially unreasonable terms for access to "TV Everywhere" rights, which is why no other BDU provides as much Bell Media content on other platforms as Bell itself. TELUS and other distributors are not failing to negotiate this deal with Bell in pursuit of some regulatory benefit in this hearing, contrary to Bell's allegations. Bell's offer is simply unreasonable -- it is far more expensive and provides far less value than what other programming services are offering.
3324 Bell has disputed the findings of the Commission in the VI framework proceeding that incentive exists for anti-competitive behaviour. And we heard the Bell panel again yesterday contend that it just doesn't make business sense for them to withhold content and therefore, if one believes this contention, no additional safeguards are necessary.
3325 Bell's arguments and the additional evidence they have filed in reply relate only to the economics of full foreclosure of content. While the economics of foreclosure of content or advertising may not support denial of access to everyone all of the time, they most certainly support holding out for unreasonable prices even if it means denial of access of some content to some competitors some of the time.
3326 Independent distributors are particularly vulnerable to being forced to pay supra normal fees or face foreclosure of content because when Bell secures carriage agreements with the other VI companies through trading-off content carriage arrangements, it reaches nearly 80 percent of the subscriber market.
3327 There is no real need for Bell to secure content deals with independent distributors and therein lies the incentive and opportunity to attempt to squeeze the independent distributors as much as possible because Bell wins either by supra normal fees or by weakening a competitor who chooses not to offer the Bell Media content to its subscribers.
3328 The Commission's current dispute resolution mechanisms are insufficient to address the imbalance of power between parties in arbitration involving a vertically integrated company and an independent distributor. There is an unequal sharing of risk in the current baseball arbitration process, which means that this form of dispute resolution does not achieve its goal of determining fair market value.
3329 This too needs to be addressed regardless of the outcome of this hearing but most certainly addressed directly with respect to Bell in the event that the Commission considers it appropriate to approve this transaction.
3331 MS MAINVILLE-NEESON: While TELUS opposes Bell's acquisition of Astral Media because it would consolidate too much power in the hands of a single communications and media company, TELUS has also gone through the exercise of determining what additional safeguards would be required in the event that the Commission approves this transaction.
3332 TELUS' proposal adds specificity to existing safeguards, fills in some necessary gaps and also creates some disincentives for adopting anti-competitive behaviour. TELUS has compiled these measures into a draft Code of Conduct which we have appended to our written submission and would be pleased to discuss further with you today.
3333 We suggest this Code should be made a condition of licence for all Bell services in the event that the Commission deems it appropriate to approve this transaction. Anything less would fail to protect the public interest against the very real incentives and opportunity Bell would have to thwart competition and thereby harm consumers.
3334 En conclusion, TELUS invite le Conseil à examiner l'effet global de la transaction proposée, allant au-delà de l'approche de silos favorisée par la politique sur la diversité des voix. Comme Bell et Astral l'ont souligné à de nombreuses reprises dans la promotion de cette nouvelle demande, « Ensemble, nous serons plus grand que la somme de nos parties. » C'est tout à fait vrai et c'est pourquoi le Conseil doit se pencher sur cette transaction avec un regard qui va au-delà d'une analyse sectorielle. Le Conseil doit tenir compte de la gamme complète des actifs à la disposition de Bell si cette transaction est approuvée et appliquer des garanties appropriées afin de prévenir les effets anticoncurrentiels sur les marchés adjacents.
3335 Dans la décision 2012-574, le Conseil a estimé :
« qu'advenant une approbation, le pouvoir de BCE sur le marché serait tellement important que le cadre à l'égard de l'intégration verticale ne suffirait pas à traiter de façon efficace les différends et à soutenir efficacement la disponibilité et la distribution des émissions. »
3336 TELUS demeure du même avis que le Conseil et c'est pourquoi, dans cette éventualité, nous proposons des règles détaillées qui pourraient aider à protéger la concurrence et les consommateurs, en établissant une plus grande certitude en ce qui a trait au comportement commercial raisonnable et minimisant ainsi les différends qui nécessitent l'intervention du Conseil.
3337 Nous remercions le Conseil de nous avoir permis de participer à cette instance, et il nous fera plaisir de répondre à vos questions.
3338 LE PRÉSIDENT : Merci, Madame, messieurs.
3339 Monsieur le Vice-président.
3340 CONSEILLER PENTEFOUNTAS : Voilà! Alors, bon après-midi.
3341 Juste pour commencer avec le marché québécois, sans divulguer le nombre d'abonnés que vous avez au Québec, Monsieur Audet ou Madame Mainville-Neeson, nous avons déjà discuté de la possibilité qu'un autre joueur qui puisse concurrencer avec Québecor puisse être bon pour le consommateur québécois et pour le marché, la santé du marché en général.
3342 Votre position face à ce constat?
3343 M. AUDET : Je vous dirais qu'elle n'a pas changé, parce que du côté d'un distributeur, et c'est le cas de TELUS, vous savez, c'est la partie négociation qui nous concerne. Lorsqu'on regarde, pour le consommateur, le tarif va dépendre de nos coûts, et lorsque vous regardez la transaction actuelle, vous avez vu plusieurs intervenants qui vous disaient qu'au niveau des chaînes payantes et des chaînes spécialisées, la nouvelle entité va représenter, on a entendu 40, 50, mais c'est plus de 40 pour cent du marché. Alors, dans tous les cas, pour nous, ça demeure un joueur qui va pouvoir changer les règles au niveau de la tarification.
3344 CONSEILLER PENTEFOUNTAS : Du marché québécois?
3345 M. AUDET : Assurément.
3346 CONSEILLER PENTEFOUNTAS : Au niveau des revenus là?
3347 M. AUDET : Assurément.
3348 CONSEILLER PENTEFOUNTAS : Pas parts du marché mais les revenus comme tels?
3349 M. AUDET : Exactement.
3350 CONSEILLER PENTEFOUNTAS : O.K.
3351 M. AUDET : Puis le deuxième élément qu'on soutient toujours, c'est qu'en termes d'intégration verticale, Bell est le seul joueur qui possède un réseau filaire qui dessert l'ensemble de la francophonie, aussi bien au Québec avec les titulaires sur la majorité du Québec, mais avec des acquisitions de Télébec et d'Aliant, Bell est capable de desservir dans son réseau l'ensemble de la francophonie, ce que tous les autres joueurs intégrés verticalement ne peuvent pas faire. Il n'y en a aucun qui se rapproche même de 50 pour cent du territoire qu'il couvre.
3352 CONSEILLER PENTEFOUNTAS : Alors, ça n'aidera ni le consommateur, ni TELUS dans le marché québécois?
3353 M. AUDET : Bien, en fait, c'est ce qu'on dit, c'est que, selon nous, un joueur d'une telle ampleur en termes de réseaux et en termes de propriétés aura assurément une incidence sur les prix, et comme on le disait, pour l'entité que Bell représente, Bell-Astral, c'est gagnant-gagnant.
3354 Ils pourront soit demander des montants plus importants pour les chaînes spécialisées ou payantes ou les distribuer eux-mêmes, ce qui dans les deux cas les avantage. Et dans notre cas, si ces tarifs-là augmentent, ça va se refléter chez le consommateur. Donc, nous, on ne voit pas aucun avantage de ce côté-là.
3355 CONSEILLER PENTEFOUNTAS : Et le fait qu'il va pouvoir concurrencer contre le grand joueur au Québec, et dans le domaine de la distribution et dans le domaine de la programmation, ça n'aidera pas?
3356 M. AUDET : Le fait que les trois... Le grand joueur au Québec, notamment, c'est une chaîne généraliste, ce qui fait que présentement, au niveau des chaînes spécialisées, le groupe Québecor n'est pas un gros joueur présentement, et la nouvelle entité qui va être Bell-Astral Média va être trois fois plus grosse en termes de possession de chaînes spécialisées et chaînes payantes. Donc, le rapport de force va demeurer assez inquiétant pour nous.
3357 COMMISSIONER PENTEFOUNTAS: Okay. You can take off your little earphones there.
3358 You raised a lot of issues. Let's start first and foremost with some of the things that maybe weren't that clear in your initial brief, this unequal sharing of risk under FOA and getting to a fair market value.
3359 Speak to me first and foremost on this unequal sharing of risk under FOA. Explain that principle, and then we can talk about the idea of fair market value and how exact a science it is or is not.
3360 MR. FULLER: Okay. So I'll start and the rest of the panel member can top up.
3361 So we actually think the FOA process as it's currently structured does actually favour the distributor in two specific ways.
3362 First and foremost, you know, as you guys have stated on numerous occasions, the stated intent of the FOA process is hopefully that you don't need to go to it, that you can, you know, come through commercial negotiations to terms in a reasonable fashion.
3363 Unfortunately, because the way the FOA process is laid out, because whatever eventual price increase you might agree to is retroactive back to when you started the process and when your previous contract expired, in our view that actually plays very much in favour of the distributor and allows them to really look at the process as -- I might as well start off with what is viewed as an unreasonable position.
3364 COMMISSIONER PENTEFOUNTAS: You are the distributor, though.
3365 MR. FULLER: Sorry, not the distributor, the --
3366 MS MAINVILLE-NEESON: The vertically integrated.
3367 MR. FULLER: -- the vertically integrated company, the supplier of the content.
3368 COMMISSIONER PENTEFOUNTAS: Yeah.
3369 MR. FULLER: Because no matter how long the negotiations might take and then the subsequent FOA process might take, you can be assured that eventually whatever price increase is agreed to will be retroactive back to when the process started.
3370 COMMISSIONER PENTEFOUNTAS: Right.
3371 MR. FULLER: If instead the fees were actually only due, the price increase was only due at the point that the FOA process or the commercial terms had come to conclusion then, you know, there would actually be a balance in our view in place where they would be incented to try to come to a commercial conclusion or even the FOA process as quickly as possible.
3372 COMMISSIONER PENTEFOUNTAS: But aren't you both incented to come to the conclusion earlier rather than later, you because you don't know what you have to pay and the content provider because they don't know what they are going to be getting and they won't know until six months, a year?
3373 I think the last time it was probably a year and a half after the completion of the termination of the previous agreement. So they are running, as an example, a year and a half without knowing what their new revenue stream is going to look like.
3374 MR. FULLER: But they're sure that they'll get it eventually, right back to when the process started.
3375 COMMISSIONER PENTEFOUNTAS: There may not be any increase at all. Well, what's unfair about that? What is unfair about getting your increase or decrease from the conclusion of the previous entente, previous agreement?
3376 MS MAINVILLE-NEESON: If I can just add a few elements to this response?
3377 COMMISSIONER PENTEFOUNTAS: But on that issue, Madam Neeson, is there -- what is the inherent unfairness in --
3378 MS MAINVILLE-NEESON: First of all that --
3379 COMMISSIONER PENTEFOUNTAS: -- retroactivity with respect to the price change?
3380 MS MAINVILLE-NEESON: While the programming service will operate regardless of the money that they will receive retroactively, we will be selling the service in the market to consumers, not knowing and not being able to recoup any of the costs that we might face in --
3381 COMMISSIONER PENTEFOUNTAS: They don't know what they're going to be getting either and they may have paid for increases in rights. You mentioned sports and we all know sports rights are increasing.
3382 MS MAINVILLE-NEESON: Another element, of course, that --
3383 COMMISSIONER PENTEFOUNTAS: And there they've paid for those rights and they don't have the revenues to compensate for the rights that they've already paid for. That's part of the give and take in the process.
3384 MS MAINVILLE-NEESON: Except that there is an imbalance of power to the extent that when it relates to one of the independent distributors and the vertically integrated company has, in virtually all cases, already signed deals with all the other vertically integrated companies, they have reached 80 percent of the subscriber market. They don't really need distribution by us or any other small independent distributor which means that they are not facing the same risk.
3385 They have recouped their costs for their programming service. We haven't. And so we're entering into that arbitration process on a very different footing.
3386 But another element in the case of the last arbitration which is of concern to us, is that it wasn't just about price. As we have indicated on numerous occasions, it was about a minimum penetration, something that the Commission has deemed is -- if it forces a service on basic, is it a commercially unreasonable term? That's part of the Code of Conduct.
3387 COMMISSIONER PENTEFOUNTAS: Okay.
3388 MS MAINVILLE-NEESON: And the point is, for us if we had lost in that arbitration we might have been forced to change our entire packaging offering to consumers, something that we really don't want to do because we have got a very consumer-friendly offering in the market. This might have forced us to change that.
3389 So the risk for us was much greater than just the cost or the revenue that Bell would have --
3390 COMMISSIONER PENTEFOUNTAS: So the retroactive is not the issue. It's how it's packaged that's --
3391 MS MAINVILLE-NEESON: It's one of the issues but not necessarily in that particular arbitration the only one.
3392 COMMISSIONER PENTEFOUNTAS: -- the issue.
3393 The fact that you may have been forced to change your packaging that would not have been explicit in the negotiation. In other words, Bell would not have forced you to offer TSN on the basic package.
3394 But from your point of view, because you've been paying so much for that particular service you'd have to include it in basic.
3395 MS MAINVILLE-NEESON: So there were --
3396 COMMISSIONER PENTEFOUNTAS: I don't want to rehash FOA. I really wish we wouldn't go there.
3397 MS MAINVILLE-NEESON: I understand.
3398 MR. WOODHEAD: Yeah, the sum and substance of it is that if you have a penetration guarantee that is so high that it economically de facto means that it's forcing you on basic. There is very little between the words, saying the words "force you on basic" and you're forced.
3399 COMMISSIONER PENTEFOUNTAS: And what about the penetration rate card as an example?
3400 MR. FULLER: So in the example of the penetration rate card that they proposed --
3401 COMMISSIONER PENTEFOUNTAS: Yeah.
3402 MR. FULLER: -- you know at, say, 55 percent penetration the cost was, you know, roughly more than two times the price at basic.
3403 So economically it would have actually been less expensive for us to push it into basic and give it to all of our subscribers than to maintain our current packaging structure which gave people choice at 55 percent.
3404 COMMISSIONER PENTEFOUNTAS: Doesn't choice come at a price at the end of the day, increased choice? I mean, if you really want the sports service, you should pay what the sports service costs.
3405 MR. FULLER: We agree.
3406 COMMISSIONER PENTEFOUNTAS: And I'm bringing us all the way back to the ex parte hearing now.
3407 MS MAINVILLE-NEESON: And absolutely that would be -- that's absolutely true. But how do you determine what exactly that service costs?
3408 COMMISSIONER PENTEFOUNTAS: Okay.
3409 MS MAINVILLE-NEESON: And what we've discovered in final offer arbitration which is a baseball arbitration, it's designed -- it's supposed to bring parties closer together to the middle which would bring -- therefore indicates some measure of fair market value. What we've seen in that arbitration is movement by one party, namely us, and no movement on the part of Bell.
3410 COMMISSIONER PENTEFOUNTAS: Okay.
3411 MS MAINVILLE-NEESON: So that's one point.
3412 The other point is of course it should be --
3413 COMMISSIONER PENTEFOUNTAS: I don't want to get into your internal negotiations.
3414 MS MAINVILLE-NEESON: But it certainly can also be measured by various other factors, things that we have put in our current revised Code of Conduct.
3415 We think there needs to be more specificity in determining what is fair market value. Viewership should be taken into account.
3416 The fact that we have a penetration for our sports pack, if you're interested in sports and you're an Optik TV subscriber, you need that sports pack. And the fact that only a certain number of subscribers were interested in paying for that should indicate the value of that service whereas that doesn't appear to have jived with the value that Bell sought for their service.
3417 COMMISSIONER PENTEFOUNTAS: Okay. But it was taken into consideration -- correct me if I'm wrong -- under FOA, the fact that your penetration rate back then was 55 percent for your sports package and you couldn't get it north of the -- it was a lower sports penetration than, say, the Quebec market as an example.
3418 MS MAINVILLE-NEESON: So ultimately, our position in that whole final offer arbitration is that the rates on that penetration rate card, or whatever rates that Bell was proposing, if not their minimum penetration because there was more than one option, would have forced that service on basic.
3419 To us it was -- that was the issue. And that to us constitutes a breach of the Code of Conduct.
3420 COMMISSIONER PENTEFOUNTAS: And FOA worked for you, though, in that instance?
3421 MS MAINVILLE-NEESON: Ultimately --
3422 COMMISSIONER PENTEFOUNTAS: It did bring the parties closer together. It put pressure on both sides --
3423 MS MAINVILLE-NEESON: Certainly, the --
3424 COMMISSIONER PENTEFOUNTAS: -- to come to an agreement.
3425 MS MAINVILLE-NEESON: Well, it didn't push both sides to come to an agreement. The Commission decided on one offer and it did decide on ours. We're very thankful for that.
3426 However, what I have difficulty reconciling is that the Commission in that decision indicated, despite what I view as very clear evidence that it would have forced that service on basic, that Bell's offer was commercially reasonable and, yet, did not seem to abide by the rule in the code of conduct which indicates that a minimum penetration or a revenue guarantee that requires -- that would force a service on basic constitutes a commercially unreasonable term.
3427 COMMISSIONER PENTEFOUNTAS: The updated -- and I've gone through your updated Code of Conduct. We could speak to some of the highlights.
3428 You wouldn't want that applied against all VIs, would you not?
3429 MS MAINVILLE-NEESON: Absolutely.
3430 COMMISSIONER PENTEFOUNTAS: Okay. And you mentioned --
3431 MS MAINVILLE-NEESON: But we understand that it's not the proceeding to open up the Code of Conduct for all VI providers. But we certainly hope that the Commission will entertain that.
3432 COMMISSIONER PENTEFOUNTAS: It's a good place to sort of --
3433 MR. WOODHEAD: I mean, well, it's the --
3434 COMMISSIONER PENTEFOUNTAS: -- this around.
3435 MR. WOODHEAD: -- you will have heard from us and from some others, some concerns. If, at the end of the day, you were to impose further safeguards or conditions of licence on BCE, of course we would see those in some further process being imposed on other --
3436 COMMISSIONER PENTEFOUNTAS: Others.
3437 MR. WOODHEAD: -- vertically integrated companies.
3438 COMMISSIONER PENTEFOUNTAS: You mentioned that when they strike deals with the other VIs which constitute 80 percent of BDU, the BDU offering, isn't that a little high?
3439 MS MAINVILLE-NEESON: According to the latest CRTC monitoring report it's 79 percent.
3440 COMMISSIONER PENTEFOUNTAS: Okay.
3441 MS MAINVILLE-NEESON: So we said nearly 80 percent.
3442 COMMISSIONER PENTEFOUNTAS: Okay.
3443 Mr. Miller, did you want to speak to that issue on the unfairness of the process as it stands today?
3444 MR. MILLER: I think we --
3445 COMMISSIONER PENTEFOUNTAS: Covered that, okay.
3446 MR. MILLER: Yeah, I think we've covered that off. Thank you, Commissioner.
3447 COMMISSIONER PENTEFOUNTAS: Is there an imbalance in the radio advertising market?
3448 MS MAINVILLE-NEESON: An imbalance in the sense that Bell will become the largest radio provider if it is allowed to acquire Astral?
3449 COMMISSIONER PENTEFOUNTAS: Yes. Astral is already the largest radio provider.
3450 MS MAINVILLE-NEESON: And by adding Bell --
3451 COMMISSIONER PENTEFOUNTAS: It would get even bigger, no doubt about it.
3452 MS MAINVILLE-NEESON: -- it would certainly -- for us, as we have indicated in our submission, and as well in round one, that's a lot of radio properties and we are a significant radio advertiser.
3453 I can perhaps let Dave speak to that as well, but we had a chart in our earlier submission that showed 80 percent of our radio advertising goes to Bell Media Astral.
3454 COMMISSIONER PENTEFOUNTAS: Is there something anticompetitive in and of itself, that number?
3455 MR. WOODHEAD: I think Dave is moving here so he is going to want to say something, but the key element here, Vice-Chair, is that a lot of these things were developed in thinking about horizontal integration. We are in a world, as we see it, where there is consolidation going on and we have vertical integration occurring and it raises other possibilities, challenges and problems, and you obviously are front and centre in dealing with some of these. So in terms of -- it's a new world where the normal supplier, vendors, purchaser arrangement is complicated by an overlay of competitor, which has not in fact been the case.
3456 So I think that's where we are coming from and Dave can add to that if he likes.
3457 COMMISSIONER PENTEFOUNTAS: Just briefly with respect to the common ownership rules per market, that does not seem to help you sleep at night, from what I gather?
3458 MS MAINVILLE-NEESON: Well, we are a national advertiser so we are less concerned I think with local markets than on a national basis. In fact, not only radio advertising, but advertising in general.
3459 We heard yesterday Bell mention how they will have the ability to provide synergies and a better advertising offering on many platforms, and so the fact that they will have TV, radio and out-of-home advertising, all of that is a concern to us. We mentioned radio because it's a stark example of they would control 80 percent of our radio advertising spend.
3461 MR. FULLER: I think you guys already answered.
3462 So what specifically is the question, are we concerned about that? Yes, we are concerned that one of our predominant competitors controls a significant amount of the media properties that we use to advertise to our consumers.
3463 COMMISSIONER PENTEFOUNTAS: Have you seen the evidence of any inappropriate behaviour on that front that far?
3464 MR. FULLER: On behalf of Bell, no.
3465 COMMISSIONER PENTEFOUNTAS: Yes.
3466 MR. FULLER: to be fair to them, and as they stated in their -- we have not yet seen any evidence that they are withholding, for instance, our ability to advertise.
3467 We have seen it from some other vertically integrated suppliers, but not from Bell.
3468 COMMISSIONER PENTEFOUNTAS: On the radio front? On the radio front withholding inventory?
3469 MR. FULLER: Actually, no, I don't think we have seen it on the radio side.
3470 COMMISSIONER PENTEFOUNTAS: On the radio side specifically here?
3471 MR. FULLER: It was on television and print.
3472 COMMISSIONER PENTEFOUNTAS: Just on the radio issue, in terms of advertising on radio, have you seen any withholding of inventory?
3473 MS MAINVILLE-NEESON: No, we haven't seen that at this time.
3474 MR. FULLER: No.
3475 COMMISSIONER PENTEFOUNTAS: Okay.
3476 MR. FULLER: We have not.
3477 COMMISSIONER PENTEFOUNTAS: Okay.
3478 MR. FULLER: But I mean, to be fair, across all the media properties we have not seen that from Bell. We have seen it from other vertically integrated players so therefore believe the incentive is there and certainly the potential is there.
3479 I would also say that if Bell, as they have stated, are not concerned at all about the fact they are going to do this, then they shouldn't be too concerned if a condition of the their license is that they won't, because they are on record as saying they don't have any intent to do it.
3480 COMMISSIONER PENTEFOUNTAS: Yes, I understand.
3481 Were you at all assured yesterday by some of the offering that Bell put forward in terms of having these rules encoded in their conditions of license?
3482 MS MAINVILLE-NEESON: What Bell proposes at this point we will see tomorrow morning --
3483 COMMISSIONER PENTEFOUNTAS: Yes.
3484 MS MAINVILLE-NEESON: -- but what we have on record is not --
3485 COMMISSIONER PENTEFOUNTAS: That our Code of Conduct, que ça fasse partie de leurs conditions de licence.
3486 MME MAINVILLE-NEESON : C'est ca.
3487 In the Code of Conduct that exists right now, first of all, we have identified some gaps. In one particular case where we tried to invoke the no head-start -- which isn't the Code of Conduct but actually the regulations -- and we were unsuccessful because of a loophole where the --
3488 COMMISSIONER PENTEFOUNTAS: Well, okay.
3489 MS MAINVILLE-NEESON: But the point is, you have a digital media and you have various other things in the other regulations for pay TV and specialty and when you combine things, which is what programmers do and should continue doing, is managing their content through multiple platforms and the current framework doesn't seem to really address that.
3490 So there are some gaps that need to be fixed with I think we will bring to the Commission's -- we have brought to the Commission's attention here and we will continue to pursue that. So that needs to be fixed.
3491 But putting the current Code of Conduct as a condition of license where there are -- it's really only designed as guidelines at this time, which is why we have taken that Code, made it more enforceable and also added the additional specificity that we think is necessary.
3492 MR. WOODHEAD: If I may add?
3493 COMMISSIONER PENTEFOUNTAS: Sure.
3494 MR. WOODHEAD: I mean, I was very mindful of the Chair's comment yesterday and I agree with it, that enshrining guidelines into COLs is something of a mug's game and I don't think that is the way to do it.
3495 To specifically -- and we will see what Bell comes back with tomorrow, but to specifically write conditions of license with respect to certain behaviours I think it where we need to go.
3496 And I noted, in fairness, in response to Ann pointing out the issue we had had that didn't get resolved and that we see it as a gap, that Mr. Purdy said earlier today it's a matter of days. So being denied going to market with a service that you have been asking for for some period of time and then find that you are not going to get it and your primary competitor goes to market with it first, I mean that is a disruptive problem on this side of the table.
3497 So we believe that these are the sorts of behaviours, because we can either point to objective examples of them in others, that need to be actually specifically prescribed in a COL.
3498 COMMISSIONER PENTEFOUNTAS: Beefing up head-start provisions on non-linear services would go a long way to resolving a lot of the issues that are going to be coming up in the short term. Would you agree with me on that front?
3499 MS MAINVILLE-NEESON: Certainly the head-start provision as we initially anticipated that it would be applied, while it adds a lot of risk to any distributor who decides to launch without a commercial agreement is definitely something that is very useful. However --
3500 COMMISSIONER PENTEFOUNTAS: there is also risk to the programmer, you would agree with me on that front? There's a shared risk and that's healthy?
3501 MS MAINVILLE-NEESON: Yes. I think there's a lot more risk for the distributer who really has no idea what to charge consumers, how to offer it to market, but having attempted to invoke the no head-start provision and having discovered that it requires a Part I application and led to a record being formed, that --
3502 COMMISSIONER PENTEFOUNTAS: I'm not going to go back to that issue. We sort of -- I disagree somewhat with your --
3503 MS MAINVILLE-NEESON: Our only point is that it would need to be --
3504 COMMISSIONER PENTEFOUNTAS: -- reading of what happened there, but I don't want to rehash that particular debate.
3505 But going forward, if we had a forceful head-start provision with an ultra rapid dispute resolution mechanism --
3506 MR. WOODHEAD: That's correct.
3507 MS MAINVILLE-NEESON: That's correct.
3508 MR. WOODHEAD: Yes.
3509 COMMISSIONER PENTEFOUNTAS: -- that would go a long way --
3510 MS MAINVILLE-NEESON: Yes.
3511 COMMISSIONER PENTEFOUNTAS: -- towards creating a healthier environment in the Canadian nonlinear -- and linear, but just more specifically on nonlinear front -- that would go a long way?
3512 MR. WOODHEAD: Correct.
3513 COMMISSIONER PENTEFOUNTAS: Okay.
3514 I think that's it for me. Thank you.
3515 LE PRÉSIDENT : Madame Lamarre.
3516 CONSEILLÈRE LAMARRE : Merci, Monsieur le Président.
3517 C'est simplement quelques points de clarification.
3518 Monsieur Audet, en réponse à la question que monsieur Pentefountas vous a posée, la première, au sujet de la concurrence éventuelle si on approuvait la transaction de l'entité fusionnée BCE-Astral et Québecor et est-ce que ça pourrait être bénéfique pour les consommateurs, vous êtes d'avis que non, et dans votre réponse, vous avez utilisé l'expression... vous avez dit, il n'y a personne qui couvre autant de territoire que Bell, avec autant de produits.
3519 Est-ce que vous faites une adéquation linéaire entre le pourcentage de territoire et le pourcentage d'abonnés quand vous faites cette affirmation-là?
3520 M. AUDET: Non, mais l'importance d'un territoire provient du fait que lorsque tu possèdes du contenu, tu peux l'offrir à un ensemble de clients, et dans le cas de Bell, notamment, ils peuvent offrir un contenu à des clients qui sont francophones au Nouveau-Brunswick, partout au Québec ou en Ontario, ils ont même leur plateforme via satellite, ce qui fait qu'éventuellement, si un contenu devient tellement dispendieux que personne ne veut l'acheter, éventuellement, les clients pourraient se tourner vers ce fournisseur-là.
3521 Les autres compagnies verticalement intégrées n'ont pas cet avantage-là. C'est-à-dire que prenons par exemple Québecor, s'ils veulent offrir des services dans l'Est du Québec, en Mauricie, dans Lotbinière, dans la Beauce ou au Nouveau-Brunswick, ils ne seront pas capables de le faire. Donc, ils ont l'obligation de s'entendre.
3522 CONSEILLÈRE LAMARRE : O.K. Donc, parce que justement... Excusez-moi là de faire une pause juste ici. Parce que, justement, Québecor devra négocier avec quelqu'un d'autre que lui-même?
3523 M. AUDET : Que lui-même.
3524 CONSEILLÈRE LAMARRE : Que lui-même. O.K. Bon, je vous remercie. Je comprends bien votre pensée maintenant.
3525 À la page 7 de votre présentation de cet après-midi, vous citez une partie de notre décision 2012-574, et je veux juste être sure qu'on se comprend bien, parce que vous dites... Vous citez l'endroit où est-ce qu'on dit :
« qu'advenant une approbation, le pouvoir de BCE sur le marché serait tellement important que le cadre à l'égard de l'intégration verticale ne suffirait pas à traiter de façon efficace les différends et à soutenir efficacement la disponibilité et la distribution des émissions. »
3526 Et là, vous dites :
« TELUS demeure du même avis que le Conseil... »
3527 Quel avis est-ce qu'on partage ici?
3528 MME MAINVILLE-NEESON : On partage l'avis que le framework concernant l'intégration verticale à présent ne serait pas suffisant pour traiter...
3529 CONSEILLÈRE LAMARRE : O.K. Merci. C'est clair. C'est clair, parce que j'étais sous l'impression que c'est peut-être autre chose que vous pensiez qu'on partageait.
3530 Maintenant, le paragraphe précédent, la dernière phrase, vous dites :
« Le Conseil doit tenir compte de la gamme complète des actifs à la disposition de Bell... »
3531 Qu'entendez-vous par « la gamme complète des actifs à la disposition de Bell »?
3532 MME MAINVILLE-NEESON : Dans notre soumission, on a parlé, évidemment, de Bell en tant que distributeur, en tant qu'offre de service mobile, service Internet et tous les services de Bell Média, évidemment aussi la publicité extérieure, le tout, la gamme de tous les services. Il faut tenir compte de l'entité qu'est Bell, qui est vraiment une entité qui va avoir beaucoup de pouvoir de marché, et c'est dans ce contexte-là.
3533 C'est sûr que nous comprenons que vous ne pouvez pas réglementer chacun de ces domaines-là, certainement pas la publicité extérieure, mais il faut en tenir compte pour constater que ça va influencer la façon que Bell va se servir de ces actifs-là dans ses opérations.
3534 CONSEILLÈRE LAMARRE : O.K. Je vous soumets la difficulté que j'entrevois.
3535 Je ne dis pas que c'est correct ou pas, mais la première chose qui m'est venue à l'esprit, c'est si on doit le faire pour les demandeurs, on devrait le faire pour les intervenants aussi.
3536 Donc, étant donné que vous représentez aussi votre propre intérêt dans cette intervention-là, ne devrait-on pas -- vous et d'autres -- est-ce qu'on ne devrait pas tenir compte aussi de l'ensemble des actifs que vous avez?
3537 Et ça va largement au-delà de services de communication. Vous avez aussi des actifs au niveau technologie de l'information. Vous avez aussi des commerces de détail. Est-ce qu'on doit aussi tenir compte de tout ça dans le cadre de notre décision pour arriver à une décision qui est juste et équitable?
3538 MME MAINVILLE-NEESON : Je pense qu'une des... Je vais commencer, puis je vais laisser Ted renchérir.
3539 Certainement, il faut tenir compte du pouvoir de marché. C'est Bell qui est le demandeur ici à l'instant. Alors, c'est dans ce contexte-là que vous déterminez, est-ce que c'est dans l'intérêt public pour Bell d'acquérir les actifs d'Astral? Alors, en premier lieu, c'est ce qu'on vous demande de faire.
3540 Pour déterminer si nos propos concernant les failles ou bien la nécessité de mesures pour garantir l'accès au contenu et tout ça, il faut vraiment se poser la question, est-ce que nos autres actifs nous permettraient d'avoir un meilleur accès au contenu?
3541 Alors, c'est sûr que vous pouvez tenir compte que TELUS, on n'a jamais... on ne s'est jamais pris pour petit, mais certainement, dans le monde de la radiodiffusion, nous le sommes à présent, mais nous sommes un intervenant ayant déterminé certaines difficultés dans le régime tel qu'il existe.
3542 CONSEILLÈRE LAMARRE : Donc, plutôt que dire la gamme complète des actifs à la disposition de Bell, on devrait plutôt dire, si je vous comprends bien, les actifs pertinents en l'espèce?
3543 MME MAINVILLE-NEESON : Oui, effectivement.
3544 CONSEILLÈRE LAMARRE : O.K.
3545 Dernier point.
3546 Oui, Monsieur.
3547 MR. WOODHEAD: Madame Lamarre, I mean the other thing I would like to add here is -- and Mr. Cope referred to it yesterday and he was referring to the scope of the trade between Bell and TELUS, and the size of that trade with us, the size of that trade with Rogers, the size of that trade with Québec or would make it possible for -- and preferable that we could work these things out in the context of that broader trade of goods and services between the companies. And I think we would agree, but, you know, despite being one of Bell's largest customers and theirs of us, we still found ourselves in front of the Commission in an arbitration. And we still are sitting here today concerned because despite that trade between us in every circumstance things are not necessarily going to be worked out because one type of business is different from another because we are competitors in different markets.
3548 So that's why I think it's fair in this circumstance or as these matters come before you that you look at the whole enterprise and the whole scope of the entity.
3549 CONSEILLÈRE LAMARRE : Je vous remercie.
3550 Et le dernier point. Je ne peux pas m'empêcher là de soulever ce que vous mentionnez à la page 6 de votre présentation cet après-midi en ce qui concerne la difficulté avec le mécanisme de résolution aux disputes que nous avons actuellement, et vous avez discuté avec monsieur Pentefountas, au niveau des modalités, qu'est-ce qui clochait selon vous. Par contre, vous n'avez pas mentionné la question du timing.
3551 Est-ce que ça aussi, c'est un problème présentement ou non?
3552 MME MAINVILLE-NEESON : Oui, effectivement. Le timing fait en sorte que c'est toujours à l'avantage de la compagnie intégrée verticalement parce qu'ils ont déjà la sécurité d'avoir la distribution de presque 80 pour cent du marché. Donc, ils ont beaucoup plus de certitude, et nous, nous vivons dans l'incertitude. Donc, le temps n'est pas en notre faveur.
3553 CONSEILLÈRE LAMARRE : Donc, vous aimeriez que ça aille plus vite?
3554 MME MAINVILLE-NEESON : Absolument.
3555 CONSEILLÈRE LAMARRE : O.K.
3556 MME MAINVILLE-NEESON : Et dans certaines circonstances aussi, surtout pour la question du no head start, lorsqu'on a une règle claire que le contenu devrait être donné à tous les distributeurs, peu importe qu'il y ait un arrangement commercial ou non, je me demande à quel point il faut avoir une procédure pour avoir les commentaires des interventions et que peut-être qu'on pourrait juste passer à la détermination est-ce que le contenu a été donné aux distributeurs ou non, sans avoir tout un processus de commentaires et d'interventions.
3557 Ça, ça pourrait aider énormément avec le timing, parce que dans les questions d'accès au contenu, chaque jour fait une différence.
3558 LE PRÉSIDENT : Madame Duncan.
3559 COMMISSIONER DUNCAN: Good afternoon. I have just one question. I was wondering if you had any comment on Rogers, what they spoke to this morning as their solution or what they would see as a solution and that is forcing Bell to divest -- or Astral to divest of the TMN to another party, TMN, TMN Encore, and if you saw that as a solution. I understood Rogers to say that that would be the solution.
3560 MR. WOODHEAD: I mean in the first instance it's difficult to say because it's largely speculative and it would depend to some extent to who that property went to. Is it nearly going from one vertically integrated company to a slightly less vertically integrated company? In which case I think our concerns remain the same. Whether Mr. McMillan shows up I don't know or the financial investor that Mr. Engelhart was referring to. So we've focused... You know, I think that we need to deal with the here and now. And what we're faced with, as I said in response to Mr. Pentefountas was that there is a level of vertical integration here and I think that we need to deal with that. And the way to deal with that, in our view, is through timely enforcement of certain clear, transparent rules that prescribe certain behaviours. And if the Commission acts -- in my humble opinion, if the Commission acts rapidly and decisively in the face of these issues, it will send the correct message throughout the whole industry.
3561 MS MAINVILLE-NEESON: And if I might add as well. TMN -- you know, Rogers proposes one solution specific to their market and our -- first of all, we serve many markets and -- but we don't serve a market that really would have consumers purchasing TMN. Out West we would have Movie Central owned by Corus, and for us the transaction raises many concerns that go way beyond simply the ownership of TSN and divestiture of that would not resolve all those other issues.
3562 COMMISSIONER DUNCAN: That's a fulsome answer. Just a quick one. I apologize if it's already in the material and I should know it, but what's an adequate turnaround, an appropriate turnaround in your view?.
3563 MR. WOODHEAD: I'm not sure -- and Dave may have a better sense of this, but I was quite stricken, frankly, this morning by what Mr. Purdy said because I personally agree with it from what I have observed. The harm can happen in a matter of days or a week. That challenges, I appreciate, the administrative process and the quasi-judicial process, but I -- whatever the time frame is it has to be quick and it has to be decisive. Now, Dave or Blair may have a more real world sort of example of this.
3564 MR. FULLER: Well, actually I think it's difficult to answer the question specifically with, you know, it needs to be two weeks because I do think it's dependent on a number of things. Obviously the complexity of the issue that you guys need to consider has to factor into how quickly it can be resolved. What -- you know, so in general I agree with the statement Ted made, which the process needs to be streamlined and as quick as possible given the context. All right. So that's the first point.
3565 Second would be that I also think it's dependent on what other implications are on the vertically integrated company. So if I can use some specific examples, that was the point I was trying to make. If their fee -- eventual fee payments are not retroactive, to me there is now a very strong incentive for them to have this resolved very quickly.
3566 Another example would be if they are actually being asked to not have an early start, to withhold showing the content to their own customers through their distribution company, that again is another incentive in place to have both parties mutually resolve this as quickly as possible. So I think the answer is dependent on a number of situations and, you know, you can't just say it needs to be two weeks, but it does need to be, you know, very quick and rapid.
3567 COMMISSIONER DUNCAN: Thank you. Good food for thought.
3568 MR. FULLER: Okay. Thanks.
3569 COMMISSIONER DUNCAN: Thank you.
3570 THE CHAIRPERSON: Thank you. Commissioner Menzies.
3571 COMMISSIONER MENZIES: Thank you. Can you tell us precisely or generally or give us at least a ballpark on how much your costs have increased as a result of negotiations to access Bell CTV services? Everybody talks about tough negotiations and that sort of stuff, but I'd like to be able to have a number to wrap my head around. And they talk about unreasonable positions and that, but it's more helpful to know where you landed at rather than where you started it.
3572 MR. WOODHEAD: Could we have just one minute to --
3573 COMMISSIONER MENZIES: Yeah, sure.
3574 MR. WOODHEAD: -- confer? Thank you.
3575 MR. FULLER: You know, it probably would be best if we get back to you tomorrow with a specific answer to the question rather than guess at it right now, so ...
3576 Mr. Miller: Yeah, part of the complexity is that it -- that last service agreement covered over 28 specialty services.
3577 COMMISSIONER MENZIES: Sure. You know, facts are always better than guesses.
3578 MR. FULLER: Absolutely. Yeah. So we'll -- we can turn it around, like, literally in a few hours and get back to you tomorrow morning. Okay.
3579 COMMISSIONER MENZIES: Great thank you. That's all.
3580 THE CHAIRPERSON: So we can have that undertaking for 9 o'clock?
3581 MR. MILLER: Tomorrow.
3582 MR. FULLER: Yes.
3583 THE CHAIRPERSON: Okay. Thank you.
3584 MR. FULLER: Yeah.
3585 THE CHAIRPERSON: I believe those are our questions. Thank you very much.
3586 MR. WOODHEAD: Thank you very much, Mr. Chairman.
3587 THE CHAIRPERSON: We'll take a break now until a little past 3 o'clock, 3:02.
3588 THE CHAIRPERSON: And we'll do the last two. Thank you.
--- Upon recessing at 1448
--- Upon resuming at 1530
3589 LE PRÉSIDENT : À l'ordre, s'il vous plaît. Bonjour, madame McNeil. Donc, vous savez comment ça procède, donc allez-y.
3590 MME McNEIL : Bonjour, monsieur le président, monsieur le vice-président, mesdames et messieurs les conseillers, membres du personnel.
3591 Je suis Natalie McNeil, directrice générale de l'Alliance des producteurs francophones du Canada. L'Alliance des producteurs francophones représente les groupes indépendants francophones -- pardon, les producteurs indépendants francophones oeuvrant dans les communautés de langue officielle en situation minoritaire.
3592 L'APFC tient à remercier le Conseil de la place faite aux communautés francophones en situation minoritaire dans le cadre des examens qu'il instruit. Nous remercions également le Conseil de nous inviter à comparaître aujourd'hui dans le cadre de la transaction Bell-Astral.
3593 La transaction proposée par le requérant est d'une grande importance pour notre industrie et les avantages tangibles sont de nature exceptionnelle pour la production francophone indépendante télévisuelle et cinématographique. Nous estimons que ceci est une reconnaissance réelle de la part de Bell-Astral envers cette composante essentielle du système de radiodiffusion canadien.
3594 Notre présentation d'aujourd'hui revient sur certaines des observations et recommandations que nous avons émises dans notre mémoire déposé au dossier public en avril dernier.
3595 Bell-Astral propose de négocier une entente commerciale avec l'APFC. Nous sommes tout à fait disposés à négocier avec le requérant et nous nous mettons à leur disposition pour entamer les discussions.
3596 Dans le cadre de la répartition des bénéfices tangibles, Bell-Astral propose que les 126 millions de la transaction servent les deux marchés linguistiques, dont 85 pour cent iront à des contenus à l'écran et 15 pour cent à des initiatives sociales.
3597 L'APFC note que pour le volet social, le requérant a retenu la proposition de soutenir un festival francophone situé à l'extérieur du Québec. Nous le félicitons de cette initiative qui permettra à un festival de continuer sa mission culturelle et artistique et de porter et promouvoir la culture francophone en milieu minoritaire.
3598 Dans le cadre du volet contenu à l'écran, cette transaction représente 73 millions de dollars pour le marché de la production francophone. Cette somme sera dirigée vers des initiatives en matière de programmation jeunesse, de projets de développement de formule télévisuelle, d'émissions d'intérêt national, le Fonds privé Téléfilm Canada et le Fonds Harold Greenberg.
3599 Afin de défendre un accès à cet investissement de manière garantie, nous demandons que Bell-Astral s'engage par condition à consacrer un pourcentage à la production indépendante francophone hors Québec.
3600 Respectueusement, l'APFC rappelle que la voix de la production indépendante en provenance des communautés francophones ne peut se limiter à nommer un champion, à avoir accès aux bureaux régionaux et encore moins à une promesse de s'engager à se procurer, et je me permets de citer respectueusement le requérant, la meilleure programmation de producteurs indépendants, dans les deux langues provenant de toutes les régions du Canada.
3601 L'APFC rappelle que dans sa décision du CRTC 2001-384 portant sur le transfert du contrôle effectif de TVA à Québecor Média, le Conseil avait décidé que 10 pour cent des fonds seraient réservés à des entreprises de production de langue française situées à l'extérieur du Québec pour la production d'émissions prioritaires et pour la jeunesse.
3602 Sur la base de ce précédent, l'APFC estime qu'il serait juste et raisonnable que Bell-Astral s'engage par condition de licence à réserver 10 pour cent de la part du marché francophone à la production indépendante francophone en provenance des CLOSM.
3603 Quant à la répartition de ces sommes, nous estimons qu'elle doit se faire de manière prioritaire vers le développement et la production télévisuelle, puis le Fonds Harold Greenberg.
3604 L'APFC ne s'oppose pas à ce que Téléfilm Canada reçoive, à travers son Fonds privé, une certaine part des avantages tangibles. Nous demandons toutefois que la part réservée à la production francophone hors Québec soit clairement identifiée afin de garantir une utilisation ciblée par Téléfilm.
3605 Enfin, en ce qui concerne la reddition de compte, l'APFC estime que le Conseil doit exiger un rapport annuel complet et exhaustif précisant l'utilisation des bénéfices tangibles en dépenses par genres, régions et langues, et ce afin de permettre une juste évaluation des efforts de la fusion Bell-Astral pour atteindre ses objectifs de promotion et de développement de la production indépendante canadienne dans les deux langues et en provenance de toutes les régions.
3606 En conclusion, la position de l'APFC est donc de demander légitimement qu'un environnement favorable à la croissance et au développement d'une industrie indispensable à l'équilibre du système de radiodiffusion canadien soit pris en considération dans le cadre de cet examen.
3607 Le Conseil est le garant de l'intégrité du système de radiodiffusion canadien. Les règles qu'il fixe doivent appuyer la production indépendante canadienne-française, en conformité avec la Loi sur la radiodiffusion et la Loi sur les langues officielles du Canada.
3608 Les producteurs de la francophonie canadienne contribuent à l'exécution de ce mandat, en offrant des productions télévisuelles de qualité, qui peuvent à la fois refléter les réalités de ces autres francophonies et s'adresser également à divers publics en abordant des thèmes fédérateurs.
3609 Je vous remercie de votre attention et je suis prête au nom de l'APFC à répondre à vos questions.
3610 LE PRÉSIDENT : Merci beaucoup. Madame la conseillère Lamarre, s'il vous plaît.
3611 CONSEILLÈRE LAMARRE : Merci, monsieur le président. Bonjour, madame McNeil. Merci d'être ici aujourd'hui avec nous et d'avoir attendu si patiemment cette fin d'après-midi pour nous entretenir de vos préoccupations.
3612 Je vais vous avouer que vous avez répondu à quelques-unes de mes questions avant même que je les pose. Je ne sais pas si c'est...
3613 MME McNEIL : Je vous fais gagner du temps.
3614 CONSEILLÈRE LAMARRE : Oui, oui. En tout cas, je ne sais pas si c'est rassurant ou inquiétant pour moi, on verra ensuite. Alors, il me reste seulement quelques points à vérifier avec vous.
3615 Donc, vous estimez que dans votre mémoire de... je reprends, excusez-moi. Dans votre mémoire déposé ce printemps-ci, vous nous demandiez d'exiger que l'entité fusionnée, si nous acceptions la transaction, soit contrainte par condition de licence à dépenser une partie des sommes des avantages tangibles dans la production indépendante francophone hors Québec.
3616 Et vous aviez utilisé l'expression de manière que... au paragraphe 13 de votre soumission, vous disiez imposer une condition de licence en dépenses de productions indépendantes francophones qui soient justes et équitables.
3617 Alors, cet après-midi vous nous dites 10 pour cent.
3618 Donc, vous arrivez comment à la conclusion que 10 pour cent serait juste et équitable?
3619 MME McNEIL : Le 10 pour cent, bon, j'ai utilisé... enfin, je vous ai exposé le précédent dans la transaction, dans l'acquisition par Québecor de TVA, le 10 pour cent est aussi un calcul qui est fait sur le pourcentage de francophones versus... vivant à l'extérieur du Québec versus la totalité de la population francophone.
3620 Selon Statistique Canada, là, en 2011, il y aurait 7,200,000 personnes de langue française et 1,000,000 vivant à l'extérieur du Québec. Donc, on est quand même en dessous du 10 pour cent. Nous, on a toujours fait nos représentations en disant que c'était un plancher. Également avec le ministère du Patrimoine canadien, dans le cadre du calcul de l'enveloppe, du FNC, puis avant du Fonds canadien de télévision, on avait aussi fait des représentations à cet égard que 10 pour cent serait une juste part de la représentation des argents dévolus à la production indépendante et allant aux producteurs indépendants en situation minoritaire francophone.
3621 CONSEILLÈRE LAMARRE : Et dans ces instances-là, j'ai vu pratiquement que vous... on a suivi votre recommandation?
3622 MME McNEIL : Oui, puisque c'est 10 pour cent qui était dévolu au Fonds canadien de télévision et 10 pour cent au Fonds des médias du Canada.
3623 CONSEILLÈRE LAMARRE : Oui. Donc, juste pour donner un exemple, là, dans le cas de ce qui est prévu présentement qui nous a été soumis par Astral et BCE, on parle d'avantages tangibles ici au niveau francophone pour les émissions internationales de $43 millions et quelque, sur une période de sept ans, 10 pour cent représentant $4 millions de dollars sur la même période, vous estimez que c'est une somme qui peut être absorbée par l'ensemble des producteurs hors Québec pour fournir la programmation de qualité que recherchent les gens d'Astral, dont ils nous ont entretenus hier.
3624 MME McNEIL : Absolument. Parce que je réponds souvent à cette question et, en fait, la question de l'offre vient avec la question de la demande. S'il n'y a pas de demande, il n'y a pas d'offre et voilà bien le problème. Donc, il faut un peu stimuler cette demande pour que l'offre arrive.
3625 Dans l'exemple que j'ai utilisé de TVA, je ne crois pas que TVA le regrette puisque dans cette transaction ça leur a donné
3626 « Destination Nord-Ouest » et « La Ruée vers l'Or » qui ont été deux... qui ont eu beaucoup de succès et qui sont encore diffusés.
3627 Alors, vous voyez que quand l'envie d'aller voir les producteurs indépendants hors Québec et stimuler -- je peux le dire comme ça -- on voit qu'il y a des productions qui arrivent au rendez-vous.
3628 CONSEILLÈRE LAMARRE : Et dites-moi pourquoi le fait que les requérants s'engagent à ouvrir des bureaux régionaux ce n'est pas suffisant pour vous rassurer, parce que si on ouvre des bureaux régionaux seulement pour payer un loyer et le salaire de quelqu'un là-bas, là, c'est à toutes fins pratiques... il n'y a pas de plus-value ajoutée.
3629 Donc, pourquoi ça, ce n'est pas suffisant pour vous rassurer?
3630 MME McNEIL : Vous en avez parlé hier dans le cadre de la comparution de Bell-Astral. Je vais utiliser un jargon qu'on dit... moi, mes producteurs, leur café ça leur coûte mille dollars, hein, avec les diffuseurs; c'est-à-dire que la plupart du temps quand ils veulent les rencontrer, ils viennent à Montréal pour faire cette rencontre-là.
3631 Alors, qu'il y ait un bureau ou pas de bureau, je ne suis pas certaine que ça va stimuler un peu plus la diffusion, la... oui, la diffusion, en tout cas, le déclenchement de la production.
3632 C'est bien, ça donne un interlocuteur plus près, ça fait des coûts de déplacement moins importants, mais néanmoins je ne suis pas certaine que le fait d'avoir un bureau va stimuler énormément la diffusion.
3633 On le voit bien avec Radio-Canada, le fait qu'il y ait des bureaux partout en région ne stimule pas la production indépendante dans les CLOSM, au contraire. Puis, là, ce n'est pas le procès de Radio-Canada ici, mais je suis quand même obligée de le dire qu'il y a une baisse, malgré le fait de la présence des bureaux en région.
3634 Donc, tout ça pour vous dire que ce n'est pas une garantie pour nous.
3635 CONSEILLÈRE LAMARRE : Et si je vous comprends et bien et vous estimez, entre autres, que ce n'est pas une garantie parce que vous avez une expérience qui laisse à désirer présentement.
3636 MME McNEIL : Disons que ce qui est une garantie, c'est quand le diffuseur achète la production et se montre véritablement intéressé et que ça fait partie de son offre de programmation.
3637 CONSEILLÈRE LAMARRE : Mais, maintenant, au sujet de votre demande d'imposer des conditions de licence en ce qui concerne aussi de l'argent qui est versé à deux fonds indépendants, le Fonds Harold Greenberg et Téléfilm Canada, expliquez-moi comment vous pensez qu'on peut mettre ça en oeuvre, parce que ces fonds-là sont indépendants.
3638 Une fois qu'ils ont l'argent, ils ont... c'est eux qui en ont la gestion, c'est eux qui décident de ce qu'ils vont faire avec. Alors, nous, ce n'est pas des gens qu'on réglemente, là.
3639 MME McNEIL : Hum, hum.
3640 CONSEILLÈRE LAMARRE : On accepte ou non qu'une partie des avantages tangibles soit versée à ces fonds-là, mais après ça, ce sont les gens qui gouvernent ces fonds-là qui prennent les décisions.
3641 Alors, comment pensez-vous qu'on pourrait arriver à satisfaire votre demande à cet égard-là?
3642 MME McNEIL : En tout cas, il pourrait y avoir une note indicative à l'effet de l'utilisation de l'argent vers les fonds privés. Je suis moins inquiète pour le Fonds de Téléfilm Canada puisque c'est une agence et que, donc, elle est assujettie à l'Article... enfin, à la Loi sur les langues officielles, donc ça m'inquiète moins. Mais c'est un fonds privé dont son utilisation n'est pas encore très claire pour moi.
3643 Mais pour répondre à votre question, enfin je ne peux pas vraiment répondre à votre question, hein. C'est évident que, vous, vous réglementez plus la télévision et la radiodiffusion, donc...
3644 CONSEILLÈRE LAMARRE : Donc, vous apprécieriez qu'à l'égard des argents qui seraient versés aux deux fonds en question, vous aimeriez quoi? Qu'on établisse des balises ou des...
3645 MME McNEIL : Qu'il y ait un incitatif.
3646 CONSEILLÈRE LAMARRE : Qu'il y ait un incitatif.
3647 MME McNEIL : Un incitatif qui aille à la production indépendante ou aux créateurs indépendants.
3648 Dans le cas du Fonds Harold Greenberg, je crois qu'il y a plusieurs volets, là, dans ce fonds possibles et disponibles et certainement avec un apport supplémentaire d'argent, le fonds va être... va avoir une nouvelle ingénierie certainement.
3649 CONSEILLÈRE LAMARRE : Mais je vous remercie. C'est très très clair, autant votre mémoire que votre présentation que vos réponses cet après-midi.
3650 MME McNEIL : Bien, merci.
3651 CONSEILLÈRE LAMARRE : Merci, monsieur le président.
3652 LE PRÉSIDENT : Merci, madame. Ce sont nos questions.
3653 MME McNEIL : Merci.
3654 LE PRÉSIDENT : Maintenant, nous allons entendre Youth eMage Jeunesse Inc., monsieur Lévesque, s'il vous plaît.
3655 LE PRÉSIDENT : Bon après-midi. Donc, bienvenue.
3656 M. LÉVESQUE : Bonjour.
3657 LE PRÉSIDENT : Vous êtes bien monsieur Lévesque.
3658 M. LÉVESQUE : Tout à fait.
3659 LE PRÉSIDENT : Oui. C'est bien. Donc, je vous invite de faire votre présentation.
3660 M. LÉVESQUE : Merci beaucoup. Donc, comme vous le savez, mon nom est Claude Lévesque. Je suis directeur général de l'organisation Youth eMage Jeunesse.
3661 J'ai eu la chance en 2012, en septembre 2012, de faire une présentation devant le CRTC.
3662 During that presentation, there were three messages that I wanted to get across. The first one was that I wanted you to understand that youth need a voice, que la Jeunesse a besoin d'une voix.
3663 The second message was that I wanted you to understand that one of the challenges to be faced in the industry is that viewers are drifting away to new media formats.
3664 The third thing that I wanted to get across was that to face that challenge, a paradigm shift is needed as to what tangible benefits can and should be in the 21st Century.
3665 Ce que je vous propose de faire aujourd'hui c'est de vous présenter les questions qui ont animé notre réflexion par rapport à ce que devraient être justement les investissements tangibles.
3666 Par la suite, je vais vous présenter la réponse à laquelle nous sommes arrivés par rapport à cette question et, finalement, je vous présenterai un mini-vidéo de deux trois minutes pour pouvoir la conclure et refléter et vous présenter ce qu'on a vu sur le terrain.
3667 Depuis septembre 2012, beaucoup d'encre a coulé sur la présentation entre Astral et Bell. Cette discussion qui a pris une ampleur nationale a mis de l'avant de nouveaux... a mis de l'avant un nombre important de défis qui concernent l'industrie et les télécommunications, entre autres, la sensibilisation des consommateurs qui est au coeur de plusieurs de ces défis.
3668 Nous, nous représentons les consommateurs jeunesse.
3669 Parmi les plusieurs questions soulevées, nous sommes arrivés à la conclusion qu'il fallait se poser les bonnes questions, notamment: Est-ce que l'industrie va être uniquement réactionnaire aux forces externes et du changement et seulement essayer de s'adapter ou est-ce que l'industrie va plutôt aller au devant de l'avenir pour essayer d'innover et de définir ce qu'elle veut être dans cinq ou dans dix ans?
3670 La transaction entre Astral et BCE est l'occasion idéale de repenser l'industrie et d'utiliser les avantages tangibles pour mettre en place les bases nécessaires pour une industrie qui ressemblera à celle qu'on veut dans cinq ou dix ans.
3671 We are at a crossroad. Our roadmap should be about content, where it is, and where it's going to be. So far, the broadcasters have been playing catch-up with the Internet. I propose that we take the bull by the horns, that we become proactive and innovative, that we dare to be bold.
3672 Ce n'est pas suffisant que de prendre du contenu télé ou radio et de le mettre sur Internet ou de faire l'inverse. Au lieu de se faire compétition, il s'agit plutôt de créer une synergie entre les différentes plates-formes médias pour créer à la fois des opportunités d'affaire pour l'industrie et de sensibiliser les consommateurs à ces nouveaux contenus de qualité.
3673 We have to anticipate the future and prepare for it now. Remember that today's youth are tomorrow's leaders and consumers. This is why we need to listen to our youth now.
3674 How do we propose to take the future in our hands? Through our virtual studio for youth. Our virtual studio for youth is designed to work in three dimensions: Education, engagement, empowerment.
3675 These dimensions can be leveraged through collaboration and synergy between the various broadcasters' resources, the Internet's effective outreach potential to bring Canadians around a Canadian story that will have a positive impact in their community.
3676 The virtual studio that we are proposing for youth will be beneficial to all broadcasters, all youth, and all other stakeholders. By stakeholders, I mean the Canadian Broadcasting Industry, the viewers, the local community, their online community, the advertisers, the producers.
3677 Let's talk about those dimensions for a second. Because youth are a consumer force today and they will be tomorrow, we must capture their attention and educate the stakeholders now. Our virtual studio for youth would provide educational tools for consumers to be able to understand the interaction between the various media platforms and the emergence of quality content.
3678 By working together, the industry, and the various stakeholders, we can foster education initiatives nationwide and work with consumer groups to address important consumer awareness needs.
3679 Because youth can be a positive influence now, we must engage the youth and engage all the stakeholders. Our virtual studio for youth would engage young consumers in the broadcasting process with grassroots movements and initiatives. These outreach activities would be able to serve the public by enabling the consumers to relate to the content that they are viewing.
3680 Because young people will dare to be awesome now, we must empower the youth and the stakeholders. Our virtual studio for youth would provide opportunities for viewers to feel good about the content that they are viewing and about their involvement in the creative process.
3681 In addition, and by extension, consumers will feel good about themselves and they will feel good about being appreciated by the industry.
3682 To empower young people as communicators, creators and viewers is an important of ensuring the longevity of the Canadian Broadcasting System, while having a positive impact on the cultural health of Canadian communities across this great land.
3683 To ensure that broadcasters and producers not only survive, but flourish, we must go beyond a discourse on content and reach the humanity of viewers and create new business opportunities for the industry at the same time.
3684 But don't take my word for it.
3685 Je vous propose de regarder un vidéo fait par des jeunes concernant ce qu'ils considèrent être l'avenir de la télédiffusion.
3686 Alors, si on peut prendre quelques secondes pour regarder.
--- Video presentation
3687 MR. LEVESQUE: The CRTC has the power to make sure that a group like ours, Youth eMage Jeunesse, will be part of the tangible benefit efforts to ensure the future of the Canadian broadcasting industry by giving a voice to you en donnant une voix à la jeunesse.
3688 Je vous remercie. Je suis prêt à entendre vos questions si vous en avez.
3689 LE PRÉSIDENT : Merci beaucoup pour la présentation.
3690 Madame Lamarre?
3691 CONSEILLÈRE LAMARRE : Merci, Monsieur le Président.
3692 Bonjour Monsieur Levesque. Merci d'être ici avec nous cet après-midi.
3693 J'ai en effet quelques questions. Rappelez-moi, présentement Youth eMage Jeunesse, c'est une entreprise à but non lucratif?
3694 M. LEVESQUE: Tout à fait.
3695 CONSEILLÈRE LAMARRE : Et êtes-vous disposé à me rappeler aussi ou à me dire quel est votre budget annuel d'opération?
3696 M. LEVESQUE: Oui. Bien sûr.
3697 Écoutez. Alors en ce moment, on est dans une période de restructuration. Mais nos derniers budgets étaient aux environs d'environ 100 000 $.
3698 CONSEILLÈRE LAMARRE : Alors, vous nous avez bien exprimé, ici aujourd'hui, l'ampleur des objectifs que vous visez avec votre projet.
3699 Maintenant, pouvez-vous me dire qu'est-ce que vous attendez de BCE Astral si la transaction va de l'avant?
3700 M. LEVESQUE: Bien écoutez. C'est pas compliqué. C'est de pouvoir, en fait, de pouvoir collaborer avec eux et de pouvoir être participant dans le cadre de leur effort au niveau des investissements tangibles.
3701 Je crois que si BCE et puis Astral sont ouverts à ça, nous on est tout à fait ouverts à l'idée de devenir de nouveaux amis avec eux.
3702 CONSEILLÈRE LAMARRE : Et avez-vous communiqué cette demande-là à BCE ou à Astral depuis que leur intention de redéposer devant le CRTC, suite au refus de l'année dernière, a été annoncée?
3703 Avez-vous communiqué avec eux?
3704 M. LEVESQUE: Oui, tout à fait.
3705 CONSEILLÈRE LAMARRE : Et vous avez communiqué avec eux cet hiver, j'imagine?
3706 M. LEVESQUE : Oui, en fait, à la fin de l'automne, une fois qu'on a su que la transaction avait été refusée, et qu'il y avait déjà -- qu'on avait parlé qu'ils allaient resoumettre. Donc, dès ce moment-là, on a essayé de rentrer en contact avec différentes personnes à différents niveaux administratifs chez BCE.
3707 CONSEILLÈRE LAMARRE : Et avez-vous réussi à entrer en contact avec ces gens-là?
3708 M. LEVESQUE : Bien, écoutez. Ils ont reçu notre information. Ils ont reconnu avoir reçu l'information. Pour le moment, c'est là où on en est.
3709 CONSEILLÈRE LAMARRE : O.K. Donc vous avez envoyé une lettre, vous avez reçu un accusé de réception et ça s'est arrêté là.
3710 M. LEVESQUE : Bien, écoutez. On a reçu un accusé de réception. Et nous, on a continué à faire des efforts en communiquant, en essayant de rentrer en contact avec différentes personnes à différents échelons auprès de ces organisations.
3711 Et puis, bien, pour le moment, on est toujours à une étape où est-ce qu'on n'a pas eu nécessairement de réponse, outre le fait qu'ils sont au courant qu'on essaie de communiquer avec eux.
3712 CONSEILLÈRE LAMARRE : O.K. Et maintenant, pour notre bénéfice, et aussi, j'imagine, pour celui de tous les intervenants, dites-moi quelle est l'étendue de vos demandes.
3713 M. LEVESQUE : O.K. Quand vous demandez l'étendue, vous voulez avoir en termes de chiffres et d'argent?
3714 CONSEILLÈRE LAMARRE : Oui, parce que, si on parle d'avantage tangible ici, il faut pouvoir le chiffrer.
3715 M. LEVESQUE : Écoutez, je comprends qu'il faut... que vous voulez avoir un chiffre précis. Par contre, j'hésite à vous donner un chiffre précis pour la simple et bonne raison que ce que nous on veut, c'est d'abord et avant tout, non pas seulement d'avoir une somme d'argent, puis partir avec et faire quelque chose.
3716 Ce que nous, on veut vraiment, c'est entrer en collaboration avec -- parce qu'on veut pas juste recevoir des sous. On veut collaborer aussi avec eux pour que les effets du projet qu'on propose, qui est le studio virtuel pour les jeunes, ait un impact à long terme.
3717 Donc, l'idée de mettre un chiffre sur, par exemple, uniquement ce qu'il faudrait en termes de technologie pour créer un site web et tout ça, c'est une chose.
3718 Mais si on fait ça, on reste dans le cadre de ce que les bénéfices tangibles étaient dans le passé.
3719 Ce que je vous propose aujourd'hui, en fait, c'est d'aller plus loin que ça et de penser à ce que ce soit pas juste un peu, c'est pas juste des bénéfices pour que -- en disant, on veut avoir une transaction puis on va vous donner un peu d'argent pour que tout le monde soit content.
3720 Ici, ce que nous on veut, en fait, nous, c'est que ce soit plus que ça. Que ça soit un effort de pouvoir collaborer avec eux. Mais aussi avec les autres télédiffuseurs qui sont alentour, qui sont au Canada.
3721 Donc, c'est pour ça que j'hésite à dire nécessairement un chiffre précis. Mais c'est clair que si vous donniez des indications à BCE ou à Astral de collaborer avec nous, on a déjà fait un certain travail par rapport à des budgets potentiels et possibles.
3722 Mais encore une fois, ça va dépendre de l'ampleur à laquelle, en termes de collaboration, ils sont prêts à travailler avec nous.
3723 Mais une chose est certaine, nous on est prêts à travailler.
3724 CONSEILLÈRE LAMARRE : Mais, dites-moi qu'est-ce que vous entendez par « collaboration »? Qu'est-ce que vous aimeriez que BCE Astral fournisse à Youth eMage en termes de ressources autres que financières pour arriver à cette collaboration-là.
3725 Qu'est-ce que vous entendez, vous, par « collaboration »?
3726 M. LEVESQUE : O.K. Une chose qui est importante avec l'idée du studio virtuel, c'est tout l'aspect de mentorat et puis d'accès avec les industries.
3727 Donc, il s'agit de pouvoir être en mesure de pouvoir avoir accès à des gens qui sont dans l'industrie, entre autres, chez les applicants qui vont pouvoir donner un peu de leur temps, collaborer.
3728 Donc, ça veut dire qu'il y a un effort aussi au niveau de l'entreprise de pouvoir faire la promotion auprès de, par exemple, leur employé, de leur expertise qu'ils ont afin de pouvoir, non seulement leur donner... permettre à ces gens-là de gagner du temps, mais de pouvoir aider à faire la diffusion de cette connaissance-là.
3729 Parce qu'un des aspects pour nous, c'est que oui, il y a l'idée de créer du contenu. Mais il y a aussi l'idée de penser à ce que ces jeunes-là aujourd'hui vont faire partie de l'industrie demain.
3730 Et donc, il s'agit donc de -- en termes d'éducation, en termes de mentorat, de leur donner des opportunités pour pouvoir déjà voir -- parce que ces jeunes-là, eux aujourd'hui, ils parlent pas du même point de vue que ceux qui sont en ce moment les dirigeants dans les diverses entreprises qui eux, ont ce « jeu » avec tout le respect.
3731 Je pense encore à un paradigme qui est un peu en retard avec les changements qui se passent, qui sont quand même très rapides. Alors que ces jeunes-là, eux, non seulement peuvent anticiper, mais ils les vivent, ces changements-là.
3732 Et quand on parle de créer de nouvelles opportunités d'affaires, bien, c'est une manière de pouvoir le faire, ça.
3733 Au lieu de penser, au lieu d'attendre que, par exemple, que le web 3.0 arrive, en collaborant avec nous et avec les jeunes, on peut déjà définir et essayer de définir ce que ça va être.
3734 CONSEILLÈRE LAMARRE : Donc, si je comprends bien ce que vous voudriez, c'est que, autant les jeunes... que les jeunes en entreprise aient accès aux jeunes qui viennent chez vous faire des projets de la même façon que ces jeunes-là pourraient avoir accès aux gens qui sont dans l'entreprise pour échanger leur point de vue. Ça, vous avez utilisé l'expression « mentorat ».
3735 M. LEVESQUE : Oui.
3736 CONSEILLÈRE LAMARRE : Ça c'est clair.
3737 M. LEVESQUE : Tout à fait.
3738 CONSEILLÈRE LAMARRE : Les termes de discussion, peut-être.
3739 M. LEVESQUE : Oui.
3740 CONSEILLÈRE LAMARRE : Et entreprendre au fond une dynamique d'échange qui se continuerait sur une certaine période de temps.
3741 M. LEVESQUE : Oui. Tout à fait.
3742 Et la dernière fois qu'on était venu ici, juste pour donner un peu l'ampleur de ce qu'on peut faire, la dernière fois que je suis venu présenter, j'ai présenté avec un de nos partenaires qui est Learn Quebec qui reçoit presque 15 millions de visites sur leur site web par année, qui sont des collaborateurs.
3743 Donc, ça c'est un des collaborateurs qu'on a.
3744 On a quand même accès à un réseau et à des gens et à un potentiel de -- excusez le terme anglais « of outreach » qui est quand même assez important, à tout le moins... peut-être pas nécessairement important, mais au moins, à tout le moins non négligeable.
3745 Et donc, ça serait intéressant de pouvoir prendre ce potentiel-là et de le transformer en quelque chose de plus que juste quelques vidéos en ligne.
3746 CONSEILLÈRE LAMARRE : Oui. Je comprends bien maintenant ce que vous cherchez à avoir.
3747 Et juste en terminant, vous voulez toujours pas me donner un ordre de grandeur au niveau financier? Quelle sorte de soutien vous cherchez?
3748 M. LEVESQUE : Encore une fois, je...
3749 CONSEILLÈRE LAMARRE : Sans que ça exclue... je comprends très bien qu'est-ce que vous m'avez dit.
3750 Vous voudriez pas qu'une demande de soutien financier se fasse à l'exclusion d'une collaboration au niveau des ressources humaines, dans le sens large, puisque ça aussi, ça fait partie de votre demande.
3751 M. LEVESQUE : Tout à fait.
3752 Et en fait, ce que je vais essayer de vous satisfaire du mieux possible.
3753 Je pense qu'en termes de... pour mener le projet à terme, je ne donnerai pas nécessairement un chiffre. Mais à tout le moins pour pouvoir démarrer le projet, établir au niveau technique ce qu'il y a à faire, préparer le terrain et puis commencer la collaboration, je crois qu'un chiffre aux alentours de 500 000 $ n'est pas irraisonnable.
3754 CONSEILLÈRE LAMARRE : Cinq cent mille dollars pour démarrer un projet, alors que présentement, votre budget d'opération est d'environ 100 000 $. Donc, ce que vous voulez, c'est vraiment faire un saut...
3755 M. LEVESQUE : Tout à fait.
3756 CONSEILLÈRE LAMARRE : Dans la direction que vous avez présentement. Mais vous voulez prendre de l'avance.
3757 M. LEVESQUE : Oui.
3758 CONSEILLÈRE LAMARRE : De mettre la pédale au tapis, si je peux me permettre l'expression.
3759 M. LEVESQUE : Oui, tout à fait.
3760 Dans un monde idéal, je veux dire, si je pouvais donner ce que pouvais demander et avoir ce que je voudrais, bien, ça serait d'avoir un fonds qui serait disponible, un genre de endowment fund qui permettrait de pouvoir garder et faire évoluer ce projet-là, non pas juste sur un an ou deux ans, mais qui pourrait prendre là...
3761 Parce que justement, nous, l'idée, c'est de voir dans cinq, dans dix ans, et même plus loin, où est-ce qu'on va être.
3762 Et donc, endowment fund, désolé, je n'ai pas le fonds de... Un fonds à terme, ça serait l'idéal.
3763 CONSEILLÈRE LAMARRE : Je vous remercie beaucoup. Ce sont toutes mes questions, Monsieur le Président.
3764 LE PRÉSIDENT : Merci bien. Ce sont nos questions. Merci Monsieur Levesque d'avoir participé.
3765 Je crois que ça conclut les présentations pour aujourd'hui. On est un peu en avance sur notre horaire.
3766 Donc, on est ajourné. On reprend l'instance demain matin à 9 h.
3767 Merci bien.
3768 M. LEVESQUE : Je vous remercie.
3769 LE PRÉSIDENT : Merci.
--- Whereupon the hearing adjourned at 1536, to resume on Tuesday, May 8, 2013 at 0900
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