ARCHIVED - Transcript, Hearing November 29, 2016
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Location: Gatineau, Quebec
Date: November 29, 2016
© Copyright Reserved
Attendees and Location
140 Promenade du Portage
- Chairman: Jean-Pierre Blais
- Vice-Chairperson, Broadcasting: Judith A. LaRocque
- Commissioners: Yves Dupras, Stephen Simpson, Linda Vennard
- Legal Advisors: Rachelle Frenette, Valérie Dionne
- Secretary: Lynda Roy
- Hearing Managers: Julie St-Pierre, Pierre-Marc Perreault
--- Upon resuming on Tuesday, November 29, 2016 at 8:32 a.m.
1872 LE PRÉSIDENT: À l’ordre, s’il vous plait. Order, please.
1873 Alors, Madame la secrétaire.
1874 THE SECRETARY: Merci, Monsieur le Président.
1875 Good morning everyone. We’ll start this morning with Bell Média’s presentation. Please introduce yourselves for the record first, and then you have 20 minutes for your presentation.
1876 MS. TURCKE: Merci, thank you.
1877 Good morning, Mr. Chairman, Commissioners, and Commission staff. My name is Mary Ann Turcke and I’m President of Bell Media. It’s a pleasure to be here today to discuss our application to renew the licences for our television services.
1878 With me today are, to my right, Mr. Randy Lennox, President of Broadcasting and Content; Ms. Wendy Freeman, President of CTV News; Ms. Corrie Coe, Senior Vice-President of Independent Production; and finally, Mr. Mike Cosentino, Senior Vice-President of CTV and Specialty Services.
1879 And to my left are Robert Malcolmson, Senior Vice-President of Regulatory Affairs at BCE;
1880 Kevin Goldstein, Vice-President, Regulatory Affairs, Content and Distribution at BCE; and Nikki Moffat, Senior Vice-President of Finance for Bell Media.
1881 We will now begin our opening remarks.
1882 We are pleased to be here today to share with you the contributions we have made to Canada’s broadcasting system over our last licence term and to discuss our vision for the next five years.
1883 When we were last here asking for our television licences to be renewed, Bell had just re-entered the media business through its acquisition in CTV. As part of that transaction and the Astral purchase two years later, we made significant commitments
1884 to the broadcasting system. Since then, both the regulatory and business environments have evolved considerably, creating challenges for all players.
1885 Despite these challenges, we have fulfilled all of our commitments including we launched our made-in-Canada OTT service, CraveTV, in a very difficult and competitive environment. We are thrilled that over one million Canadians now subscribe to CraveTV.
1886 We have kept all of our local television stations open, upgraded the vast majority of them to HD despite their financial difficulties, and continued to invest in local news with boots on the ground in communities across this country.
1887 We launched local morning shows in Western Canada. We invested over $650 million in programs of national interest, many of which regularly garner audiences of over a million viewers on conventional television and significant tuning on our discretionary services as well.
1888 And we promoted and invested in Canadian original content that attracts international attention, shows like Orphan Black, whose lead actor, Tatiana Maslany, won an Emmy this year for her role; and Frontier, starring Jason Momoa.
1889 A number of Bell Media's programs have been distributed around the world: Saving Hope,
1890 Motive, Killjoys, and Bitten in addition to, of course, Orphan Black.
1891 I hope that you will be able to see from our video the pride we have in our originally produced Canadian content strategy. More Canadians view our original Canadian programming than any other broadcaster.
1892 Can we roll the video? It’s better with sound.
1893 (VIDEO PRESENTATION)
1894 MS. TURCKE: Thank you.
1895 We are eager to build on these achievements, and continue our strong support for
1896 Canadian programming as we move into our next licence term. Pick-and-pay will require us to further "up our game". We know that there will be winners and losers, but enhanced choice for consumers is something we supported and we will continue to do so.
1897 There are many new regulatory measures that you have put in place which should help us to meet the challenges ahead. These include the standardization of regulatory requirements for all discretionary services; modified content exhibition requirements which will help support the production of high quality Canadian programs; the amended VOD exemption order which helps hybrid VOD undertakings, such as CraveTV, to compete in a market dominated by foreign OTT providers; and a partial but very much needed support mechanism for local news through the redirection of community television funding.
1898 The shared characteristic of these specific initiatives is the parity between licensees, and the much-needed flexibility they provide. However, we now compete in an ecosystem that blends both regulated and unregulated operators, which creates a new level of complexity.
1899 Let me explain. When we were here five years ago, we spoke about the fourscreen universe and how easily consumers could access all types of video content, both through traditional distribution systems as well as via the Internet. At Bell, we have embraced this universe, believing that it supports the long-term viability of our operations and the Canadian broadcasting system.
1900 Today, our programs are widely available on air, on demand and on the Internet either through our TV Everywhere apps or through CraveTV. What was unknown five years ago was whether we could translate this
1901 universe into an acceptable business model, and we continue to make positive steps in that direction.
1902 We also spoke about the formidable competition that Netflix and others like it present to us in competing for viewership and subscription revenue, and how their massive scale and cost structure allows them to outbid Canadian broadcasters for exclusive program rights to first run programming. Five years later, it is clear that our concerns were well-founded.
1903 Large numbers of Canadians are watching video content online, with more and more cutting the cord and watching it exclusively online. In English Canada, there has been a 12 percent erosion in primetime viewing in the current broadcast season alone, a recent and dramatic decline. As of this past June, it was estimated that Netflix had 5.2 million subscribers in Canada, with more than one million of those subscribers signing up in the last year.
1904 That number represents approximately half of all BDU households in the country. This means that Netflix is generating about $600 million in subscription revenue per year in Canada, or approximately 30 percent of the revenue of all Canadian discretionary services, excluding sports.
1905 Now, a new global OTT competitor -- Amazon Prime -- is entering the Canadian market in two days. So it’s not just our fellow Canadian broadcasters who will try to outbid us for first run original programming, but it’s Netflix and now Amazon, two entities that are not subject to the same regulatory requirements as us and that have astronomically more buying power than we do.
1906 And Amazon is just the next one in a potential universe of six worldwide brands that we will have to compete against.
1907 Let me give you a real world example. Last May, we were in Los Angeles buying our foreign television content. There were three shows that we were bidding on and Netflix was the competitor, a competitor who put a global, first run and SVOD rights deal on the table even though these are shows that are coming into Canada on the U.S. networks. We were fortunate to take two of the three shows; however, we paid a significant premium.
1908 The conclusion, therefore, is that Netflix was willing to pay more for the content even in a non-ad supported world. The global scale of these players
1909 fundamentally alters the monetization model in this country. It also begs the question whether the “product” we currently buy that is known as “Canadian rights” is going to become obsolete.
1910 Consider a world where Netflix, or another global OTT player, acquires the majority of the top prime time network television shows. The consequences are broad and can be bucketed into two scenarios.
1911 First, Canadians will watch this popular television content on a U.S. network, taking away Canadian broadcasters’ viewers and reducing our ability to monetize our prime time schedule, not to mention taking away the opportunity for Canadian businesses to advertise to these viewers. We must remember that the revenue earned from popular foreign programming is still the prime support for Canadian production, including local news.
1912 Even worse for the existing ecosystem though, is the second scenario where Canadians decide they don't need any TV subscription at all because the best of prime time television is dropped day and date on Netflix. In this instance, broadcast revenue is falling and BDU revenue is falling. The functional relationship between BDU revenue, CMF contributions, advertising revenue, and Canadian production is so inter-related that negative motion in any of these components results in an exponential decline in the system.
1913 So what does this mean? We must have as much flexibility as possible and have parity with other regulated entities. We also must continue to be at the forefront of creating and promoting the best Canadian content.
1915 MR. LENNOX: Good morning. In my short time at Bell Media it has become clear to me that our entire team works very hard not just to satisfy our conditions of licence, but to serve our viewers by giving them the best possible TV content. And we are very proud of this. We want to build upon our achievements, to be seen as innovators, and continue to be the number one destination for Canadian viewers. Most importantly, we want to be recognized around the world as Canada’s preeminent media company.
1916 We do this by focusing on quality over quantity with respect to programming, by continuing to invest in Canadian content, including heavy emphasis on local news; and by ensuring continued and strong promotion of our content across all platforms.
1917 Our first-run original programming, as Mary Anne said, plays a key role in our overall strategy to provide brand-defining content for our services. In addition, strategic windowing of this content across multiple platforms allow us to make it discoverable, which is core to its success. These shows afford us the opportunity to establish our channels as a destination for viewers and to open the door to experience the rest of our services and offerings.
1918 For example, on Space, one of our premier discretionary channels, there is first-run, original programming like Orphan Black, Killjoys, and Dark Matter which are strategically scheduled to generate the largest audiences possible.
1919 Meanwhile, Canada's favourite new show, The Beaverton, which is on the Comedy Network, provides a uniquely Canadian spin on the world around us, and helps us to shape The Comedy Channel’s distinct personality as well. It lives in Comedy’s marquee 10:30 prime slot, home to some of the biggest series on the schedule.
1920 Bravo! also has the compelling police series, 19-2, while CTV has The Amazing Race Canada and Saving Hope to name just a few. In the case of Amazing Race Canada, the show is quite popular and CTV uses this as a lead-in to launch other American series that follow it. In the case of Saving Hope, it is paired, for example, with Grey’s Anatomy to provide viewers with an optimal experience around hospital dramas that we can call our own.
1921 In-house production also plays a very key role for us in helping viewers identify with our many brands, with shows like etalk, The Marilyn Denis Show, The Social, Inner Space, Daily Planet and our brand new offering, Your Morning.
1922 As proud Canadians, we are also very excited about our project currently in production -- this is called Canada in a Day -- created entirely from videos submitted by Canadians, 16,000 of these in fact, and reflecting our thoughts, hopes, and the lives in of Canadians as we celebrate the upcoming 150th birthday next summer.
1923 Going forward, we intend to continue to acquire and create the best programming, including local and national news, programs of national interest and top-tier international fare. There is no doubt in my mind that such high-quality Canadian content resonates with our viewers.
1924 Frontier, a brand new show, is another example of creating the best possible calibre of programming for our viewers. We actually co-produce Frontier between Discovery Channel and Netflix. We negotiated this deal with Netflix as it made strategic sense for us and resulted in a well-known American actor, Game of Thrones’ Jason Momoa, making a Canadian television series in Newfoundland. It allowed us to calibrate upwards the kind of quality content that we need to compete in the world marketplace.
1925 But this type of deal is not the norm, nor is it likely to be. In fact, these deals are
1926 difficult to achieve with these worldwide brands and I can tell you first-hand that the terms will always favour the global over-the-top players due to their scale and leverage.
1927 Ensuring Canadian pride of place and continued support for Canadian television programming is paramount for all of us and all of our services. CraveTV, for example, contains the biggest curated collection of Canadian programs streaming anywhere. We’re proud of this. LetterKenny, our first Canadian Crave original program, filmed, in fact, in northern Ontario and Sudbury, has been a significant success for us, being the biggest debut in CraveTV’s history since it launched in 2004. We are optimistic and we're always looking for content like this.
1928 One of the many strategies that we’ve been successful is for the promotion of Canadian content and placing past seasons of other programs on CraveTV to build this brand and viewership.
1929 Championing and promoting Canadian content is also an integral element of our conventional television stations. While locally reflective news will always be the foundational element of our stations, other Canadian programs that connect with and appeal to mass audiences and the advertisers that we’ll want to reach is also quite key.
1930 We want to ensure the discoverability of Canadian programs and we do so in a variety of ways, including targeted spots across our television, radio, digital, and out-of-home assets, as well as cross-promoting several conventional programs on our discretionary services and vice versa.
1931 The shows I have spoken about are wonderful examples of the quality of Canadian content that we aspire to continue to produce. Quality over quantity has always been our desire and is our mission continuing and going forward. The Commission's new focus on this will help considerably.
1933 MS. FREEMAN: Every day, CTV News plays an important role in ensuring that Canadians are informed about local and regional issues that are reflective of and relevant to their communities. We are Canada's largest private television operator with 30 local stations located in markets of all sizes, some of which have been in operation for over 50 years. All told, our local stations broadcast well over 300 hours of local news per week and we complement that local perspective with the CTV National News, news specials on events such as federal and provincial elections and Remembrance Day services, and news programs such like W5 and Question Period.
1934 We are committed to producing news of the highest possible standard and are recognized as being an industry leader in this regard. Earlier this year, CTV News with Lisa Laflamme was named by RTDNA Canada as the Best Network Newscast in the country. For the fifth year in a row the program has won this honour. Our local news
1935 operations are among the most highly regarded and respected in Canada. After being judged by their journalist peers, the 2016 CTV and CTV Two local newscasts were recognized with 44 RTDNA Canada and RTDNA International awards of excellence.
1936 We want to continue to provide high-quality local news to Canadians and the funding announced in your recent decision on local and community television
1937 programming will help us to do that. Arising out of that decision, you've asked us to provide a commitment to local news CPE and exhibition requirements. As a subset of local programming, we are committing to air a minimum of six hours of locally reflective news segments for metropolitan markets and a minimum of three hours for non-metropolitan markets.
1938 As part of the 22 percent CPE for conventional television stations we have proposed, 11 percent would be directed to local news. We note that all three English-language broadcasters have proposed identical obligations. We welcome this as it would
1939 provide parity.
1941 MR. MALCOLMSON: Thanks, Wendy.
1942 As we've highlighted, the Commission's recent policy approach is to eliminate regulatory protections and guarantees, and treat all services in the same manner in order to ensure flexibility and parity. Consistent with this policy direction, we believe that the Commission should impose identical CPE and PNI spending obligations on each of Bell, Rogers, and Corus.
1943 Our proposal is as follows.
1944 First, for conventional television, CPE should be set at 22 percent of the prior year’s gross revenues. This level recognizes the precarious financial position of local stations.
1945 Second, for discretionary services with more than one million subscribers, CPE should be
1946 set at 32 percent. Consistent with the new TV policy, we agree that smaller services that previously did not have CPE obligations should be required to spend a minimum of 10 percent. And finally, PNI should be standardized at five percent, which is the current level that Bell, Rogers, and the former Shaw services are required to meet.
1947 We firmly believe that continuing with an individualized approach to Canadian content spending requirements would frustrate the Commission's intent in removing genre protection. We've also requested some amendments to our Conditions of Licence for some of our specialty services. Most are simply to ensure that there is parity with the Standard Conditions.
1948 Finally, a few words with respect to our request to shut down a number of our analog transmitters. We recognize that over-the-air television has an important role in our broadcasting system. That said, these analog transmitters require significant expense to repair or replace. The replacement cost is up to $2 million each, representing scarce capital resources that are simply not available given the precarious state of our over-the-air television operations. Importantly, no local programming will be lost as the affected transmitters offer the same programming as their main re-transmitter.
1949 Mary Ann?
1950 MS. TURCKE: Thanks, Rob.
1951 We are very proud of what our television services have achieved over the last licence term. While we are excited about the future, we are also apprehensive. The proposals that we have advanced, specifically with respect to CPE and PNI, are designed to provide the flexibility needed to respond quickly to both the opportunities and the challenges that present themselves in our industry. They will also ensure regulatory symmetry between key players, to the net benefit of the system as a whole.
1952 Therefore, we respectfully request that the Commission approve our proposals and renew our licences for the full five-year term. That concludes our opening remarks, and we look forward to your questions this morning. Thanks.
1953 THE CHAIRPERSON: Well, thank you, Ms. Turcke, and welcome to you and your team. I'll put you in the hands of our new vice chairperson to start us off.
1954 COMMISSIONER LaROCQUE: Good morning, everyone. I have a number -- a series of issues I'd like to raise with you today, try to do it in some kind of a logical approach.
1955 I'd like to start with Canadian programming expenditures. Requirements based on percentages of gross revenues fluctuate and adapt along with either increasing or decreasing revenue. So what is the logic behind lower-standard CPE requirements for all broadcasters, given that these requirements are calculated as percentage of revenue and will fluctuate along with the changing environment?
1956 MS. TURCKE: What we designed was a system of parity, and really, the important point is that we view it as a floor and historically, I think that we've done a pretty good job around CPE, in terms of the formulaic approach.
1957 I don't know, Kevin or Rob, if you want to talk a little bit about the math behind what we did and how we see that working, going forward?
1958 MR. GOLDSTEIN: Yeah, so thanks, Mary Ann.
1959 So what we tried to do, with respect to specifically the discretionary services, we looked overall at what the industry was spending and we tried to create a baseline minimum for all discretionary services of the large groups. That was in the range as to what the industry had spent on a historical basis, because it recognized, I think, in terms of what the overall obligations were for each individual group, the historical genres which they had been licensed, because when they were licensed, they -- years and years and years ago, they proposed specific requirements that aligned with the genre in which they were operating.
1960 Now that we're in an environment where genres aren't regulated and services are moving around, those historical requirements may not be acceptable, but you still need a reasonable baseline that everyone can meet in terms of the conventional side of the equation. I think we proposed something that aligned with what was essentially the baseline level for the lowest of the three of us, going in in 2011, recognizing the continual struggle or continuing struggles of that sector.
1961 COMMISSIONER LaROCQUE: That answers part of my question, but arguably, given that genre protection is no more, broadcasters already have -- should have more flexibility. So I'd just be interested in understanding a bit more about your logic pertaining to historical levels of CPE limiting ability to consider certain programming strategies.
1962 MR. MALCOLMSON: I'll take a crack at that. The spending requirements that were established historically were based on the genre in which a channel operated. So for example, a channel like Bravo that may have been heavily into drama may have had a higher spending requirement, and another channel that didn’t need to fund that much Canadian programming had a lower spending requirement.
1963 So all we're saying is that once you've eliminated different genres, it makes sense to standardize spending requirements. If you maintain individualized spending requirements, you inhibit the ability of a licensee to morph from one genre into another, for example. So that was the logic behind it.
1964 MR. GOLDSTEIN: If I could just add, you know, it's also an issue in terms of that you create a bit of an equity in the system, because if I have, for example, a Bravo that -- you know, that was in a drama space and had a CPE in the high thirties, the -- another one of my competitors has numerous specialty services that fell into the latter category that Rob referenced that had a much lower CPE, historically, they would have been restricted from competing directly with Bravo.
1965 Now they're not. So they can take that channel that was in another genre and say, "Oh, hey, I'm at 28 percent. I can take a run at Bravo because I have more -- much more competitive cost structure."
1966 COMMISSIONER LaROCQUE: Thank you. Bell proposes its proposed standard 22 percent for a CPE for its conventional stations. I'd ask you, though, to explain how the new flexibility granted in the local policy affects Bell's proposed CPE for conventional television?
1967 MR. MALCOLMSON: They're not directly linked. The bottom line is, conventional television, as you’ve heard, needs a lot of help. So certainly what you did in your local and community TV policy with the ability to shift funding over to fund local TV helps. That's part of the equation. The other part of the equation is having a realistic spending requirement for conventional television.
1968 So how did we get to the 22? As Kevin mentioned, we looked at baseline spending levels historically, and arrived at 22 percent as a fair and appropriate contribution, recognizing the state of conventional TV. But you know, conventional TV is precarious at best, so it -- both of those regulatory assists still don’t solve the problems that conventional TV faces.
1969 COMMISSIONER LaROCQUE: Right. Now, by the Commission's math, if we were to accept Bell's proposal, this would result in a decrease in the average required CPE spending per year in the years 2018 to 2021 by $29.4 million. And in the Create policy, the Commission stated that it will maintain the existing expenditure levels; so Bell's current average CPE for the proposed groups, I believe, 29.3 percent for the current term.
1970 So I would like to understand better how you can justify Bell's proposed minimum group CPE of about 27 percent, which is lower than the requirement set out in 2011, and lower than historical expenditure, frankly?
1971 MR. GOLDSTEIN: I think the rationale behind our proposal is we're looking at a five-year renewal in a very uncertain environment. It's a lot of changes that have happened. We're not complaining about those changes. They're the reality of the system and we're operating within that system.
1972 Historically, we have spent at a particular level. We see our obligations as a floor, not a ceiling, and what we're trying to recommend is a flexible baseline requirement for the industry that allows us to adjust to changes that may happen over the course of the next five years that we don’t even envision at this point in time.
1973 So I think we're putting something forward that recognizes the state of flux the industry is in and the massive amount of change that is happening and trying to set ourselves up over the next five years so that we can respond to what we may be faced with, as opposed to seeing a situation three years from now where we're in dire straits still and coming forward saying, "This doesn’t work."
1974 So ---
1975 COMMISSIONER LaROCQUE: Thank you.
1976 MR. GOLDSTEIN: --- it's not -- we don’t see it as something that's all of a sudden $29 million is going to evaporate. We're trying to create something that's reasonable for everyone.
1977 COMMISSIONER LaROCQUE: What would be the impact on Bell if a standard English market wide 30 percent CPE is outlined in the group base policy?
1978 MS. MOFFAT: I'll take that. We'd calculated that if we revert to a 30 percent, the impact would be 28 million annually to our filing.
1979 COMMISSIONER LaROCQUE: Could you repeat that, please?
1980 MS. MOFFAT: It would be 28 million ---
1981 COMMISSIONER LaROCQUE: Twenty-eight (28) million.
1982 MS. MOFFAT: --- annually.
1983 COMMISSIONER LaROCQUE: Yeah, thank you. Okay.
1984 I'm going to go now to questions on the removal of the 25 percent cap on conventional flexibility. Currently, in the English-language market, conventional stations have overspent and discretionary services underspent throughout the licence term. How has Bell Groups used the flexibility between OTA and discretionary, and what is Bell’s strategy with respect to flex between conventional and discretionary?
1985 MR. GOLDSTEIN: Actually, I think, you know, I can speak to just generally the 25 percent specifically. We haven’t seen that as an impediment to how we’ve actually used the CPE sharing mechanism.
1986 But maybe I’ll toss it over to ---
1987 MS. TURCKE: Yeah, we’ll talking about ---
1988 MR. GOLDSTEIN --- Mike and Corrie.
1989 MS. TURCKE: We’ll get into programming a little bit more as well, if we can.
1990 MR. GOLDSTEIN: Yeah.
1991 MS. TURCKE: Mike, do you want to comment on sort of the switching back and forth flex?
1992 MR. COSENTINO: Flexibility afforded in the group-based model and the percentages that you’ve described allow for CTV and our specialties to essentially follow the creative. In other words, the flexibility allows us to pivot to a very big show that we feel would be best suited for one of our discretionary services.
1993 A third scripted show for space, for example, Killjoys may never happen because in an older inflexible system that money was earmarked for CTV. So there is an example of how we can pivot to designing a schedule that helps to create brand-defining programming, which serves our viewers and strengthens our programming and schedule.
1994 COMMISSIONER LaROCQUE: Okay, thank you. And how is the cost of programs allocated between discretionary and OTA?
1995 MS. MOFFAT: The methodology that we follow is wherever the originating licence, whether it be conventional or specialty, greenlights that project that’s where the costs reside. And then it’s just shared as a cross-promotional vehicle to attract viewers to that originating station.
1996 COMMISSIONER LaROCQUE: Okay. And in your opinion, what has caused such a high overspend on the OTA side of the groups?
1997 MS. MOFFAT: In my opinion, it’s really coming from the programming team’s philosophy on where the programming should reside to garner the greatest audiences. And on conventional, there is that great reach where we typically will launch a program in that space and then carry it through to specialty if it’s the right programming strategic decision.
1998 MS. TURCKE: Mike, do you want to add anything?
1999 COMMISSIONER LaROCQUE: Yeah, could you add? I’d be interested to hear the programming side.
2000 MS. TURCKE: Yeah, sure.
2001 MR. COSENTINO: Generally speaking, a series that’s commissioned for CTV is much more expensive than a series commissioned for a discretionary service. So for instance, CTV in particular in the next 12 months will be unveiling three scripted dramas, you know, The Disappearance, Cardinal, and the Indian Detective while still rolling out Saving Hope and other Canadian specials. These are all at the highest budget levels because, you know, our feeling is that these series need to be on the same stage as big budget Hollywood series.
2002 So the environment isn’t necessarily the same for discretionary service program budgeting. If you look at a series, a speciality service such as E or some of our other, like, Discovery Channel whose program strategy may not be entirely as focused on scripted programming and the cost to deliver the same number of hours which deliver enormous viewership, is not the same as for that CTV series I described.
2003 I would also add that, you know, we take great pride in series like the Amazing Race Canada. But that series in and of itself is a very expensive series and one that would never happen if we were commissioning that for one of our discretionary services. It’s just a functioning of, I think, where we have to be in terms of our spend if we want to make the kind of impact we want to with respect to delivering a show for CTV.
2004 COMMISSIONER LaROCQUE: Thank you.
2005 You know, in the hypothetical world -- and I’m not going to suggest one way or another -- but what would the impact or the benefit be on Bell of removing the 25 percent cap on spending flexibility between discretionary and OTA?
2006 MS. TURCKE: Why don’t we start with Kevin? And then if there’s programming, we can go to more detailed information on programming too.
2007 MR. GOLDSTEIN: At this point given that conventional has overspent, you know, for the reasons that Mike alluded to, the 25 percent cap has not been an impediment to us. You know, I’m not certain over the next term that we anticipate a situation where we would be pumping up against it.
2008 COMMISSIONER LaROCQUE: However, if we continue in this hypothetical world, should the 25 percent cap be removed what measures would Bell propose to ensure that the diversity of programming is still produced? But I gather from your first answer you don’t think that’s an issue, but I’d just be interested in hearing if you have any further thoughts.
2009 MR. GOLDSTEIN: Let me start and then maybe the programming team can talk a bit more extensively about diversity.
2010 I’m not sure the 25 percent cap actually impacts diversity in any way. It essentially was designed to ensure that we didn’t essentially significantly reduce what we were spending on conventional television to the benefit especially in actual application. It’s actually done the reverse. And so but I don’t think in and of itself has, you know, resulted in any lessening of diversity.
2011 Mike or Corrie may want to -- or Randy -- may want to speak more about how we ensure diversity amongst our services.
2012 MS. TURCKE: Go ahead.
2013 MS. COE: I’ll jump in and then Mike may have some extra things to add.
2014 But each of our channels has a very specific brand and an audience that’s attracted to the kind of programming that’s available there, and the brands differ from one another largely. And so in order to create programming or to acquire programming that suits that brand and that audience, there is necessarily a kind of built-in differentiation between the kinds of programming, for instance, that’s suitable for Discovery versus that’s suitable for CTV.
2015 Occasionally there are shows that kind of could work well across one or more, and we do do that cross-promotion that Nikki alluded to earlier to try and build audience to drive them back to the originating channel. That’s kind of a strategy to sort of both promote the show and build audience.
2016 But in general, it really is a matter of trying to make programming that works for that brand. And because they’re distinct, the programming is distinct from one another.
2017 MS. TURCKE: I think, Corrie, you do a lot of outreach too. If you could talk about that in terms of getting diversity to your programming and those sorts of initiatives that would be great too.
2018 MS. COE: Sure. Mike mentioned earlier that we’re really trying to follow the creative, and that’s very applicable kind of throughout our whole process. I look after the development and the production that we do for our commission programming with independent producers, and a key part of that is trying to make sure that we are hearing ideas from across the country from a range of producers and writers to try and make sure that we’re hearing everything that’s out there so that we can quite selfishly pick the best and try and develop that, and work those forward and try and find the best shows possible for our audiences.
2019 So the very nature of that is you have to spread the net as widely as possible to make sure that you’re seeing everything and hearing everything.
2020 COMMISSIONER LaROCQUE: Thank you.
2021 MR. COSENTINO: I think this is a very important question so I just wanted to add that -- you know, just to piggyback on what Corrie has said. Her team travels the country, and we encourage interaction and pitches from the creative community from coast to coast to coast and then we follow the creative.
2022 And I think our track record it’s worth bringing forward a little bit. If you take a look across our suite of diverse channels, you see Letterkenny from Sudbury, you see Motive from Vancouver, you see 19-2 from Montreal, you see Frontier from Newfoundland.
2023 And you see a diversity as well amongst formats. You see one-off big specials like Canada in a Day residing next to series format shows for main network mass audience appeal, but you see genre series for space in addition to in-house format.
2024 So I do think that it’s important that we follow the creative, but we have such a diverse audience base across our portfolio of channels. It would be foolish for us to try and bring everything into the middle and program to that team -- I mean, sorry, to those viewers.
2025 And so coming back to the root of your question, I think the removal of any of the flexibility that allows us to be all those things would challenge ourselves in our ability to deliver those programs.
2026 COMMISSIONER LaROCQUE: Thank you. Just one last question on diversity, and that’s whether or not you believe that the PNI requirements are sufficient to ensure diversity in an environment where there’s full flexibility between discretionary and conventional?
2027 MS. TURCKE: Corrie, do you want to start?
2028 MS. COE: Sure, I’ll kick off.
2029 Many of our channels have quite a distinct drama focus, so I think scripted drama and scripted comedy is always going to be important for our array of channels. It just is. I don’t foresee -- and Mike can probably speak to this -- a market departure from those two genres.
2030 So I think the PNI programming that we do is some of the best programming that we do do, and we’re really proud of it and it gets us great audiences. So I’d be surprised if we wanted to tinker with that success too too much.
2031 COMMISSIONER LaROCQUE: Well, that’s a nice segue way into questions about programs of national interest. So that’s where I’m headed next.
2032 The elimination of genre protection grants with the groups, unprecedented flexibility, and the ability to program their services in the way they want -- and I think we’re all in agreement that that’s a good thing. With no more restrictions on genre and very few restrictions on program categories, what’s Bell’s view on PNI as a tool to ensure diversity of programming and production in Canada?
2033 MS. TURCKE: Go ahead, my team down at the end there. Keep going.
2034 MR. COSENTINO: Well, I’ll kick it off.
2035 For several of our services, and I’ll throw our Space and Bravo! and Comedy, the PNI programming is exactly the way that we create brand-defining programming that is 100 percent the way that we can differentiate our services from the services that are entering our market -- and that Mary Ann referenced -- and from our competitors.
2036 The Beaverton, which we launched recently, the day after the US election, would be a perfect example of giving Comedy a distinct personality. It allows us to showcase our network to our viewers. PNI programming is how we achieve that. So long as we’re operating brands like Space and Bravo! and Comedy, TMN, Discovery Channel, I don’t see our philosophy changing.
2037 COMMISSIONER LaROCQUE: Thank you. This next statement I’m going to make I apply no judgement to it; it’s just a simple statement that -- it could be observed that Bell used the elimination of genre protection as justification for a lower PNI and CPE requirement. But we’ve recently seen Bell make use of genre protection by rebranding M3 to Gusto, which they couldn’t have done pre-Let’s Talk TV.
2038 So how can the addition of greater flexibility to cater to its consumer cause Bell to require a lower PNI?
2039 MS. TURCKE: I’m going to turn it back over, but it really -- greater flexibility means setting a floor that we can step over if we need to. And I think Rob said it best. When you eliminate genre protection but impose other constraints in terms of how and what you can spend your money on, you sort of reintroduce limitations in terms of how you can program stations.
2040 So it’s a cause and effect thing that I think we’re -- that’s being implied that’s not true. Like, we really want the flexibility to be able to compete where we see the competition going, right? I mean, there are a lot of international players here in the drama space. So you know, made-at-home channels like Gusto are attractive now because we need a different place where we can compete; we need a niche audience.
2041 I don’t know if you want to add, Corrie or Mike, in terms of the flexibility that this provides us and how, frankly, we’re excited to be able to do these things and to be able to take it to our competitors in ways that we weren’t able to before.
2042 MR. COSENTINO: So I’ll start. And the flexibility that you just described is -- you can connect the dot immediately, as you’ve done, with the transition of M3 to Gusto. And if you look at the last six, eight months, and the development prior to that, Bell has turned that flexibility into the opportunity to invest in a new channel in a category that we have not operated in. We’ve ordered eight or nine new Canadian series that simply wouldn’t be there if we didn’t have the flexibility. That would not have happened in the former M3 universe.
2043 So we are today operating in an environment, in a new category, in the food and lifestyle category. If you drove through any major market, as we all do, you will see the promotion of Gusto that is unparalleled, again, something that wouldn’t have happened in the former M3. So we’ve turned the flexibility into an investment which we hope generates audiences in a category we haven’t been participating in. And I think that’s a good thing.
2045 MS. COE: And I’m just going to add the point that having the flexibility to best use our programming budget dollars to be able to sometimes pivot to do a bit more in-house, sometimes do a bit more on the inexpensive kind of lifestyle programming versus focus and push a bit harder this year on two scripted dramas, really lets you both build some channels that may need help as they are just starting. And Gusto is kind of a younger brand that needs some extra help so it made sense to try and really attend to that in its first year and build that out.
2046 But it also allows us to really focus. CTV is a powerhouse for many of our programs and our Canadian original programs and we always want to try and continue to support that.
2047 So we try and make all of our dollars do multiple things and having that flexibility really lets you be as nimble as possible to try and squeeze out as much as you can. Because it’s never as much as you want so you’re always trying to hit all sorts of goals with the same people, the same resources. Thank you.
2048 COMMISSIONER LaROCQUE: Thank you for that.
2049 MR. MALCOLMSON: And Madam Vice-Chair, the other part of the equation here is -- we’ve heard lots about flexibility. The other part of the equation is we’re trying to create regulatory parity. So you know, it’s not about reducing PNI; it’s about finding a consistent level of PNI spending across all similarly-situated competitors so they can go out into this new, flexible, uncertain environment, have the same regulatory obligations, and compete for viewers. So that’s the other part of the proposal of five percent PNI.
2050 COMMISSIONER LaROCQUE: Okay. Then you’re not going to like my next question.
2051 But Bell’s historical PNI spending hovers around seven percent. And since the last renewal Bell has acquired TMN and TMN Encore and they have an 18 percent PNI requirement. So given the addition of these services to the Group, how do you justify a five-percent level being appropriate? And I understand your desire for regulatory parity, but I also wonder about shouldn’t those who can do more, do more?
2052 MS. TURCKE: Do you want to start, Rob?
2053 MR. MALCOLMSON: I think perhaps in the previous environment maybe the idea of those who can should do more would apply. But the environment we operate in today, and particularly in the pay space where we compete with the various OTT players that you’ve heard about in Mary Ann’s opening -- you know, we’re competing with Netflix; we’re competing with Amazon in the next 48 hours. They don’t have PNI requirements. They don’t have exhibition requirements. They don’t have CPE requirements. So part of the discussion here can’t ignore the unregulated ecosystem in which we find ourselves.
2054 So what we’re trying to do is we’re trying to say what’s a fair and reasonable contribution for us as regulated licencees, which we’re prepared to make. But at the same time, please take into account the unregulated ecosystem.
2055 In terms of TMN in particular, you’re right; it has an 18 percent PNI requirement at the moment. But with the removal of genre protection, you know, anyone could apply for a pay licence and they wouldn’t necessarily have to assume an 18 percent PNI requirement. Similarly, Super Channel, which is our current competitor in this space, interestingly doesn’t have a requirement for PNI. So again, it creates regulatory asymmetry and we’re looking to clean that up and have parity.
2056 MR. GOLDSTEIN: If I could just add, Madam Vice-Chair, you highlighted the seven percent and that was kind of in the pre-TMN environment against a five-percent requirement. That’s because, as we indicated earlier, we see these things as floors, not ceilings. We don’t think it’s good public policy that if one exceeds what their obligation otherwise was that that automatically should be viewed as that becomes your new obligation going forward. Because in our view that creates a disincentive to everyone in the industry to ever exceed your requirements.
2057 COMMISSIONER LaROCQUE: Thank you.
2058 MS. TURCKE: May I add?
2059 COMMISSIONER LaROCQUE: Go ahead.
2060 MS. TURCKE: Randy and I are the newbies to the industry. It’s really important -- and Corrie said those words and they kind of slid out of her mouth and you may not have heard. She said, “We never have enough.” And we are so proud of the Canadian work that we do. And it is really good for our business.
2061 I think what we’re looking for is a flexibility so that we can move adjacently. We are starting to go into ventures. Randy is new to the team, you know, in live music. You’ve probably seen the announcement with Bat Out of Hell with partnering with Michael Cohl, who is an amazing Canadian. It won’t be Canadian but it’s so incredibly Canadian because of who’s driving that strategy.
2062 There are partnerships with DAIS, run by Sol Guy, who worked for Tribeca in New York who is an amazing Canadian. We’re going to be developing interesting content there.
2063 So the constraints and the formulas that currently exist, we just need some oxygen in the room so that we can move adjacently here as we protect this great system that we have in Canada.
2064 I don’t know, Randy, if you want to talk about it a little bit because you went through a little bit of this in the music industry as well.
2065 MR. LENNOX: Yeah, I mean, you know, we -- as I listen to Mary Ann and Mike and Corrie speak this morning, the thought process I'm having is the amount of time we spend creatively around Canadian content. It is my background from a previous career, but I can tell you that it is extraordinary, the all-hands-on-deck approach, not only creatively, but in terms of the leverage of the Bell Media assets that we spend. And we don’t do so with sort of deference on any kind of a quota system. We do so because we go to what is exciting to us creatively, what we can put our arms around.
2066 And Corrie and Mike spend an inordinate amount of time going through literally hundreds and hundreds of scripts and hundreds of producers so we can end up in the creative process.
2067 One of the reasons I joined the company, as Mary Ann just said, was to expand into live. You know, live is, as you know, in the linear world and the digital world, sort of omnipresent and very important. We have a theatrical joint venture. We have an artists' repository. We have a building on Queen Street that we're partnering on, four storeys with young people in their early twenties writing scripts, writing music, creating content.
2068 We do this, not because we have to, but because we want to. This is the creative process that we engage in, and we're extremely proud, because those are not short-term results. You know, the creative process around which you make these investments are all wise that take years and years to come, yet Bell Media -- and again, my attraction to joining is predicated largely on the fact that we have patience, in terms of the Canadian artist process.
2069 COMMISSIONER LaROCQUE: Thanks. I'm finished.
2070 One last question on PNI and then I'll move on to other things, but -- and it's a bit repetitive. I'm sorry, but I think it's important to have on the public record.
2071 Bell has stated that original programming is one of its key programming strategies, and I think that's, you know, "louable", in French we would say. Wouldn't a higher spend on PNI help contribute to the creation of high-quality original productions and thus setting you apart from the others?
2072 MS. TURCKE: I think we're going to set ourselves apart like we have in the past, irrespective of where we set the floor. We're going to spend what we need to spend to set ourselves apart.
2073 COMMISSIONER LaROCQUE: I'd like to turn now to local and community programming. In the local television policy, the Commission announced that all licensees will be required to broadcast a minimum level of local news and to allocate a percentage of their previous year’s revenues to such programming, with the exhibition and expenditure levels to be determined at licence renewal, based on historical levels.
2074 Should this requirement be calculated on the revenues of conventional television stations only, or on the revenues of the whole designated groups under the group-based policy?
2075 MS. TURCKE: Okay, Kevin can you start with that?
2076 MR. GOLDSTEIN: Our perspective is that it should be against conventional television revenues, as that's where the programming airs, and then that's who's involved in the production of the local news programming.
2077 COMMISSIONER LaROCQUE: Licensees have raised concerns about the difficulty of applying the policies adopted with respect to the monitoring of time devoted to local programming and local news through broadcast logs and with respect to the allocation of expenditures incurred for the production and broadcast of locally reflective news.
2078 What are the difficulties associated with the allocation of local programming expenditures between locally relevant programming and locally reflective news programming?
2079 MR. GOLDSTEIN: I think the issue for us is really a manpower one, and it's really one philosophically as to should we be devoting scarce resources to what actually goes on screen, in terms of professional journalists and reporters, or should we be devoting it to staff sitting with a stopwatch, timing locally relevant segments?
2080 Because I think it's important to highlight, we don’t log news currently in the way in which the new policy wants us to track it. If our newscast airs at six o'clock and it's an hour long, our logs reflect an hour newscast from 6:00 to 7:00, ads in, locally relevant, locally reflective, regional, national, international stories. They're all in on that one hour.
2081 We're not concerned about meeting a locally reflective due segment requirement. That's what we do every day. That's what our viewers want. And I'll pass it to Wendy in a second. She can comment more thoroughly on how we do that.
2082 But we have 30 local stations, when you include CTV 2 Atlantic -- if you add CTV 2 Alberta in, that's 31 -- that air well over 300 hours of local programming a week. We counted it. We think it's 331 local news units, essentially broadcasts, that would require us to track. We initially looked at what would be involved in doing that at the local station level because of minimum shift requirements and what it would cost to actually staff people involved.
2083 There's not a lot of synergies between the various stations because they're individual markets. The initial cost of that we priced at was $1.6 million. For us, we found a more cost-effective way of doing that, where we actually centralized the department in Toronto. It would require 19 full-time staff as well as a manager, so 20, at an annual cost of roughly $1.2 million a year.
2084 That exceeds -- no, no, no. That -- we found a cheaper way of doing it. The 1.6 was if we did at the local station level. If we centralize it, it's 1.2. That $1.2 million figure exceeds the local news budget in some of our stations for everything. So you know, in an environment where we're dealing with scarce resources, and we're putting an emphasis on the importance of local news, we think it should be on screen, not on paper.
2085 COMMISSIONER LaROCQUE: The -- because I'd like to hear from you as well, but just might I add, have you given any thought to how we might -- you might provide us with results at a -- if -- in a much cheaper way or in a way that could be -- I mean, we'd be interested in hearing your views, if there's an easier way of doing it.
2086 MR. GOLDSTEIN: So actually, Madam Vice-Chair, we do. And actually, we filed it in our deficiencies. We actually think it would be appropriate is for the Commission to do -- to apply an audit-based approach, where essentially, you know, twice a year or three times a year the Commission, after the week had occurred, so we couldn't sit and structure it in a particular way -- the Commission would request a specific week of logs for, you know, particular stations. And then we would do it on an ad hoc basis. And in the event that there was an issue, you could look at broader weeks.
2087 But as we indicated, we're comfortable with the requirements, and we're going to set the necessary rules in place to ensure that we exceed those, so it isn't ever going to be an issue. But actually, sitting there with a stopwatch on a week-after-week basis, to us, seems like a huge administrative burden and not something that really achieves much.
2088 MS. FREEMAN: Yeah, as Kevin said, that would work for us, just because it is so costly and time consuming to have someone do this now, and we would really rather be spending that on news gathering, you know? And we would rather have reporters showing up at City Hall and asking the tough questions and boots on the ground than having someone, you know, sitting in the back with a stopwatch. So that would be helpful.
2089 COMMISSIONER LaROCQUE: Has Bell Media come to an understanding with its related BDU with respect to an amount that could be transferred, as allowed by the new framework to conventional stations for the purposes of financing local news?
2090 MS. TURCKE: So I want it all. And we are -- Kevin can add more detail but there's two buckets, right? There's our -- from our satellite or television business, and that's coming our way to be invested in local news, and then we're -- frankly, we're working through the process on the community television side, show-by-show and deciding what is going on there. Kevin represents BCN total, so he can provide more detail.
2091 MR. GOLDSTEIN: I wear two hats, and those two hats like to fight with each other. But so on -- as Mary Ann indicated, so on the DTH side, our Bell satellite TV division, we know that at least in the first year, we're talking roughly $8 million that's going to be transferred over. That's likely declining amount, because the satellite subscribers are exiting the system.
2092 With respect to the money that would come over from our IPTV group, that is from Fibe TV and our TV1 local community channel, it's going to be somewhere -- at least at this point -- in the range of -- at a high end, $10 to 12 million a year, as Mary Ann indicated. She's fighting for all of that.
2093 But we are doing a program-by-program analysis to determine, you know, in the local markets, what makes sense to fund, in terms of local news, what makes sense to actually keep on the community side.
2094 COMMISSIONER LaROCQUE: Thank you. In the local television policy, the Commission announced it will set locally reflective news expenditure requirements based on historical spending. This policy also states the BDUs will be able to allocate local expression contributions to designated local television stations for the production of local news.
2095 Should these amounts be eligible for CPE or LNE, and should these amounts be added to the LNE requirement?
2096 MR. GOLDSTEIN: So they should be eligible expenditures for local news expenditures and CPE expenditures in terms of underwriting the cost of local news because that was, I think, the intent of the policy; recognizing the challenges facing local news.
2097 They should not be added to the revenue base on which CPE or LNE expenditures are assessed because they were never designed to be incremental in nature. And if you actually add the revenue, you’re essentially creating an incremental requirement and top and it actually diminished the value of transferring the money over. And that’s actually consistent with the manner in which the Commission applied LPIF in the past as well.
2098 COMMISSIONER LaROCQUE: Thank you.
2099 Could you explain to me how your proposal for six hours in metropolitan markets and three hours in non-metropolitan markets is in line with the new local programming policy?
2100 MR. GOLDSTEIN: So I’ll try, simply because every time we practice this answer Rob told me I was beyond confusing.
2101 Essentially the six hours and the three hours are a bit apples and oranges to the 14 and the 7. What we know is that local news is part of local programming, so anything we do in terms of local news will form part of either the 14-hour or 7-hour requirement.
2102 But when we were looking at the numbers and when we were working with Commission staff in terms of what specifically they wanted us to count, they wanted us to count specifically locally reflective news segments. So if our 6:00 o’clock news has a two minute and forty-two second on a fire that happened in a community in Winnipeg, that two minutes and forty-two seconds would count against the six hours -- or the three hours in the case of Winnipeg because it’s a smaller market.
2103 So what we’ve done is we sort of said, okay, in a large market local programming is 14 hours. We recognize that we can’t propose a commitment for locally reflective news that when it’s levered up actually equals more than 14 hours because one is a subset of the other.
2104 What we needed to do to start off with was say, “Okay, what’s the apples to apples?” The apples to apples is 14 minus the advertising, because when you log to the 14 your six to seven counts as one hour against the 14. So take out about 25 percent, about 15 minutes an hour. So that equals just over 10 hours in a 14-hour market.
2105 And so we said, “Okay, about 60 percent of that should be locally reflective news stories.” In effect, about two-thirds of our local news broadcasts that we would do would be locally reflective news stories. The rest would be regional, national, international stories that are of importance and interest to the local community.
2106 But when we do the 14 or the 7, we kind of started from a premise that you can’t create a requirement that equals greater than that. So it’s not necessarily reflective of what we’re doing now. We actually in most -- you know, in fact all our markets -- far exceed those requirements. But we’re setting a baseline, you know, related to the 14 and the 7.
2107 I hope that was clear as it can be.
2108 COMMISSIONER LaROCQUE: How would Bell’s proposal for its 11 percent spend on local news CPE being applied on a group basis ensure that local news was available to all or most communities when in theory Bell could decide to allocate its local news expenditures in metropolitan centres to the detriment of the smaller centres?
2109 MR. GOLDSTEIN: Maybe I’ll start and then maybe Wendy can add more on kind of how we approach it.
2110 Those local communities, whether they be small, medium, or large, all are going to have specific local news requirements flowing out of this process. So I think local news in larger markets, given the scale and just salaries and everything, obviously is going to be more expensive than producing local news in a smaller market. But given that all of them are going to have requirements, you know, to do local news, I can’t see a situation develop -- and in addition, you know, those smaller markets have all historically, at least for us, done a large amount of local news.
2111 So, Wendy, if you want to talk more strategically?
2112 MS. FREEMAN: Yeah, absolutely. You know, our smaller markets are very important to us, you know, as important as our larger markets. And in fact, you know, we rely on -- the national network system relies on those local markets as well to gather news for us in those places. You know, it is these smaller local markets as well as the larger ones -- but especially the smaller ones too -- they’re the backbone of the network. And without them, the national news network wouldn’t exist. They are vitally important to the entire system, and they always will be.
2113 MS. TURCKE: And if I may make a comment. And, Mike, you can jump in and correct me here.
2114 But just from a top down perspective, when we were here for the local news hearing we talked about, like, 81 percent of people surveyed -- a CRTC survey -- said they liked their local news. This is a network, like, CTV is a network.
2115 So when we program primetime starting with a really interesting and attractive newscast at that dinner hour, for instance, in that local market it gets people to turn on the TV. And they tune in to CTV and they stay there all night. It’s a really important part of kicking off our primetime schedule. That’s another reason why these newscasts are so important, and that they be locally relevant so people watch them.
2116 MS. FREEMAN: And our local communities they love our local news. They love our local anchors, our local correspondents, and it’s a big part of the vibrant of the community.
2117 COMMISSIONER LaROCQUE: Thank you.
2118 Could you provide me with an explanation as to why Bell’s Northern and Atlantic regional stations should continue to be permitted to average out the local programming between its stations?
2119 MR. GOLDSTEIN: So I’ll start, and perhaps Wendy can talk more specifically.
2120 Essentially, I think it was acknowledged many, many, many, many years ago -- several licence terms ago -- that it was not economical to have standalone local newscasts in each of the four markets that comprise our Atlantic group and our Northern Ontario group.
2121 So what we did was put in place essentially a newscast that draws from all four. So, you know, if you’re in Halifax -- you know, the Atlantic one is based in Halifax but it gets input and there are journalists on the ground in each of those markets that input into that broadcast.
2122 And so instead of trying to meet a base minimum of seven hours in each of those markets where -- and Wendy can speak to actually even the prevalence of news in those markets to actually compile that -- we’re doing, I think, 16 to 18 hours in total that draws from all of those markets and provides the necessary stories.
2123 So, Wendy, if you want to speak to ---
2124 MS. FREEMAN: This has been ongoing for about 20 years in the region, and we feel that we still serve them adequately. When stories do break in Prince Edward Island or in Moncton, we go right away and we do the news from there. But we do have people on the group, we have VJs, we have boots on the ground in these regions, and they still are adding into the newscast so you will see locally reflective stories in those regions.
2125 COMMISSIONER LaROCQUE: I’d like to have a better understanding as to why CICC Yorkton, CIPA Prince Albert, CFCH Lethbridge, CFRN Red Deer should be permitted to have lower programming requirements than is directed in the policy. I just don’t quite understand how you got to that state of thinking.
2126 MR. GOLDSTEIN: So all of those stations historically were not really designed as originating stations. They were essentially re-broadcasters of stations from larger markets that then developed and had some distinct local programming in addition to what exists in the larger market.
2127 So Yorkton and Prince Albert are offshoots of Regina and Saskatoon, and Lethbridge and Red Deer are offshoots of Calgary and Edmonton. And so those stations have never really been designed as full up, you know, over the air local television stations. They were efforts by us to essentially say, “You know what? We’re recognizing an opportunity here where there’s a community that’s underserved. And if we do a bit of local programming here, perhaps we can also, you know, service the local advertising market there as well.”
2128 But they’re not sustainable as full-up stations, and they were never actually designed in the first instance to be that. So that’s the rationale behind it.
2129 MS. FREEMAN: And we do have correspondents in these areas who are gathering news.
2130 COMMISSIONER LaROCQUE: And could you just explain to me a little bit further what the impact would be if the requirements were increased for those? What would be the impact on Bell?
2131 MR. GOLDSTEIN: It would effectively be like launching full up new local television stations in four markets, something in today’s economic environment, you know, with respect to over the air television, something we would not be in a position to do.
2132 I don’t know that we’ve costed out the actual financial impact of it, but it would be dramatic.
2133 COMMISSIONER LaROCQUE: Okay.
2134 Could it possibly result in closures of those stations?
2135 MR. GOLDSTEIN: Potentially in terms of us not being able to deliver the small -- you know, the limited amount of market-exclusive programming we’re doing.
2136 MS. TURCKE: I think going to full-fledged stations in those markets is just something from a financial perspective we’re not in a position to do, whether it results in the closing of those or something else. I mean, there’s sort of a fixed amount, right? And it would result in negativity somewhere, whether -- somewhere across the network I think is how I would best put it. If you want us to come back with a build-up of what that might be we could undertake to do that.
2137 COMMISSIONER LaROCQUE: That would be very helpful, actually. Thank you.
2139 COMMISSIONER LaROCQUE: And what is our deadline for undertakings?
2140 THE CHAIRPERSON: November ---
2141 COMMISSIONER LaROCQUE: November?
2142 THE CHAIRPERSON: December 9, sorry.
2143 COMMISSIONER LaROCQUE: December 9th.
2144 MR. TURCKE: Okay.
2145 THE CHAIRPERSON: Yeah, December 9th. Okay? Thank you.
2146 COMMISSIONER LaROCQUE: One last question on local before I move on to other things.
2147 Does Bell want to maintain Dawson Creek and Terrace’s commitment to broadcast 3.5 hours each week of local news?
2148 MR. GOLDSTEIN: I think our proposal relating to those stations is that they would be added into the regular -- the requirements.
2149 COMMISSIONER LaROCQUE: I’m sorry; could you repeat that?
2150 MR. GOLDSTEIN: That they would essentially fall into the category of smaller market stations.
2151 COMMISSIONER LaROCQUE: Okay. So does that answer my question? Yeah.
2152 MR. GOLDSTEIN: Yes.
2153 COMMISSIONER LaROCQUE: So you would maintain the 3.5 hours?
2154 MR. GOLDSTEIN: Yeah, yeah. Yes.
2155 COMMISSIONER LaROCQUE: Yeah, okay. Sorry. Thank you. I’m getting used to all this.
2156 I’d like to move on to children’s programming, if I might?
2157 You know, in the Create Policy the Commission stated that it considers children’s programming -- children and youth programming to be an integral part of the broadcasting system.
2158 However, as part of that proceeding, the Commission received conflicting data on the state of children’s programming and the system. So I’d just like to clarify a few things and get your advice, frankly, on a few.
2159 What further support, if any, would you like to see given to the creation of Canadian children’s programming?
2160 MS. TURCKE: We don’t do a lot of children’s programming or any children’s programming; it’s a niche area. And I have a lot of respect for my colleagues at Corus and others; they do quite a good job of it. So we have done a little bit of youth programming in our French market as you know, but we don’t do much in the English market.
2161 COMMISSIONER LaROCQUE: Then this question is probably less relevant to you. But even if we went to your French market for a moment, did you have challenges accurately reporting your spending and logging on youth programming or children’s programming? Because we have heard from other groups that there have been some difficulties in making that -- in providing that information.
2162 MS. TURCKE: I’m not sure. I’d have to ask the French market folks. Not that I’ve heard of but we can double back and check on that.
2163 COMMISSIONER LaROCQUE: Yeah, just if you could. I mean, I understand that you’re not in kind of a lead children’s programming position, but we’re just trying to get on the public record any difficulties or challenges that have occurred in this area.
2164 MS. TURCKE: Okay.
2165 THE CHAIRPERSON: So that’s an undertaking as well for the 9th.
2166 MS. TURCKE: Right, yeah.
2168 THE CHAIRPERSON: Thank you.
2169 COMMISSIONER LaROCQUE: So if we could turn now to promotion and discoverability?
2170 What do you think the Commission’s role should be with respect to promotion and discoverability, if any?
2171 MS. TURCKE: That’s an interesting question. I’ve always only thought about our role in that because it’s vitally important to what we do and I think it takes off a little bit of what Mike was saying earlier in terms of the work that we do across our channels. I mean, we could talk a little bit about what we do. And I don’t, Kevin, if you have any perspective on the Commission’s role. But we undertake to do that because it’s for the betterment of our audiences and the betterment of our product and our business model.
2172 So I don’t know, Kevin, if you have anything to add?
2173 Mike, do you want to talk a little bit about our work we do there?
2174 MR. COSENTINO: Definitely I can jump in. Promotion of a Canadian series is the highest bar you can surpass at Bell Media. There is nothing we don’t do to support the launch of a new Canadian series. Just Sunday in the Grey Cup we undertook to launch the first ever promotion spot advertisement for Cardinal. You know, we did that on purpose knowing three or four million Canadians would be seeing the Grey Cup on TSN.
2175 So we view promotion of Canadian programming across two or three very complex buckets.
2176 The first starts with strategic scheduling. You know, commissioning Saving Hope, a hospital drama, and then scheduling it behind Grey’s Anatomy and -- you know, our philosophy is that Canadian shows stand shoulder to shoulder with Hollywood hits. It always has been as long as I’ve been involved. That’s the way CTV has operated.
2177 But it goes so much beyond that. A program will air in its first instance on CTV, in the case of Saving Hope. We will window it, you know, for discoverability on CTV Two. We’ll take some time and it will go to one of our specialty services and we’ll cycle through that strategy where it will ultimately land in a binge environment on CraveTV. We’ll probably launch that about a month before season two and you’ll see promotion across all of our networks in targeted spots across promotion time to support one, two, three, or four categories of what I just walked you through.
2178 But that entire process is extremely complicated and involves selection of time that is not going to injure us. It involves finding avails that are strategic. It involves the right scheduling strategy. It involves so many different things.
2179 So you know, not to promote your Canadian programming would be at your own peril. And I would say that, you know, I think our track record is exemplary. I would hope that there would be no external forces on that because we see it as totally organic and germane to our success.
2180 I’d be remiss, you know, if I didn’t mention that we employ the 105 radio stations across Bell Media. You will hear the radio ads for these shows. You will see the transit shelter ads across the out-of-home business we operate. And our promotion and publicity budgets make the highest -- the first spending of any dollars goes towards bringing in Canadian stars from wherever they are to our headquarters where we then bicycle them across all our entertainment platforms so that we can give our stars and our shows a national exposure that they deserve.
2181 So that editorial support is part of the DNA; it’s part of the recipe for success. And again, that’s something that we’ve worked hard to create because again, there’s no more amount of pride that we take in the success of a Canadian series. And so supporting that series or program is the highest priority.
2182 COMMISSIONER LaROCQUE: That’s very interesting. I’d like to pursue with you the challenges that you face in terms of discoverability. You mentioned not putting in an ad at a time that’s going to be a bad time for other products or other things you do. But I’d just like to have a better sense of the challenges that are involved with promoting discoverability.
2183 MR. COSENTINO: So we -- across all of our channels, across all of our inventory of course we have a very sophisticated approach with respect to our revenue management against our promotional strategy. So there’s a fine balance. And we absolutely want to hit a certain number of GRPs and awareness levels for our programs through promotion. At the same time we want to make sure we optimize the revenue with respect to demand and advertising.
2184 So there’s an ebb and a flow at certain times of year. There’s less demand in advertising and at certain times of year there’s a spike in advertising. And we have levers internally to offset, you know, one or the other so that we can take advantage of increase in advertise or demand and lower the lever on promotion and vice versa. It’s very organic.
2185 So the challenge is -- so we don’t see it as a challenge. I’m not saying you’re saying that we do, but the challenge is really in the optimization of your time, again, across not just your network television schedules but your out-of-home advertising business, your radio business, all the ways we spend money on external platforms.
2187 MS. COE: I would just add, too, from sort of a less sophisticated point of view ---
2188 MR. COSENTINO: I think your microphone is -- there you go.
2189 THE CHAIRPERSON: Too many mics on at the same time. Okay, that’s the problem. So if you’re not speaking I think you might want to turn off your mics, thanks.
2190 MS. COE: Okay.
2191 I just would add too that part of what Mike and the promotions team and the publicity team also are very conscious of is when they’re going to promote a particular new show, or an ongoing show that’s coming back for a fresh season, they try to promote it within shows that have appropriate audiences to the demo and to the genre type that we’re talking about.
2192 So there’s quite a jigsaw puzzle. So for instance, promotion of say Amazing Race Canada you would do at a time of year when makes sense, you would do it across a variety of our channels. So TSN would get it, CTV would get it. We would also have heavy online presence. We use a lot of social outreach as well, whether it’s Facebook or it’s Twitter or it’s our CTV.ca to press -- to try and get that news out there in addition to the other stuff.
2193 But we would do an entirely different approach for say 19-2, which is a much more niche premium cable-style drama. We would be advertising and promoting that to a different set of audiences who might be more interested in that show than they might be in Amazing Race Canada.
2194 Thank you.
2195 COMMISSIONER LaROCQUE: And how do you measure the success of your promotional campaigns? I mean, is it a scientific grid, is it organic; how do you go about that?
2196 MR. COSENTINO: IT’s a range of things. You know, it’s your production partner at Gusto sending you an email saying, “I couldn’t drive through Toronto without seeing a billboard advertising Gusto. Thank you.” It’s seeing your premiere of Saving Hope do a million seven. It’s awareness, it’s watching the social media light up when you drop a Letterkenny spot in Grey Cup and watching the wave of social media.
2197 It’s not entirely measurable, but I think we all monitor it and watch it and pay attention.
2198 COMMISSIONER LaROCQUE: I’d like to switch gears now and talk a little bit about support for official language minority communities.
2199 And the Quebec English Language Production Committee has made a number of proposals with respect to all groupings. And I’d like to have your comments on the following, and we’ll just do them seriatim if you don’t mind.
2200 That the Commission impose a condition of licence that Bell, Corus, and Rogers spend at least 10 percent of their expenses in total annual PNI on English language OLMC productions assessed on an average licence term for all stations and platforms.
2201 MS. TURCKE: Okay, I’m going to hand it to you, Corrie. It sort of stems off of our diversity conversation earlier, I think.
2202 MS. COE: Thank you.
2203 I get a bit loss in math; I will confess. So I’m going to answer this without the math, and then maybe other people may want to jump in and speak to the math.
2204 But from our perspective, we’re actually really, really proud about the productions that we’re already doing from an OLMC perspective. We’ve got 19-2; we are just finishing its fourth season in post. That will be going on air in spring, an English language production shot and set in Montreal. And apologetically so, that was actually just nominated for an international Emmy for best drama which was kind of fantastic.
2205 We also have a variety of feature documentaries that we do there regularly for Discovery. We do a lot of TMN work there. We have The Disappearance, which is our brand new CTV drama that will be going on in 2017. Again shot and set in Montreal, English language production, which we couldn’t be more thrilled with.
2206 We do Just for Laughs All Access there, which is our premium cable comedy show related -- nor surprisingly -- to the Just for Laughs Festival.
2207 We have a number of projects in development from English language producers in Montreal. We work really closely with them; they know us well. We have good relationships with them. And I guess it was just even as recently as early summer that we went and had an event that we organized with Kirwan Cox and the OLMC community to just have kind of a day session where we got together and talked about new things that we had done and changes to our programming strategies, new things we were looking for. We talked about their projects, answered questions, asked questions of them, had a nice lunch. We regularly get together.
2208 And I think, from my perspective, it’s so hard to create a huge hit that we really just need to follow the very, very best creative ideas and teams that we can find. And I think any time that you put some sort of set of guidelines or parameters around that that gets too narrow, it can impede that and actually not be as strong in terms of actual shows that get to air.
2209 MS. TURCKE: Yeah. So the reason I had Corrie start is because we do a lot of it, and it really stems from the diversity conversation earlier. We’re in a no-holds-barred, all-hands-on-deck incredible fight for viewership that this country has never seen before with competitors from outside. We need to be able to go wherever the best creative is and do -- we do a lot of diversity outreach as it is.
2210 I don’t think we need a condition of licence to go and find the best creative that this country has to offer to fight for the viewership that we need to get against our American competitors.
2211 COMMISSIONER LaROCQUE: I know you don’t want to speak numbers per se, but it sounds like you’re doing quite a bit. Do you have any idea how close you would come to a 10 percent expenditure anyway, even if it wasn’t a condition of licence, like, actually with what you’re doing now?
2212 MR. MALCOLMSON: We don’t have those numbers at our fingertips, but if you wish we could come back and provide that by way of undertaking.
2213 COMMISSIONER LaROCQUE: That would be excellent if you could do that. Thank you.
2215 COMMISSIONER LaROCQUE: Another one of the ---
2216 THE CHAIRPERSON: I’m going to assume that we’re going to go with the standard 9 December, and if you have an issue with that you’ll raise it, correct?
2217 MR. MALCOLMSON: Yes.
2218 THE CHAIRPERSON: Okay, thank you.
2219 COMMISSIONER LaROCQUE: Thank you.
2220 Another of the QEPC proposals is an expectation that these licensees -- yourself, Corus, and Rogers -- spend at least 50 percent of their programming expenses on Canadian programming. Could you comment on that?
2221 MR. GOLDSTEIN: Sorry, 50 percent of our Canadian programming ---
2222 COMMISSIONER LaROCQUE: Of your programming expenses on Canadian programming.
2223 MR. GOLDSTEIN: Well, I would assume that -- it’s a Canadian programming expenditure requirement so I’m not sure we fully understand the proposal.
2224 COMMISSIONER LaROCQUE: This is the Quebec English Language Production Committee that has expressed an expectation that all licensees spend at least 50 percent of their programming expenses on Canadian programming.
2225 MR. GOLDSTEIN: So 50 percent of our total programming budget ---
2226 COMMISSIONER LaROCQUE: That’s correct, yeah.
2227 MR. GOLDSTEIN: --- go to Canadian programming?
2228 I would have to look at what we do now. I’m fairly certain we’re about that or in excess of it amongst our group. But I think this was a consistent theme last week in Laval, and I think -- and we’ll see when we get into the intervention phase and reply and how it develops here, but I think it’s going to be a fairly consistent theme this week as well.
2229 We have no guarantees in our business anymore. You know, we have a completely radically changed environment in which we’re operating. We’re going to lose carriage rights flowing out of this proceeding. Our competitors, both regulated and unregulated, can compete with us on all fronts in terms of what we’re doing.
2230 All of these proposals, unfortunately, harken back to a time where we’re talking about an industry that has, you know, essentially a guaranteed rate of return, guaranteed carriage, restrictions from competition, limitations on foreign entities entering the system.
2231 I think the reality of our proposals is we need broad flexibility, we need parity.
2232 Do I think that’s something we’re doing? Yeah, we’re doing it now. Is it something that the Commission needs to regulate on a go-forward basis? No, we don’t think it is.
2233 COMMISSIONER LaROCQUE: Thank you. I just want to clear that I’m raising these statements so that you can get on the public record what your appreciation is of the situation, and I form no judgment one way or another.
2234 MR. GOLDSTEIN: We understand.
2235 COMMISSIONER LaROCQUE: It’s your opinion.
2236 So the QEPC also has an expectation that licensees not decrease their expense averages over the 2012-13 to 2014-15 years. I think I know what you’re going to answer to that but please go ahead and put it on the public record.
2237 MR. GOLDSTEIN: Just as I indicated before, the environment we were operating in between 2012-13 and 2014-15 is radically different than the environment we’re operating in even today and will be even more radically different by the time we get into and at the end of this licence term. So there’s no guarantee. The system we’re operating in today isn’t the same as it was in those years, so it's not something we can commit to at this time.
2238 COMMISSIONER LaROCQUE: And the last expectation on the part of the QEPC is an expectation that each licensee increases their OLMC production expenses by 10 percent, based on an annual average over three years. Again, for the public record, I'd appreciate your comments.
2239 MR. GOLDSTEIN: I'd just think -- tackle what Corrie was saying earlier. We want to follow the best creative -- you know, as Mary Ann is indicating, we want to be in a position to do the best programming, wherever it comes from. I think we have a phenomenal track record in dealing with OLMCs as well as producers in regions across the country, and that's something we're going to need to continue if we want to ensure we can produce programming that is attractive and appeals to our audience.
2240 We don’t agree with any specific requirement or quota system that has us putting an envelope of money in a given year in a particular region or a particular group of producers, because there's no guarantee that in that situation or in that given year that the projects those producers present are going to the best ones. The reality is that in future -- another year, it might be double what that is, because those are the projects that come to us that are the ones that we think make most sense for our viewers.
2241 COMMISSIONER LaROCQUE: Some intervenors have argued that Bell's proposal to regroup -- to reduce the group's PNI percentage will reduce production by producers living in minority language situations. Do you -- could you comment on that?
2242 MR. GOLDSTEIN: As we indicated earlier, what we're proposing is a floor, not a ceiling. It has no specific intent, in terms of increasing or reducing what we're doing with respect to any specific group. It's designed specifically to recognize the changes in the market and the competition we're facing from both regulated players and unregulated players.
2243 COMMISSIONER LaROCQUE: Right.
2244 Mr. Chairman, this might be a good time to take a brief break and then we could come back and talk about transmitters.
2245 THE CHAIRPERSON: Okay, so we'll adjourn til 10:15. So we're back at 10:15.
2246 COMMISSIONER LaROCQUE: Thank you.
--- Upon recessing at 10:03 a.m.
--- Upon resuming at 10:16 a.m.
2247 THE CHAIRPERSON: À l’ordre, s’il vous plaît. Order, please.
2248 Alors, Madame la Vice-présidente, s’il vous plaît.
2249 COMMISSIONER LaROCQUE: Sorry. We want to talk to you about your intention to shut down 40 of the 94 over-the-air television transmitters. And you state that these transmitters generate no incremental revenue and are costly to maintain, repair, or replace. Can you provide data to support those claims, and if so, can you undertake to file that data with the Commission?
2250 MR. MALCOLMSON: Yes, Madam Vice-Chair, we can provide that data by way of an undertaking.
2252 Just to give you order of magnitude, to replace -- these are analog legacy re-transmitters that have reached end of life. To replace them in their entirety represents a capital investment of as much as $80 million, so when we look at the investment made, relative to the coverage they provide and relative to our need to invest in on-screen programming, it's just not an investment that's warranted at this time.
2253 COMMISSIONER LaROCQUE: PIAC has opposed Bell's request, stating that approval would run counter to the objectives of consumer choice, competition between services, and a dynamic marketplace, which would result in greater program diversity. Could you comment on that, please?
2254 MR. MALCOLMSON: I think context is important here. The 40 transmitters we're talking about, 38 of them are located in communities that today have access to a terrestrial BDU, so for those 38 communities, they'll continue to have the ability to receive our signals through their choice of BDU.
2255 In the other two communities that don’t have access to a terrestrial BDU, they're, of course, covered by DTH satellite, so they're -- again, there's an option. Viewers aren't being deprived of access to the programming, so I think PIAC's concern sort of ignores the fact that in today's conventional television environment, we have to make difficult choices, and making a choice to not reinvest in legacy infrastructure seems to us to be the responsible thing to do, and rather invest in programming.
2256 And I should note that, as you know, the Commission has a policy that permits the shutdown of transmitters. We're acting in accordance with the policy, and we fully understand that as a result of shutting down those transmitters, we would lose carriage and simsub rights in the affected areas.
2257 COMMISSIONER LaROCQUE: Where will the savings from these shutdowns be directed, and how will this benefit the broadcasting system as a whole?
2258 MR. MALCOLMSON: I'll let Mary Ann answer, but you know, our laser focus is always on investing in programming.
2259 MS. TURCKE: Right, and in addition to investing in programming and of course, local news, you heard the -- so the financial situation of local television and local news, we haven't talked a lot about it yet, but we were also, while growing and protecting our legacy businesses, entering into the digital world, and different advertising platforms, digital advertising platforms, iHeartRadio Canada, those are all software applications that require -- that are capital investment as well.
2260 And from our perspective as a senior team at Bell Media, we would rather invest in the future, going forward, and compete on those digital platforms -- CraveTV is another one of them -- rather than invest in an area that has marginal to flat gain in the marketplace.
2261 MR. MALCOLMSON: I should just add -- I was remiss in my answer -- that the transmitters that we're talking about are rebroadcast transmitters that don’t originate separate programming, so it's not a case of a community losing access to separately -- separate programming for that community.
2262 COMMISSIONER LaROCQUE: How do you think this shutting down the only transmitter that currently provides over-the-air service to Canadians living in communities such as Wormley, Wynyard, Colgate, Saskatchewan, and Drumheller, Alberta? How will this affect the residents of these communities?
2263 MR. MALCOLMSON: Again, Madam Vice-Chair, those communities that you've identified all have access to terrestrial BDU service, and of course, have access to satellite service, so for those that choose to subscribe to a BDU, they will -- it will have no impact.
2264 COMMISSIONER LaROCQUE: Well, that leads me to last question on transfers. What alternatives are available to residents of these communities? You said satellite, you said access to terrestrial. I guess that's it, right?
2265 MR. MALCOLMSON: Yes, for the regulated services, terrestrial BDU or satellite.
2266 COMMISSIONER LaROCQUE: Okay, very good.
2267 I'd like to go on to the merging of TMN and TMN Encore. I'm just trying to determine whether or not the merging is inconsistent with the connect policy. And I'd like to question you a little bit more about the benefit of merging these licences to consumers.
2268 So first of all, how would you merge -- how would this merge affect both the wholesale rate and retail rate by BDUs and Canadian consumers, respectively?
2269 MR. GOLDSTEIN: There would be no impact at all. Essentially, what we've proposed is something that, at its essence, is for regulatory and administrative simplicity. As we've indicated in our application, right now, TMN has six multiplexes, TMN Encore has two multiplexes. They are often -- subscribers often take the two of them together. They're also able to take them separately.
2270 Going forward, we've committed that we will continue to make them available on that basis, both in terms of separate wholesale fees, as well as a separate six-feed and two-feed services, much like today, how we sell, you know, TSN 2 and the other TSN multiplexes. And the -- you know, a customer will continue to be able to decide whether they want the six or the two, or all eight.
2271 COMMISSIONER LaROCQUE: If the merger of the two licences is approved, will Bell provide each service, including each multi-feed -- multiplex feeds on an individual pick-and-pay basis?
2272 MR. GOLDSTEIN: No. And we had quite an extensive discussion about this a couple of years ago at the Let's Talk TV hearing. The services, as they're structured now -- and we expect to continue to be -- are essentially two services, and that will become -- you know, will remain, kind of in their nature, two services, because the HBO Canada feeds and the other TMN feeds, essentially, the business model is to market them collectively. There isn’t -- it’s not the same business model when you split them up.
2273 COMMISSIONER LaROCQUE: Again, I think I know the answer to the next question, but how does this square with the concerns expressed by the Commission in BRR 2015-96 that:
2274 “…further multiplexing of services may place limits on the ability of Canadians to pick and pay for individual services…”
2275 MR. GOLDSTEIN: I think the intent of that statement and the discussion at that hearing, what led to it was about a situation where, for example, if we were to take the six feeds to eight feeds and mandate the BDUs, sell the eight feeds together as opposed to splitting the between six and two, it was acknowledged at the time that existing multiplexes were structured in that way, the way that they had been developed, and they would continue to be offered collectively.
2276 So in developing our proposal we were cognizant of that policy and that’s why we have committed that going forward if the licences were merged, that there would still be a six-channel multiplex and a two-channel multiplex, essentially preserving what exists today.
2277 COMMISSIONER LaROCQUE: Okay. Does Bell wish to continue to maintain condition of a Licence 11 of the TMN Encore licence? If a merger is approved, that the maximum of 500,000, I think, on Canadian programming to be devoted to the preservation and restoration of Canadian films.
2278 MR. GOLDSTEIN: To be honest, I’d appreciate if I could take an undertaking on that. It’s not something we’d actually considered or thought of.
2279 COMMISSIONER LaROCQUE: That’s fine.
2280 MR. GOLDSTEIN: Okay.
2281 COMMISSIONER LaROCQUE: For the 9th of December as well.
2282 MR. GOLDSTEIN: Yeah, no problem.
2284 COMMISSIONER LaROCQUE: Yeah. Item 5 of the Wholesale Code specifically prohibits tied selling. And the merger of TMN and TMN Encore would, if approved, permit these otherwise separate services to be sold together as a single entity. In that case, why would the Commission approve this request given that the outcome would appear to be inconsistent with a practice that is specifically prohibited by the Wholesale Code?
2285 MR. GOLDSTEIN: As we indicated before, right now, you know, a lot of BDUs offer them together to be sold as well as individually and we have no problem going forward if they’re offered in that manner. We don’t know of a situation, actually, right now -- I can’t think of a situation where a BDU doesn’t actually carry both.
2286 COMMISSIONER LaROCQUE: Okay, thank you.
2287 I’d like to move on to contributions to BravoFACT and MuchFACT, if we could? Let me just look back at some of my notes here. Yeah.
2288 Could you please reconcile the following? In your Deficiency Response Number 1 you stated that:
2289 “The contribution amounts from BravoFACT and MuchMusic should be moved over and included in Bell Media’s general CPE.” (As read)
2290 However, in Deficiency Response Number 3, you stated that:
2291 “No individual service would have a specific CP requirement different from the others.” (As read)
2292 Can you clarify your position, please?
2293 MR. GOLDSTEIN: Sure. It’s kind of a two-part situation.
2294 So the rationale behind eliminating BravoFACT and MuchFACT is that those were funds that were specifically put in place to align with specific genres in which the services that contributed to them operated in. So in the case of MuchFACT it was Much and M3, now Gusto, and in the case of BravoFACT it was Bravo!.
2295 As we discussed earlier, what we’ve essentially recommended is a common CPE requirement for discretionary services based on the historical amounts of the industry as a whole spent. So our number is based on that industry level. It’s not about taking that industry level and then adding the BravoFACT or MuchFACT to it. The industry level already incorporates the BravoFACT and MuchFACT amounts in establishing what the baseline level is.
2296 COMMISSIONER LaROCQUE: And where would the money that was previously going into the system from BravoFACT and MuchFACT go if the conditions of licence were to be diluted?
2297 MR. GOLDSTEIN: I think they’d be used in the most optimum way to fund Canadian programming that we think makes the most sense for our operations.
2298 COMMISSIONER LaROCQUE: Okay. What, if any, impact the elimination of these conditions of licence to contribute to BravoFACT and MuchFACT may have on the Canadian production industry, in particular with respect to Canadian music videos and unscripted and documentary short-form content respectively?
2299 And I just go back to the position taken by the Canadian Independent Music Association which is opposed to Bell’s request to eliminate the requirements for Much and m3 to contribute to MuchFACT. CIMA argued that:
2300 “The financing of the production of music video clips must be protected in order to ensure the sustainability of this form of artistic expression, which continues to be widely consumed and appreciated by Canadian audiences.” (As read)
2301 So I’m just putting that on the record so that you might respond to it as well on the public record.
2302 MR. MALCOLMSON: I’ll start. I think their -- I certainly understand their concern. But again it goes back to there are no guarantees in our business anymore. With the environment in which we compete, sort of old world guarantees of revenue streams simply don’t exist anymore. With respect to MuchFACT in particular, as Kevin noted, it was tied to the specific genre of the service.
2303 That channel doesn’t operate in that genre anymore and it doesn’t make sense to have specific investment requirements tied to genres because it precludes flexibility for the programming service. It doesn’t mean we’re not going to continue to invest in programming; you know, we’ve committed to an appropriate Group spend requirement and that’s how we would like to be able to make the investments.
2304 MS. TURCKE: Just, if I may, we’re sort of talking about two very specific services. I don’t want to let it go by without at a high level talking about our overall continued investment and increasing investment in the music culture of this country. And you know, the iHeart MMVAs were unbelievable this year with one of the best lineups it’s seen in years. The iHeart Jingle Ball that we had last Friday was a near-sellout crowd that came to rave reviews. And the iHeart Radio digital platform that we spent a lot of money developing and taking to market will continue to be a place where we can celebrate Canadian musical artists.
2305 And we promote them; we have them on a lot of our shows. I think since Randy has come, our attention to and support for music in this country has never been better.
2306 MR. LENNOX: I might add that I spoke -- keynoted at the AGM for CIMA this year and expressed exactly what Mary Ann said, is that our commitment to the independent sector via the curated system through iHeart was just really, really well-received. And there are, frankly, less videos being made because of the points that Kevin and Rob made, and that is that the linear vehicle for videos is yesterday’s news.
2307 You know, there really is an exponential change in the amount of videos being financed because the expenses are, you know, much more now online and less expensive videos. But we will support where we can the independent sector itself.
2308 COMMISSIONER LaROCQUE: Thank you for that. One last question on this issue. And that is, can you demonstrate and detail the makeup of the year-end accrual amount and how the amount is determined and accounted for?
2309 MR. GOLDSTEIN: Are you referring specifically to MuchFACT and BravoFACT?
2310 COMMISSIONER LaROCQUE: Yeah.
2311 MR. GOLDSTEIN: So ---
2312 MS. MOFFAT: I’m not sure I quite understand the question, but if there’s a liability required at the end of the year then that would meet the accrual test and that would be accrued.
2313 COMMISSIONER LaROCQUE: It would be accrued?
2314 MS. MOFFAT: So it’s fully funded by the end of the licence term.
2315 COMMISSIONER LaROCQUE: Okay. Thank you very much.
2316 I’d like to turn my attention now to the deletion of conditions of licence requiring CTV Two Alberta to be the provincial education station. And I’ll just turn to where I took some notes here.
2317 What has changed in the way people consume educational broadcasting from the time of the last licence renewal when Bell did not seek to remove the educational aspects of the service? How have the conditions changed?
2318 MR. GOLDSTEIN: So before I get there I’ll just back up. I was fortunate; I did that renewal too. And the one before. And actually, we did, at the outset of that process, actually seek to remove the educational requirements at the hearing in terms of discussions with the Commission. We adjusted that ask and ended up with, you know, the COLs we have today.
2319 The environment has changed dramatically in the last five years just in terms of the proliferation of online learning activities. And people don’t look to television in the same way for educational programming, coverage of university classes, or anything like that. Online video, the cost of producing it has plummeted and the prevalence of it has increased so exponentially that universities and other educational institutions have exactly zero difficulty in reaching their target market through unregulated, you know, over the top services. And the concept of educational programming on television is really, really a dying concept.
2320 COMMISSIONER LaROCQUE: You claim in your application that educational programming and children’s programming are the responsibility of the provincial broadcasters, yet it looks like you’re trying to get out of being a provincial broadcaster.
2321 MR. GOLDSTEIN: I think we mean the public broadcaster. And in terms of children’s programming, I think we’re generally -- should I say more clearly publicly funded ---
2322 COMMISSIONER LaROCQUE: Publicly funded.
2323 MR. GOLDSTEIN: --- broadcasters, whether that be provincial or federal. And with respect to children’s programming, I think as Mary Ann indicated earlier, that’s an area that is well served in both the specialty space through what Corus is doing as well as DHX, as well as CBC obviously has invested heavily in that space for years and has specific public funding for that activity.
2324 COMMISSIONER LaROCQUE: Have you considered the impact if Alberta were to lose its educational broadcaster as well as the children’s programming that was broadcast by CTV Two Alberta?
2325 MR. GOLDSTEIN: The impact on the market?
2326 COMMISSIONER LaROCQUE: Yeah, and on citizens.
2327 MR. GOLDSTEIN: The reality is actually -- well, first of all, CTV Two Alberta is a service that isn’t available over the air. It’s only available through licenced BDUs and exempt BDUs in the Province of Alberta and more broadly. A lot of the programming it does is educational programming not specifically designed necessarily for the Alberta market, but it is something that is designed in partnership with other educational broadcasters across the country.
2328 I’d note that various other educational broadcasters, whether it be TVO -- which by the way is licenced to serve Ontario but also is actually ironically does in Manitoba as well -- and the Knowledge Network in B.C. are available to BDU subscribers in that market. And in fact, I’d note that Knowledge Network actually the Educational Broadcaster in British Columbia intervened in support of this application. And I think it is their hope, and something we support, that they would seek to move into the educational space in Alberta.
2329 COMMISSIONER LaROCQUE: If CTV Two Alberta were given the same access as CTV Two Atlantic, would you accept all of the standard conditions of a licence for a television station and all of the regulatory requirements associated with the privilege tied to having this access including local programming?
2330 MR. GOLDSTEIN: So, yes, with one proviso. The CTV Two Alberta is a regional service. It serves the province as opposed to any specific local community. So what we have been doing, and what we expect to continue to do, is to provide regional programming to serve that market at the same level -- the 14 hours -- that would apply in the major markets in Alberta for local programming. But other than that, yes, we would accept all the other COLs.
2331 COMMISSIONER LaROCQUE: Is there any potential that CTV Two Alberta could maintain its status as an educational broadcaster until a new one is named by the province?
2332 MR. GOLDSTEIN: I think there’s the potential. Ultimately, the province has designated as such -- although it’s kind of an interesting regulator situation because the province designates is as the educational broadcaster but the Commission sets the requirements that that educational broadcaster has to meet.
2333 So we don’t believe it’s a productive and viable service in terms -- under its current conditions of licence. You know, if this is simply a timing issue in terms of a new player coming forward such as Knowledge Network to getting it going, if it’s a six-month or twelve-month period I think we’d probably be prepared to do that. But it’s something that we don’t see in the medium to long-term as being sustainable.
2334 COMMISSIONER LaROCQUE: Did you have something to add?
2335 MR. MALCOLMSON: Just to express our strong preference, Madam Vice-Chair, that as part of this renewal we would like to rectify the situation and start from a clean slate.
2336 You asked about the province’s sort of roll in CTV Two Alberta. It’s interesting to note that I think since 2008 they haven’t provided any provincial funding support to it. So we’ve been funding it and operating it in a difficult climate and we would like to, as we would like to with our other conditions, sort of get out from under ones that constrain our ability to compete.
2337 COMMISSIONER LaROCQUE: You know, you have projected that CTV Two Alberta will be profitable in the next licence term. So why is the deletion of conditions of licence designating CTV Two Alberta as the provincial educational broadcaster necessary for the continued viability of CTV Alberta if you’re already projecting profitability into the next term?
2338 MR. GOLDSTEIN: So the projections of profitability assume the revised conditions of licence. They don’t assume the continued, you know, devoting time to educational broadcasting. I think the designation itself is not the specific issue; it’s the conditions of licence that come along with that, which is to devote 60 percent of the programming to educational program, to limit the amount of advertising that it can access to 882 minutes a week. Those are the things that actually restrict the station from being successful.
2339 So you know, without those, if those requirements are removed, then we can fill in the programming with programming that’s more attractive to advertisers, more attractive to viewers. And there’s a potential upside from a revenue perspective. That programming also -- we already air that programming in other markets so there’s some synergies to be realized there.
2340 COMMISSIONER LaROCQUE: Have you had any reaction from the province, and specifically from the provincial elementary education system? I know that there was a letter filed -- if I can remember correctly, yeah, there was -- you’ve included in the record a letter from the Advanced Learning Alberta. But other than that, have there been other discussions or conversations?
2341 MR. GOLDSTEIN: No, we’ve maintained a good relationship with the Province of Alberta over the last eight years. But as Rob indicated, they don’t fund the service anymore. So from their perspective and in, you know, the discussions we’ve had with them they’re kind of happy with whatever direction we want to take it.
2342 I think they made their intentions clear as to what their commitment was to educational programming eight years ago when they decided that they would no longer give us millions of dollars in funding.
2343 COMMISSIONER LaROCQUE: Okay, thank you.
2344 Ladies and gentlemen, we’re almost over. I’d just like to spend a little bit of time on the rebranding of M3 as Gusto.
2345 And, you know, there are some obligations with the Commission when a transaction like this occurs. I was just wondering if you could explain to me why Bell didn’t submit confidential financial projections for Gusto when it knew its plans for a rebrand?
2346 MR. GOLDSTEIN: So our plans for a rebrand of Gusto were not known at the time of the application. To the best of my knowledge, when we do choose to rebrand a service mid-licence term there isn’t an obligation to provide financial projections. We generally -- there is an obligation to advise the Commission in advance, you know, and we did advise the Commission, I believe, when we were going to rebrand the service. We also interact with the logging department in terms of at the Commission so they’re aware of that.
2347 But there were no restrictions on M3 once the genre protection rules were eliminated that required us to seek any kind of approval to do this. So that’s why there isn’t -- you know, I think we’re happy if the Commission would like as part of this an undertaking to file projections on a confidential basis for that service. But it wasn’t something that we felt was required in the situation.
2348 COMMISSIONER LaROCQUE: I think the Commission would be interested though in receiving from you as an undertaking a description of the service that can be listed on the CRTC’s website.
2349 MR. GOLDSTEIN: We’d be happy to do that.
2351 COMMISSIONER LaROCQUE: Okay. Again, for December 9th would be fine.
2352 I understand, and of course I’m new here, but I understand that there is an obligation for Bell to inform the Commission of any change in description of services set out in the Create Policy upon a rebranding. And again, I do not believe that that occurred.
2353 MR. GOLDSTEIN: If that didn’t occur that’s on me. We do do that, you know, and advise the Commission of these things. So that’s obviously an oversight on our part and something if we -- we’ll file obviously the undertaking as to what that is. If that happens, then we’ll move -- you know, on a go-forward basis we’ll know that’s required.
2354 COMMISSIONER LaROCQUE: Very good. I’d appreciate that, thank you.
2355 The current financial projections on the record of the proceeding are for M3. So could you please provide the Commission, by way of an undertaking, financial projections for the new Gusto?
2356 MR. MALSOLMSON: Yes. And we’ll do that by December 9th.
2358 COMMISSIONER LaROCQUE: Very good. Mr. Chairman, that concludes my questions. Thank you very much.
2359 THE CHAIRPERSON: Thank you.
2360 Commissioner Simpson?
2361 COMMISSIONER SIMPSON: Good morning.
2362 I just have a few questions that came from all your oral material this morning so I’m just going to sort of free-form, if you’ll indulge me.
2363 Mr. Goldstein, you referenced, you know, how many hearings you’ve been on. I’m beginning to feel the same way; I’m having déjà vu all over again. And one of those déjà vu experiences was this very GBL hearing way back when.
2364 And the first question I’ve got is that at the outset of your oral presentation this morning you proudly stated that, you know, you’ve maintained the course in keeping your OTAs on the air and I appreciate that. But I also remind you that at one point in the last few years your former president, Mr. Crull, had actually suggested, you know, a scenario where all the licences are handed in. And I also remember that we asked you to keep certain OTAs on the air, I’m thinking CTV Two in Barrie and Victoria and the like.
2365 So with that sort of table set, my question is, as you go forward into this next licence term -- and I look at the rationale of closing certain transmitters, understanding, you know, that there’s a heavy burden; 2 million bucks is a lot of money and when you start multiplying it by 30 or 40 services that’s a whole lot of money.
2366 But I guess where I’m going with this is, are you still thinking in the back of your mind that there’s a day coming when services like CTV are not an OTA service anymore; they’re more of a pure-play cable system as a network? Because one of the by-products of vertical integration is that you have control of your distribution destiny, as do Rogers and to a certain extent Corus/Shaw. And a quid pro quo between the three of you would pretty much pre-empt the need for 9(1)(h) and some of the obligations that would come with it as you look for ways to economize and optimize the distribution of your product.
2367 So the question is, are we going to see more shuttering of transmitters that right now are out of economic necessity, but possibly be more of a strategic scenario going forward?
2368 MR. MALCOLMSON: I’ll start and I hope others will add.
2369 Do we see a day where we’re shutting down all of our transmitters and transmitting what are today over-the-air signals over our regulated BDU system with our BDU partners? Is that -- if that’s your question, that would be an efficient mode of delivery and certainly might make sense one day in the future. And it might help solve conventional TV’s problems because presumably if we were distributed purely over the BDU pipeline rather than free over the air, it might enable us to be able to negotiate some form of compensation for the distribution of our signals. So in a perfect world that type of mode of distribution I think would help conventional television greatly.
2370 COMMISSIONER SIMPSON: It’s more frictionless, yeah.
2371 MR. MALCOLMSON: But you know, today we’re licenced as over-the-air TV stations and that’s how we have to operate.
2372 I hope I answered your question. And Mary Ann may add.
2373 COMMISSIONER SIMPSON: Don’t be afraid of heresy.
2374 MS. TURCKE: I’m not afraid of heresy. That’s on the record.
2375 Look, I will tell in our, sort of, three-year budget projections that we do there are no, sort of -- there’s no capital windfall or anything like that to, sort of, shutter everything down.
2376 The thing, though, when we look to the future and the uncertainty, and it’s a common theme, you know, it’s a global future. And we’re competing against -- and I’m going to call them television service providers from around the world who are coming in and they don’t have a big capital infrastructure like over-the-air network or anything like that.
2377 So when you look 24, 36, 60 months down the road, what are the economics of both of those businesses? You know, a lot of the things that we presented here today are increasing our flexibility, driving parity among the regulated entities in this country. I think there are bigger issues that we have to think about with step-change kind of economics when we go forward. I’m not here saying we’re going to shut it all down or anything like that, but it is very difficult when the global television service providers of the future are using broadband as their distribution channel and increasingly our BDU partners as well on the set-top box.
2378 COMMISSIONER SIMPSON: Fair enough. I know what you said earlier, Mr. Malcolmson, that you wouldn’t embrace this, you know, strictly from a financial windfall standpoint. But you know, as you start looking at -- on our side of the fence, trying to uphold the spirit of Broadcast Act, the indomitable spirit of the broadcasting industry to try and provide what Canadians want, and an industry that helps Canadians see themselves through cultural reflection and all the other things that we talk about, there’s a regulatory windfall that -- you know, I’m just trying to sense whether that regulatory windfall of reduced obligations as a specialty service over an OTA is a wall that you’re getting closer to that -- or your back is getting up against.
2379 And I’m just trying to gain a sense of, when you start throwing around the kind of numbers we talk about in CPE and PNI, whether there’s a battle raging within broadcasters’ minds over PBITs versus cultural contribution that becomes untenable at a point.
2380 MR. MALCOLMSON: You used the phrase “regulatory windfall” and I don’t ---
2381 COMMISSIONER SIMPSON: Is there such a thing?
2382 MR. MALCOLMSON: Yeah. We don’t see any regulatory windfalls. We sort of see how do we do our part discharging the obligations of the Broadcasting Act through flexibility and parity in a world where we are competing every day with a completely unregulated ecosystem. So that’s how we approach it. So we’re trying to find the right balance of regulatory obligations to discharge what we know we have to do under the Broadcasting Act, but at the same time balance that with the reality of what we’re up against, which Mary Ann in the programming (inaudible) can certainly speak to.
2383 MS. TURCK: Go ahead.
2384 COMMISSIONER SIMPSON: The second part of this is -- and it was motivated partly by virtue of what we’ve heard so far from Rogers and Corus, which everybody has different operating methodologies and constructs to make their business work. But the one thing that I can’t help but remark on is that in terms of the go-forward into this next five years, I’m hearing dramatically different views as to what is needed, but I hear very consistent views as to the problem that’s being faced. You know, the operative word is “uncertainty”, “uncertainty”, “uncertainty”. We know the threats of services like Netflix and potentially Amazon in the future; we know the technological disruption of broadband and what that may do.
2385 But I just can’t get my head around how all three of these VIs that are in front of us are proposing different ways forward. You know, I was quite taken aback yesterday with Corus when they implied that VOD was not for them; you know, they’re exiting that business because of cost of content and also uncertainties over returns. Yet, I’m seeing you moving forward into that realm with, you know, a certain amount of enthusiasm. Crave is alive; SHOMI is not. Movie Central is dead. Encore is dead. Your provision in that area is not.
2386 So what are you seeing that they’re not with respect to enthusiasm to embrace these disruptions more aggressively than perhaps what we’ve seen from the other providers?
2387 MS. TURCKE: So that’s a good question and I’ll start with TMN because it’s what you finished with.
2388 You know, Movie Central isn’t dead. Our strategy was to lock up the best video content we could without our HBO and Showtime deal. In order to monetize that appropriately and to bring efficiency to the system, it was deemed necessary to have a national footprint. At that point, Corus and Bell Media decided to expand that service nationally and it’s really worked well for us.
2389 And that stems straight into our Crave strategy and why we are still very optimistic on that service, because it is synergistically appropriate to have a national linear pay service and then an SVOD service that complements that.
2390 And I would go so far as to say that I don’t know -- everybody comes from a difference place. Rogers comes from a place of live sports and they place their bet that as opposed to my HBO. And so obviously SVOD is a little tougher in the live sporting environment.
2391 Corus comes from a place of lifestyle and kids. And we’re just getting our lives sorted out here around in the world without SHOMI in the play. What does Crave mean? And I don’t know that Corus isn’t going to be in SVOD forever so as a licencing partner potentially to us, right.
2392 So I think that there are a number of paths through, but everyone’s path is a function of where they start. And we’re all starting from very different places, from a kids and lifestyle, premium drama versus sports. And that’s maybe why you’re hearing different potential solutions as opposed to we’re all feeling the same uncertainty.
2393 COMMISSIONER SIMPSON: So to carry on in the theme that you’ve just laid out, not all VIs are the same; their DNA are different. Some have sports, some don’t, some embrace and have control of different technologies, some don’t.
2394 Another area that I just want to again get a contextual sense of is yesterday we heard from Corus that, you know, they’re very much into building brands as to brands with a new genre. But I see a strategy that comes out a methodology for that company pre-Shaw that made a lot of sense, and I questioned as to whether that formula was going to be capable of sustaining -- a strategy that’s capable of being sustained as they go forward.
2395 But I think what everyone picked up on yesterday was a comment made that revenues from legacy television can’t be relied upon going forward. And yet I didn’t see the counterpart to that statement, which was the bold move into non-legacy distribution that I expected would be the other shoe that came with that first one dropping.
2396 Now, I guess the first question I’ve got for you is in spite of the fact that you’re boldly going forward -- because of your DNA and this different place that you come from -- you’re still a big supporter and a believer in the legacy system as we know it, which is both conventional and specialty?
2397 MS. TURCKE: Right. So we are a supporter in the legacy system as we know it today. I think that my colleagues are right that it is under pressure. It’s under a significant amount of pressure.
2398 I also agree that the way you survive in a pick-and-pay world is picking your brands and supporting those brands and promoting those brands. We talked about that earlier. I mean, when you think about brand at its root cause it’s a series of -- it’s a set of consumer desires, right, you know when you turn on to a certain channel. When you log into Crave that you’re going to get a certain thing, you go on to TSN you’re going to get a certain thing.
2399 So we are also in the mode of programming, building, and promoting our brands. We are very much pivoting to the future. The issue is when you pivot on the Titanic it’s not even the -- like, it’s a big boat we’re driving on this legacy system. And now you have to take a part of your brain and concentrate on iHeart, on Michael Cohl and Live Productions, on Crave TV.
2400 These are different ways that people consume entertainment and different ways that people look at the world. It requires investment and headspace in order to go there, and it’s frankly a challenge in terms of -- I have another few billion dollars over here to make sure that produces to support BCE and all that we stand for from a shareholder perspective.
2401 But we are not shying away from the future at all, and I think it’s why you’ve seen some of the changes that we’ve made.
2402 I don’t know, Randy, if you want add anything to that?
2403 MR. LENNOX: Yeah, if I could.
2404 One of the initiatives that we’re very excited about which cross all platforms is short-form content. We see the attention span. We’re paying attention to the fact that you can be episodic in under five minutes, so we are partnering and creating content that is from zero to five minutes on a regular basis in all genres from comedy, to music, to video, to episodic.
2405 So think that’s an example of what Mary Ann is saying about we’re trying to hold on to the mast but also be as forward thinking as we can. You know, we have to watch the mitigation of risk here but I think -- you know, we have a product called Snackable TV that we’re launching in 2017 which does just that. It takes short-form content, puts it on linear television. It airs in the airports that outdoor media has houses in, which is seven major airports across the country, for example. And it also has a digital platform where Snackable TV will be a mobile app.
2406 So it’s an example where content lives on as many screens as possible, and I think that’s the future that we’re looking forward to.
2407 COMMISSIONER SIMPSON: What methodology or process do you have in place -- I’m thinking of the programming council we heard of yesterday -- that you have within your shop that helps you make determinations as to how you’re going to spend your CPE and PNI?
2408 I’m thinking that of course, you know, great ideas will bubble to the surface; you go after an independent producer’s product, you may sometimes may want to produce your own ideas and incubate them internally and then shop them out. But I got the very distinct impression that decisioning today in building brands is affecting the choice of what CPE and PNI investment may go into because of its ability to build something that’s more than content that you can put on the air. That it has that knock-on potential of building the brand outside the broadcast product.
2409 MR. LENNOX: Well, content is the song of the brand. It has to drive the brand. Brand ubiquity is what we’re competing against, so of course we have to choose -- as Corus said -- the very brands that we want to live in. But content drives the process regardless. If you can’t drive the pipe with something interesting there is no pipe.
2410 MS. TURCKE: And we do -- I’d like to think it’s a little bit of our secret sauce in terms of the folks that we have around the table making content decisions. And I will tell you we automatically go to entertainment and to video, but I think one of the most innovative organizations at Bell Media has been the news division actually in the way they have thought about how to get out in front of digital. In our digital business, news is the most successful.
2411 And recently, Wendy launched a short-form news application that is geared towards millennials. I don’t know, Wendy, if you want to talk about that a little bit?
2412 MS. FREEMAN: Yeah, it’s called CTV News on the Go. Because we’ve seen absolutely news is absolutely going to mobile. And as you know, I have a 17-year-old daughter and her smartphone is attached to her body. So it’s very important for us to play in all spheres, and because we are news we need to be everything for everyone. So it’s a very important thing for us.
2413 And digital and mobile is 100 percent where we play. And, you know, we have a full digital culture in all our newsrooms across the country because it’s so important.
2414 COMMISSIONER SIMPSON: One of the growth industries is tattoo removal. I’m thinking that down the road there’s going to be surgical removal of devices as an option; elective surgery. Thanks for that.
2415 Just following through on independent productions for a second, you know, we’re going to be hearing from intervention groups, you know, that are representing various aspects of the producer community. And I’m kind of wondering if you couldn’t give me a little bit of context as to what is expected of independent producers going forward?
2416 You know, there’s always been the notion as you approach it from the cultural heritage viewpoint, you know, the funding viewpoint that this is where all ideas come from. They’re gestated and inoculated with money and these producers go forward.
2417 But I get the impression that one of the challenges that you're finding, not only from a monetary standpoint of more ownership and control of content for copyright -- for rights purposes, basically, as well as profit -- that there's a need to have different relationships now with independent producers. And some of them may be relegated to contractors, as you want to take a production to market and fulfil your obligations of the 75 percent.
2418 And on the other hand, there's probably, I suppose, a new pressure on independent producers to do more development of their own product, so it's coming to you in a more, you know, more developed way so you can really see the merits of this thing without having to put time and effort into it.
2419 So could you give me a 360 on how those relationships are changing and the pressures on the independent producers?
2420 MS. TURCKE: So I'll start and then I'll hand it off to Corrie. At a really high level, it shouldn't surprise anybody that there are pressures on independent producers. There's pressure on the entire system, so each player in the system, part of the value chain, is going to have the applicable force put on them.
2421 I believe that the relationships with the independent producers are going to cross -- be a spectrum, and it's going to be dependent on the kind of content and where that content's going to air and what it's going to mean. At the end of the day, the philosophy still stands. We're going to follow the best creative and we're going to work with independent producers who provide that to us.
2422 And Corrie, you can double click down maybe on some of the new relationships that you're seeing in that land.
2423 MS. COE: Sure. It's -- you’ve reached a good point, and it's probably an ongoing issue and an evolving discussion that happens every time. But certainly -- and I know the CMPA highlighted this in their submission, they have increasing concerns around producer of record, kind of arrangements that some broadcasters are leaning more -- leaning into more greatly.
2424 That's not something that we have been doing. From our perspective, we really value our relationship with the independent producers that we've been working with. We very much rely on them to be our partners as we try to evolve and adapt to the changing landscape. We -- our business strategy, quite frankly, is to try and be the place that they want to bring their ideas to first, so that necessitates creating a reasonable approach and environment so that they will do that. I mean, it's in our best interests when ideas are the heart and soul of what you're doing, and it's just kind of our ethos anyhow.
2425 I think from the development perspective, I have heard that there -- increasingly, there are expectations on producers and writers to come forward with, you know, mini-pilots or kind of written scripts et cetera before -- just as part of the consideration of whether or not to get involved. It's actually not something that we've found to be -- it certainly isn't something we're asking for.
2426 And to be quite honest, I'm not even sure it's very effective, because we really are a very collaborative -- some might even say interfering -- broadcaster, where we really want to be a part of creating and that development work and helping to shape it so that it best suits our platforms and our audiences, hopefully not stifling any creativity, but definitely being there to watch it evolve and helping to shepherd that along.
2427 So that again isn't something that I can speak to from our experience. It's not something we look for.
2428 But what we do find that we are asking more of producers is, we're just -- the bar is continually raising, and we are leaning on them and asking them to help us get better and better and better shows. The competition is increasingly fierce. It's -- you know, now, it's not -- one of our new shows is not just competing against other new Canadian shows or other new shows that are available on the market, it's any show ever made whenever, and that's a whole different level of trying to grab someone's attention.
2429 And it changes the paradigm of what people continue to be noteworthy shows, because you can become noteworthy years after you were initially created. So it's kind of more almost like a literary form than a visual. So that's where we've been really urging our producers to go higher, do better, and hopefully, we're doing the same ourselves.
2430 COMMISSIONER SIMPSON: Would it be fair to then say that, you know, you very much view yourself still as programmers, not producers?
2431 MS. COE: Well, we have an independent production team that ---
2432 COMMISSIONER SIMPSON: Of course.
2433 MS. COE: --- produces our daily -- a lot of our daily, and of course, in news, we do. But in terms of what I do in the independent production work, absolutely.
2434 COMMISSIONER SIMPSON: Yeah.
2435 MS. COE: We are -- we're the commissioning broadcaster and we're a partner, and we have thoughts and input and voices, but it's the producer who is the producer on the project.
2436 COMMSSIONER SIMPSON: Okay.
2437 MR. COSENTINO: Can I -- sorry, can I just add ---
2438 COMMISSIONER SIMPSON: Yeah, please, yeah.
2439 MR. COSENTINO: --- to Corrie's comment? So from our broader perspective, I think that the program strategy, if you will, is set at the channel level.
2440 COMMISSIONER SIMPSON: Yeah.
2441 MR. COSENTINO: Corrie's team checks in and we have interface between independent production and the channel groups, who convey what the channel strategy is. Corrie's team takes that strategy to the independent production community and then bring forward the best creative, based on that feedback.
2442 So I know -- I think that in our company, we would say we are producers and programmers, because of course, we have this wonderful news division, we have an in-house production team, and of course, we have the independent side of the business.
2443 COMMISSIONER SIMPSON: Yeah. I was being overly categoric, but yeah, I was just trying to get the gist of the corporate psyche there, and I think you’ve done a good job of explaining that.
2444 You talked earlier about, you know, you're driving a pretty big boat, and it takes miles to stop, miles to turn, an analogy. When it comes to the services that we all seem to be grappling with, like Netflix and potentially Amazon, coming down the road, yeah, these are game changing. The frustration for some is that the game they're playing is not a game we're in, and others are trying to get them into that game and -- but you’ve got -- you're a pretty big outfit. And last time I looked, you're a company that could get into the ring south of the border and take the fight to them, as opposed to sitting back and having them bring the fight to us.
2445 With respect to these services eating a lot of lunches that perhaps they shouldn't, have you thought about -- I'm going back into your other comment of, "We may be at a day in the future where the concept of Canadian rights is a redundant term".
2446 Have you got a game plan in mind to figure out a way -- if you have to go deep into program acquisition and get rights for a hot product or for Black or something like that -- that you will take that product, not just take it to the market for resell, but actually, if you're a program owner or a content owner of rights in the future, that it's going to embolden you to start fighting that bigger fight with these giants that are coming this way?
2447 MS. TURCKE: There's a couple of different parts to answer that question.
2448 COMMISSIONER SIMPSON: Yeah.
2449 MS. TURCKE: Some are defensive and some are offensive. So from a defensive perspective, entering into deep licensing arrangements with ongoing producers of great foreign content is really important. Obviously, if I have the exclusive rights to HBO and Showtime and Comedy up here, then Netflix, Amazon, Hula, can't have it. So that's point number 1, and that has been the strategy for a few years now.
2450 So far, it's been reasonably economically viable to do so, right? The point that I was making earlier is, you know, if Netflix can buy or there's one of six -- Randy keeps reminding me, "There are six that are -- that could be coming, right?" -- are going to studios and offering global deals.
2451 Now, what we're seeing is an interesting thing in the marketplace, where we go down to visit the studios, the foreign studios in LA in the end of March or so, and when they show you the book of projects they're working on, more than half -- almost 60 or so percent -- are being done for streaming providers.
2452 And then you marry that with some of the most prolific producers like the Mark Gordons of this world, the Jerry Bruckheimers, are separating themselves away from their studio partners that, in themselves, are vertically integrated in the States, and saying, "I want to be on my own because of the stuff I produce, I want to be able to freely sell to whomever I want around the world."
2453 There's just -- for us, there's not an economic model where we could pay what some of those global people are willing to pay to get that content. So that’s on the foreign content side.
2454 We are currently, you know, working on building our ability to sell -- and I know this came out of the Let’s Talk TV process as well -- travelling Canadian content, travelling any content that we produce. You know, I often say there’s Canadian content in the context of the regulatory environment and there’s just really great content that if we have an idea coming from any one of our relationships around the world, we should think about investing in that and owning global rights to that content.
2455 And this is, you know, the deal that we did with Michael Cohl, who is a producer of Bat Out of Hell that’s launching in the U.K. later on in 2017. We, in partnership with him, have the global rights to that. Is it Canadian in the context of the regulatory environment? It’s not. Is it going to be exception content that we can leverage across our assets? It absolutely will be.
2456 So that’s how we’re beginning to dip our toe into that global area. But you have to have incredible scale to have the intestinal fortitude of the ups and the downs of producing your own content and marketing it around the world. So that’s -- we’re doing a couple of projects there.
2457 And then maybe, Corrie, you can talk about, sort of, travelling our Canadian content internationally, which we already do quite a bit of?
2458 MS. COE: Sure. Certainly most Canadian productions that we’re involved with do have foreign sales. Often because of the budget levels of the shows that we commission, the producers will have a foreign distributor put forward an MG for the world or they’ll have presales from foreign broadcasters already as part of the financing. And then to the extent that there are territories unsold and not part of the financing, those sales happen afterwards.
2459 We’re often an equity investor in many of our productions. And so we bring forward, in addition to our licence fee, cash to try and be an investor and see how well these do.
2460 I think Mary Ann made a good point earlier when she mentioned that this business is not for the faint of heart and that you need a strong intestinal system. Because it’s a risky business. And certainly foreign sales has not to date been a lucrative and profitable part of our revenue strategy. But it’s something that we want to keep our eyes open for and keep those opportunities alive.
2461 And as we continue to work on our shows, I think the quality is getting better and better and better over time. The sales out there are happening. Many of our shows are being sold in 100 territories, 150 territories, 162 for MasterChef Canada, which is just kind of fun.
2462 So it’s something that we want to lean more heavily into. And I think it is -- your reference earlier about partnerships is a good one. We do want to have it where we are in the driver’s seat as well as anybody from outside of Canada who we might be partnering with.
2463 So that’s kind of, I guess, the position currently.
2464 MR. LENNOX: I’d like to add one experience that I had personally, that we spent 20 years in the music business in this country trying to get arrested elsewhere. And we woke up about eight years ago and chose to have rich aunts and uncles, in other words people that would strategically partner with us. We didn’t have the artists yet -- in other words we didn’t have the content yet -- but we set the template for strategic partnerships.
2465 We happened to split the revenues cost in, cost out on a 30/70 basis with these rich aunts and uncles and it culminated in 2014-15 with us having 7 of the top 10. Are those two things connected? I think they are. I think the fact that we had, you know, people with much leverage internationally, certainly rich resources -- that’s the rich uncle approach -- helped us get all of these artists properly scaled and leveraged taking the geo-fences down.
2466 And we are setting to accomplish exactly that with our content today, to have partnerships that are trusted that are rich aunts and uncles that we can share creatively with and financially with. Because you can’t really scale internationally, respectfully, with a country with a populous of California. You need to have someone that’s strategically trusted with you on the way out in terms of travelling that content. And we have evidence of that all day long from music. And that profit incidentally came back to Canada incrementally.
2467 COMMISSIONER SIMPSON: That’s a whole new context of me of that corporate version of first-tier financing with family and friends. I just have to take away and think about it.
2468 MR. LENNOX: Right.
2469 COMMISSIONER SIMPSON: Thank you very, very much. That’s it.
2470 THE CHAIRPERSON: M. Conseiller Dupras?
2471 COMMISSIONER DUPRAS: No. Well, that answered my question. Thank you.
2472 THE CHAIRPERSON: D’accord. Des fois on n’est pas assez vite sur nos signaux. D’accord.
2473 Just a few questions for you. Well, first of all, Ms. Turcke, I assume your shipping analogy should have been to the Queen Mary rather than the Titanic.
2474 MS. TURCKE: Yes, I know. I realized fast after I said it. I needed to ---
2475 THE CHAIRPERSON: I was getting concerned you were sailing the Titanic and I don’t think your shareholders would like that.
2476 So I had the opportunity earlier to ask some questions of the folks are Rogers and indirectly we also asked the folks at Corus about the environment in which they thought they would be operating over the next five to six years. I’m not necessarily going to go back and ask, you know, individually all those questions, but I’m sure you followed that exchange of testimony.
2477 And I was wondering if you had a markedly different perspective on the environment over the next five or six years?
2478 MS. TURCKE: I don’t believe I do. I think I talked about it earlier. We all see the same sort of pressure and I believe we all agree on the reasons for that pressure. Depending on where we’re each starting from, the path through that is a little bit different. And that’s why my comments around -- you know, we’ve chosen to expand TMN and make an investment there; we’ve chosen to, you know, continue to invest in CraveTV as we grow that business. These are -- we’ve invested in, you know, very, very premium content through HBO. We continue to invest in our sporting properties with the key leads around the world.
2479 So you know, that’s the strategy that we’re undertaking while entering into -- dipping our toe into new domains in live and other areas. But I don’t really disagree with this state of affairs.
2480 I do, though -- I think I want to be more overt around what I see as not a distant future in terms of this notion of Canadian rights. And if there are six or seven global players at the table, what does that mean? And in some contexts it might mean oh, no American content comes to Canadian broadcasters and there’s a lot of people that would think that’s a good thing. The fact of the matter is that content still comes in anyway and it’s going to be monetized. It’s just going to be flow-over free advertising for the Americans, right, that Canadian advertisers won’t get access to that popular content that still supports a lot of the system.
2481 I really do -- I am concerned about that going forward and you know, Malcolm Gladwell’s tipping point is a good analogy here in terms of when that is, I’m not sure. We could be walking into it this May in terms of -- and it’s not going to be a binary switch that gets flipped; it’s just going to be picking around the edges a little bit. That is slowly going to impact, you know, CTV, Global, and City as we go forward.
2482 THE CHAIRPERSON: Some of your competitors have thrown in the towel on their SHOMI investment so I was wondering what your outlook is for your Crave investment?
2483 MR. TURCKE: So we are comfortable with our Crave investment because we think that the national presence of The Movie Network and the great content that that has -- we have some library from The Movie Network on Crave. We have been very successful with some original Crave productions like Letterkenny and we continue to be quite optimistic about that product.
2484 And I think what you’re going to see from us -- the market has already seen it -- we’re more aggressively programming Crave in terms of more first-run content. Shows from Showtime like The Affair and others are going day and date on Crave to become more popular. We believe, as our partners HBO believe in the States, that putting first-run content on an SVOD product doesn’t accelerate cord-cutting; it, in fact, lets you capture part of the market that has never had a cord. So we are getting more aggressive there and I’m excited about it.
2485 I don’t know, Mike, if you want to build on any of the CraveTV programming things that we’re excited about next year?
2486 MR. COSENTINO: Thank you.
2487 CraveTV has commissioned two original programs. We’re about to announce the third.
2488 As Mary Ann points out, you know, we’re in the fight for sure. We know that this is kind of game-on. We have 13,000 assets and growing on Crave. But we feel like from the outset, when this strategy to launch a streaming service was born it was to augment the ecosystem we’re in today. And so that we can use an OTT service like Crave to cross-pollinate, you know, the linear ecosystem that we’re also in on the linear side. That there’s a complementary nature between the two.
2489 So for us, Crave is a way to reach consumers and toe-dip in an area that we haven’t done before. It’s an opportunity to be the home of Canadian programming in a Canadian curated collection. Eleven (11) percent of the inventory is Canadian, and proudly so. But it is also the home of -- we believe it needs to be the place where you can’t see anything else.
2490 And so for us Letterkenny, you know, is the start of a new way to commission original programming. And so we’ve passed a million subscribers and we hope to get the profitability.
2491 THE CHAIRPERSON: Right. And when you refer to 11 percent Canadian that’s according to our standard definition that we use now, right?
2492 MR. CONSENTINO: That’s 11 percent of the inventory.
2493 THE CHAIRPERSON: Right.
2494 MR. CONSENTINO: Yeah.
2495 THE CHAIRPERSON: But according to the definition that we use now?
2496 MR. CONSENTINO: Oh, I’m sorry. Yes, Canadian ---
2497 THE CHAIRPERSON: There’s no special definition.
2498 MR. CONSENTINO: --- as per your definition.
2499 THE CHAIRPERSON: Okay.
2500 MR. CONSENTINO: Yes.
2501 THE CHAIRPERSON: Whether it’s co-productions, or joint ventures, or meeting the point system, right?
2502 MR. CONSENTINO: Correct, it’s absolutely correct. And for us it’s a way for discoverability and for promotion, you know. It’s a life for Killjoys, you know, in a way that’s never been -- we’ve never been able to give that series an opportunity to be sampled. It’s a life for Saving Hope, Orphan Black, the Frontier. So it’s a way for Canadians to discover in a second window, and sometimes a first window, some great Canadian programs.
2503 THE CHAIRPERSON: Right.
2504 And the future of streaming, as I understand, includes over the licence period we’re looking at first-run Canadian original productions, correct?
2505 MS. TURCKE: The future of streaming first ---
2506 THE CHAIRPERSON: On your platform.
2507 MS. TURCKE: Yeah.
2508 THE CHAIRPERSON: You will commission first-run Canadian as well?
2509 MR. CONSENTINO: In fact, we have yes.
2510 MS. TURCKE: We have with Letterkenny.
2511 THE CHAIRPERSON: The two you were referring to were Canadian?
2512 MR. CONSENTINO: Yes.
2513 THE CHAIRPERSON: Okay.
2514 MR. CONSENTINO: The three I’m referring to are Canadian. We have other originals which are -- we buy out the rights from Hollywood, but these ---
2515 THE CHAIRPERSON: These are Canadian.
2516 MR. CONSENTINO: --- absolutely 100 commissioned programs.
2517 THE CHAIRPERSON: You’re familiar with the questions I’ve been asking about how one measures and remediates non-compliance when the compliance is measured against a five-year term. I think we asked the question in the Laval hearing. I take it you’ve been reflecting on that.
2518 And would you undertake in the context of this hearing to provide a response on how we could do that going forward?
2519 MR. MALCOLMSON: Yes, we would, Mr. Chairman. And we’ve actually drafted a proposed condition of licence, which we’re happy to file with the hearing secretary today.
2521 THE CHAIRPERSON: Well, today or at the latest the 9th. But maybe today would be good. That way we could maybe see it, get the ball rolling more quickly.
2522 With respect to Exhibit Number 1, you’re familiar with Exhibit Number 1 as well?
2523 MR. GOLDSTEIN: Yes.
2524 THE CHAIRPERSON: Will you be able to provide responses as an undertaking to that?
2525 MR. GOLDSTEIN: We will. We actually started working on it last week.
2527 THE CHAIRPERSON: There you go. You had more time that everybody else, yes.
2528 MR. GOLDSTEIN: To reinforce the massive undertaking that I was discussed with the Vice-Chair but, yes, we intend to have it ready for December 9th.
2529 THE CHAIRPERSON: Thank you.
2530 With respect with the standard conditions of licence -- just for the record -- do you have opinions on those?
2531 MR. GOLDSTEIN: So we’re generally fine with the standard conditions of licence with two notable exceptions. One, as part of our application we asked for a lower exhibition requirement for TMN and TMN Encore. In addition, we’ve supported Corus’s recommendation to eliminate specialty -- or restrictions on advertising on discretionary services, which will be either the Commission will amend the standard licence if that’s approved or would be an exception to them.
2532 THE CHAIRPERSON: Right. Either way you’re making -- those are the two exceptions you’re putting forward?
2533 MR. GOLDSTEIN: That’s correct.
2534 THE CHAIRPERSON: Okay. And with respect to the condition, the approach we were proposing for the 600 megahertz if ever there’s a shutdown at some point, were you comfortable with what we were proposing?
2535 MR. GOLDSTEIN: We’re fine with that. I think that process has a long way to go both in the U.S. and Canada. That absolutely we’re fine with the proposed language.
2536 THE CHAIRPERSON: With respect to the shutdown of transmitters, just to be clear, the list you already have on the public record is exhaustive and you haven’t changed the transmitters you’re proposing to shutdown; is that correct?
2537 MR. MALCOLMSON: That’s correct, Mr. Chairman.
2538 THE CHAIRPERSON: Would you be able to help us on trying to estimate how many households would be affected by that?
2539 MR. MALCOLMSON: We did file population data transmitter by transmitter. I don’t think we broke it down by household. I’ll go back and ---
2540 THE CHAIRPERSON: Well, maybe I’ll tell you what I might be wanting to look for. I mean, you need the total number of households.
2541 Then the second subset question would be how many of those households would have access to another over-the-air service? And therefore, the third point is how many of those households would have access to no over-the-air service? And I realize it’s not a pure science; there will be assumptions required.
2542 MR. MALCOLMSON: Subject to that caveat, Mr. Chairman, we will endeavour to provide that as accurately as possible.
2543 THE CHAIRPERSON: Well, providing the assumptions you’ve made, fair?
2544 MS. TURCKE: Right.
2545 THE CHAIRPERSON: Thank you.
2546 MS. TURCKE: Might I add something?
2547 Just with respect to Exhibit 2 -- maybe you’re going to come to it.
2548 THE CHAIRPERSON: Well, you don’t have children’s programming so I don’t think there was any need to do Exhibit 2.
2549 MS. TURCKE: Yeah, exactly.
2550 THE CHAIRPERSON: So we’re not going to ask you to do an undertaking with Exhibit 2.
2551 So, Ms. Freeman, my question is to you specifically. And I’ve asked this before in previous hearings, and I’ve asked you whether you’re able to exercise your independent editorial news choices without interference from anyone, particularly in the executive suite of your company.
2552 MS. FREEMAN: Thank you for that question. And again, as you know, we have an independence code now at Bell Media and all of BC. And again, no organization, no one can influence what we do and we have complete independence.
2553 Unfortunately, that was a situation that happened many years ago, and moving forward because of this policy we have seen absolutely no interference and we expect no interference; complete independence.
2554 THE CHAIRPERSON: Would you -- you, not anyone else on your panel -- be more comforted if that was protected by a condition of licence?
2555 MS. FREEMAN: Sure but, you know, I think this policy is very strong and stands on its own but I would not have a problem with that.
2556 THE CHAIRPERSON: Thank you. I believe those are our questions.
2557 Yes? Would you like to add anything in closing?
2558 MR. MALCOMSON: Just one housekeeping matter, Mr. Chairman.
2559 THE CHAIRPERSON: Yes.
2560 MR. MALCOLMSON: Madam Vice-Chair, you asked us whether we had properly notified the Commission of the rebrand of Gusto. And we went back, and we did file a letter on September 1st in accordance with your policy outlining the rebrand and the description of service.
2561 THE CHAIRPERSON: Okay.
2562 MR. MALCOLMSON: I thought it was very unlike Mr. Goldstein to have made that oversight so we checked.
2563 COMMISSIONER LaROCQUE: Thank you for that clarification.
2564 THE CHAIRPERSON: Thank you. It may have gone missing in our file, so maybe provide a copy of that to the secretary. That would be useful, thank you.
2565 MR. MALCOLMSON: Yes.
2566 THE CHAIRPERSON: So anything else to add, Ms. Turcke?
2567 MS. TURCKE: No. No, thank you.
2568 THE CHAIRPERSON: Okay, thank you very much. Those are all our questions.
2569 MS. TURCKE: Thank you.
2570 THE CHAIRPERSON: So, Madam Secretary, I think we’ll at least hear the oral presentation and maybe start some of the questions in Phase II at this point?
2571 THE SECRETARY: All right, so this concludes Phase I.
2572 And I will now invite the first intervenor, which is Canadian Ethnocultural Council, Consumers’ Association of Canada, Council of Senior Citizens’ Organizations of B.C., National Pensioners Federation & Public Interest Advocacy Centre to take place, please.
2573 So please go ahead whenever you’re ready; we’re ready.
2574 MS. LAU: Good morning, Mr. Chair, Commissioners, and Commission staff. Thank you for the opportunity to appear today to represent the views of the Canadian Ethnocultural Council, Consumers’ Association of Canada, Council of Senior Citizens’ Organizations of B.C., National Pensioners Federation & Public Interest Advocacy Centre, whom we will refer to all together as the Coalition.
2575 We have consulted with each of the Coalition organizations and made an effort to shape proposals which reflect a united view.
2576 My name is Alysia Lau, Legal Counsel at PIAC, and it is my pleasure to introduce my fellow panel members. To my far right, Anna Chiappa, Executive Director of the Canadian Ethnocultural Council, and beside her, Dominic Campione, President of CEC. To my left is Geoff White, External Counsel to the Coalition.
2577 As the Commission knows, many of our public interest coalition members have closely followed and participated in Commission broadcasting proceedings over the last few years, decisions which are creating significant changes and new trajectories in the Canadian broadcasting system. We believe many of these new policies, which allow Canadians to access the content they want to watch through greater choice and affordability, are positive and relevant to Canadian consumers, and we commend the Commission for them.
2578 However, as organizations who also represent minority communities and vulnerable consumers, we believe the Commission has an ever-present role in ensuring that minority voices are not only heard but don’t get crowded out in the broadcasting system, that ethnocultural Canadians, seniors, local communities, and low-income families can also access programming that serves and reflects their needs.
2579 We raised many of these issues in our intervention, and have also had the chance to review the Commission’s working document. For the record, we support the Commission’s proposed condition of licence regarding local station frequency relocations from the 600 megahertz band.
2580 The bulk of our oral remarks today will be devoted to the OMNI services. We will then also briefly touch on over-the-air TV and proposals to eliminate advertising restrictions on discretionary services.
2582 MR. CAMPIONE: The Canadian Ethnocultural Council, or CEC, is the only not-for-profit, non-partisan national coalition of ethnocultural organizations dedicated to working together to promote intercultural dialogue and further the understanding of the multicultural reality of Canada.
2583 Multiculturalism not only exhibits the strength of our diversity but also recognizes all Canadians as full and equal partners in Canadian society. It was this vision –- sewn into the Canadian Multiculturalism Act, the Canadian Charter of Rights and Freedoms, and then the Broadcasting Act -– that created the foundation for flourishing multiethnic radio and television, a vision which CFMT founder, Daniel Iannuzzi, and his successor, Ted Rogers, both recognized.
2584 Over the years, Rogers has not only profited but garnered the public trust of Canadians through OMNI’s delivery of quality local programming and news to Canadian ethnic communities. The value and special position of OMNI held in these communities was undeniable and proudly noteworthy, both in Canada and the world, providing free over-the-air, third-language programming and newscasts to millions of viewers in their native tongue.
2585 The daily newscasts provided an essential and vital link for their respective communities, where each individual could, in their own language, be informed of news and events in their city, province, nation, and globally, and participate in our democratic and multicultural society. In fact, despite Rogers’ cuts OMNI’s newscasts, its Fresh Intelligence survey shows that Canadians who speak a third language are more likely to watch news -- that's 82 percent of their respondents -- than any other type of program, and that the majority use television as preferred medium.
2586 The OMNI we knew then is no longer the same, far from it. Rogers’ unilateral decision to eliminate news was only the last straw in a gradual dismantling of multiethnic news and programming at OMNI over the last three years. In 2012 to 2013, Rogers cancelled 25 ethnic news and programs affecting 12 languages, eliminating in May 2015 the remaining third-language newscasts -- Italian, Mandarin, Cantonese, and Punjabi -- and closing the OMNI news bureau in Ottawa.
2587 These decisions, made without meaningful consultation with ethnocultural groups and associations, sent shockwaves through the communities affected. The CEC’s member organization have, and continue to feel, the loss, the frustration, the remorse, and abandonment felt by cultural programming viewers as a result of Rogers’ cuts.
2588 The delivery of third-language newscasts is important and necessary. The number of hours of daily newscasts should not be diminished but increased, at the same time ensuring quality is enhanced by the proper allocation of resources, financial or otherwise.
2589 We encourage this Commission to use this opportunity to take a bold, positive, and leading role to ensure that quality, multilingual Canadian newscasts and programs are delivered by licensed broadcasters, thus furthering the policy objectives of the Broadcasting Act and nourishing the multicultural nature of Canada.
2590 MS. CHIAPPA: Many seniors watched OMNI. In my own family, once the Italian news was cut, my parents stopped turning the channel to OMNI. Communities who had news cancelled did not receive coverage of local stories, such as the last federal election, and a number of Members of Parliament of Italian ancestry, for example, do not have a way to reach their community through a Canadian television broadcaster.
2591 Our members have told us about other cuts to OMNI programming. For instance, OMNI has significantly cut back on Polish arts and culture programs, which were popular with both older and younger audiences. Now, there is only one radio program, CHIN Radio, and a Polish Studio program once a week for these.
2592 Our Board youth representative also wrote to us and said, "This is not just ‘ethnic media’, it is a Canadian cultural programming. The cuts in no way, shape, or form help stimulate growth in Canadian cultural media."
2593 The Commission has already acknowledged the importance of news. We submit that regardless of the result of Rogers’ mandatory distribution application, the Commission must ensure OMNI broadcasts multilingual newscasts again.
2594 MS. LAU: In regards to Rogers’ application to have OMNI Regional nationally distributed on the basic service, we are skeptical of Rogers’ commitment to multiethnic programming. Notably, the 9(1)(h) criteria set a high bar for receiving mandatory distribution, and to be given that status would be a great privilege. Yet, Rogers’ application does not present a renewed long-term vision for OMNI, which would make an exceptional contribution to Canadian expression. Instead, many of its commitments already reflect existing or past conditions of licence and programming.
2595 Therefore, we do not believe Rogers’ current application has met the criteria for national mandatory distribution. Moreover, we believe a review of the CRTC’s Ethnic Broadcasting Policy is critical and needed to ensure that ethnic television continues to advance the broadcasting policy objectives.
2596 In regards to the local and community TV framework, our Coalition organizations generally support the Commission’s decision to impose local news exhibition and expenditure requirements on local stations as conditions of licence. We believe these requirements should take into account the need for original programming, not mere program repeats. And the Commission could consider refining its definition of “locally reflective news programming”, which includes Category 2a) Analysis and Interpretation, or tailor its local news conditions of licence. Some broadcasters may seek to fulfill their local news obligations without broadcasting any Category 1 News.
2597 We also oppose Bell’s proposal to shut down 40 over-the-air transmitters, which would end over-the-air TV for hundreds of thousands of Canadians while likely only saving Bell a marginal sum. While we recognize Bell may not be precluded from doing this, we do not believe its proposal is in the public interest. Geoff?
2598 MR. WHITE: Finally, organizations of the Coalition oppose the elimination of all advertising restrictions on discretionary services. Consumers often find TV advertising annoying and not necessarily helpful or informative. Nor has Corus or other broadcasters shown that the removal of advertising limits is critical to the survival of their services or to the achievement of the broadcasting policy objectives. This proposal would not be in the public interest.
2599 Coalition members are concerned by Corus’ request to remove the advertising “safe haven” for children from its Teletoon services. In the Coalition’s view, this proposal is unjustified, as children are -— as recognized by the Commission -— a unique audience deserving unique protections.
2600 To conclude, the Coalition is encouraged by recent Commission decisions to place Canadians at the centre of their communications system. It also believes the Commission continues to have a strong role to play in ensuring the broadcasting system provides diverse programming which serves local and ethnocultural communities, and protects the public interest by establishing safeguards and consumer protections where needed.
2601 Thank you for giving the Coalition the opportunity to appear today. We would be happy to answer your questions.
2602 THE CHAIRPERSON: Right. Rather than start questions and stop for a lunch break, are you okay if we take a break at this point and come back at one o’clock? You’ll have the benefit of enjoying the food court here in the building, if nothing else.
2603 MS. LAU: Yes, of course. Thank you for that.
2604 THE CHAIRPERSON: Okay? Thank you. So we’re adjourned until one o’clock. Thank you.
--- Upon recessing at 11:46 a.m.
--- Upon resuming at 1:00 p.m.
2605 LA SECRÉTAIRE: A l’ordre s’il vous plaît. Order please.
2606 THE CHAIRPERSON: A l’ordre. Order.
2607 So I’m going to pass it on to Commissioner Vennard to start off the questions.
2608 COMMISSIONER VENNARD: Good afternoon and thanks for coming to talk to us today. And nice to see you again.
2609 You started off -- I know you want to talk a bit about OMNI, but I’ve been sitting here for the last day and a half thinking about some things. And so I want to just engage you in a bit of a dialogue and get your thoughts on some things. And then we’ll finish off with OMNI.
2610 So there’s about three or four different areas that I want to just take you into. And you can think of these areas as being almost like inkblots. They’re deliberately sort of vague so you can respond to them in the way that you want to.
2611 The first area that I really want to get into is to -- you might have noticed -- I think you’ve been following the hearing so far? Yeah. You might have noticed that the Chair has asked all of the groups so far about their high-level thinking. What do they see? What do they see as the future? What do they see as happening right now with the major players and so on?
2612 Now, you’re the first group that is -- we’re going to start looking at different things now.
2613 So the first thing I want to do is basically ask you to tell us about your high-level view of the world and the trends that you see in it with respect to TV, the things that are going on, the things that you think are important. And here, if you look at the Create Policy, you can see that there were certain trends there that were identified and so on. And Bell and Corus and Rogers have all, in some way or another, responded to that.
2614 For example, on-demand viewing, mobile, viewing on multi platforms, different sorts of strategies, different sorts of business models are needed and so on.
2615 So what I’d like you to do is just share with us your view on what is happening to TV. Where do you see it going? Do your views line up with what you’ve heard so far?
2616 MS. LAU: Yeah. I’ll do my best to start and then if anybody would like to add, they’re welcome to. And maybe Dominic and Anna might want to add something more specific to their, kind of, organization’s members.
2617 To us, television is important to Canadians and it remains important. And I don’t just mean television on the, kind of -- in the traditional sense that we think of it, although reviewing, kind of, the Commission’s last Communications Monitoring Report, Canadians still watch about 28.6 hours of traditional television per week. And yes, that number is lower for some age groups in particular, maybe teens and young adults. But it still hovers around 20. So to us, traditional television is still important.
2618 And Canadians now have the ability to access different types of content on various platforms. And there might be shifts because there are only so many hours in a day, but to us there may be trends but it’s more of an opportunity to access content just on different platforms.
2619 And I think sometimes it’s easy to characterize a specific group in a very specific way and say, for instance, that younger viewers might be trending away from traditional television. But there’s been also a lot of discussion of over-the-air television in this proceeding. And in fact, I think a media monitoring report from July said that OTA viewing has actually increased over the last three years, since 2013, and that that number in particular has tripled for viewers aged 18 to 34.
2620 So there are different trends, but I think it’s difficult to say that -- to treat groups as homogenous. Canadians are choosing to access content in different ways and now there are various platforms to do that. Traditional television, in our view, remains important and I think the CMR, for instance, would support that.
2621 In regards to the regulation, I guess, of Canadian content, it’s been interesting just watching the -- following the Heritage Canada consultation on CanCon as well. We don’t want to introduce new evidence at this stage, but for that consultation we did commission a survey to get an idea of what Canadians thought the role of CanCon was and what the appropriate tools to support it moving forward would be. And I would say relevant to this proceeding, many Canadians, and in particular younger Canadians we saw, showed growing support for wanting to see various minority communities and ethno-cultural groups, First Nations communities, Canadians with disabilities supported and seeing a diversity of programming which would support those groups in particular.
2622 So that’s how I’m going to start off. I don’t know if anyone else has anything to add.
2623 MR. CAMPIONE: If I may, I think we’ve come a long way from the town crier or the Paul Revere to the mobile and cell phone and the medium, as Marshall McLuhan said, is the message. It’s changed. And I really empathize with the decisions that this Commission has to make because it’s always in a constant flux or it’s a change. And we have to adapt to that, to those times.
2624 But we also have to have a foot in making decisions of the past. And when I say the past and the present, the ethno-cultural community across Canada -- and I would say that the organizations that we represent -- confirms exactly what it says in the report by the Fresh Intelligence Survey, that still television is a preferred medium.
2625 From a personal to my family to these organizations, television is a medium today where people come home and look at good quality newscasts and third-language programming with Canadian content. You can’t get that on a mobile phone today, true Canadian content. Let’s put it this way. So ---
2626 COMMISSIONER VENNARD: That’s a really interesting comment. Would you like to expand on that one?
2627 MR. CAMPIONE: Well, with the -- I’m just learning how to use the cell phone. It’s been the last three or four years. My children are way in advance of me.
2628 But unless you know your provider -- I mean, you can get lost in this web, you know, into the internet field. But reputable providers such as Rogers, Bell, CTV News, OMNI -- you know the quality of news that is there; it’s stable; it’s safe; it’s -- you know, into that extent. I don’t have to talk about all the things that we have heard with respect to news from the election in the United States and all. So it is kind of new ground with this new age. And like I said, I empathize with the decisions that the CRTC has to make.
2629 COMMISSIONER VENNARD: Okay.
2630 MR. CAMPIONE: But television still today remains the medium.
2631 COMMISSIONER VENNARD: Would any of you care to comment on the different strategies that you’ve heard from Bell and Rogers and Corus with respect to, you know, this new space and going into the digital world?
2632 MR. CAMPIONE: Yes.
2633 COMMISSIONER VENNARD: Because everything is changing. Whether we like it or not everything is changing. And they are creating strategies to transition into new areas.
2634 Would anybody care to comment on that? Do you think that these sorts of plans that you’ve heard about, the sorts of visions that you’ve had and the different plans that you’ve heard about -- do they line up with what -- the way you -- the groups that you represent see the world and see things happening?
2635 MR. CAMPIONE: The members of the CC and the members that make up those member organizations, they’re heavily relying on the television network, on the medium of the television.
2636 The new generation may go -- foresee are going to the -- much more into the digital, I would assume but, you know, I don’t have a crystal ball to say -- yes, go right ahead.
2637 MR. WHITE: I want to speak to -- I’m not sure if this is your first question or second one but it’s about, sort of, the bigger view ---
2638 COMMISSIONER VENNARD: M’hm.
2639 MR. WHITE: --- and the reaction of these groups to some of the proposals we’ve heard.
2640 You say, Commissioner Vennard, that everything is changing. And I say with respect, yes, but some things are staying the same.
2641 Deloitte in its TMT predictions talks about conventional TV eroding, not imploding. This Commission, in its Create Policy, recognized that traditional TV remains a very important source of access to programming by Canadians and there’s a lot of inertia associated with, for lack of a better metaphor, that Titanic.
2642 So market shares aren’t changing. The incumbent programming providers and their BDU affiliates maintain a commanding share of market and considerable advantages over video-streaming services and the ability to have the live sports, for example, and the ability to have multiple revenue streams through other media properties.
2643 Yet at the same time the rates for some of these services seem to be going up; and this was very much an issue that’s being addressed -- or that has been addressed by the skinny basic.
2644 So things are changing and you’re hearing from some of the programmers that it’s really hard out there and we really need some help to be able to compete against these foreign streaming services.
2645 And that’s really just a repeat of what this Commission heard in its Talk TV review and the Commission has already come to the decision that that’s coming in the next couple of years.
2646 You heard Bell’s executive say, “Well, in terms of a tipping point, we’re not really sure when that might be,” but the home-field advantage is with the incumbents and consumers very much -- as the Chairmam has said, “Viewers are the emperor. They want what they want when they want where they want it.”
2647 And as a broad trend that may be true but in terms of access by ethnocultural communities, there’s an issue there in terms of not being able to access local news on the mobile device. In terms of low-income Canadians, there’s an issue with access, an issue that may be addressed in terms of over-the-air, which was something that the Commission has recognized as a very promising tool to improve accessibility.
2648 So those are just some high-level comments. And I’m sorry if mine were -- I was a bit vague in response to your vague question but let’s not forget that the incumbents have tremendous advantages.
2649 COMMISSIONER VENNARD: Okay. So would you say -- would it be fair -- this is what I’m getting from you, is that we have this really complicated world that’s moving and that’s changing and that there’s certain parts of it -- and that would be the traditional TV -- that you think should stay the same for the benefit of those people that want it to be that way.
2650 MS. LAU: I don’t know if we’d say that. Hopefully -- I’m just going to go back to Talk TV in order to hopefully clarify our position.
2651 We did -- there was a coalition of public interest organizations which had intervened at that time and we did recognize that consumers were looking for more choice and more affordability and so we had advocated for their ability to pick and pay for channels and also to have access to a more affordable small, basic service.
2652 We also, in that proceeding, supported removing some protections such as genre exclusivity in order to give services the ability to kind of better compete and create and air -- distribute the content that would attract consumers.
2653 That said, we do believe the Commission still has an ongoing role to ensure that Canadians are protected within the Commission’s mandate under the Broadcasting Act under the Broadcasting Policy objectives.
2654 Today we’re standing before -- we’re here before you in particular on behalf of some ethnocultural communities, seniors, minority groups who would also like to be heard and would also like to be protected and would like to have -- to be able to access the programming that they feel would serve their communities.
2655 So we do support the Commission’s move towards allowing consumers to have the choice and control over what they want to watch. We also believe that in specific cases the Commission still has a role to ensure that the necessary protections that are needed, and which are authorized under the Broadcasting Act, are still there.
2656 COMMISSIONER VENNARD: Okay. From your point of view, I’d just like you to comment on, you know, who’s being left behind? Who is not being served?
2657 Now, I know that you are representing children, seniors, ethnic communities. Notably absent to me, and something that’s very important to me, are the disabled, the disabled community, as well. But that aside, you’re basically talking here about minorities and vulnerable groups.
2658 And how do you see -- where’s the role of Rogers, Bell, and Corus, and also the Commission, in making sure that the Broadcasting Act and what it is that we’re charged with looking after -- how does all this come together for us because it seems to me that -- as I say, that you -- there’s a group of people that want to stay where there are; they want the traditional TV and that’s fine.
2659 But there’s also people that want to go into this new -- in this new direction. And there’s plans for that. There’s all sorts of plans for that. Bur should there be plans to preserve in some way this world that other people feel very comfortable in and still want it?
2660 MS. LAU: I’ll start, maybe, and others can add if they wish. I think you’re pointing to a contradiction there, or what you may view to be a conflict, and that’s not, I don’t think, necessarily what we view it to be.
2661 Yes, things are changing in terms of, perhaps, the way Canadians access content and so there could be a rush to the middle line; I know there’s been a lot of talk about that, maybe not.
2662 Our goal, I think, is just to make sure -- you know, in this proceeding in particular, there’s been -- I think our members really value local programming, local news, ethnocultural programming, to ensure that those types of programming are still available to Canadians -- or continue to be available to Canadians, and that’s no matter what medium or platform -- through -- yeah, whatever medium or platform.
2663 Does that make our position clearer for you?
2664 COMMISSIONER VENNARD: Well, it makes a little more sense but when I look at it I think, “Well, children.” It seems to me that the majors are kind of preparing the way for them in the future and yes, maybe they’re -- you know, no maybe about it but they are vulnerable and they need protection of some sort with respect to being kids; no question about that.
2665 But are they really vulnerable in terms of they are being prepared for their future, too, in an awful lot of ways? So that’s one thing.
2666 So I’m wondering -- so it seems to me like your coalition has got a lot of different pieces in it here and I guess what I’m trying to find sort of unifying piece that I didn’t see in your submission; and I’m not really hearing it now either, and perhaps I won’t. And perhaps it’s my thinking that it’s now allowing me to hear what it is that you’re actually trying to say.
2667 But it seems to be like you’ve got a whole lot of different groups here that you are representing in your coalition and I don’t really hear that common voice of the coalition.
2668 So, for example, if you look at seniors, for instance, many of us -- I’m a senior myself. As you can see, we’re not a long of young people sitting up here. So we maybe don’t really feel like we’re being marginalized, or that we aren’t being heard, or we’re not -- like, it’s like you’re -- who, really, are you speaking for here I guess is what I’m asking? Who exactly are you representing here?
2669 MR. WHITE: So the five groups before you today are five of the six groups that were before you during your talk TV hearing. And in that hearing -- so Option consommateurs is the absentee today, for no reason that I -- no reason that you can read anything into.
2670 That Coalition, which is represented here today, minus Option consommateurs, had wide range -- commissioned wide-ranging evidence, made wide-ranging proposals in your talk TV review. That was sort of the main event, in terms of let's look at the framework, the old framework for television, and let's start moving in the direction that everyone acknowledges it needs to go in.
2671 This Coalition, you're -- you want to hear what's the common thread between all of these groups? And this Coalition didn’t intervene on every single proposal. It didn’t give Commission evidence, like it did for talk TV. It took a more narrow approach, and the focus of this Coalition is on the vulnerable interests, the interests that may not be reflected or thought of when the programmers are making their proposals to you.
2672 So it's -- it is children, and it is seniors, and it is the ethnocultural community, and it is consumers. But some of the messages from these Coalition members, you’ve already heard, and I think it's -- I submit to you that there's a record of these groups' positions on those issues, in terms of the importance of news, for example, to seniors. Like, the distinct importance of news to seniors.
2673 COMMISSIONER VENNARD: Okay. Maybe what we ---
2674 MR. WHITE: This time around ---
2675 COMMISSIONER VENNARD: Maybe it would be more instructive to think of it in terms of, you know, it is a coalition. It is not an association, it's not a corporation, it's a coalition, and that suggests that you want the same outcome, and the path to that outcome depends on the interest and the motivations of the people involved in the coalition.
2676 I guess to try and be a little bit more focused, what's your outcome? Like, what would you like to see as the outcome here? Because when I read your submission, you talk about a lot of things, and then I was a little surprised this morning to hear that you're really very much focusing on OMNI.
2677 So what's the outcome that the Coalition wants from this hearing?
2678 MR. WHITE: So we're moving away from the deliberately vague questions to more specific ones. And like you, this ---
2679 COMMISSSIONER VENNARD: Well, I think it might -- I'd rather be more vague ---
2680 MR. WHITE: Of course.
2681 COMMISSIONER VENNARD: --- but if -- but we don’t seem to be getting anywhere with the vague ones, so to be more specific ---
2682 MR. WHITE: Understood, and I meant no disrespect.
2683 COMMISSIONER VENNARD: Yeah.
2684 MR. WHITE: I mean, this -- like you, this Coalition is monitoring the hearings, and it's looking at the evidence as well. And we'll have final arguments for you, but in terms of its priorities, this Coalition is bringing to you two members of the largest ethnocultural group in Canada. There's an interest there in discussing the proposals in respect of OMNI, and Ms. Lau and myself can speak to some other issues.
2685 And we've focused on those in our intervention. We're not here to not -- excuse me, we're not here to, you know -- like I said, the comprehensive submissions were made on Talk TV. These are our more focused proposals in respect of certain licence conditions relating to the vulnerable communities that are represented at the table here today.
2686 COMMISSIONER VENNARD: Okay, I'll take that.
2687 But do you have -- obviously, you must think that there are -- there is something that is -- needs to be taken into consideration. Can you tell us what that would be? As we're in the process of renewing these licences, what is it that you're not liking about this? What is it that you're feeling that people are being left out, that the ethnocultural communities have been left out, that seniors have been left out, and so on? What is it that needs to be done? What's missing? What's the missing piece here?
2688 MS. LAU: Right. I'll start and then Dominic can add, because I think OMNI is a very specific case in a different application in this proceeding.
2689 In the Commission's Notice of Consultation, the Commission was asking about different issues and what intervenors' positions would be on different issues. And so we consulted with our Coalition members to give the Commissions our views and our positions on what our responses to what -- to the Commission's questions and our views on what -- on those -- pardon me -- on various issues raised in the proceeding.
2690 I don't think we're here to say -- maybe except for the specific OMNI case -- that certain groups are being overlooked. We're here to represent a coalition of organizations just to highlight that moving forward -- because this is also kind of a forward-thinking exercise, I suppose -- just not that we believe the Commission still has a role to play in ensuring there is a diversity of programming for these specific communities. So I don't think we're here to complain, necessarily, but there are questions about ---
2691 COMMISSIONER VENNARD: No, and I wasn’t suggesting that. Perhaps it came across that way, but that was not what I was suggesting. I'm trying to understand what it is that you would want as an outcome here. What should we be looking out for? We're renewing licences, we're implementing policy, and if we're missing something, it would be very helpful for you, from your point of view, to point it out to us so we can take that into consideration.
2692 MS. LAU: Okay, I'll let Dominic maybe start with OMNI and then maybe we can -- I -- we can add in regards to other issues.
2693 COMMISSIONER VENNARD: Okay.
2694 MR. CAMPIONE: We've been requesting, after the numerous cuts by Rogers of third-language programming and newscasts, the reinstatement of those newscasts. There's a void in our community, a void because whether they're seniors -- let's put it -- the ethnic community, news is an essential service that without it, it prevents people to engage in our democratic society. They do not know or the amount of knowledge that they can receive from news is hindered without the news.
2695 I coined the word that "no news is bad news". It's bad news for the ethnocultural community, for the viewers, for multiculturalism, and for Canada.
2696 So we're asking the reinstatement on over-the-air of third-language newscasts: the Punjabi, the Mandarin, the Chinese, the Italian, the South Asian, the Gambian, and even the Portuguese news that was cut. By reinstating them, you can have these communities, these people, be able to converse and partake in everything that every Canadian should know. It's essential.
2697 The importance of news has been acknowledged by this Commission, by all of the presenters, the ones seeking for news broadcasting. There's no justification, if I can say, with respect to its cut. I read on the Broadcasting Regulatory Policy of June 15th, 2016, from this Commission:
2698 "Broadcasters have a duty to ensure that news reporting and analysis continue to be properly funded so that Canadians, as citizens, understand events occurring around them every day."
2699 News is essential. We cannot have these people who have helped in the building of the broadcaster just be taken and abandoned. It is a feeling where people now want to -- want and yearn for that news. What is happening? They can't converse, be it for the seniors and be it for many other Canadians of all ethnic background.
2700 And we cry. When I say "my members" I hear this every day. The CEC hears it, and it's -- that's why I ask to this Commission, take this bold step. No matter whether it's the application on 9(1)(h) or is the OMNI's renewal, that these newscasts be reinstated.
2701 COMMISSIONER VENNARD: What are your views? I presume that you listened to Rogers when they were presenting to us yesterday?
2702 MR. CAMPIONE: I'm sorry?
2703 COMMISSIONER VENNARD: I presume that you listened to Rogers when they were ---
2704 MR. CAMPIONE: Yes.
2705 COMMISSIONER VENNARD: --- presenting to us yesterday?
2706 MR. CAMPIONE: Yeah.
2707 COMMISSIONER VENNARD: What were your views on their perspective on the 9(1)(h)?
2708 MR. CAMPIONE: I'm sorry, I'm not hearing the ---
2709 COMMISSIONER VENNARD: What were your views on their perspective of the 9(1)(h)? Did you follow ---
2710 MR. CAMPIONE: Yes, they were saying that ---
2711 COMMISSIONER VENNARD: --- their line of reasoning?
2712 MR. CAMPIONE: --- it's an essential requirement. I don't think it meets the threshold. I'm not going to -- I can pass that on to Alysia with respect to that. News casts were there. They were cut. They’re now being said, “We want to put them back in.” Is that an essential requirement?
2713 COMMISSIONER VENNARD: Did you catch the part where they said that they would put the money back into OMNI?
2714 MR. CAMPIONE: Yes.
2715 COMMISSIONER VENNARD: Yeah. What are your thoughts on that? Because essentially they’re talking about not making a profit on it.
2716 MR. CAMPIONE: All right.
2717 COMMISSIONER VENNARD: Any comments on that?
2718 MS. LAU: Yeah, sure. Well, first of all, having reviewed all the documents filed in regards to that specific application, it seemed as though Rogers was budgeting so as to ensure -- not to ensure, but the service wasn’t projected to be profitable in the first place.
2719 That said, Rogers’ commitment yesterday was nice but it really just falls in line with the mandate with a 9(1)(h) public interest service. The 9(1)(h) status isn’t intended to be granted to services which could have been profitable. They’re intended to be granted -- 9(1)(h) is intended to be granted to services that don’t have the business case in the first place.
2720 So in our view, it’s nice that Rogers made that commitment, but it really just falls in lin+++++e with the mandate of a 9(1)(h) public interest service in the first place.
2721 COMMISSIONER VENNARD: Okay. In your intervention you brought up the idea of procedural fairness. What are your views on that? First of all, do you think that there should be or needs to be a national ethnic station along the line that Rogers has suggested or what are your views on that?
2722 MS. LAU: Okay, I will start and the maybe other panel members have something to add.
2723 Our view, of course, is that Rogers’ current application doesn’t meet the criteria.
2724 In our intervention we did state that conceptually there could maybe be a national multi-lingual service which does or would meet the 9(1)(h) mandatory distribution exceptional criteria. And if truly, kind of, backed into a corner -- I mean, we have questions about Rogers’ application and some of Rogers’ statements. But yes, we do think in that case it would be more fair to open it up to a general call for 9(1)(h) applications in regards to a national multi-lingual service.
2725 COMMISSIONER VENNARD: Okay. So that’s your position, okay.
2726 MR. WHITE: Could I offer something to you, Commissioner Vennard?
2727 COMMISSIONER VENNARD: Sure.
2728 MR. WHITE: And it’s this. You’re looking for the tie that binds the groups in this Coalition together. You’re looking, I believe, for the message. And on what basis do these groups come together to intervene in this hearing?
2729 And it is in the spirit of suggesting to the Commission that the broadcasting groups can do better. The Commission has taken great steps with its Talk TV policy. This licence renewal is the implementation of some of the drastic changes, changes which Coalition members supported. And so the intervention really is a constructive one to say on over-the-air the Coalition believes Bell and ought to do better.
2730 For OMNI, Rogers ought to do better and we think they can. For children’s services the Coalition believes Corus, to the extent that it holds itself out as being a children’s programmer, should observe minimum safeguards. That’s the spirit. These programmers can do better in certain respects. We’re not here to say TV prices are too high or that Bell is bad or anything like that. This is a constructive intervention.
2731 COMMISSIONER VENNARD: Okay. Thank you for that. This is also not a policy hearing either; we’re renewing licences. So for some of those areas we need to -- you know, I was more interested in if there was something that you thought we should be keeping an eye out for now that in your view has not been given sufficient weight as we’re making decisions with respect to licence renewals.
2732 Again, this is not a broad policy. We’re not opening up the policies at this time.
2733 So if you have nothing to add on that sense, then I think that your position is clear. Are there any final remarks that you would want to make?
2734 MS. LAU: I think our intervention is quite -- hopefully clear enough in terms of touching on the issues which we thought were important, which were, in particular, ethno-cultural programming, local news. We did discuss advertising as well, over-the-air television. And then we did provide views on more specific issues such as TMN, TMN Encore. But I think today we’re appearing before you to discuss ethno-cultural programming, local news, and over-the-air television advertising.
2735 COMMISSIONER VENNARD: Okay. Okay, I have no further questions. Thank you very much.
2736 THE CHAIRPERSON: Thank you. Just a couple of quick ones.
2737 So I heard you say that conceptually there may be a need for a multicultural service with a 9(1)(h) status. But it seems to me that the course you’re laying is that we have to review the ethnic policy, which could take up to a year, and then we’d have to do a call after that, let’s say for a mandatory 9(1)(h), and that might take another year. So in fact, what you’re saying is that the people that might benefit from a multilingual ethno-culturally diverse might have to wait up to two years.
2738 MS. LAU: I might ask Dominic to jump in here or Anna to discuss just Rogers and their cuts to OMNI service.
2739 THE CHAIRPERSON: Oh, I’m not disputing that you think that that community is not currently well-served and that one option would be to impose conditions on the OMNI licences to continue to provide that service. I got that. What I’m saying, though is, with respect to potentially -- because you said conceptually there could be a need for a 9(1)(h) -- if we go down that road it could be a two-year slog at the very least.
2740 MS. LAU: Yeah. And other panel members can jump in. But I think in our view that would be needed to ensure the communities are adequately served and that there is meaningful consultation with the communities that are meant to be served or would be served by that service.
2741 THE CHAIRPERSON: Right. Now, Rogers’ idea of doing this has been in the public domain for some time and to my knowledge nobody else has said, “Wait a minute; we’re ready to do this. Here is our draft application if you did a call.”
2742 Are you of the view that there is a pent up demand to provide such a service that could operate on even a stand-alone basis and not part of a larger group?
2743 MR. WHITE: I think you’re hearing consumer demand from the ethno-cultural community representatives here, And from a variety of different communities saying, “This is something we want. We’re here. Please give it to us. We will watch it.”
2744 On the supply side, in terms of alternatives to fill the void that Rogers might leave, I do believe there was at least one intervention or a procedural request filed by a number of commercial entities crying foul over the inclusion of 9(1)(h) as a proposal in this licence renewal.
2745 But as a question of fact it does remain to be seen and I think the Coalition is sensitive to your concern that to accept the Coalition’s view that the Commission ought to pursue 9(1)(h) in a broader process could slow things down. But the message we would like to leave you with is the demand is there right now. The tools and technology are there to connect with these audiences and this is why -- I’m referring back to what I said earlier; this is why the submission is we think Rogers can and should do better.
2746 THE CHAIRPERSON: Right. I agree with you people did not like Rogers’ application, but I haven’t seen anyone go beyond the, “Don’t licence them” to the other step, which is, “We’re ready and willing to step up and offer that service even on a not-for-profit basis.”
2747 I haven’t seen them. Perhaps I’m mistaken. I’ve seen a lot of defensive moves, but nobody proactively coming up and stepping up saying, “We can fill that void.”
2748 MR. WHITE: And the response to that from a policies perspective -- and I appreciate this isn’t a policy proceeding -- is that the absence of potential licence applicants I don’t think justifies a departure from the threshold that the Commission has set and the Act sets in regards to 9(1)(h), the granting of 9(1)(h). This Coalition is submitting, hypothetically, a multi-ethnic service could warrant 9(1)(h) treatment.
2749 What the Commission has seen from Rogers with its OMNI does not rise to that threshold. So more would be required and I would turn it over to representatives of CEC to say what it is that they would think would meet that level.
2750 MR. CAMPIONE: If I may, my understanding is that when you do a 9(1)(h) I think there’s a general call for 9(1)(h) applications with respect to trying to have a levelling field of procedural fairness. We would like to have third-language newscasts restored as if it was yesterday because the yearning of the people out there in the communities is that it’s needed. The faster we get it the better we all are.
2751 However, we also understand that in anything that we do, as the CEC is based on intercultural dialogue on trying to get harmony and acceptance amongst cultural communities that the playing field be open. We do not know what is out there. I mean, when I say “we do not know”, undoubtedly if a call is in there for providing multicultural newscasts in the future under 9(1)(h) maybe there are other players there.
2752 We’ve had a good relationship with Rogers. The CEC has worked with Rogers in the past. As I say, their value has been undeniable. These cuts were unwarranted. For whatever reason -- I understand it’s financial and otherwise but we have a duty as the Canadian Ethnocultural to be fair and equitable to all, and I believe likewise this Commission.
2753 THE CHAIRPERSON: You want the restoration of those third-language news programs. If the Commission were to conclude that the best way, and most efficient, and straightforward of getting to that outcome is to accept Rogers’ proposal and provide those ---
2754 MR. CAMPIONE: Or the other ---
2755 THE CHAIRPERSON: --- what’s wrong with that outcome? You’d get the third language proposal.
2756 MR. CAMPIONE: I understand there is that at a certain cost that’s built in, even though I understand about the not-for-profit and they’re coming in there. And I’m not sure how the non-OMNI viewers in the basic television look upon this, you know, with respect to the 12 cents or the 10 cents.
2757 THE CHAIRPERSON: But the outcome would be there. There would be the third-language news services.
2758 MR. CAMPIONE: Yes, I understand that. I understand that the question though is it procedural fairness, is it -- when I have ---
2759 THE CHAIRPERSON: Well, procedural fairness is a means to get to an outcome.
2760 MR. CAMPIONE: That’s correct.
2761 THE CHAIRPERSON: It’s not the outcome in itself. I mean, the Commission is not about consultations for consultations’ sake. It’s about consultations for an outcome.
2762 If we were to conclude that that is the best and most efficient way, I’m not understanding what you’re actually trying to get out of this other than slowing it down.
2763 MS. LAU: Well I mean, I’m not going to put words in Dominic’s mouth. But I think what CEC is saying is that to them as an organization and the members that they represent, it is important -- they don’t represent OMNI and they don’t represent OMNI viewers, you know, specifically. If there were an opportunity for an actual multilingual service, they believe in the best application being awarded that status.
2764 THE CHAIRPERSON: Okay, I get that. I’m just saying if we were going to try to go faster how could -- assuming that the Commission is going to say okay to this OMNI 9(1)(h), what mechanism could be built in to ensure a proper consultation going forward of this service? I think that would be, you know, sort of down the road that would be more constructive rather than saying we have to do a call and it might delay two years; that’s all.
2765 MR. CAMPIONE: I can try to answer a little bit but, yes, it’s like saying, you know, you have your -- you can get your fruit now or you’re going to wait later. There’s an element of fairness and at the same time there’s an element that probably -- and I respectfully submit whether or not on the renewal of the licence conditions can be put on the reinstatement of newscasts.
2766 MS. LAU: (off-mic).
2767 MR. CAMPIONE: Well, in the process of these newscasts that were cut, I think maybe something that can be instilled is the process with respect to consultation with the ethnocultural communities prior to the cuts. Ongoing matters that can be done in the future, a recommendation that we would submit would be that Rogers or any broadcaster when it comes to an essential service at least adhere to the wants or the feelings of the -- and the needs of the community at hand and those that will be affected by it.
2768 MR. WHITE: To be of assistance, Mr. Chair, could the Coalition take an undertaking to put to you ---
2769 THE CHAIRPERSON: I was going to suggest that. I mean, the purpose of us asking questions of intervenors after you’ve made your five or ten-minute proposal, I mean, that part of your intervention is you making your case. When we ask questions it’s to test your position, not to give you more opportunities to re-state your original position.
2770 And here we’re down the decision tree, right? So my question presumes that -- and I know your original position, but assume that down the road when we’re deciding we’ve decided no, it would be a good thing to put 9(1)(h) for this OMNI service. I’m not saying that’s what we’re going to do but hypothetically.
2771 And in that hypothesis, what could be built around the conditions of licence associated with that new service to ensure the kind of preoccupations you have about consultation with the ethnocultural community. So if you could answer that by way of undertaking that would be good.
2772 MR. WHITE: The Coalition so undertakes.
2774 THE CHAIRPERSON: Thank you very much. For the 9th is that feasible? Okay, thank you.
2775 Those are our questions for you. Thank you very much for appearing at the hearing.
2776 Madame la secrétaire?
2777 THE SECRETARY: Merci, Monsieur le Président.
2778 I will now invite the CMPA, Canadian Media Producers Association to take place please.
2779 MR. MASTIN: Good afternoon Mr. Chairman, Commissioners, and CRTC staff. My name is Reynolds Mastin, I’m the President and CEO of the Canadian Media Producers Association.
2780 I’m pleased to have with me here today from the CMPA to my left, Marcia Douglas, Director of Business Affairs and Digital Initiatives; and to my right, Jay Thomson, Vice-President Broadcasting Policy and Regulatory Affairs.
2781 In our written submission, we presented a number of proposals for the Broadcaster Groups’ licences which are intended to further the objectives of both the Create Policy and the group licensing framework.
2782 For example, we called on the Commission to maintain fundamental components of the group framework, namely the mandated 30 percent group CPE level and historical levels of support for both independently produced PNI and non-PNI.
2783 We also highlighted how, even as we transition to a more expenditure-based regime, exhibition can still promote program discoverability and export opportunities. And we proposed mechanisms for promoting the special role that children’s services play for younger audiences.
2784 In these remarks, we want to focus on one particular matter -- how best to foster true partnerships between independent producers and the broadcaster groups in the creation of great Canadian made content, to the benefit of Canadian and global audiences.
2785 Certainly, what drives producers is how best they can serve viewers. It’s what gets them up every morning. It’s what keeps them awake at night. It's why they risk their own savings -- sometimes even the roof over their heads -- and invest years of their lives to develop the next great show. And they do this because, as creative entrepreneurs, they fundamentally believe that in a truly competitive environment only the best shows will succeed.
2786 Independent producers certainly play a unique role in the Canadian broadcasting system. They are nimble. They can pivot quickly to embrace new platforms and storytelling media, and find new business models in a rapidly changing environment.
2787 Independent producers are also willing to take risks at the early stages. Perhaps their most fundamental function is to find and develop the next great idea. Without producers filling that high-risk function, the system would stop innovating. Producers are willing to tolerate the high risk of early development because they know that it’s only through investment in R&D that they will ultimately produce the next hit show. But they are only able to make these investments where they retain a meaningful share of rights and revenues to their shows.
2788 In this post-disruption age, our members’ work is clearly and entirely viewer-driven. Producers have to, and want to, make shows that resonate with viewers. If not, none of these big Broadcaster Groups or anyone else will buy their shows. As we say in the industry, you’re only as good as your next show.
2789 MR. THOMSON: What shows resonate with viewers? What shows will become Canadian or global hits? Figuring that out, whether here or in Hollywood, is much more art than science.
2790 But this is what we do know. First, viewers here and abroad want great content.
2791 Second, in this current broadcaster-centric environment in which traditional broadcasters still control most production and most viewing, Canada needs a thriving, diverse, and competitive broadcasting and production ecosystem to make great content.
2792 And third, as the Commission identified in the Create Policy, Canada needs strong broadcasters and strong producers, working in partnership, to build and sustain such a viewer-driven ecosystem.
2793 Successful partnerships require balance. In the case of producers and broadcasters, this means balance of risk, balance of rights, and balance of return.
2794 What independent producers need to achieve this balanced partnership is simple. They need to be truly “independent”.
2795 The Broadcasting Act provides that the Canadian broadcasting system:
2796 “…should include a significant contribution from the independent production sector”.
2797 The independent sector. Reynolds and I both articled at the Commission -- much longer ago for me -- where it was reinforced that each word in the Broadcasting Act is there for a purpose. Each word has a meaning. The word “independent” is in the Act for a reason and it must therefore have a real, substantive meaning.
2798 MS. DOUGLAS: So what makes a producer and a program “independent” in a real and substantive way?
2799 We have proposed a new definition of “independently produced program” that answers that question. Our new definition addresses both who owns the production company and who has the economic and creative control of the programs made.
2800 Our new definition differs from the current definition in the Groups’ Conditions of Licence, which is based solely on production company ownership. The Commission adopted its current definition over 15 years ago to prevent a vertically integrated production company like Alliance Atlantis from getting preferential access to its affiliated broadcasting services.
2801 As reflected in our new definition, the fundamental characteristic of a program that is truly independently produced is that the producer, rather than the broadcaster, owns and controls the rights to produce the program in the first place, and is able to exploit its ownership to generate a return for itself and its partners, including its Canadian broadcaster partners.
2802 Our new definition also reflects the principle that a broadcaster’s negotiation of back-end entitlements should reflect its up-front financial contribution. This leaves room for other partners, such as Canadian and foreign broadcasters and distributors, to participate in the financing of the show and share in its success.
2803 And contrary to Corus’ assertions, our new definition expressly allows for the Groups to share in revenues and profits and own equity in independently produced programs, consistent with the Commission’s vision in the Create Policy.
2804 With our definition in their COLs, the Broadcaster Groups will only be able to claim programs which are truly independently produced for the purpose of meeting their independent production obligations. They won’t be able to claim service productions disguised as being “independent”.
2805 Despite what the Groups may say, our new definition will have limited practical impact on them. It would not apply to broadcaster in-house or affiliated productions, which would still represent the majority of CPE by the Groups. It would still leave the Groups with plenty of flexibility to pursue an “own and control” programming strategy, with such programs counting towards their CPE, just not their independent production requirements.
2806 MR. MASTIN: Mr. Chairman, contrary to the assertions of the Groups, it is perfectly within the Commission’s powers to amend their Conditions of Licence in this proceeding as we propose.
2807 It is also in your power to direct the Broadcaster Groups to come back to the negotiating table to work out a successor to our current Terms of Trade Agreement. We accept the Commission’s view that producers and broadcasters should chart their own destiny and work out any future agreement for themselves. We also agree that the Commission should not be placed in the position of enforcer, as it is, for example, with the Wholesale Code.
2808 It’s why over the course of the current Terms of Trade Agreement we have not once asked the Commission to intervene or to enforce its terms. And all that we ask now is for the Commission to bring the parties back to the table with a clear timeframe for concluding a new agreement. Once concluded, the parties will take it from there.
2809 Mr. Chairman, at the IIC Conference earlier this month, you forecast that the major players in the communications and media industries in the future will not be the same as those that dominate the market now. We agree. But the rules that govern us now are all about the dominant players of today.
2810 Producers are restricted in fully embracing the future because of the broadcaster-centric nature of the current rules. It’s why we applauded your decision to broaden the triggers for accessing financing from the Certified Independent Production Funds. But the rest of the system has yet to catch up with the Commission.
2811 We hope that by the time of the Groups’ next licence renewal hearing, the federal policy toolkit will better reflect the multiplatform environment in which producers now compete.
2812 And let’s not forget; Canadians still watch traditional TV almost 4 hours each day, and Bell, Corus, and Rogers control over 80 percent of that viewing in the English-language market. This, all by itself, speaks to their ongoing dominance and the need for balance in the system.
2813 Mr. Chairman, Commissioners, the CMPA has every confidence that by adopting our proposals, the Commission will give real meaning to the word “independent” as provided under the Act and foster an environment that will lead to a truly balanced partnership between broadcasters and producers. An environment where well-capitalized production companies can fiercely compete on the basis of having the best show. An environment where the focus is where it should be -- creating innovative, diverse and compelling Canadian-made programming for both Canadian and global audiences.
2814 That concludes our oral presentation and we welcome your questions.
2815 THE CHAIRPERSON: Thank you very much for your presentation and for being here today.
2816 I’m sure you’ve been following the hearing so far and I was wondering if you shared the perspective of the Broadcasting Groups, what they’ve said so far in this proceeding as to the environment, the audio-visual environment, the television environment, in which they will be operating over the next five or six years.
2817 MR. MASTIN: I think we share many of the same views in terms of how the environment is changing, though the conclusions we might draw from that might differ in some respects.
2818 So when we’re looking ahead, we feel that we have entered an age of both adaptation and experimentation. So five years ago we were talking about the emergence of the multi-platform universe; today it is the reality for everyone.
2819 And at the same time, however, television still has pride of place as an incredibly powerful medium for distributing compelling content to audiences.
2820 What this has meant for our members, though, as the demand for high-quality content, and the bar that Corrie Coe was referencing earlier, has increased over time, is producers have had to go out into the international marketplace and partner, bring partners -- foreign broadcasters, U.S. networks, foreign distributors -- to the table, partnering with broadcasters in order to raise the financing for the higher budget productions that audiences want and expect today, both to be able to pay for the talent and also to ensure that we have the production values to make those shows successful both here and globally exportable.
2821 So that’s what producers have been doing. And when you look at the productions that the broadcasters have listed as part of their applications ---
2822 THE CHAIRPERSON: My question is about the future, not what they’re doing now.
2823 MR. MASTIN: So they’re doing that even more, Mr. Chairman. They’re going to have to do that even more in the future. There’s no question about it.
2824 What they’re also having to do is experiment more. So to talk about two projects that are about to launch, but haven't launched yet, which I think auger for what producers are doing generally. One is Halcyon, which is a virtual reality project, maybe you, I'm sure, have heard about being produced by Secret Location, which is a division of eOne.
2825 Another is Emerald Cove. That was very recently announced, and that's a joint partnership between Corus and Shaftesbury/Smokebomb, Ubisoft, as well as a Let's Talk Science, a charity, where the focus is science and technology and promoting science and technology and engineering as a pathway for young girls aged 8 to 12.
2826 And that series is going to premiere first online, and then migrate to the YTV service. And I think it's an excellent example of how both producers and broadcasters are adapting to the audience and changing their windowing strategies to make sure that they're capturing them in the most effective way.
2827 THE CHAIRPERSON: In your organization, there are small producers and large producers. Would you agree with that?
2828 MR. MASTIN: Yes.
2829 THE CHAIRPERSON: Would you agree that the smaller producers are probably finding it more difficult to adapt to this new environment?
2830 MR. MASTIN: It really depends, because some producers have created very effective niches for themselves in the marketplace and are adapting just like our large players are.
2831 THE CHAIRPERSON: How much consolidation has occurred in the independent production sector in Canada over the past five years?
2832 MR. MASTIN: Well, we have seen some significant consolidation, so take for example, DHX, which has now become a powerhouse producer, both Canada and globally. So it was originally several production companies that combined over the past few years -- you had Studio B, you had Halifax Films -- and then they continued to acquire over the past five years. So they picked up Degrassi, for example, which is produced by Epitome. So there has been consolidation ---
2833 THE CHAIRPERSON: That suggests to me that that's a good model, in your view, that that gives girth and clout?
2834 MR. MASTIN: It is a model and it's an important model. There is no question about that. One of the things we say in our submission is that we want an ecosystem that both promotes the building of globally-competitive companies with scale, including studios, while at the same time, also leaves room for the next generation of producers to have their impact on the system.
2835 THE CHAIRPERSON: But other than that one example you gave, has there been any other consolidation?
2836 In fact, I would put it to you that we've had, if not a increase, at least a steady number of sole proprietorship that do not have, necessarily, the wherewithal and the financing and the structure and the clout and the girth necessary to compete in what, I think you'll agree, will be a far more competitive environment.
2837 MR. MASTIN: There have been other examples of both consolidation and expansion, Mr. Chairman, so eOne has acquired a number of companies over the past few years. Thunderbird Films, based in B.C. has done the same thing. And frequently what you see is that it's not only production, but also distribution that is being brought under one roof.
2838 So that trend is happening, and we think it will continue to happen. And we also believe that it will be best facilitated where there are conditions in place that enable production companies, in their partnerships with broadcasters, to retain a meaningful share of rights and revenues to their shows, because then they have ---
2839 THE CHAIRPERSON: But that consolidation has occurred ---
2840 MR. MASTIN: --- an inventory.
2841 THE CHAIRPERSON: --- without regulatory support, so far, has it not?
2842 MR. MASTIN: The consolidation?
2843 THE CHAIRPERSON: M'hm.
2844 MR. MASTIN: Well, actually, it has been facilitated in part by the regulatory support that you put behind terms of trade over the past few years.
2845 THE CHAIRPERSON: The mere existence of an obligation to have a terms of trade, where we didn’t regulate at all the content of the agreement?
2846 MR. MASTIN: That was the beauty of it, Mr. Chairman.
2847 THE CHAIRPERSON: Right, because it put -- it forced parties to the table and put you in a higher -- for regulatory purposes, at a higher negotiating position, but it really didn’t actually ensure any outcomes, did it?
2848 MR. MASTIN: We would disagree with that.
2849 THE CHAIRPERSON: And you have, and you went to court, and the Court said you were wrong. And now we're in a situation. What would you say to somebody who would say that what you are coming to do in this hearing is essentially saying, "Yes, the world is changing. Yes, we agree with your Let's Talk TV decision, but except for this bit, this bit, and that bit"?
2850 MR. MASTIN: Mr. Chairman, I would say, first of all, that I wish my record as President CEO was not zero-for-two, which it was in those, though we did prevail in a recent arbitration with the broadcasters under the Terms of Trade Agreement with respect to its expiry.
2851 But more fundamentally, I think we learn more from our defeats than from our victories, and what we did internalize through that whole process over the past 12 to 16 months was that we have to make as strong a case as we can to you for the need for you to continue to play a role in ensuring that there is balance in the system, as between broadcasters and producers. And if we fail to do that the way we should have 16 or 24 months ago, it's our role, on behalf of the independent production community, to make the best possible case that we can today.
2852 THE CHAIRPERSON: What is your view on the impact of genre protection disappearance on the availability of various genres in the wider ecosystem?
2853 MR. THOMSON: It doesn’t appear to have manifested itself just yet, in terms of many changes to the broadcasters' behaviour. They continue to operate, for the most part, in the same genres that they have built their brands around. And they appear, based on what we've heard in the last day and a half, that that's what they continue to plan to do.
2854 There's been a couple of new entrants into the system, such as Gusto, that was talked about today, but otherwise, in many ways, there hasn’t been much of a change as a result of the removal of genre protection, as of yet, anyway.
2855 THE CHAIRPERSON: When you look at your membership, what percent of your membership are actively involved in PNI-type programming versus non-PNI programming?
2856 MR. MASTIN: I can't give you an exact number, Mr. Chair, but I would say ---
2857 THE CHAIRPERSON: Roughly.
2858 MR. MASTIN: --- that it would be the majority for sure.
2859 THE CHAIRPERSON: The majority involved in?
2860 MR. MASTIN: In PNI programming.
2861 THE CHAIRPERSON: PNI?
2862 MR. MASTIN: Yes.
2863 THE CHAIRPERSON: Majority, like, 45/55 or 40/60?
2864 MR. MASTIN: One of the challenges that we have is that the production cycle fluctuates a lot, so it tends to oscillate. And I don’t want to mislead you, so I would be happy to give you exact numbers on that.
2865 THE CHAIRPERSON: Do you wish to do that by undertaking?
2866 MR. MASTIN: I would be happy to, yes.
2868 THE CHAIRPERSON: Have you noted -- have you or your members noted any decline in non-PNI programming being asked for from the independent production sector?
2869 MS. DOUGLAS: What we would say is that perhaps not a decline, but a change in the structure in which the deals are happening for some of the non-PNI programming.
2870 THE CHAIRPERSON: Could you give me a for-instance?
2871 MS. DOUGLAS: As we included in our submission, for example, Corus' producer of record program.
2872 THE CHAIRPERSON: Okay. Now, you're against the removal of the 25 percent cap on flex, and I was wondering why you're taking that position, because certainly, with the local news expenditure, combined with the PNI, one could argue that there's a sufficient amount to address the risks you identified.
2873 MR. THOMSON: With respect, Mr. Chair, we actually supported Corus' proposal to remove the 25 percent limit on the flex for OTAs down to discretionary services. We have opposed removal of the condition of licence that requires, for a number of services, that they allocate 25 percent of their non-sports, non-news to independently-produced programs.
2874 THE CHAIRPERSON: Because you're afraid of what?
2875 MR. THOMSON: I wouldn't characterize it as being afraid of anything, but it's a concern that we have that without that obligation which the Commission established as an important part of the group licensing framework, that money will flow away, opportunities will flow away from independently-produced non-PNI programming.
2876 THE CHAIRPERSON: There are parties that are advocating -- and I think you would be one of them -- that they're concerned that the system might meet PNI obligations through non-original first-run programming. And there's a couple of different phrases being used in the proceeding and in the broader environment. Some people speak of original first-run and others speak of newly-commissioned programming.
2877 Would you think that those phrases are interchangeable?
2878 MR. THOMSON: I guess my response would be whether or not they’re interchangeable it would be much better for us to have one single, clear definition.
2879 THE CHAIRPERSON: And which term would you use and what would the definition be?
2880 MR. THOMSON: Well, I think we can look at what the Commission has already done with respect to defining original programming. There was a definition of a new Canadian programming in the decision in which you approved DHX’s purchase of Family Channel. And then there was a very similar definition that you provided when you renewed with the CBC’s licence, and you were establishing an obligation for original children’s programming.
2881 The only difference that I believe -- the only fundamental difference or substantive difference between the two definitions in those different decisions is that the CBC’s refers to situations in which another broadcaster has provided funding for the show.
2882 THE CHAIRPERSON: But it’s original on -- because originality can be it’s original for the first time on a broadcaster as opposed to a first run original programming which is in absolute term in the system the first time it’s been created.
2883 MR. THOMSON: So the DHX definition speaks of a Canadian program that has never been broadcast in English in the licence territory, and I guess broadcast has a very broad meaning these days.
2884 And basically the same definition for CBC, although because CBC’s in both language markets it’s not previously broadcast by the licensee or any other licensee.
2885 THE CHAIRPERSON: And do you believe that to be the better definition?
2886 MR. THOMSON: We actually don’t have -- we haven’t made a decision as to which is better. We’re putting them forward as equally effective in our mind at this point.
2887 THE CHAIRPERSON: Okay. And for the purposes of reporting, what do you think the Commission should report on when it comes to either original first run or first time in the system, whatever definition we use?
2888 MR. THOMSON: Well, if we -- for example -- pick the DHX definition, which is a program that’s never been broadcast in English in the licence territory, that is a definition that we could rely on but the question then becomes what is the obligation? Is it an exhibition obligation or an expenditure obligation?
2889 An exhibition obligation would be relatively easy to monitor because you monitor exhibition compliance all the time. An expenditure obligation would be a bit more difficult, at this point in time at least, to monitor because it’s tied to how each broadcaster actually claims costs for an original first run programming.
2890 And to our understanding, each of the groups allocates their cost or amortizes their costs differently. So even if we had a common definition of what kind of program we’re talking about, we would still need a common definition of how to allocate the costs to it.
2891 THE CHAIRPERSON: I would have thought of it as an association that represents people that make original first run programming you would care a little bit more about how it is defined and how it is reported upon.
2892 MR. THOMSON: Well, we can speak to the definition if you like. We can follow-up in an undertaking if we need to choose between these two definitions.
2893 But what the fundamental problem was for us that we identified in our written submission was how to measure it. And as I just identified, we don’t have control over how the broadcasters amortize their programming. That’s a discussion that needs to take place with them in terms of coming up with a standard approach.
2894 Once we have that answered, then we have a workable definition and a workable expenditure requirement.
2895 THE CHAIRPERSON: And when do you intend to do that? I thought we were in the licence renewal now.
2896 MR. THOMSON: Well, we were hopeful that the broadcasters themselves would come forward with some proposals because the onus was on them to deal with it and ---
2897 THE CHAIRPERSON: It may very well be, but do you think it’s out of scope in this proceeding for you to take a position on this?
2898 MR. THOMSON: Excuse me? I don’t understand.
2899 THE CHAIRPERSON: Is it out of scope for you as an intervenor in the proceeding to take a position on this?
2900 MR. THOMSON: Not at all.
2901 THE CHAIRPERSON: Okay.
2902 MR. THOMSON: So we would believe that the broadcasters should have a common amortization schedule for the purpose of an expenditure obligation relating to original programming. To us it doesn’t matter how they amortize it as long as it’s standardized so that we can compare one to another.
2903 THE CHAIRPERSON: But do you have a proposal on how that standardization would occur?
2904 MR. THOMSON: No.
2905 THE CHAIRPERSON: Okay. Do you want an opportunity to provide one?
2906 MR. THOMSON: Certainly, we’ll take advantage of that opportunity.
2908 THE CHAIRPERSON: Thank you.
2909 What support do you think is missing, if any, for Canadian children’s programming in the broader system?
2910 MS. DOUGLAS: Within our submission we offered two proposals, but we are open to other suggestions. The reason why we included that in our submission is because we feel that Canadian children’s and youth audiences deserve a special consideration. That it’s important to ensure that they have access to Canadian programming.
2911 And while we all love Mickey Mouse, we thought it was important that they have access to Canadian independently produced programming.
2912 THE CHAIRPERSON: But you have no specific proposal, or do you?
2913 MS. DOUGLAS: Within our submission we had proposed two options. The first, which is the simplest, was to keep the existing conditions of licence on those children’s services. We had also had a separate proposal about the notion of creating a mini group with a separate CPE.
2914 But again, we are open to other proposals or suggestions on that. We were mostly asking that Commission considers children’s and youth as a special audience; that it should be ensured that they have access to Canadian independent programming.
2915 THE CHAIRPERSON: Now, in your presentation you’ve put a lot of emphasis on this notion of defining independent production. I take it that’s your main message for us.
2916 Now, the current definition has been in place as you pointed out for some time. There’s never been appeals saying that that definition is inappropriate. Do you agree that -- you’re not making the argument that we’ve somehow for the past 15 years made a jurisdictional error?
2917 MR. MASTIN: Not at all, Mr. Chairman. What we’re saying is that that definition was conceived to address a very different issue than we are proposing needs to be addressed today. So as we referenced in our opening remarks, the origins -- we did our research on this. The origins of that definition came from concerns arising from Alliance Atlantis essentially getting preferential access to, for example, the Food Network by virtue of them being vertically integrated. And so the need was felt to put parameters around that to prevent that from happening.
2918 Today the issue is different. Today the issue is preserving the capacity of the sector to deliver what it needs to deliver for its broadcaster customers and Canadian audiences. And that basically comes down to ownership, ownership and the content that you develop and produce for your broadcaster partners.
2919 Now, that doesn’t preclude your broadcaster partners from having profit participation or revenue sharing, or even sharing in the equity of a program. But what does it mean is that in order to be an independent producer and not a service producer, or worse, a contractor where all of the liability risk is downloaded onto you and virtually none of the rewards from the show, which is the producer of record program that Corus has been implementing.
2920 And I would note, Mr. Chairman, that the reason why that program troubles us so much is because we can actually draw a direct link between the proliferation of that program and the Commission’s decision in Let’s Talk TV to no longer enforce terms of trade as a condition of licence.
2921 And the metaphor I’ve been using a lot -- perhaps inappropriately -- is that, you know, in a high school the principal sets the tone for the behaviour of the staff and the students. The rulebook can be the same high school to high school, but ultimately it comes down to how the principal decides they’re going to enforce or not enforce those rules that determines outcomes and behaviour.
2922 And since the Commission signalled in Let’s Talk TV that it was effectively removing itself from terms of trade, all of a sudden I’m getting phone calls constantly from my members about the producer of record program.
2923 And what’s so interesting about that is that technically adherence to the terms of trade agreement is still a condition of licence, with the exception of the OWN Network. And the reason we feel that that behaviour is going on is because that condition of licence no longer has the full weight of your regulatory authority behind it, and it speaks to how important you are in intervening in this way to ensure balance in the system. And that producer-of-record program will become the standard post-Terms of Trade is our concern, where particularly for the next generation of producer they’re essentially going to become interns will all of the risk.
2924 Producers are entrepreneurs; they’re creative entrepreneurs. They’re out to make the next great show. And in a hyper-consolidated system like we have today, there are just too many incentives by broadcasting partners -- and I’m picking on Corus because they’re the ones engaging in the behaviour. Bell is a wonderful partner for our producer members.
2925 But in that kind of a highly-structured environment, it creates too many incentives to use that leverage in ways that erode the capacity of the sector to deliver. And ultimately their job is to deliver for audiences.
2926 THE CHAIRPERSON: Do you agree with me that the expression “independent sector” in section 3 of the Broadcasting Act is not self-implementing and that the Commission would somehow have to come up with a definition beyond what the section 3 says because it’s merely declaratory?
2927 MR. MASTIN: Yes, and that’s what we’re asking you to do.
2928 THE CHAIRPERSON: Right. But you agree with me that the Commission has a certain amount of discretion as to how to define that? In fact, we’ve defined it in a certain way for 15 years.
2929 MR. MASTIN: Yes.
2930 THE CHAIRPERSON: You’ve made the argument that the independent sector, production sector, plays an important role in the ecosystem. Is it your view that the independent sector is the only part of that ecosystem on the production side that can fill that role?
2931 MR. MASTIN: Not at all. We have always had in the industry service production. And I’m not just talking foreign service production; I’m also talking where a broadcaster develops a show in-house and then essentially hires a producer in a service capacity to produce that show for the broadcaster.
2932 We also have affiliated production, so Nelvana, for example. Those have always played a role in the system. And really what we’re saying with our “independent producer” definition, Mr. Chairman, is that our definition is only to ensure that when a broadcaster says that a project is independently produced, that it isn’t actually a disguised service production; it is a truly independent production using the criteria that we have proposed in the definition.
2933 They can still do service production; they can still do affiliated production as well through Nelvana or any other affiliated company they have. They would just not be able to count that as meeting their independent production requirements as mandated by you.
2934 THE CHAIRPERSON: And I sort of wonder why you’re insisting on this definition while you say at the same time it would have limited practical impact on them. They obviously think it does have an impact on them.
2935 MR. MASTIN: It would have, in our view, limited practical impact on them in the sense that they would retain the flexibility that they’ve always had to engage in service production and affiliated production.
2936 But where it would have a seismic impact is on the independent production sector because it would ensure that there is meaningful ownership in the rights and content that they produce for broadcasters, while at the same time creating the conditions for partnerships on those shows.
2937 THE CHAIRPERSON: But they would argue, I think -- we’ll let them argue it themselves -- but just for the purpose of discussion, they would argue that in the end when they order a show from an independent producer, depending on the economic model they’re the ones that are at risk in the future as to whether or not audiences will be there to convert it into advertising revenue or convert it into maintaining subscription. Because with the system we have, with the pick-and-pay, it could be very well that if they’re not putting on air shows that attract audiences, people will unsubscribe.
2938 MR. MASTIN: There’s no question that they have risk and producers also have risk. They’re the ones that typically take the risk at the early development stage where they’re developing concept, creating bibles and scripts. Sometimes they even do demo reels in order to make the most effective pitch for a show for a broadcaster.
2939 The biggest risk, of course, that they have is that if what they pitch their broadcaster customers don’t like, then they’re dead in the water. They ultimately have to be consistently producing top-quality content that meets the needs and expectations of their buyers and of audiences or they’re out of business. And that’s a precarious place to be in.
2940 THE CHAIRPERSON: Right. And they’re saying to manage that risk they need more flexibility to structure deals according to the particular nature of that given program. And we’ve had evidence here that each type of production requires its own structure.
2941 MR. MASTIN: What I find most interesting about that, Mr. Chairman, and it brings a flashback to me, recently we did a consultation with our members about this whole issue, particularly Terms of Trade in light of recent development, including with our larger members where we would say to them, “Look, just tell us if Terms of Trade or equivalent safeguards really are necessary anymore. Because if they’re not my life will lose all meaning for a little while but I’ll get over it and we’ll focus on other priorities.”
2942 And what the consistent theme back to us was, yes, there needed to be safeguards; yes, there should be another agreement. But that agreement needs to evolve in the same way that the market has evolved.
2943 And there are two principles that I distilled from all that consultation. And the first was actually articulated by Doug Murphy, of course, yesterday when he said that every deal is a snowflake. And to some extent that is absolutely true. There is a wide spectrum of different kinds of production.
2944 THE CHAIRPERSON: It melts when you’ve pitched it.
2945 MR. MASTIN: Pardon me?
2946 THE CHAIRPERSON: It melts after you’ve pitched it? No, it’s unique. It’s unique.
2947 MR. MASTIN: Well, there is that risk. There is that risk. You hope that it doesn’t melt.
2948 But we don’t deny for a moment that depending upon the project, the budget, the talent attached, the audience, the programming service it’s going on, that certain elements to the deal, the matrix of the deal, are absolutely going to change.
2949 But to abuse the metaphor a little bit, while every deal is a snowflake, every snowflake has the same constituent elements; it’s H2O. And similarly, we can also distill in a framework agreement certain standards, certain norms, certain basic principles that would govern the commercial relationship between the parties while retaining their ability to tailor the particular deal to the needs of that particular project.
2950 THE CHAIRPERSON: You advocate for more balance in the system but isn’t there a risk with your proposal that you’re putting it out of balance and putting too much power in the hands of the independent producers when it comes particularly to PNI when you’re guaranteed as a Group 75 percent of that PNI?
2951 MR. MASTIN: We don’t believe so, Mr. Chairman, for the simple reason that at the end of the day, leaving aside all of the other leverage that the broadcasters have in the system -- like, for example, with the CMF you can’t access CMF funding as a producer unless you’ve got a CRTC licenced broadcaster attached to it. So that means that six executives at these companies control $100 million in CMF funding, which gives them a certain kind of leverage.
2952 But leaving that aside, leaving all those structural imbalances aside ---
2953 THE CHAIRPERSON: For the broadcasting envelope, not for the other envelope.
2954 MR. MASTIN: For the broadcasting envelope, yes, absolutely, to access television funding.
2955 Leaving all of that aside, the ultimate leverage the broadcaster always has is they get to choose what goes on their services. And there are only so many slots on the television schedule. There is only so much financing that’s available. There’s only so much spending the broadcasters are going to do. And if you as a producer don’t have a better pitch and a better show than the person who is meeting with Corrie Coe or Barb Williams an hour before or an hour later, then you’re not going to last in the business very long.
2956 So we actually believe that’s the ultimate check, notwithstanding the fact that we can identify so many other factors that give broadcasters effective market leverage in every negotiation.
2957 THE CHAIRPERSON: Right. But that decision will have direct impact on revenues immediately. They may not be recuperable in the next year. And plus, it will have an impact on the CMF envelope.
2958 MR. THOMSON: Sorry, I was going to jump in just to say that the expenditure obligation as it exists now for the broadcasters only represents 3.75 percent of all of their revenues. So $3.75 out of every $100 is -- they’re obliged to allocate to interdependently-produce PNI. So they have a lot of flexibility to allocate their revenues to other places.
2959 THE CHAIRPERSON: Right. Except that we know that PNI, the drama portion -- drama is the most sought-after content, whether it’s Canada or non-Canadian. And we’ve, I believe, heard evidence here that going forward those kinds of marquee programming that some streaming services provide now. That’s what audiences are going to. So the PNI includes drama. So it is an important factor.
2960 And so I think the question then becomes if you’re codifying business practices that maybe should be structured on an individual basis you’re taking away potentially the discretion that commissioning broadcasters might have to manage the risk of a otherwise well-intentioned quality production not finding its audiences. And the question then is, is that really a balance?
2961 MR. MASTIN: Mr. Chairman, we are confident that sitting across from very pragmatic sophisticated business people in a Terms of Trade 2.0 negotiation, or however you want to articulate that, that the parties will come up with a formula that provides the flexibility that broadcasters -- and frankly, producers also -- need depending upon the show and who’s involved in the show on the one hand, while also ensuring a certain measure of balance in that negotiation for the individual deal on the other.
2962 MR. THOMSON: If we believe, and we do, that the broadcasters’ position on any of their obligations represent floors not ceilings, then if it’s in their best business interest to invest more money in high budget dramas they will have the flexibility to continue to do that. It’s only, as Reynolds has said, that portion that they claim is independently produced that has to meet our definition. They still have a lot of flexibility with respect to other kinds of programming that they make.
2963 MR. MASTIN: And, Mr. Chairman, if I may just jump in with one final point. One of the principles that we’re trying to enshrine both in what we propose in the definition and would be something obviously we would be speaking with the broadcasters about directly is that, yes, you should absolutely share in a show’s success. And there are many different ways of getting there. Equity is one, revenue sharing, profit participation are other tools that we have.
2964 But the principle is your back-end entitlement should be proportional to your upfront financial contribution to the show because what happens all too often is for very little additional cash up front over and above the licence fee for the Canadian market, the broadcaster will acquire global rights essentially for a song.
2965 And we don’t think that’s appropriate. We don’t think that reflects a balanced partnership, and we don’t think that will enable the sector to reach its full capacity, which ultimately comes down to producing the best shows for broadcasters and audiences.
2966 THE CHAIRPERSON: Why then to use -- and I wish I had written them down -- but why isn’t that the sufficient rule to say that the risk and reward has to be proportional to the money being put in?
2967 MR. MASTIN: It’s a very good starting point, and really ---
2968 THE CHAIRPERSON: But you want more?
2969 MR. MASTIN: Well, we’re not asking more from you. Our definition really is just focused on that very basic principle actually.
2970 THE CHAIRPERSON: But it’s way more prescriptive than that general principle; is it not?
2971 MR. MASTIN: It isn’t, Mr. Chairman. Essentially what the definition says in terms of proportionality is yeah you can get revenue share, yeah you can get profit, yes you can get equity but it has to be proportional to your over-and-above licence fee cash contribution to the financing of the show which is actually really a basic principle of the market. It only gets distorted here because of the imbalance.
2972 The reason why it’s not asking for more beyond the definition is that through a Terms of Trade discussion we can address issues head on like the producer of record program and provide assurances to our members that that kind of a program where -- and I’m going to choose my words very carefully -- the envelope is being pushed and pushed and pushed in a way that is not good for the entire industry that we can engage in a dialogue with our broadcaster partners, Corus in this particular case, to persuade them that there are other ways of achieving their objectives and our objectives without putting producers in such a needlessly and inappropriately precarious position in these deals.
2973 THE CHAIRPERSON: A neutral observer might come to the conclusion that your proposal is nothing more than Terms of Trade by the back door.
2974 MR. MASTIN: Well, we’re actually also proposing Terms of Trade by the front door, Mr. Chairman.
2975 THE CHAIRPERSON: We’re just discussing your definition of independent.
2976 MR. MASTIN: Oh, in terms of independent producer. We think that the definition is intended to achieve a similar ultimate objective, which is the health of the independent production sector to enshrine independence in the sector. But really fundamentally ---
2977 THE CHAIRPERSON: Is that an objective we should have. the health of the independent production sector? Aren’t we here about, you know, programmings for Canadian?
2978 MR. MASTIN: You absolutely are. And one of, in our view, key ways of achieving that -- which we think was articulated in the Create Policy -- was a strong well-capitalized sector that will produce great programming for Canadian audiences.
2979 THE CHAIRPERSON: But there has been absolutely no movement in any quarters to actually make that happen. Our recommendations to the government got no response.
2980 And in fact, I heard the independent productions sector arguing against it. And as we said earlier, there’s been very little consolidation. Yet if you were to consolidate you would have stronger clout, you would have negotiating position vis-à-vis the broadcasters. That has not happened. You don’t need any regulatory authority to do that.
2981 MR. MASTIN: That’s absolutely true, but unfortunately you will not achieve that goal if there is a race to the bottom. And programs like producer of record are a perfect illustration of a race to the bottom.
2982 THE CHAIRPERSON: But the federal policy allows for broadcasters to be the producers. The tax credit is available to them, the CMF has been changed a number of years ago to allow for broadcaster financed productions.
2983 MR. MASTIN: And we ---
2984 THE CHAIRPERSON: Except in Quebec where the tax credit is somewhat different, but for the rest of the country it’s pretty standard policy now across the board.
2985 MR. MASTIN: Yes, except one of the unique particularities of the producer of record program -- and the reason why it’s called the producer of record program, we believe -- is that this is not a service production in the traditional sense of the term. You are essentially -- because in a service production you really are just an extension of the broadcaster in-house group where they’ve developed the show and they say, “Okay, we don’t have the capacity to produce this ourselves, you go and produce that for us. And because it’s our show, we’ll assume the risk for that show and you just go and deliver the product.”
2986 What the producer of record program does is effectively offload all of that risk onto the production company while allowing Corus to reap the benefits of the show. And that we think does represent a troubling trend that will accelerate.
2987 It started in reality lifestyle. Now our understanding is Corus is saying that for children’s programming they want that to be the model there. And it will just inevitably, in our view, spread unless there is some kind of safeguard to counter it.
2988 THE CHAIRPERSON: Right. The current definition feeds into the 75 percent PNI obligation; you’d agree with me on that, the current definition?
2989 MR. MASTIN: It would feed both into the 75 ---
2990 THE CHAIRPERSON: The current one, not your proposed definition. The current one.
2991 MR. MASTIN: The current definition feeds into every independent production obligation so both ---
2992 THE CHAIRPERSON: But in particular ---
2993 MR. MASTIN: --- the 71 and the 25 percent exhibition ---
2994 THE CHAIRPERSON: But in particular the 75 percent on the PNI, correct?
2995 MR. MASTIN: Yes.
2996 THE CHAIRPERSON: Would you agree with me that your definition is a tightening of that definition?
2997 MR. MASTIN: We would describe it as a modernization of the definition, Mr. Chairman.
2998 THE CHAIRPERSON: But it takes away some constraints or else you wouldn’t be providing it.
2999 MR. MASTIN: That is undeniable.
3000 THE CHAIRPERSON: In light of the fact that the definition for the 75 percent PNI has been always based on the definition we’ve been using for 15 years, what would you say if in response to adopting your definition -- which is somewhat more restrictive -- that instead of 75 percent it’s a lower percentage like 70 or 65 percent?
3001 MR. MASTIN: We would be very concerned about that, Mr. Chairman, especially because we don’t regard anything in the definition that is going to materially prevent broadcasters and producers from determining what the best deal terms are for the projects the broadcasters would be licencing from them. Our members would not support us asking for something that would have that result. It doesn’t help them.
3002 THE CHAIRPERSON: But you do understand the point is that by changing the definition you’re changing the assumptions that the broadcasters may have been making when they were applying for the renewals?
3003 MR. MASTIN: To the extent that certain broadcasters like Corus had developed new assumptions where the producer of record model would now be the baseline in terms of how they commission from independent producers. We don’t believe that that reflects the objectives that the Commission has been trying to achieve through PNI and the independent producer’s role in it and, more broadly, ensuring independence of the sector.
3004 THE CHAIRPERSON: Right. My last question before I check whether my colleagues have questions -- could you elaborate on your BC News 1 perspective and why do you think that that is that important?
3005 MR. THOMSON: We’re ultimately relying on why the Commission excluded news services in the beginning back in 2011 in their group licence policy.
3006 THE CHAIRPERSON: M’hm.
3007 MR. THOMSON: And that was to ensure that CPE that would be allocated to certain types of programming, using the flex would be allocated elsewhere, specifically to news, and subsidized news services to the detriment of spending on other kinds of programming.
3008 Commission has put in certain new rules to help support news programming, local news programming, and there needs to be a balance between the amount of CPE that flows to news and that flows to other kinds of programming. And I think by excluding -- we think that by excluding news services, as you’ve done with National news service, achieves that balance.
3009 THE CHAIRPERSON: And how much does it shrink the pie for independent producers, in your view?
3010 MR. THOMSON: Well, we don’t know because we don’t how much they will allocate from their other services and their other independent production spending to their news services.
3011 THE CHAIRPERSON: And if assuming it’s de minimus, do you still maintain your position?
3012 MR. THOMSON: I don’t see why we would have rationale to maintain that position in those circumstances but, as you heard from Corus, they are asking for inclusion in the group for the specific reason of allocating CPE from their other services to shore up a struggling BC News 1.
3013 THE CHAIRPERSON: M’hm.
3014 MR. THOMSON: So -- and we don’t have confidence that it’s going to be de minimus. We are concerned that it will be much bigger than that.
3015 THE CHAIRPERSON: And we are stuck having to make the difficult of, do we prefer to support PNI or local news and information?
3016 MR. THOMSON: But I think you’ve already addressed that with your local TV and community channel policy ---
3017 THE CHAIRPERSON: Right.
3018 MR. THOMSON: --- where you’ve introduced these new support mechanisms.
3019 THE CHAIRPERSON: Okay. So your argument is that we should assimilate them to -- I don’t think that’s a word in English -- but align them with National news services as opposed to local news services?
3020 MR. THOMSON: News is news is news.
3021 THE CHAIRPERSON: Yeah, without the same conditions and restrictions as -- I don’t think we called them Category Cs but -- the old Category Cs would have, the news services?
3022 MR. THOMSON: Just that they be excluded from the groups is what we ask.
3023 THE CHAIRPERSON: That’s the only thing, nothing -- would they be subjected to the same rules as national news services?
3024 MR. THOMSON: We haven’t thought about that. We would prefer to think about that and come back to you in an undertaking.
3025 THE CHAIRPERSON: See, the problem is it’s not sort of policy where you can take the bits you like and not eat the broccoli. There’s been a lot of that last week and this week where some people like to pick and choose the parts of the policy they like. But it was a balanced policy; there’s wins and losses for everyone.
3026 MR. THOMSON: Frankly, whether the news services are subject to the national news service rules or not is not really an issue that we’ve spent any time thinking about. We’ve been focussed on the expenditure issue ---
3027 THE CHAIRPERSON: M’hm.
3028 MR. THOMSON: --- as you had identified in previous decisions related to BC News 1.
3029 THE CHAIRPERSON: Right. Yeah, except that we have to look at the outcomes for the entire system and not just, you know, the benefits for a particular sub-group within larger system.
3030 MR. THOMSON: Fair enough.
3031 THE CHAIRPERSON: All right. Well, thank you very much for your intervention.
3032 I think it’s probably time for our afternoon break so why don’t we take a 10-minute break until 2:55 and we’ll continue afterwards. Thank you very much.
--- Upon recessing at 2:44 p.m.
--- Upon resuming at 2:55 p.m.
3033 THE CHAIRPERSON: Order, please.
3034 À l’ordre, s’il vous plait.
3035 Alors, Madame la secretaire.
3036 THE SECRETARY: Oui, merci. Alors, we’ll now hear Item 3 of Phase 2, which is the Canadian Association of Film Distributors and Exporters. Please introduce yourselves first for the record. And you have 20 minutes -- 10 minutes, sorry.
3037 MS. HARRIS: Good afternoon, Mr. Chairman and Commissioners. My name is Emily Harris. I am Senior Vice President of Business and Legal Affairs at Entertainment One and I am joined by John Bain, President of Search Engine Films.
3038 We are here today on behalf of the Canadian Association of Film Distributors and Exporters, CAFDE, and we would like to thank you for the opportunity to participate in the Canadian Broadcaster Group License Renewal Consultations.
3039 CAFDE is the non-profit trade organization that represents the Canadian film distribution industry and its members on matters of national interest. CAFDE members include d Films, Elevation Pictures, Entertainment One and Les Films Séville, Entertainment, Kinosmith, Métropole Films, Mongrel Media, Pacific Northwest Pictures, LaRue Entertainment, and Search Engine Films.
3040 CAFDE members provide Canadians with the majority of the domestically-produced filmed entertainment, putting CAFDE in a unique position to offer comment on certain of the Commission’s stated areas of examination and objectives including both an examination of the effectiveness of the group-based licensing approach during the most recent licence term, as well as its continued future application and the implementation of certain policy decisions set out in the “Let’s Talk TV” Broadcasting Regulatory Policy that you issued.
3041 The Canadian film industry supports a diverse and expansive economy of creators, talent, producers, distributors, and service providers. Canadian films attract audiences at home and abroad, and Canadian talent is celebrated on the international stage.
3042 Most importantly, the Canadian film industry provides a unique platform for Canadian voices to share Canadian stories and all Canadians will benefit from a broadcast system that showcases and supports this diverse and important work.
3043 Robust Indigenous production and a supportive broadcast environment is critical to the continued health and growth of the Canadian film industry. To that end, CAFDE supports the application by Canadian broadcasters to renew their licences, but we do so with the expectation that the CRTC will continue to uphold the commercial and cultural interests of the Canadian film industry in the process.
3044 The film industry is seeing a shift in how Canadians enjoy film. We recognize that the traditional theatrical, video, and television windows, which are so crucial for sharing Canadian films with Canadians, are shifting in the new digital era.
3045 However, linear platforms continue to be of key importance to filmmakers and audiences. Currently, and for the foreseeable future, these traditional platforms remain crucial avenues for both ensuring access to Canadian content as well as for showcasing Canadian content to significant audiences.
3046 As distributors, the health of our business, as well as the strength of the greater Canadian content industry, relies on effective regulation of these content pipelines. CAFDE members want to see the relationship between Canadian content creators, Canadian distributors, Canadian broadcasters, and Canadian audiences strengthened at this critical moment of disruption.
3047 The vitality and very existence of our sector depends on support from regulatory bodies to ensure that broadcasters and exhibitors provide audiences with access to our high-quality Canadian film content. These requirements provide the platform for Canadian films to reach Canadian homes and is crucial to the success of the Canadian film and television eco-system. Unfortunately, in recent years, we have seen a distinct decline in the overall trend of film acquisition by Canadian broadcasters. Our members have seen a reduced commitment to Canadian films by Canadian broadcasters over the last five broadcast seasons, both in pay and free television acquisitions.
3048 This trend has been consistent across all broadcasters and appears to represent a change in strategic direction which is not compatible with the CRTC’s mandate or spirit of the Broadcast Act, and also stands in sharp contrast to the Commission’s stated goals of supporting the creation, dissemination, and discoverability of Canadian content for Canadians.
3049 A requirement that broadcasters demonstrate a renewed commitment to Canadian feature film will not only ensure that the cultural fabric of Canada is enriched and strengthened by providing Canadians with access to Canadian stories, it will also facilitate an increase in employment opportunities for Canadians in the film industry.
3050 CAFDE therefore recommends that the Commission create a home for Canadian feature film on broadcast television by creating and strengthening mechanisms that encourage the exhibition in primetime of feature films made in Canada. To that end, we recommend that the Commission adopt the following in the conditions of license for Canadian broadcasters.
3051 First, mandating that Canadian broadcasters devote a given time of their required -- sorry, a given amount of their required Canadian content scheduling and spending commitments specifically to Category 7(d) programming, being theatrical feature films aired on TV. To date, most broadcasters have had the latitude to program within Category 7 as a whole, and without any specific requirements for feature films.
3052 Second, ensuring that as part of the license renewal for The Movie Network (TMN), not only does Bell Media Inc. commit to specific Category 7(d) investment, but that Bell Media reiterate its commitment to buy and air all Canadian theatrical feature films presented by Canadian film distributors.
3053 Third, we recommend that the CRTC require all broadcasters to maintain both the established standard exhibition requirement of 35 percent of Canadian content during the broadcast day; and b) maintain some minimum requirement for exhibition of Canadian content, including feature films, during primetime.
3054 Finally, to ensure that the commitment to Canadian film spans from traditional platforms into the digital age, we recommend that the CRTC require that all digital and on-demand platforms operating in Canada maintain a minimum commitment for the availability of Canadian film content.
3055 If implemented, these recommendations will ensure continued access for viewers across the country to Canadian programming and will ensure our Canadian feature films aren’t left behind. The requirement that broadcasters feature Canadian theatrical films during primetime will support the CRTC’s objective of enabling audiences to discover and enjoy Canadian feature films on the platform of their choosing, while also allowing for broadcasters to highlight their investment in the Canadian economy through high-quality Canadian content while engaging audiences both at key timeslots and on an on-demand basis.
3056 Additionally, in a time when we see a shift in Canadian consumption of television and film, the exhibition standards that have been applied to broadcasters should be applied to new subscriber and streaming video on-demand services to ensure that all platforms support Canadian content in the years to come.
3057 CAFDE is not the only stakeholder group that sees value in certain of the above recommendations. These sentiments were also echoed in the 2015 Review of the Feature Film Industry in Canada conducted by the Standing Committee on Canadian Heritage. Specifically, Recommendation 5 by the Committee was that the CRTC consider creating a special category for feature film as programs of national interest to guarantee appropriate exhibition, funding, and promotion of Canadian films.
3058 CAFDE’s recommendations as presented here today will ensure that Canadian films, made by Canadians and telling Canadian stories, continue to be accessible to all Canadians. Our recommendations will provide broadcasters the opportunity to showcase Canadian feature films and share our diverse Canadian narrative. Our domestic industry produces world-renowned films and CAFDE believes that to continue and grow our film industry, regulatory bodies, filmmakers, distributors, and broadcasters must work together to build locally, compete globally, and celebrate nationally.
3059 On behalf of the members of CAFDE, I thank you for your time and considerations.
3060 THE CHAIRPERSON: Thank you very much.
3061 Vice-Chair of Broadcasting will start us off.
3062 COMMISSIONER LaROCQUE: Thank you very much for your presentation today.
3063 I have a few questions for you. How do your proposals, which I gather are, you know, the four pieces of your puzzle -- how do those proposals square with the Commission’s removal of genre protection and the move towards more flexibility for broadcasters altogether?
3064 MR. BAIN: We’re reluctant to state a position on genre. Our members are involved with productions of all different genres and I think that Canadian audiences can figure that out for themselves, more or less. So I’m not concerned with genre protection, per se.
3065 COMMISSIONER LaROCQUE: But by obliging all broadcasters to be required to drive programming from a specific program category, in this case theatrical films, are you not in contradiction with the position taken by the Commission in the past?
3066 MS. HARRIS: Yeah. I mean, I think what we would say is that, you know, we’re talking about an overall spend in a Group licence requirement. So you know, on the whole for these large vertically-integrated companies, the spend could be targeted, you know, on specific channels where it made sense. And obviously we would -- we recognize that the Commission is concerned with flexibility and I think that we are not necessarily trying to implement how much spend or when or how, you know, that kind of commitment could take place.
3067 But what I think what we’ve seen is a reduction, you know, especially with respect to speciality and free television, you know, down to negligible amounts. And I think what we want to see if as we’re discussing Canadian content and Canadian content regulations, to make sure that film isn’t forgotten in those discussions.
3068 COMMISSIONER LaROCQUE: Thank you for that answer.
3069 With respect to the position you’ve taken on the established standard exhibition requirement of 35 percent, again I would ask you is that not in -- does not that appear to be -- or some people might consider that that appears to be in conflict with the Commission’s focus on expenditures over exhibition as a means to ensure production and access to Canadian productions in particular.
3070 MR. BAIN: There’s always -- I mean, this is a struggle that everybody will have when you’re regulating this, which is, like, is it the amount of money you spend on something or the number of projects? And that’s a tough balance to strike. I’m not sure what the right answer is but the answer is not just purely a dollar figure. It can’t be because then there’s certain voices that won’t get heard because money will tend to go towards the bigger projects and not towards the smaller projects.
3071 COMMISSIONER LaROCQUE: Okay, thank you.
3072 I’d like to hear from you as to whether or not you think the Commission itself has a role to play with respect to promotion and discoverability?
3073 MS. HARRIS: I think that obviously the balance in the Broadcasting Act is to ensure that, you know, as we put the broadcasters in the privileged position that they have in our Canadian television ecosystem, that they do so with the responsibility of ensuring that Canadian content is a large part of that mandate.
3074 And I think, you know, as many of the previous submissions have indicated, Canadian broadcast television is the way that the majority of Canadians are still accessing content. So I think discoverability in primetime and discoverability through the day on our Canadian broadcast networks are the way that a number of Canadians are discovering all kinds of content and hopefully, from our perspective, including feature films.
3075 So I think the system itself is designed to ensure that discoverability is first and foremost. And I think you wouldn’t want to dictate to the broadcasters what that looks like. There should be flexibility in their ability to program but within the framework of the Broadcasting Act and within the framework that the CRTC imposes.
3076 COMMISSIONER LaROCQUE: Okay. I’d like an assessment on your part as to whether your proposals are in keeping with the Commission’s existing policies. Because after all, we’re not here for the purpose of implementing -- of creating new policy but rather of implementing existing policy. So I just wondered if you had any observations on the four proposals that you’ve made and where they are helpful to existing CRTC policies, furthering, advancing certain issues, or where they may indeed bump up against some existing policies.
3077 MR. BAIN: Well, just one by one. The first one is basically to specifically to consider theatrical feature films separate from just Canadian content as a whole.
3078 I mean, I would say just generally on all these points is we’re just kind of advocating for things to continue the way that they’ve been done and it’s more about not policing it, exactly, but paying attention, because things can tend to slide when people aren’t looking.
3079 Because most of our members are primarily distributors of feature films, obviously that’s more important to us. Now, some of our members are actually involved in television as well. So that’s why for us, if it’s not considered in and of itself, people will tend to go the path of least resistance with their programming and so feature films would suffer. And the consequence of that is there are certain stories that are best told as feature films. And if the system starts to strangle those off, some of those stories just won’t get heard and seen by Canadians.
3080 The issue with TMN and Bell, there’s been consolidation of broadcasters partly because of technological reasons, sometimes of just structural reasons in broadcasting. But effectively there’s only one, kind of, pay television service that will buy Canadian feature films, at least in English Canada. And as a consequence there’s a lot of Canadian feature films that are just not finding a home on broadcast, which means they’ll be really hard for Canadians to see.
3081 So if Bell is not buying a lot of them, most of them, all of them, then what happens to those stories? So that’s a real issue. And it’s not picking on Bell, per se; it’s just the way the system has worked out right now. And it’s partly to do with over-the-top providers coming in and ciphering off some subscribers or viewers. And so Bell has reacted to that as well.
3082 Regarding the 35 percent Canadian content, I haven’t, like, monitored the airwaves to know for sure if that's being followed or not. I assume it is, but again, specific to us, the feature film part has -- certainly, our members are reporting that feature films are just really, really hard to sell to broadcasters.
3083 And then the VOD end of things, it's access to potential eyeballs, and so if Bell or TELUS or Rogers, whoever, is not putting Canadian feature films up on their services, Canadians sometimes might not know about the projects and not be able to see them, even if it's -- they can see them when they want to see them and not in prime time or any other time of day.
3084 COMMISSIONER LaROCQUE: Thank you. I have one last question for you, and even though you didn’t mention it per se in your presentation, your advice would be very helpful to us on the question of programming for national interest.
3085 And I'd like to know how -- what -- how CAFDE views the impact of PNI requirements on the diversity of programming in the system, and this is kind of a two-part question. Do you have a view on the impact of various PNI levels, and as to whether or not they make a difference?
3086 MS. HARRIS: I don't know that it's something in that level of granularity that our members have discussed. I mean, I think the way that we interact with the regulatory regime is different than what you would have seen from, you know, our colleagues at the CMPA or some of the other members who would be presenting to you. You know, I think to John's point earlier, what we focus on is how easy is it for us to sell?
3087 And so I think, you know, an increased spend or a focus on a certain category of PNI, you know, to the extent that some of that spend has been allocated to different genres and one of which to be theatrical feature film, is something that would be -- that we would be interested in.
3088 I think, you know, respectfully, we leave those decisions to you with the consult of the people who are giving you that information, in terms of thresholds and levels and how do you implement those decisions? But I think, you know, based on our submissions, there -- having some form of categorization and some guidelines and restrictions for broadcasters in the past has been helpful for us as an industry and is something that we think should continue and you know, per the submission, ensure that feature films are part of that conversation.
3089 COMMISSIONER LaROCQUE: Thank you very much.
3090 Mr. Chairman, that concludes my questions.
3091 THE CHAIRPERSON: Thank you. I believe those are all our questions for your participation. Thank you very much.
3092 UNKNOWN SPEAKER: Thank you.
3093 THE CHAIRPERSON: Madame la secrétaire.
3094 THE SECRETARY: We'll now hear the Canadian Cable Systems Alliance. Please come forward to the presentation table.
3095 THE CHAIRPERSON: I guess we're moving too fast, Mr. Boyd.
3096 MR. BOYD: You can see how anxious I am.
3097 THE SECRETARY: Please go ahead when you're ready.
3098 MR. EDWARDS: Thank you. Thank you for having us here today, Chairman and Commissioners.
3099 I am Chris Edwards, Vice-President of Regulatory Affairs of Canadian Cable Systems Alliance. With me, starting from my immediate left, are Celine Laporte, V.P. Strategies, Marketing and Sales for CCSA member, Maskatel. Next is Stéphane Arseneau, General Manager of CCSA member, CCAP; and Harris Boyd, CCSA’s regulatory consultant.
3100 We would like to request that the Commission place our oral presentation, including the questions and answers portion of it, on the public record of the public process of the French Television licence renewals. Since Bell and Corus have licences in both French and English markets, we believe it would be in the public interest to approve that request.
3101 In our written comments, we raised a single concern; that is, the possibility that the VI companies might use this proceeding to weaken certain aspects of the Wholesale Code. That should not be permitted.
3102 CCSA is seeking the Commission’s Dispute Resolution assistance in virtually every negotiation conducted with the major programming groups. That is because they are attempting to transfer an unreasonable portion of the risk of a new consumer choice environment onto the independent distributors.
3103 For that reason, it is absolutely critical to our members that the Wholesale Code remain fully intact and that it be applied firmly and consistently in all CRTC Dispute Resolution proceedings.
3104 We do wish to note and support some points raised by Cogeco and TELUS in their written submissions. Specifically, we support continuation of a Condition of Licence on the VI companies to the effect that multi-platform rights must be made available to other BDUs at the time the corresponding linear rights are negotiated; continuation of a Condition of Licence on the VI companies to the effect that such companies must submit to CRTC Dispute Resolution when the other party indicates an intention to renew a distribution agreement; and imposition of a Condition of Licence on the VI companies that requires such companies to make all discretionary services available to other BDUs.
3105 Bell has requested that specific Conditions of Licence it accepted to secure approval of its Astral purchase be removed. The Wholesale Code, as written, appears to permit Bell to withhold multi-platform rights for so long as it does not make such rights available to its related BDUs.
3106 Bell’s existing Condition of Licence requires it to make multi-platform rights available to other BDUs at the time linear rights are negotiated. That is different from and stronger than the corresponding Wholesale Code language. Rogers assumed an identical Condition as a result of Decision 2014-399.
3107 Today, customers demand the ability to view content anytime, anywhere. Access to multi-platform rights is essential to the independent BDUs’ ability to offer innovative, competitive products to their customers. The VI companies cannot be permitted to act as gatekeepers to such products.
3108 Bell’s and Rogers’ existing Conditions of Licence should be maintained.
3109 Independent BDUs rely on timely access to the Commission’s Dispute Resolution mechanisms. Given the relative lack of power we have as against the VI companies, CRTC Dispute Resolution is our primary avenue of recourse to achieve fair treatment.
3110 CCSA has experienced stalling and delays by the VI companies that greatly diminish the effectiveness of those mechanisms. That is a growing problem for CCSA. It has become the norm in contract renewals with the VI companies.
3111 For example, even though the Commission has made it mandatory for parties to activate the Dispute Resolution processes 120 days before contract expiry, CCSA once again finds itself in a position of being over a year past its Bell Media contract expiry with no resolution in sight. Once again, retroactive payment has become a major obstacle to fair resolution of the contract dispute.
3112 Bell has delayed the Commission’s mediation process by challenging CCSA’s authority to represent its members, by stalling in providing counter-offers to CCSA, and by dragging its heels with respect to attendance at mediation sessions.
3113 We agree with other parties’ submissions that the Wholesale Code provision, as written, could give the VI companies an effective veto on Dispute Resolution. To exercise that veto, the VI company would simply have to refrain from confirming, in writing, its intention to renew an affiliation agreement.
3114 The VI companies control most of the Canadian content that independent BDUs absolutely must have to meet their own regulatory obligations, to meet customer demand and, in short, to compete. That content must be provided on fair terms and, to achieve that, the independent BDUs must have access to timely dispute resolution.
3115 The standard requirements for discretionary services issued under Regulatory Policy 2016-436 do not include any obligation on programmers to make such services available to BDUs. Similarly, while the proposed Discretionary Services Regulations incorporate an undue preference provision, they do not set out any threshold obligation to provide services to BDUs that wish to distribute them.
3116 As a result, a VI company could have the ability to deny access to a discretionary service or group of services, and the independent BDU’s only recourse would be to pursue an undue preference complaint. The process of mounting and proving such a complaint places a significant burden of time and cost on the independent BDU.
3117 Those circumstances are entirely inconsistent with a regulatory framework intended to give all Canadians improved choice and flexibility as to their programming services.
3118 Independent programmers, as they have in the past, retain a strong incentive to ensure the greatest possible distribution of their services. The same is not necessarily true for the VI companies. The relative profitability of their BDU operations skews their incentive toward maximizing BDU revenues, sometimes at the expense of their programming revenues. CCSA agrees that, for the VI companies, “unnatural incentives come into play”.
3119 For that reason, rather than creating a threshold obligation for all program suppliers, in the regulations, to make services available, a more appropriate approach is to place such an obligation on the VI companies as a Condition of Licence.
3120 We recommend that the programming licensees of the VI companies be subject to a Condition of Licence that requires them to make discretionary services available to all BDUs on terms that are consistent with the Wholesale Code.
3121 Mme LAPORTE: Ces principes s’appliquent à tous les marchés canadiens, mais ils ont une importance particulière pour les marchés francophones et tout spécialement pour le Québec. En effet, les choix de programmations disponibles et attrayantes sont beaucoup plus restreints dans ces marchés.
3122 Malheureusement, pour nos membres, les entreprises intégrées verticalement opèrent de la même façon partout, qu’elles soient propriétaires de services en anglais seulement, en français seulement, ou dans les deux langues. Le comportement anticoncurrentiel est insensible à la langue.
3123 Il est très fréquent que le même contrat avec une entreprise intégrée verticalement traite de tous les services de programmation de cette société dans les deux langues officielles, de sorte que la séparation des deux marchés par la géographie ou la langue ne reflète pas nécessairement les particularités du marché Canadien.
3124 Au Québec, la demande pour les services de langue anglaise est somme toute limitée dans les marchés servis par les membres de la CCSA, ce qui diminue d’autant l’importance de ce marché pour ces fournisseurs. Dans bien des cas, c’est à prendre ou à laisser.
3125 Pour les services de langue française, tout le marché canadien est caractérisé par le peu d’alternatives. Ces facteurs contribuent à accentuer la problématique au fur et à mesure que les services acquièrent un statut d’incontournables.
3126 Compte tenu du choix plus limité de services facultatifs offerts aux marchés francophones, il est d’autant plus important que les EDR indépendantes aient un accès garanti pour ces services, et ce, à des conditions raisonnables qui leur permettront de demeurer compétitives. En effet, le Conseil préconise la liberté de choix pour les consommateurs et ceux-ci s’attendent à retrouver chez l’ensemble des fournisseurs des offres comparables.
3127 Il est donc important que les conditions de licence dont nous avons discuté continuent de s’appliquer dans tous les marchés pour que l’ensemble des joueurs puissent répondre à l’appel du CRTC en contribuant au monde de choix et d’abordabilité.
3128 MR. EDWARDS: To sum up, it’s extremely important to independent BDUs that the Wholesale Code be applied vigorously and consistently. We hope to see a strong body of precedent emerge from the Commission’s application of the Code that will ensure Canadians have access to all services provided by the major programming groups at reasonable prices.
3129 In addition, the Code, as written, still has some apparent weaknesses. The Commission has the opportunity to redress those weaknesses with Conditions of Licence on the major groups that ensure multi-platform rights are made available at the same time linear rights are negotiated; ensure that independent BDUs have meaningful access to CRTC dispute resolution in relation to all programming services; and have access to distribution of all discretionary services at rates and terms that are consistent with the Wholesale Code.
3130 That’s our presentation. Thank you very much for your time and attention and we’ll take your questions.
3131 THE CHAIRPERSON: Thank you very much. Merci bien tous d’être là.
3132 M. le Conseiller Simpson va commencer avec les questions.
3133 Oh, wait a minute. Before we do that I’m going to address the -- sorry -- the procedural issue that you raised right at the beginning.
3134 Why is it necessary to take this position in this hearing to put it in the other hearing when you still have a right of reply?
3135 MR. EDWARDS: We can use that right of reply and we will do that. We wanted to get our comments that were made today and the discussion between us on the record of both because really our comments universally apply to the VI entities, all of them.
3136 THE CHAIRPERSON: Right. But all the VI entities are not parties to this hearing. Bell may be here; Corus may be here; but Quebecor isn’t. Is it fair to them?
3137 MR. EDWARDS: I’m not sure about the fairness to them. We could certainly reserve for ---
3138 THE CHAIRPERSON: You’re still a party in that proceeding.
3139 MR. EDWARDS: Yes.
3140 THE CHAIRPERSON: All the next steps can be fully met in that proceeding, can they not?
3141 MR. EDWARDS: Yes. Truly our comments really are directed more to Bell, Rogers, Corus; and Bell and Corus in particular have both French and English services. And quite frankly, we thought we could come here and present and not waste your time by saying the same thing at two hearings. But I understand the fairness issue that you raise.
3142 THE CHAIRPERSON: Okay. So we’ll take your request under advisement.
3143 MR. EDWARDS: Thank you.
3144 THE CHAIRPERSON: Now I’m putting it in the hands of my colleague, Commissioner Simpson.
3145 COMMISSIONER SIMPSON: Thank you very much.
3146 This is like one of those little pans of popcorn where it’s very small when you put it on the stove and then it gets very big when it’s finished.
3147 I have three general questions. First, going back to the remedial processes that we put in place a while back where we got into helping arbitrate issues that usually arise or arose between BDUs and various entities. I have not had a personal experience in having to do one of those arbitrations. I gather from what you’re saying that they have not been entirely as effective as you’d like them to be because of the way everybody plays before and during when they get to the table?
3148 MR. EDWARDS: Yes, that’s correct. You know, I was using the Bell mediation as an example. But that contract expired some time ago, about a year. And we’ve been pressing very hard to get to the dispute resolution process and get that done. And it’s just taken a very long time in terms of getting counteroffers to the proposals we make, in terms of getting them to commit to actually coming to staff-assisted mediation proceedings. And so it becomes a very protracted
3150 So I’m not indicating that there’s anything necessarily wrong with the structure of the process, but it is open to some gamesmanship.
3151 COMMISSIONER SIMPSON: So how do you regulate bad behaviour to become good behaviour if it isn’t a fault of the process itself? You know, we’re sitting on this end looking at table after table of individuals who want to contribute to the betterment of this whole Group licencing process. But sometimes the asks are not met with the hows as much as -- at least as much as I’d like to see them.
3152 And I get the distinct impression that if the process is not flawed, as you just said, what are we to do differently to make everyone play better ball? Is it by taking a tougher stance when everybody does get to the table? Is it putting something in place to get them to the table quicker? I’m just trying to really get my head around what can be done.
3153 MR. EDWARDS: Yeah, from our point of view it’s a mix of those things, I think. One of the things in our experience is that we’ve been in a very long time in the staff-assisted mediation processes and I can tell you that we’re looking more and more at just going straight to final-offer arbitration because it does have a set timeline and it’s the only way we can click a timeline into place. So to a certain extent that’s on us to manage. But certainly some attentiveness, perhaps, at the staff-mediation level is important.
3154 The other general comment I would make, and this goes to our discussion of potentially a Condition of License that would require the major entities to make services available, the discretionary services.
3155 Where there is a possibility of -- and I hate to a prescriptive rule but that’s really what I’m talking about -- a Condition of Licence that requires something, that alleviates the burden on us to actually go to the Commission and seek a process and work through that process, such as an undue preference complaint, where we’re just by nature of our lack of power disadvantaged.
3156 Proportionately, for an organizations like ours, it is very time-consuming and expensive to pursue a complaint like that, whereas if there were a threshold condition of licence that said, “This shall be so,” that’s one fight that we just don’t have to take on our own.
3157 MR. BOYD: And perhaps I might just make one comment. I mean, the tools at your disposal are somewhat limited. Obviously, you don’t have finding power, and that's been talked about for a long time, and maybe it will eventually come. But you do have the ability to have short licence renewals. This is a hearing about licence renewals, so if you detect or the staff involved in mediation detect a consistent misbehaviour, if I can use a polite word, or gamesmanship in the regulatory process, you do have the ability to only renew their licences for a very, very short period of time and send them a message, because it's quite consistent who the mischievous ones are.
3158 M. ARSENEAU: Est-ce que je peux m'adresser en français?
3159 Y aurait peut-être une autre façon de faire qui pourrait régler la question, ça serait de règlementer les tarifs. Ça serait pareil pour tout le monde, connu par tout le monde.
3160 La réalité c'est quoi? C'est qu'on négocie sur des tarifs sur la question... avec tout ce qui s'est passé avec la question de la petite base et tout ça. Les chaînes nous arrivent avec des demandes qui sont importantes en termes d'augmentation de tarifs. Ils ne veulent pas partager le risque et ça fait que le tarif final va être transposé au client en bout de ligne, et c'est le client qui va perdre.
3161 Alors, on est ici pour vous dire moi quand j'ai une chaîne qui vient me voir, que ce soit une chaîne de sport ou peu importe, qui m'arrive et qui me dit, écoute, si tu veux offrir ma chaîne à la carte, tu vas devoir payer 12$ par client, pour moi c'est abusif. Et c'est un exemple dans le sport mais je vous reviendrai avec des chaînes plus conventionnelles et de ce temps-ci, on voit rien en bas de 4$ la chaîne qu'ils nous demandent à nous.
3162 C'est sûr qu'en bout de ligne ces prix-là vont se refléter dans le tarif qu'on va devoir charger à nos abonnés.
3163 La problématique c'est qu'on n'est pas certain que ces frais-là sont les mêmes pour tous les joueurs, et c'est là que ça devient difficile et anticoncurrentiel.
3164 MR. EDWARDS: If I may add to that, I'm not -- you know, I'm not suggesting a major policy change here. I think there are two answers to your question. One is perhaps some attentiveness to what's going on at the ground level, but the other is really, we are very pleased with the Wholesale Code. We think that's the right structure, and as we said a couple of times in our presentation, now is the time for vigorous and consistent application of that Code. And I think that, in large part, addresses the comments that Stéphane just raised.
3165 COMMISSIONER SIMPSON: Well, thank you for that, because that's exactly where, you know, my line of questioning has been going, because when you take the multiple processes that led up to the Code and the iterations thereof, and then you take the issues today of behavioural practices that are separate from the outcomes, I wanted to get under the hood of that exact point.
3166 And I hear what you're saying, that we have an ability, without changing anything, simply be a little more attentive to the manner in which discussions are progressing before they reach arbitration. And I think that, you know, that is something we can take under advisement.
3167 Well, let me ask another question now, that goes to the same line of thinking.
3168 While the Wholesale Code came out of LTTV -- Let's Talk Television -- did the issues that have generated your need to be here today come as the result of the total output of Let's Talk Television, which included pick and pay, which included, you know, all the changes to BDU distribution rules? Did all of a sudden things just all get thrown up in the air as a result of that?
3169 MR. EDWARDS: So you know, what is in place as a result of that entire process -- which we think was a very good rational approach to things -- is a new element of risk on the programmers, and that's well recognized, that some services are going to survive, some are not. Everybody's got to find their new position in this marketplace.
3170 And where we sit in that process is as players with some of the least power, in terms of making affiliation agreements. I refer to this in the written comments. We are consistently facing a pressure to accept essentially all of the risk in that new environment, and that takes the form of rate cards that are more than make whole to the existing rates, so that, you know, none of the risk actually is borne by the programmers, at least the large ones.
3171 They're structured at such that if we lose subscribers, whether it's because of their over-the-top service taking customers away, or because we haven't done a good job, it really doesn’t matter. We're still going to pay more and more and more. So that's the structural element that I think you're asking about.
3172 COMMISSIONER SIMPSON: That's exactly right.
3173 MR. BOYD: Maybe just to answer your question directly, Commissioner Simpson, the before and after part of it, things were certainly worse before, so these problems didn’t come out of Talk TV or anything like that. What the -- putting in place the Code improved the situation. It made the rules of the game clearer.
3174 Now, the Code and your jurisdiction to impose it is being challenged by Bell in court, so the game may not be over, and if that's not the case, what happens if we collectively lose? So having conditions of licence in place is a sort of a backstop to that, and they were put in place for very good reasons when those purchases were allowed, and as a condition -- as we said in our remarks -- for permitting them to get bigger.
3175 Getting them bigger, though, has created a problem, because they're more powerful. They control now the bulk of the services, well over half, in the case of Bell. So we think there is need for new protections. We think you really did a good job through Talk TV. It's just that they -- the other side has a lot of lawyers too, so ---
3176 COMMISSIONER SIMPSON: Yes, they do.
3177 MR. EDWARDS: And as we've said, we're looking forward to seeing a body of precedent emerge, and it's a new tool, and there's -- there have been a couple of instances so far, and we're very encouraged by how those have been applied, actually. But you know, that's to be done yet.
3178 COMMISSIONER SIMPSON: Three issues. I'll come back to you. Mr. Arseneau, I will come back to you in a minute regarding your comment on rates. I just wish to go back to Mr. Boyd for a second.
3179 Yes, it's before the courts, and yes, it may be upheld, it may be struck down, the appeal, and if it is upheld, the appeal, then you're right, things change. So when it comes to your presence here today, are you, in generality, telling us that things go very bad, very pear-shaped, if the request from Bell and others behind obviously that outcome of the decision, would change the Code and render it ineffective?
3180 MR. BOYD: Certainly, that would be a very regressive step.
3181 COMMISSIONER SIMPSON: Yeah.
3182 MR. BOYD: We pushed hard for a Wholesale Code. We commented on it. We provided wording, and as I said a minute ago, it is a tremendous improvement. There are some weaknesses in the Code. I'm not sure that we're here to actually strengthen the Code or change the Code. I don’t believe that that's what this process is about, but we are commenting on the Code in the context of trying to retain those other conditions of licence, which are a little stronger than the Code.
3183 So -- and of course, if the court case goes the wrong way, then we still have those and the conditions of licence. The Code is really important in operating in harmony with the conditions of licence as opposed to just being a big stick. That's sort of our view.
3184 COMMISSIONER SIMPSON: So in the worst case scenario, what you're saying is there are other aspects -- other parts of the Code that would make life manageable, should the appeal win, or are you saying that we have to go back to the drawing board and do something different regarding COLs if the appeal ---
3185 MR. BOYD: Well, I think if the Code were struck down, yes, we would certainly urge you to go back to the drawing board ---
3186 COMMISSIONER SIMPSON: Okay.
3187 MR. BOYD: --- and come up with some other way of doing it, and then maybe we're back into the policy realm there and to the higher powers that be, if we ---
3188 COMMISSIONER SIMPSON: Yeah.
3189 MR. BOYD: --- you know, if it comes a question to -- that you don’t have the jurisdiction to do this, we would be very, very worried.
3190 COMMISSIONER SIMPSON: So how -- so given that this hearing will end, quite likely before the appeal is heard and released, and let's say in the worst case scenario we decide before they decide, what is the worst that can happen if you have to live with that outcome for a five-year period before we get a chance to revise the ceiling?
3191 MR. BOYD: I guess that's where we come down to the proposals that we've made today in our submission and our earlier written intervention.
3192 COMMISSIONER SIMPSON: Yeah.
3193 MR. BOYD: You should put conditions of licence on these VI companies ---
3194 COMMISSIONER SIMPSON: Yes.
3195 MR. BOYD: --- that protect their -- the abuse of power against their competitors. And whether we still have the Code or not, we have that backstop and in some cases, as we said, they're a little better than that Code. So I think that would give us a sense of ---
3196 COMMISSIONER SIMPSON: Comfort?
3197 MR. BOYD: Re-assurance I guess is the right word, and then we just watch what goes on in the courts and then we may all have a job to do at the political level. We don’t really know what that outcome will be.
3198 COMMISSIONER SIMPSON: I just wanted to be absolutely clear that that’s what your game plan was.
3199 Mr. Arseneau, can I go back to your observation about rates. Putting a tariff or a rate to a certain type of service, you know, that’s price fixing. You know, how does that work? You know, that’s price fixing.
3200 M. ARSENEAU: Je suis pas certain de savoir comment ça fonctionne vraiment, mais ce que je pense par contre c'est que le fait qu'un tarif soit connu par l'ensemble des joueurs et des citoyens, ça rendrait la vie plus facile pour tout le monde.
3201 Alors, je le sais pas moi. Quand Bell vient à la table et nous offre une table de tarifs qui varient à tous les 10 points de pourcentage et qu'il... à chaque fois qu'on... parce que c'est ça la réalité maintenant. À chaque fois qu'on perd des abonnés, on risque de tomber sur une table de tarifs qui est différente, mais le poids est sur nos épaules à ce moment-là. Une fois que le contrat est signé, on doit vivre avec pendant un certain nombre d'années.
3202 Le fait que les tarifs seraient règlementés et les mêmes pour tous, ben les règles seraient les mêmes pour tous les joueurs, que ce soit eux-mêmes ou les autres joueurs, les autres gros joueurs intégrés verticalement. C'est un peu ça l'idée.
3203 Je vous dis pas que c'est la meilleure solution mais vous parliez d'avoir une autre solution, qu'est-ce que vous... vous nous demandiez un peu qu'est-ce qu'on suggérerait pour trouver une solution à ça, ça en serait certainement une.
3204 COMMISSIONER SIMPSON: But it sounds to me like this concern is coming more out of more recent negotiations regarding pick and pay.
3205 M. ARSENEAU: Ben c'est certain que les tarifs augmentent à un rythme effarant et mon exemple des chaînes à la carte c'est tout à fait viable là. On arrive avec des tarifs qui tournent autour de trois, 4$ pour des chaînes conventionnelles. Douze dollars (12$) pour des chaînes de sports, c'est juste impensable pour nous.
3206 Et en fait, le problème c'est que le client c'est pas chez Bell qu'ils vont aller... qu'ils vont aller cogner à la porte. C'est au... ben oui, s'ils s'obligent à leurs propres tarifs. Mais bizarrement, allez voir les tarifs de Bell Canada pour TSN ou RDS à la carte, c'est pas le 12$ chez leur propres clients.
3207 Alors, c'est là qu'est la problématique, qu'ils ne se traitent pas de la même façon qu'ils traitent leurs compétiteurs.
3208 MR. BOYD: I don’t think Stéphane is talking about you setting rates. He’s really talking about why should one of our customers pay more than one of their customers given we’re paying the transport to get it to our small community, and it’s the same service. They don’t have any additional costs to get it to us so why should it not be the same rate? It’s more a question of principle. Not easy to do or to prove.
3209 COMMISSIONER SIMPSON: You’re talking about parity rather than fixed rates.
3210 MR. BOYD: Yes.
3211 COMMISSIONER SIMPSON: Okay.
3212 MR. EDWARDS: I’d like to comment on this for a minute if I could.
3213 COMMISSIONER SIMPSON: Yeah.
3214 MR. EDWARDS: I appreciate the current concerns. I don’t think we would propose that the Commission should be regulating wholesale rates per se.
3215 And I have some faith that now that the Wholesale Code is in place that the Commission will be able to look at the indicia it has set out for what is a reasonable commercial rate. And I would look to see a body of rate precedence and terms precedence emerging from that that will articulate what is good commercial practice in the industry.
3216 My colleagues may be a little less patient than me in that regard, but I think that’s how it’s intended to work and I can see that result coming about.
3217 COMMISSIONER SIMPSON: Thank you.
3218 Madame Laporte, would you please revisit for me the point you were making? I thought I heard you say that you were referencing English language product that is not as easily available for English viewers on your service. And is that extraordinarily more difficult than accessing French products from the same sources?
3219 Mme LAPORTE: C'est pas difficile d'accéder au service anglophone. La problématique c'est qu'on a un volume d'abonnés qui est moins intéressés dans nos marchés qui sont purement francophones par ces services anglophones là du fait notre volume d'abonnés ou nos taux de pénétration sont tellement bas que les tarifs qui nous sont proposés nous obligent à recharger ces coûts-là aux clients. Et je crois pas que les clients aient à payer pour ça. C'est pas...
3220 COMMISSIONER SIMPSON: Okay. And what you’re saying is that you’re really not able to recapture by any other means other than a pass-through rate to that customer. And so what would the solution be, sort of a differential pricing so that the cost of that service is more in relationship with the size of the subscriber base?
3221 Mme LAPORTE: Je pense que, comme Stéphane, le Conseil ne devrait peut-être pas mettre des tarifs en place. Par contre, il devrait y avoir des échelles pour que ces tarifs-là soient accessibles...
3222 COMMISSIONER SIMPSON: A two-tier type system?
3223 MS. LAPORTE: Yeah.
3224 COMMISSIONER SIMPSON: Okay.
3225 Mme LAPORTE: Qu'ils soient accessibles et qu'ils soient surtout équitables pour tout le monde.
3226 Quelquefois on dessert des secteurs que ces grandes entreprises-là ont pas voulu desservir et on le fait et c'est des coûts qui sont importants pour nous dû à la population qui est plus petite, au territoire qui est plus grand. Et en plus, on fait face à des conditions qui sont "unfair" pour nous.
3227 Alors, ça nous amène à devoir justement offrir des services qui sont pas toujours compétitifs ou si on veut rester compétitif, ben on est obligé de prendre la charge de ces frais supplémentaires là.
3228 MR. BOYD: You know, I think Mr. Edwards would probably want to comment on this but there are usually different rates for an English service in the French market than in the English market.
3229 But the arrival of penetration based rate cards and that mentality that it should be the same everywhere, it’s virtually impossible to reach those penetration rates for an English service in a French market but yet you’re still dealing with the same type of contract. So it makes it very, very expensive because maybe you only got 10 or 15 percent penetration and the lower rates are at 765 or 80 percent.
3231 M. ARSENEAU: En fait ce que je voulais dire c'est que l'inverse est également vrai. Les chaînes francophones dans le reste du pays ont la même problématique que les chaînes anglophones dans les marchés francophones.
3232 Alors, ça fonctionne un peu de la même façon mais c'est tout à fait vrai ce que Céline disait. Les chaînes anglophones... et là on parle seulement de chaînes anglophones canadiennes. Si on parlait des chaînes anglophones américaines, ils veulent même pas nous parler. Alors, c'est la réalité avec laquelle on doit vivre.
3233 Mais je peux vous dire moi que même dans un marché... ben, on est dans la région de Québec, la ville de Québec. Ne pas offrir CNN aujourd'hui, c'est impensable pour nous. Alors, on doit faire ce qu'ils nous disent mais c'est la même chose pour toutes les chaînes. Même si mon marché est pas strictement anglophone, j'ai pas le choix d'offrir le plus de chaînes anglophones possible parce que y a un certain nombre de nos clients qui en veulent et à des prix acceptables.
3234 MR. BOYD: I guess just one final point. In every single market we have our two satellite competitors, and because they’re national they’re carrying all of these services so if we can’t carry them it’s very hard to compete. And of course they’re looking at it from a much bigger market share.
3235 In some places we also have a big terrestrial BDU, but we always have in all those markets those two big satellite providers who have all of the services. And that makes it very difficult if it’s too expensive for us to carry them.
3236 COMMISSIONER SIMPSON: Thank you very much.
3237 Your oral presentation today answered most of the questions I had from your written submissions, so those are my questions. Thank you.
3238 THE CHAIRPERSON: Just one question. You’re not suggesting that you believe that the appeal will not be successful, are you?
3239 MR. BOYD: That’s a double negative. I’m not suggesting that ---
3240 THE CHAIRPERSON: Your mic, please.
3241 MR. BOYD: I am not suggesting that I believe the appeal will be successful.
3242 THE CHAIRPERSON: Okay.
3243 MR. BOYD: Okay?
3244 THE CHAIRPERSON: Yes, so it’s merely in case ---
3245 MR. BOYD: In case, yes.
3246 THE CHAIRPERSON: In the remote likelihood that that would be a successful ---
3247 MR. BOYD: And in my prayers I ask that they lose.
3248 THE CHAIRPERSON: Well, unfortunately you’re not in front of that authority for that case, you’re in front of the courts.
3249 THE CHAIRPERSON: So thank you very much. Those are all our questions.
3250 MR. BOYD: Thank you.
3251 THE CHAIRPERSON: Thank you.
3252 Madame la secrétaire?
3253 THE SECRETARY: We’re at item five, Documentary Organization of Canada. I would ask you to come forward, please.
3254 THE CHAIRPERSON: Welcome and, as is usual, just identify yourself for the purpose of the transcript and then go ahead, please. Thank you.
3255 MS. FERRARI: Thank you, Mr. Chairman, Mme Vice Chair, Commissioners, and Commission staff.
3256 My name is Pepita Ferrari and I am the Executive Director of the Documentary Organization of Canada, l’Association des documentaristes du Canada. DOC is here today proudly representing more than 700 independent Canadian producers of documentary film and television programs working in every region of this country and in both official languages.
3257 With me today, on my left, is Joanne Levy, member of the DOC National Board of Directors and independent producer from Manitoba.
3258 Documentary programs created by Canadians for Canada and for the world have been at the heart of our film and video culture for at least 70 years. From the beginning of the CBC and the NFB to today’s multi-platform digital environment, documentaries have revealed and explained Canadians and Canadians’ sensibilities to the world, and the world to Canada.
3259 With support from consumers, governments, and the regulator, Canadian documentary producers are continuing this critical role for Canadians, a role that is clearly -- that clearly fulfills each part of Section 3(1)(i) of the Broadcasting Act.
3260 MS. LEVY: Canadian viewers are watching Canadian documentaries in increasing numbers. According to your very own 2016 Communications Monitoring Report, viewing to both long-form docs on all English-language television -- that’s the Category 2(b) -- and other information programs has increased since 2011. In contrast, viewing of drama, Category 7, the major component of programs of national interest has, unfortunately, declined during this period.
3261 DOC will use our time before you today to focus attention upon three key proposals designed to ensure that the group television licensees seeking renewal at this proceeding play their part in supporting the production of long-form documentary programming.
3262 In making its proposals, DOC recognizes and supports the Commission's general policy shift away from the regulation of shelf space and towards an investment in Canadian program creators.
3263 We agree that a focus on ensuring the continuous creation of quality Canadian programming is a more appropriate policy approach than attempting to continue the imposition of Canadian content quotas in this quickly evolving multi-platform digital environment.
3264 However, careful management of this policy transition is critical to the creative community. As licensees’ requirements for Canadian content are reduced, they must be balanced by an increase in spending requirements, spending that supports the continuous creation of new Canadian programs by the independent production sector.
3265 MS. PEPITA: Accordingly, DOC proposes the following:
3267 One, we recommend that the Commission impose a condition of licence requiring group licensees to spend 1.5 percent of their previous year’s gross revenues on independently produced documentary programs Category 2(b). This amount is consistent with recent spending patterns. This requirement will ensure that popular Canadian documentary programs will continue to be made and will find audiences on both traditional and new media platforms.
3268 Two, we recommend that the Commission require group licensees, as part of their annual reporting on programs of national interest, to set out the details of their spending on long-form documentaries, separate from other PNI categories. These reports should include titles, length, producer, production budget, and licence fee.
3269 The Commission should ensure that the format of the PNI annual reports is the same for each licensee. This will enable all interested parties to evaluate and compare how the licensees are fulfilling their PNI requirements using a common format.
3270 Three, we recommend that the Commission renew the group licences for a period of only three years. This short-term renewal will give the Commission, the licensees, and interested parties the opportunity to assess the licensee’s contribution to PNI, including long-form documentaries, in light of changing government policies and the evolving broadcasting environment.
3271 This short-term renewal should focus exclusively on the group's PNI conditions and commitments and would be in lieu of an immediate increase in the overall PNI condition of licence. A three-year renewal will also provide Canadian producers and creators with an opportunity to discuss with the Commission the need to review and revise key regulatory definitions, important to the production community, in order to better reflect current realities.
3272 In this regard, DOC supports the recommendations made by the CMPA with respect to the definitions of “independently produced program” and “independent production company”.
3273 MS. LEVY: DOC wishes to commend the Commission on its recent policy respecting local and community programming. We believe that short documentary programs, Category 2(a), can be an important tool in assisting local licensees to meet the Commission's objective for local news programming. Such mini-docs can also be an effective means to develop new, diverse, and regionally-based documentary producers and associated crafts.
3274 Our intention is to work with local broadcasters to help them cooperate with local independent producers to make this policy beneficial for all parties.
3275 MS. FERRARI: Finally, Mr. Chairman, DOC wishes to underline the importance of this proceeding to the Canadian creative community. Despite all the changes that have taken place in the broadcasting sector, the powerful private broadcasting groups, along with the CBC, continue to be an important trigger for the production of Canadian programs of national interest.
3276 Programs supported by these licensees are then made available to Canadians on both traditional networks and a variety of new media platforms. Ensuring that these licensees support the production of long-form documentaries will go a very long way in meeting the public policy goal of quality Canadian programming available to audiences around the world on multiple platforms.
3277 Based on current information and on our past experience, DOC is confident that “if we make it, they will watch”. Thank you
3278 THE CHAIRPERSON: Thank you very much for that presentation. I’ll put you in the hands of the Vice-Chair.
3279 COMMISSIONER LaROCQUE: Mrs. Ferrari, Mrs. Levy, good afternoon.
3280 And Mrs. Ferrari, I’m glad to see you didn’t have to wait quite as long as you did in Laval for your presentation before the Commission; I think you were the last witness, and quite after six o’clock, if I recall correctly.
3281 Your presentation is quite straightforward. I think we heard similar things in Laval so I’m going to try and ask you some things that have not come up yet. But I first have to ask you, would you have any objection that the answers to the questions that you gave us -- that were provided in Laval be placed on the record of this hearing?
3282 MS. FERRARI: This answers I did provide? I provided two out of four and I still have to provide two by Friday.
3283 THE CHAIRPERSON: No, we also meant the exchange, the oral exchange, because we have the transcript. So we would take that transcript as well as your undertakings and put it on the record of this proceeding.
3284 MS. FERRARI: Oh, sorry.
3285 THE CHAIRPERSON: Is that okay, yes?
3286 MS. FERRARI: Yes.
3287 THE CHAIRPERSON: Okay, great. Thank you.
3288 COMMISSIONER LaROCQUE: I’d like to speak with you a little bit about the new PNI proposals and ask you what your thoughts are with respect to specific spending on documentaries and how these are in keeping with the Commission’s existing policies on PNI and on genre protection.
3289 MS. FERRARI: And could you just be a little bit more specific about a question in that, please?
3290 COMMISSIONER LaROCQUE: Well, I think the Commission staff put forward three proposals for PNI levels in the English-language market. I think the first one was for five percent, if I remember, for all services.
3291 THE CHAIRPERSON: I think that -- sorry, if I can help out here.
3292 COMMISSIONER LaROCQUE: It’s correct.
3293 THE CHAIRPERSON: It’s that the philosophy of the policy was to allow more flex within the PNI so that people could move it back and forth, but there wasn’t a philosophy of protecting each individual genres. And I think the Vice-Chair is asking how consistent is your proposal by creating obligations within sub-categories of the genres?
3294 MS. FERRARI: I believe it would be correct to say that what we’re asking is in line with the existing CRTC policies that long-form documentaries have always been a component of PNI and that if we take a closer look at the calculations that have already been spent up to date, that it’s pretty much in line with the 1.5 percent that we’re proposing.
3295 COMMISSIONER LaROCQUE: All right. I’d also ask you if you have any specific proposals with respect to the English-language broadcasters that are in front of the Commission at this hearing as opposed to the proposals that you expressed in the French-language hearings in Laval?
3296 MS. FERRARI: Well, I think that we would be basically asking that all of the licensees are asked to -- be required to spend a minimum amount of spending on category 2(b) programs; that they are required to have better and more consistent reporting on all PNI programs, including documentaries; and that we would require all groups to appear before the Commission within three years in order to review their expenditures on Canadian PNI programs in light of the changing digital environment.
3297 I think that in that regard, we’re particularly concerned about there being some kind of consistent model that’s applied across the board for all of the licensees.
3298 COMMISSIONER LaROCQUE: All right. Well, that concludes my questions, Mr. Chairman. Thank you.
3299 THE CHAIRPERSON: Thank you.
3300 Just one area. You said there’s 700 independent Canadians producers that you represent? Are these mostly sole proprietors?
3301 MS. FERRARI: Yes. I would say that our membership is largely skewed towards what we would call a “mom-and-pop” operation.
3302 THE CHAIRPERSON: Right.
3303 MS. FERRARI: So you know, a one-or-two-person production company. We do certainly have a few of those 700 members that would be consisting of a larger production company. And so they might be joining up with, let’s say, a maximum of 10 of their employees that are members. But by and large, yes.
3304 THE CHAIRPERSON: But those smaller players would probably have one or two projects that they work on over a period of time, try to get a broadcaster interested, and they’re not -- I don’t want to use mom and pop in a pejorative way, but they’re smaller undertakings; is that correct?
3305 MS. FERRARI: Yes, that’s correct. It’s very much a situation where it’s a project-by-project situation. And there’s very little to sustain that company in between projects.
3306 THE CHAIRPERSON: Right. And they’re generally not members of the -- even though they’re independent producers, they’re generally not members of the CMPA or are some of them members of the CMPA?
3307 MS. FERRARI: There’s actually a mix. There would be some that are members of both CMPA and of DOC. By and large, the ones that are members of CMPA are more inclined to be following a bigger business model and more inclined to have an ongoing kind of relationship with broadcasters that allow them to have a very sustainable production.
3308 THE CHAIRPERSON: And I take it the smaller undertakings tend to skew in favour of point of view as opposed to other types of documentaries?
3309 MS. LEVY: Not necessarily.
3310 THE CHAIRPERSON: Not necessarily?
3311 MS. LEVY: There’s a broad mix of documentaries that are done by the smaller players, I being one of them. I have my own independent production company but I tend to work in association with a larger company that can better handle some of the ongoing business affairs side of the business.
3312 THE CHAIRPERSON: Right.
3313 MS. LEVY: So I’ve created a business doing things that way. But I’ve done a variety of different kinds of documentaries and, in fact, all kinds of programming.
3314 THE CHAIRPERSON: Right. And I would think that at a smaller operation like that it’s quite challenging in the current environment?
3315 MS. LEVY: It’s extremely challenging in the current environment. The numbers of opportunities available with the broadcasters have diminished over time.
3316 THE CHAIRPERSON: Right.
3317 MS. LEVY: And the existing opportunities seem to get reduced from time to time. And there’s whole categories of documentary that are very challenging.
3318 Arts and entertainment documentaries are very challenging to place, even though once they’re done. people seem to really enjoy them. Whereas natural history, science seem to have a -- are on the upswing right now. It does tend to be rather cyclical.
3319 THE CHAIRPERSON: Okay.
3320 MS. LEVY: But yeah, that’s sort of where the landscape is right now. And getting the longer feature documentaries done is extremely challenging. That whole model has totally cratered. Those are the documentaries that have the best chance of global sales and they are the most difficult to get done in this country right now.
3321 THE CHAIRPERSON: Okay.
3322 MS. FERRARI: If I may, Mr. Chairman? I think, you know, a perfect example of how fragile the situation is for a large portion of our membership would be the situation that arose with the Super Channel. And it has had a really disproportionate effect on our community because the Super Channel was this amazing buyer of feature documentary. And it’s had an impact that is extremely far-reaching. Certainly every day I hear from producers telling me they’ll have to close shop if nothing happens to redeem their situation.
3323 There’s something like in the order of, I think, of overall, $20 million-worth of production budgets that are in play. And that would cross the whole spectrum of, you know, what has been either disclaimed or still business as usual or whatever.
3324 THE CHAIRPERSON: Those promises or those future sales were part of the structure for the production of the documentaries.
3325 MS. FERRARI: Yes, yeah.
3326 THE CHAIRPERSON: Okay, understood.
3327 MS. LEVY: And there was no -- the way Super Channel structured its agreements, there was no payment upfront or during production. So all of the payment was back-loaded on delivery and in fact on broadcast date. So it’s extremely challenging for people who have expended capital, who’ve taken the risk, who are interim-financed and are now left hanging.
3328 THE CHAIRPERSON: As unprotected creditors?
3329 MS. LEVY: Absolutely.
3330 MS. FERRARI: The reason I brought that example up ---
3331 THE CHAIRPERSON: Your mic, please.
3332 MS. FERRARI: Mr. Chairman, the reason I brought that example up specifically was just to show you that that was the one broadcaster, aside from of course our public broadcaster, who was really involved in buying documentary. And just the impact that that one broadcaster’s difficulties has had on our community shows the fragility of the whole situation.
3333 THE CHAIRPERSON: Right, right. Well, thank you very much for participating in the hearing and I’m looking forward to the next steps in the proceeding. Thank you.
3334 MS. FERRARI: Thank you very much for your questions.
3335 LE PRÉSIDENT: Madame la secrétaire?
3336 THE SECRETARY: Thank you Mr. Chairman.
3337 For the record, Mr. Jeremy Torrie from High Definition Pictures will not be appearing today. His presentation at the Laval hearing last week will be added on the public record of this public hearing.
3338 As well as Item 8, the Urban Alliance on Race Relations has indicated they will not be appearing today.
3339 Also for the record, Mr. Chairman, please note that the additional information regarding the new “Policy framework for local and community television” from Corus Entertainment, and discussed yesterday during their presentation, has been added to the public examination file of its application. And copies are available as well in the examination room.
3340 And now we’ll hear the last presentation of the day, which is the Metro Toronto Chinese & Southeast Asian Legal Clinic. And they’re appearing from the Toronto regional office. So we should be able to see them on the screen.
3341 Hello. Good afternoon.
3342 MS. GO: Hi.
3343 THE SECRETARY: Can you hear us well? Can you hear me well?
3344 MS. GO: Yes. Can you hear me?
3345 THE SECRETARY: Perfect. Yes, we can. So the Panel is now ready to hear your presentation. Please, go ahead.
3346 MS. GO: Thank you and my name is Avvy Go and I am the Clinic Director of the Metro Toronto Chinese & Southeast Asian Legal Clinic. I would like to thank the CRTC for giving us this opportunity to comment on the application by Rogers Media Inc. to renew its licence for the five OMNI TV stations across Canada.
3347 I just want to start with a little bit of information about our clinic. We are a community-based legal clinic that provides free legal services in a cultural and linguistically-appropriate manner to low-income members of the Toronto’s Chinese and Southeast Asian community.
3348 We were established in 1987 and since then we have provided services to thousands of clients, and in addition helping advance access to justice for low income communities in Toronto.
3349 And for more than two decades, our clinic has relied on OMNI TV Toronto and its predecessor CFMT to help reach out to the Chinese community and to inform them on important developments in political, legal, and economic policies that affect the community as a whole but specifically the low income members within those communities.
3350 Many of the clients served by our clinic find out about our services and about changes in government policies through the first language media such as OMNI. And conversely, sometimes we find out about government announcements when we are contacted by reports from, you know, OMNI and other media who ask for our response.
3351 And it’s through this two-way communication that we’re able to empower and educate our community by keeping them up-to-date and by engaging them on discussions on current issues.
3352 Over the last several years, however, OMNI has become a shadow of what it was once was. The drastic cuts that Rogers previously implemented have seriously affected the quality of OMNI’s programming, with the most serious cut occurring in May 2015 when it cancelled all third-language newscasts in an important election year.
3353 The cancellation of local third-language newscasts impaired the ability of many ethno-racial Canadians to fully participate in Canadian society because they were denied an important source of information that engaged their democratic rights.
3354 The action of Rogers flies in the face of the objectives of the Broadcasting Act and the Ethnic Broadcasting Policy which provide that broadcast programming should reflect a multi-cultural and multi-racial nature of Canadian society and assist smaller ethno-racial communities in the full participation in Canadian society.
3355 In the current application to renew its licence for OMNI stations, Rogers is once again seeking to undermine accessible ethnic broadcasting for Canada’s diverse ethno community and dispensing with its obligations under the Broadcasting Act.
3356 Rogers’ two applications, one, to renew its current licence for OMNI television stations, and two, to create OMNI regional, highlight Rogers’ disingenuous commitment to ethnic broadcasting.
3357 In its application to create OMNI Regional, Rogers espouses its commitment to “Canada’s growing ethnic communities” by stating that the primary purpose is to represent ethnic Canadian perspectives and build understanding and awareness among Canadians of all cultures and languages.
3358 However, if its application to create OMNI Regional fails, Rogers is then seeking to further reduce ethnic programming in its licence for OMNI TV.
3359 We find it contradictory that in one application Rogers claims that the growth of third-language and ethnic communities in Canada justify the creation of a new national discretionary programming service with mandatory distribution, and yet in its application to renew OMNI TV, Rogers justifies the reduction of ethnic groups and languages served from a minimum of 20 distinct ethnic language groups to 15 on the basis that there are now fewer groups and languages.
3360 With all due respect, whether Canada’s third-language and ethnic communities are growing or shrinking is not dependent on what is more convenient to Rogers.
3361 By stating that the failure of the application to create OMNI Regional will result in further cuts to OMNI TV, Rogers is demonstrating that its priority is really not to advance the policy objectives of the Broadcasting Act and the Ethnic Broadcasting Policy but to profit from the discretionary programming service it seeks to create.
3362 Although Rogers justifies the request for reduction in its licence of OMNI TV on the basis of the dwindling profits, we believe Rogers has not really fully explored all existing viable alternatives to maintaining an adequate level of ethnic broadcasting and programming at OMNI TV.
3363 We do want to see the licence for OMNI TV renewed as we recognize the important part it plays in disseminating information about local, national, and international news to our client communities. However, we submit that the licence should not be renewed based on the terms put forth by Rogers.
3364 Instead, we are asking the Commission to consider the following recommendations and conditions.
3365 First of all, the Commission should impose the condition that Rogers reinstate original third-language newscasts that it had previously cancelled.
3366 Second, we ask the Commission to require Rogers to present a detailed plan and clear business model on a go-forward basis that will ensure the viability of OMNI station on its own and not linked to its application to create a new discretionary service.
3367 We believe that Rogers has linked the two applications in order to exert additional pressure to acquire a news licence. However, these are two separate applications and each should be assessed on its own merits -- but provided that Rogers should have a separate detailed plan that actually addresses the viability of OMNI.
3368 Thirdly, we are in support of the proposals put forward by the Forum for Research and Policy in Communications as well as Unifor. The Commission should set clear, enforceable, and transparent requirements for local news and non-news programming through the conditions of licence. This means that the Commission should set quantitative levels of original hours of local programming so that the requirements are enforceable.
3369 In addition, licensees should be required to report and publish data regarding their performance annually, and the data should be made publicly available so that Canadians may monitor the broadcasters’ performance and progress in meeting the needs and interests of the communities that they are licensed to serve.
3370 In addition to these conditions on Rogers, we are also asking the Commission to conduct its own review of the Ethnic Broadcasting Policy to ensure there is parity among all third-language television stations.
3371 Rogers’ concerns over the lack of parity within the Ethnic Broadcasting Policy should be addressed by conducting a thorough review of the policy to ensure that the free over-the-air ethnic stations are not put at a disadvantage when compared to the pay stations, in this case such as Fairchild TV that serves more or less the same community.
3372 Community ethnic broadcasting and programming is mandated by Canada Broadcasting Act. It is integral to building informed, civic participation among the diverse population that make up Canada. Rogers has profited from protections and privileged access to public airwaves by presenting itself as a champion of ethnic broadcasting and programming.
3373 If Rogers wishes to continue to hold the privilege of owning the licence to these free over-the-air television stations, then Rogers must earn such privilege by complying with strict policy objectives regarding Canadian content, local programming, and ethnic broadcasting.
3374 Thank you very much for your time. I will send you my written submissions after today’s presentation.
3375 THE CHAIRPERSON: Right, thank you very much. We do take a transcript of what you said, so we appreciate your offer, however.
3376 So I’ll put you in the hands of Commissioner Simpson, who may have a few questions for you.
3377 COMMISSIONER SIMPSON: Good afternoon, Ms. Go.
3378 MS. GO: Good afternoon.
3379 COMMISSIONER SIMPSON: Thank you very much for coming before us today.
3380 Before I get going on some of my questions, did you have an opportunity to see or hear the Rogers presentation made to the Commission on Monday?
3381 MS. GO: No, unfortunately I wasn’t able to do so. I had an all-day hearing yesterday.
3382 COMMISSIONER SIMPSON: Okay.
3383 MS. GO: But I have read their proposal.
3384 COMMISSIONER SIMPSON: Okay, thank you.
3385 Just out of curiosity, what type of services do you provide as a legal clinic to your various -- I presume you’re a not-for-profit organization. What kind of services do you provide?
3386 MS. GO: Correct.
3387 COMMISSIONER SIMPSON: What kind of services do you provide in the average day?
3388 MS. GO: Right. So I guess I would divide our services into three areas. The first one will be individual client service. So we will provide legal advice and free services, as well as legal representation for individual clients who have a legal matter particularly in what we call the poverty law area.
3389 So typically a client comes in because they have problems with their landlord, they’re not getting paid by their employers, or they’re clients with precarious legal status in Canada seeking to stay in Canada, or Canadian citizens and permanent residents who want to bring their family over under the Immigration and Family class, as well as people who face discrimination in the workplace and access to government services and so on. So we provide actual legal services to these clients.
3390 The second area would be what we call the public legal education, where we go out into our community and educate our communities about various areas of law, about changes in government policies. And this is where I think the media really comes into play, where we actually use the ethnic media, including OMNI as well as the three -- well, now two major Chinese-language newspapers to reach out to the community.
3391 And through the media, we kind of do explain what the law is and we actually get a lot of calls from the media themselves. When the law is being changed, when the government is making a new proposal, they see us as an expert on certain areas of law, and they seek our input into how these laws are going to affect our community. So there's a huge educational component to our work.
3392 And the third area would be what we call law reform and advocacy. So we try to promote and advocate for policy changes that will benefit our communities, and we do that by, you know, sometimes suing the government, but sometimes coming before, you know, commissions or standing committee, you know, at the legislature level as well as the parliamentary and senate community levels. And we sometimes present before the UN, the United Nations in the -- during the -- I guess, sort of that the treaty bodies review of Canada as well.
3393 So again, media also is an important part of our work in that regard, because it's through media that we allow our community or to inform the community about the work that we're doing.
3394 COMMISSIONER SIMPSON: Thank you. You’ve given me a pretty good understanding now of the answer to what was going to be my next question. I had taken great interest in the particular point of view you had taken that the reduction of OMNI services was of vital concern to you because it -- I don’t want to say prevented, but it removed a vital component of your constituents in their ability to participate in the democracy of Canada. Normally, we're hearing the culture word, but not the participation of democracy. So it really struck a chord with me.
3395 What -- you indicate in your first -- written submission that your organization had worked closely with various media outlets including OMNI. How would you work with them? Were you actually contributing to program production or you -- were you inputting in the background? How did that relationship work with OMNI, in particular?
3396 MS. GO: Right, so I guess I see it as a two-way street. So on the one hand, we often gets call from OMNI or from other media. Well, and mainstream media as well, so it's not just the ethnic media that we get approached. When an incident happened or when there's a case before the court or when, you know, sort of like, there was a racist attack on Chinese and so on, so forth, then we're called upon to comment on that incident or on the law or on the policy.
3397 And through that -- so we will be appearing on the news programming, in OMNI, for instance, to talk about that particular change. So we -- you know, so that's one way of doing that.
3398 The other way of doing that is that -- let's say earlier this year, we released a report on the plight of workers who worked in the Chinese -- Chinese workers in the restaurant industry, where we did a survey of 184 Chinese restaurant workers and about the conditions of work, and we -- when we released the report, we had a press conference, we did a number of medias interviews, and we invite the media, including OMNI, to come to the press conference so that we can tell them about the report.
3399 So we sometimes reach out to them, but sometimes they reach out to us. And in both ---
3400 COMMISSIONER SIMPSON: So you ---
3401 MS. GO: --- cases ---
3402 COMMISSIONER SIMPSON: If I may, just in the interest of time -- what I hear you saying is that you were important to each other? OMNI was a tool by which ---
3403 MS. GO: Yes.
3404 COMMISSIONER SIMPSON: --- you could distribute more effectively the work you were providing your communities and conversely, you were providing them with greater authority and understanding about issues and -- that were both legal, democratic, and cultural.
3405 Sorry, I didn’t mean to cut you off, but I do have other questions, and I want to make ---
3406 MS. GO: That's okay.
3407 COMMISIONER SIMPSON: --- sure we get -- we all have good time.
3408 MS. GO: Yeah.
3409 COMMISSIONER SIMPSON: In your written presentation, I found it a little concerning -- which is why I asked you if you had seen their presentation or heard their presentation on Monday -- that you categorically or generally found that OMNI or Rogers was -- that all of their proposals and clawing up of services that were non-profitable and the proposals they're making now, seems to you somewhat disingenuous.
3410 And I ask this question in context to what we heard on Monday, which is that OMNI has been losing money; it is not a not-for-profit exercise; that they have made a proposal to us as part of their conditions of licence to reintroduce both national and regional/local newscasts in four languages: Cantonese, Mandarin, Punjabi, and Italian.
3411 And I -- so take it back to you. Why do you find this rebalancing of what will perhaps stem losses and reintroduce -- perhaps not the extent they had before the services that they're bringing back into the play -- why do you still find that disingenuous? And why are you taking the tack you are?
3412 MS. GO: Well, I think we need to go back as to why we think that OMNI was losing money. And in some way, I think you need to spend money to make money. At some point after Ted Rogers passed away, Rogers take a -- the decision to do some internal reorganization where they combined OMNI, City TV, and a number of other programs, whereby they basically no longer had a targeted marketing strategy in order to allow OMNI to branch out and to build on its market, sort of like a -- because the basic source of revenue, of course, revenue is, of course, advertising. But you need to do targeted sort of business marketing in order to generate the revenue for the advertising.
3413 After they combined the City TV and OMNI together, they basically lose that -- lose a targeted business strategies to reach out to the ethno-racial business communities ---
3414 COMMISSIONER SIMPSON: Yeah.
3415 MS. GO: --- and do the marketing that is required to generate the revenue. So it's like a self-fulfilling prophecy ---
3416 COMMISSIONER SIMPSON: I understand.
3417 MS. GO: --- that, you know, by not doing it, you're losing the revenue. And now, as you lose further, you're losing audience as well, because they keep cutting the news programs.
3418 COMMISSIONER SIMPSON: I get that.
3419 MS. GO: And many of our clients, because they are low income ---
3420 COMMISSIONER SIMPSON: Okay, yeah, thank you. I -- we just need to be a little shorter in the answers, so that we can both ---
3421 MS. GO: Okay, sure.
3422 COMMMISSIONER SIMPSON: --- get to the finish line.
3423 Rogers is not an unsophisticated broadcaster. That's how they got their start, and they've, I think, are pretty good at figuring out how to market the services they introduce. So this is a two-part question.
3424 Do you think that that disingenuousness was that they did not have their heart or resources into marketing OMNI? And the second part is, when it comes to spending money to make money, can that not also apply to the community that use OMNI as a service? Because they lost -- they were losing 74 percent of their revenue since 2010.
3425 The community was evidently not supporting them, and it isn't -- and you can't say that they didn’t know the service existed, because if the service was being used and listened to, then there might have been, arguably, a higher level of financial support to see the service continue?
3426 MS. GO: Right. So Rogers is a huge, gigantic conglomerate, and I think at one point, they decided to make hockey its priority as opposed to ethnic broadcasting. And they also, as I mentioned earlier, since 2010, they basically gave up on having a targeted marketing strategy, which, I think, result in what we're seeing today.
3427 COMMISSIONER SIMPSON: Well, to -- as they say, see one and play one or I’ll call you on that because they’ve indicated at this hearing that even if they continue at a loss for the foreseeable future, they’ll continue to operate the service, even if it means drifting into a business model where the service operates as a not-for-profit.
3428 So that doesn’t sound to me like this is a company that is willing to walk away from this obligation.
3429 MS. GO: Only -- if I -- you know, correct me if I’m wrong; I’m reading -- as I read their application, they are tying the two applications, the application to renew with the application create the regional television. If the regional television is -- the application is denied, they will cut further to the ethnic broadcasting within OMNI.
3430 COMMISIONER SIMPSON: Yeah.
3431 MS. GO: So I don’t see that as continuing at all.
3432 COMMISIONER SIMPSON: We’d ask them that and their answer was that -- and you can take as it was offered -- that it was function of timing because I think the Chair was the one who asked the question, “Why wasn’t this put forward as a separate application that would require a separate process?”
3433 And so with that said I’ll just move to the last parts of my question which has to do with -- going forward, do you feel that, then -- because you sound very articulate about this whole process; whether that’s because you’re a lawyer or you just know the subject matter really well, I like the answers I’m getting; thank you.
3434 Do you think that this is a way of justifying what we call a 9(1)(h) guaranteed or mandatory access exercise on the back of the merits of an ethnic proposal that in a few years, if it fails, we’ll see them before us trying to change their format or condition of licence? Is that what you’re saying?
3435 MS. GO: Yeah. So -- and that’s what -- yeah, that’s what I’m trying to avoid. And, you know, even if I want to give them the benefit of the doubt -- and I think that -- I think it’s in everyone’s best interest and -- you know, for the Commission to put clear conditions so that we don’t get into that situation whereby they come in a few years time and say, “Sorry, we can’t do this and we want to cut further,” because we had that experience before.
3436 They came in to ask for their OMNI television licence; they said they’re going to do local broadcasting news and all that kind of stuff. And then they come back in a couple of years saying, “Well, we met these basic requirements,” but at the same time, you know, all the news programs were gone.
3437 So I just want to avoid seeing the repeat of what we saw in 2010 and in 2015. And we can do that by having very clear, outlined conditions on either one of those applications.
3438 COMMISIONER SIMPSON: Thank you. So here’s my final question. If there was, by some stroke of a magic wand at this end of the table, a condition of licence that the service remain as proposed ---
3439 MS. GO: M’hm.
3440 COMMISIONER SIMPSON: --- which may not be entirely to your liking but just if you were to accept everything that was on the table, that this service was to continue for the full extent of the licence period of this group-based licencing, which would be five years, and they would have to tough it out until renewal, would that satisfy you?
3441 MS. GO: I think if everything that they said they would do in the applications -- I guess, assuming that the regional -- regional licence being granted and then the OMNI TV licence conditions are met ---
3442 COMMISIONER SIMPSON: Yeah.
3443 MS. GO: --- as a package, then I think I can live with that. But I do want to kind of emphasize that maybe it is also time for the Commission to review your policy because one of the problems that Rogers is facing is because Fairchild TV and other pay televisions have a -- has an advantage over Rogers.
3444 COMMISIONER SIMPSON: M’hm.
3445 MS. GO: So, you know, to address that issue, I think it’s fair to address the issue.
3446 COMMISIONER SIMPSON: Not to eat into my own time here but just on the basis of the request for ethnic policy review, has your group, or any group that you’re aware of, made representation?
3447 Heritage Canada and the federal government is doing a fairly broad-sweeping review of whole lot of cultural policies associated with broadcasting and I'm wondering if you’re aware of whether your group or others have made representation for a review of the ethnic policy?
3448 MS. GO: So we have written to -- as a joint letter with some of the other groups, have written to the Minister of Canadian Heritage. And we have actually requested a meeting but we were -- the meeting request was not granted; however, we have, I guess, expressed some of the concerns about -- you know, in the context of this licence renewal, that we have expressed some concern and urged the minister to look at the ethnic broadcasting policy as well.
3449 But certainly, you know, I’ll take your advice and I’ll continue to push the minister on that point.
3450 COMMISIONER SIMPSON: I think the door is closing on that so you better get your pen and ---
3451 MS. GO: Okay.
3452 COMMISIONER SIMPSON: Anyway, thank you very much. Your presentation was very helpful today ---
3453 MS. GO: Thank you.
3454 COMMISIONER SIMPSON: --- and I appreciate the effort you made to do it. Thank you.
3455 MS. GO: Thank you.
3456 THE CHAIRPERSON: Thank you very much for participating in the hearing.
3457 And I think, Madame Secretary, that brings to end the number of appearing Intervenors for the day?
3458 THE SECRETRARY: That’s correct.
3459 THE CHAIRPERSON: Okay, so we will adjourn until nine o’clock tomorrow morning.
3460 Donc, en ajournement jusqu’à neuf heures demain matin. Merci.
--- Upon adjourning at 4:37 p.m.
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