Canadian Heritage Committee on April 24th, 2007

[The Chair, Conservative, Gary Schellenberger]

Good morning, everyone.

Welcome this morning to meeting 53 of the Standing Committee on Canadian Heritage, pursuant to Standing Order 108(2), a full investigation of the role of a public broadcaster in the 21st century.

For the first hour, until 10 o'clock this morning—I'm sorry, we're running a little late—we have Our Public Airwaves as witnesses, Arthur Lewis and Paul Gaffney.

Mr. Lewis.

[Arthur Lewis, Executive Director, Our Public Airwaves]

Good morning, Mr. Chairman and members of the committee.

I'm Arthur Lewis, executive director of Our Public Airwaves. We're a voluntary organization devoted to revitalization of public broadcasting in Canada.

In the interest of full disclosure, I should confess that I worked for CBC for many years as a reporter and producer in TV news and current affairs.

With me is Paul Gaffney, a member of our coordinating committee. I'll introduce him more fully in a minute.

Obviously, your study of CBC and its mandate speaks to the very issues that concern us the most, and we very much appreciate the opportunity to participate in this very important discussion.

Our Public Airwaves believes that CBC's current legislative mandate is as relevant today as it was when that act was first written.

To fulfill that mandate, we believe that CBC needs a long-term agreement with the government, increased multi-year funding, new funding for expansion of regional programming, access to additional TV channels, wider cable and satellite distribution of existing specialty channels, a reduction in reliance on commercial revenue, greater access to cable and satellite subscription fees, and major reform of the CBC's governance.

The past two decades have witnessed explosive growth in the number of new television channels available to Canadians. This growth has created a serious imbalance in our broadcasting system because the vast majority of those new channels have been private commercial services delivering heavy doses of American programming. During the same period there was almost no growth in the number of public broadcasting channels delivering predominantly Canadian programming.

As your committee noted in its 2003 report, CBC/Radio-Canada was badly served by the CRTC's repeated refusal of licences for new specialty channels, while private sector competitors greatly expanded their array of specialty channels.

In a recent brief to the CRTC’s TV policy review, Our Public Airwaves recommended that the commission attempt to right this wrong by requiring cable and satellite distributors to provide carriage in their first tier of all of CBC/Radio-Canada specialty channels. This is in keeping with one of the basic tenets of public broadcasting: universal accessibility.

As first proposed by this committee in its 2003 report, CBC should also be encouraged to apply for additional licences in order to return our broadcasting system to a better balance of public and commercial services. This would provide CBC with substantially more shelf space for the display of Canadian programming, something akin to the multiplicity of channels provided by the BBC.

At this point I'd like to more fully introduce my colleague, Paul Gaffney. Paul spent many years working for CBC, starting as a TV production assistant and later as a producer and director of news and current affairs, and then TV program manager here in Ottawa, where, parenthetically, he was my boss. More recently he was director of strategic planning and senior director of corporate affairs for CBC. He also served as executive director of the office of the president.

[Paul Gaffney, Member, Coordinating Committee, Our Public Airwaves]

Thank you, Arthur.

Ladies and gentlemen, while the question of adequate funding for the CBC is obviously a very serious one, we believe that the premise for any such funding of national public broadcasting has to be an understanding of what the broadcaster's job is and a mutual agreement on how the job is going to be done. These qualifications, we would submit, are not in place now, and indeed they have barely existed for the better part of the last two decades. Yes, there's a mandate spelled out in the Broadcasting Act, but as we all know, that mandate is intentionally broad. It lays out basic principles, sets the outlines of what's expected of the broadcasting system and of the CBC as a central part of that system, but it's far from precise.

In a broadcasting environment as turbulent as the one we've been experiencing ever since the current legislation was enacted in the early 1990s, we think that's not good enough. The fact that your committee is once again addressing the role of national public broadcasting serves to underline the harsh reality that the existing processes haven't worked very well. We would in fact submit that the role of the CBC as a critical instrument of national cultural policy has been sadly neglected.

In the public interest we think that has to end, and we believe the very first step toward accomplishing that is for Parliament to forge a new relationship with the CBC, a relationship in which both parties are fully aware of what's expected of the other, binding them in a negotiated covenant based on the Broadcasting Act to achieve those expectations.

We recommend this take the form of a memorandum of understanding between the parties, entered into for a renewable period of five years. The understanding would, at the very least, lay out the agreed-upon tasks to be undertaken by the broadcaster. It would establish the standards and benchmarks by which the achievement of goals would be measured. It would provide a mechanism for addressing amendments to the agreement that might be made necessary by unforeseen changes in the environment, and it would assure comparability in reporting results by establishing a template to be followed by the CBC in compiling its annual reports to Parliament. This, by the way, is not a new recommendation. It was in fact proposed by this committee in its 1995 report on the future of the CBC.

The next really critical bit is that the memorandum of understanding would also guarantee the public funding to be allocated over the lifespan of the agreement. This too is hardly a new recommendation. It's been made by virtually every investigation into the handling of public broadcasting since the Aird commission first made it in 1929. It's hard to know what more we could add to support the overwhelming logic of the idea, except to say that condemning the CBC to the uncertainty of annual funding both demeans the political process and, because of its negative effect on the long-range planning the broadcasting business demands, it inherently wastes taxpayers' dollars.

Regarding what an MOU between Parliament and the CBC would say, we take it as given that everything would be on the table. Some parts of the broadcasting environment are in flux; some aren't. That should be recognized by both parties through a willingness to change or not change with the times. The objective, after all, is to serve the Canadian public, and there's no hard and fast rule that says what should be done in 2007 should be done in the same way it was done 50 years earlier or even five years earlier.

We're obviously not in a position to be definitive about the terms of an MOU. Developing such an agreement would take some significant effort and detailed consultation as well as the determination to recognize that there are no easy common sense solutions to a dilemma that's taken decades to reach the point it's at today.

As my colleague, Mr. Lewis, indicated at the beginning of this presentation, we do have ideas about some of the CBC's problems and about some approaches to solutions to those difficulties. We're very pleased to have this opportunity to discuss them with you. But so you know where we're coming from, we should tell you something about our values.

While we believe the marketplace can go a significant way toward meeting our cultural and industrial goals in the broadcasting sector, we don't believe it can go as far as we need it to, especially given the overwhelming presence of our next-door neighbour. In Canada's unique circumstances, there are things we want as a society that simply aren't going to arise from the commercial market largely because there's no business case for them. If there were, the private sector would long ago have replicated CBC radio's style of broadcasting. It would have developed hours and hours of commercial-free children's programming on television. It would be giving us a steady diet of purely Canadian drama and entertainment, rather than relying on high-profile U.S. programming to populate prime time schedules. The list could go on, obviously, but the point to be made is that there is a role for public involvement in broadcasting to provide us with the things that speak to us as citizens rather than just as consumers, the things that speak to us as unique in our sphere rather than as members of an undifferentiated North American mass.

We believe the CBC remains the ideal vehicle to achieve those objectives, but we also believe strongly that year-over-year funding and year after year of underfunding the CBC amounts to a self-fulfilling prophecy for those who think there is no role for public broadcasting in a market-driven economy. You simply can't expect miracles from an organization that has something on the order of $400 million less spending power now than it had 20 years ago.

Indeed, it may be argued that the people of Canada are getting a much better deal from the CBC than they have any reason to expect, on the basis of what they're paying for it. But the price has been that the company has arguably been forced to focus more time and more effort on saving and making money than it has on providing public broadcasting services so good that the question of what to do with the CBC wouldn't even arise.

The fact that CBC television has recently taken to describing itself as a publicly subsidized commercial television network is either a deeply ironic comment on their state of affairs or an abject admission of failure. Either way, we're all losing.

[Arthur Lewis]

Your committee has already heard many voices calling for increased government funding for CBC, and you are certainly aware of concerns about the degree to which the need for advertising revenue is at odds with the CBC's public service mandate. While we are distressed by the degree to which CBC television has become focused on generating advertising revenue, we want to make it clear that under present circumstances, any new government funding—and we certainly hope your report will call for increased funding—must be allocated to more and better Canadian programming rather than to a reduction of advertising.

There is, however, a suggestion, which we recently made to the CRTC, that your committee may wish to consider. As part of its TV policy review, the commission is examining proposals to allow the over-the-air broadcasters to charge cable and satellite subscription fees. Should the CRTC decide to allow such fees, we recommended that it give preference to CBC.

Again, first call on any such new revenue should be for programming. But we also suggested that a portion, perhaps one-third, should be allocated to removal of TV advertising, particularly during news, current affairs, and documentary programming. That would help reduce the commercial character of our public networks.

On another topic, Our Public Airways believes the current governance structure of CBC/Radio-Canada is dysfunctional. First and most important is the need for a president who is selected by and responsible to the board of directors. The current process, whereby the president is appointed by order in council, seriously undermines the ability of the board to provide adequate oversight to the administration.

To do that, the board must have authority to hire and the power to dismiss the corporation's chief executive officer. Because the president is appointed by the government, it has been deemed necessary to protect CBC from undue influence by appointing the president for a fixed term during good behaviour. In practical terms, this means the CBC president is responsible to no one and can't be removed from office, no matter how poor his or her performance. Surely this is not acceptable.

We also find it unacceptable that the president is not only a member of the board but serves as its chair when that position is vacant, as has now been the case since last September. Until a new board chair is appointed, the current president is, for all practical purposes, his own boss. What kind of oversight can that possibly provide?

Also of great concern is lack of transparency in the process for appointment of the board itself, as well as the board chair. Over the years, this has resulted in numerous appointments of dubious merit.

While the issue of governance is vital, action on this must not be used as a cover for inaction on the more important issue of financial support. That CBC/Radio-Canada must be supported with public dollars is a price we need to pay to provide a modest reflection of our country in a TV universe awash with high-powered programming from across the border.

It is in this spirit that we call on your committee to enthusiastically support renewal of Canada's 70-year tradition of public broadcasting.

Thank you.

[The Chair, Conservative, Gary Schellenberger]

Thank you for that.

We'll go to questioning now.

Andy, or Mr. Scott—sorry.

[Andy Scott, Liberal, Fredericton, NB]

Andy's fine, Mr. Chair.

Thank you very much. I appreciate it very much. I read your brief.

I'd like you to elaborate a little bit on the BBC process for appointing the board to make it more transparent and less subject to political considerations, for one thing.

[Arthur Lewis]

In Britain they use something called the Nolan rules, and I won't claim to be an expert on it, but it is a process—as I understand it, and my colleague may have more to add on this—that involves a non-partisan appointments board that reviews nominations. The nominations are public. It's not that you get an announcement from the PMO that somebody has just been appointed. There is a process. It's public. It's open. Anybody can be nominated, and the final result is a board that is generally considered to be non-partisan and not somehow connected to the political party in power.

[Andy Scott, Liberal, Fredericton, NB]

On the question of the balance between the public contribution and advertising revenues, we'll accept—or I certainly would accept—the fact that they're underresourced. That's caused them to be more advertising conscious than we would want a public broadcaster to be. I accept all of that. I'm trying to get to the question of the balance, because you don't rule out the idea of advertising. You're simply saying that it is out of balance. You talked about new funding maybe being allocated on a two-thirds, one-third basis—two-thirds for new programming, as the first, most important piece, and then perhaps one-third being applied to advertising.

[Arthur Lewis]

More or less. I just want to clarify, because we're looking at two different pockets of new funding.

We think there should be new funding from Parliament. We think it should all be primarily devoted to new programming. We don't think the Canadian public have a toleration for enormous amounts of money going to the CBC for nothing that achieves new programming. However, should the CBC be able to achieve the subscription fees from cable, we think it might be reasonable to put a modest amount of that towards production.

Ultimately, we believe—and I'll just try to sum this up in one sentence—the CBC should not be dependent on advertising revenue and that it should not drive programming decisions.

[Andy Scott, Liberal, Fredericton, NB]

But the idea of some advertising revenue in and of itself isn't conceptually an automatic negative to you.

[Arthur Lewis]

Absolutely not, and we don't see any problem with, for instance, advertising on Hockey Night in Canada or other professional sports programs. We just think it's a little overdone, and at this point it drives a lot of programming choices. The example that's been given over and over again is that of the American movies shown during the hockey lockout. While I'm sympathetic to those who put forward the argument that CBC should be running Canadian movies, the reality is doing so wouldn't have brought in enough advertising revenue, and the CBC was driven to running American movies. It shouldn't be in a position of having to make that choice.

[Andy Scott, Liberal, Fredericton, NB]

In terms of the five-year MOU, how do you envision this process playing out? I can understand how it would begin. I'm a little less sure, in year three and a half or year four, what the discussion or the debate is. I think we need stable and adequate funding, and I do think we need to re-establish purpose so that everybody's on the same page on that. How do you see that process sort of playing out, and why would that be anything better than simply establishing the responsibility, making it clear, making it transparent, doing all the other things you speak of, and then simply having an adequate budget allocation? How would that be any different?

[Paul Gaffney]

I think what it really comes down to is taking the view that when you spend money, you have a right to know what you're getting for it.

The Broadcasting Act, as we all know, provides the basic guidance. But the process of interpreting the CBC's mandate has been a pretty random affair over the years. It's been a matter of decisions arising from committees such as yours; decisions or recommendations arising from royal commissions; decisions and recommendations and conditions of licence arising from licence renewal processes undertaken by the CRTC; and so on and so forth. That's been the way the mandate has been interpreted, if you will.

We have before us an example of what we think is a better system—namely, the charter and agreement system that's used by the BBC. It has been for some years. It allows for the public, through its elected representatives, to say this is what we want our national public broadcasting system to do, in some detail. This is bearing in mind that the most critical thing that you guys have to deal with—I think—is the continuing question of the arm's-length relationship. We don't want a state broadcaster in Canada, we want a national public broadcaster. It's that arm's-length relationship that makes that critical difference.

So bearing that in mind, you still, we think, need to be in a position where you can reasonably say this is what we want this outfit that we're paying a big chunk of money every year to do, and we want to talk about it in some measure of detail, but we also want to reduce that incredible and persistent gap between the expectation of service and the payment for service.

I mean, that's been the problem with the CBC for a very long time. So the recommendation is a two-part one—that there be a process in place that says this is what we want from you, this is how we're going to measure whatever it may be, this is the amount of money we're willing to put forward to do that, and this is what we're going to commit to doing over a period of time.

You know, it truly is amazing that this has been recommended so many times, literally beginning with the Aird commission report, which started the whole affair in 1929. It's there, in big black and white letters.

That talks to the principle. It doesn't, I fear, address the specifics of your question—namely, how you go about doing it. That's process. I don't know exactly how you go about doing it, but we have the example of the BBC. It's all there in black and white.

Broadly speaking, we all, or many of us, have the business experience that guides us in what an MOU really means. You sit down, the two parties, and you say, okay, folks, where are we going? What are we going to try to achieve over the next period of time? We come to an agreement on that and we write it down--along with some of those process things we talked about before.

That's the principle of the thing that we're talking about.

[Andy Scott, Liberal, Fredericton, NB]

Thank you very much.

[The Chair, Conservative, Gary Schellenberger]

Thank you for that.

Mr. Kotto.

[Maka Kotto, Bloc, Saint-Lambert, QC]

Thank you, Mr. Chairman.

Good morning gentlemen, and welcome.

You spoke of the need to increase funding, particularly targeting programming. Did I understand you correctly?

[Paul Gaffney]

Yes.

[Maka Kotto, Bloc, Saint-Lambert, QC]

From the perspective of including that in our recommendations, it would be appropriate to point to the need for a more detailed and more transparent accountability, because these programs involve craftsmen, stars, and hours of creation and production. Up to now, we have pointed to the need for a much more transparent and detailed accountability.

In your opinion, would it be inappropriate for us to make this a requirement or would it simply be good common sense?

[Paul Gaffney]

May I answer in English please? My French is a trifle shaky.

[Maka Kotto, Bloc, Saint-Lambert, QC]

Please. We can accommodate you in that respect.

[Paul Gaffney]

It's a very difficult issue. I come back to the arm's-length question. I think what you have to do is be prepared to say we're setting up a process and a system. We have appropriate and reasonable oversight over that system. The system is equipped to hire and fire the right people. Those people have to be left to determine what is and what isn't good journalistic practice, if I can pick on that particular aspect of things.

I would submit to you the minute anybody outside that ambit becomes involved in what is and what isn't good journalism, you're on a very slippery slope. You're getting to the point where you're putting yourself in a position to deal with things that you really don't want to deal with in the final analysis. You have to let people do what they do, if I'm interpreting your question correctly.

I don't think you want to make recommendations about details at that level. I think you want to stay at a higher level than that when you talk about this kind of thing.

Is it sufficient?

[Maka Kotto, Bloc, Saint-Lambert, QC]

We can hear you.

You also mentioned a new source of funding by alluding to a proposal you had put forward to the CRTC. You were talking about a levy on wholesale satellite services.

Who is the target in this case? The consumer or the carrier? I would like you to give us more details on the subject.

[Arthur Lewis]

At the moment, there are satellite subscription fees. They are collected primarily by the specialty broadcasters: Newsworld, RDI, The Sports Network, and MuchMusic. All these specialty channels, essentially delivered by cable, now collect from the cable company a subscription fee that is passed on to the public.

At its TV policy hearings in November and December, the CRTC looked at many issues. One of the hottest issues was this question. Should over-the-air broadcasters, CBC, CTV, Global, CHUM, TVA, and so on, be allowed to say to Rogers or any of the cable distributors that they can't have the programming unless they pay a fee? We haven't yet heard from the CRTC on that.

By the way, Ted Rogers, the pre-eminent cable czar in this country, before the CRTC, opposed the idea. But he said if we're going to do it for anybody, we should do it for the CBC, and we shouldn't do it for the other guys because they make lots of money. We would endorse that. We think this is another way, a reasonable way, to help fund our public broadcaster. For instance, adding $2 or $4 to a cable bill or satellite bill is certainly not going to be thrilling for consumers. But it would provide a new source of additional revenue to help pay the cost of public broadcasting. We're saying some of it could be used to reduce advertising.

We would certainly hope this committee would not say all of the new funding for the CBC should come in that way. We think some of it needs to come from Parliament. The government of this country has to step up to the plate and start properly paying for the delivery of our public broadcasting service.

[The Chair, Conservative, Gary Schellenberger]

Okay. Thank you.

Mr. Angus.

[Charlie Angus, NDP, Timmins—James Bay, ON]

This is a very interesting presentation. I think it would be fair to say that at this point in our study we're starting to see a number of common themes emerge.

There is certainly some consensus on certain areas. The issue of governance structure and the desperate need to deal with this has obviously come up again and again. I think it's a fairly straightforward recommendation we can make as a committee.

The other issue that comes up again and again, which is a little more difficult, is the need for increased funding. Everywhere we go, we hear there's not sufficient funding.

I'm interested in the alternative ways of funding. The more we get into the study, the less I am convinced there are alternative ways, other than an increased fund from government.

For example, on lessening the reliance on commercial advertising, as you said, we've lost $400 million in the last 20 years out of what we normally had as a pot. If we take any advertising dollars out of CBC, I would imagine they're probably paying somewhere in the range of $300 million to $400 million. Can we reasonably expect the government to step into the breach at this time?