Canadian Heritage Committee on May 1st, 2007

[The Chair, Conservative, Gary Schellenberger]

Good morning, everyone. Welcome this morning to the 55th meeting of the Standing Committee on Canadian Heritage.

Pursuant to Standing Order 108(2), we are doing a full investigation of the role of a public broadcaster in the 21st century.

Our first witnesses this morning are from the National Film Board of Canada: Claude Joli-Coeur and Deborah Drisdell. Would you make your presentation, please?

[Claude Joli-Coeur, Acting Government Film Commissioner and President of the National Film Board of Canada, National Film Board of Canada]

Good day, Mr. Chairman and members of the committee. My name is Claude Joli-Coeur and I am Acting Government Film Commissioner and Chairman of the National Film Board of Canada. Today I am accompanied by Deborah Drisdell, Director of Strategic Planning and Government Relations at the Film Board.

We are pleased to be here today to discuss the important role of the CBC in the Canadian cultural landscape and its important contribution to the overall public policy objectives of the Canadian government.

The audio-visual environment is rapidly changing. The transformation from analog to digital formats is a basic technological change that is transforming the audio-visual sector. This transformation is affecting the creation, development, production, distribution, exhibition, and the nature of social engagement across all audio-visual media, including broadcasting.

The new digital technologies allow consumers to generate and exchange audio-visual material with peers through interactive distribution channels that do not occupy scarce broadcasting frequencies. As a result, the transition to digital formats is creating new exhibition platforms that are continually reshaping the traditional audio-visual environment and fragmenting audiences. It is also increasing the mobility of audio-visual content, so that Canadians can access this content anywhere, any time.

The digital revolution, including the rise of the Internet, has permitted the decentralization of production and distribution, so that “hits” and less successful entertainment products and services can exist side by side. Indeed, a flourishing retail business has arisen that focuses exclusively or predominantly on the long tail of specialized or niche product offerings. The National Film Board of Canada and other niche suppliers are now offering a spectrum of audio-visual products and services destined for a multitude of mobile devices, such as iPods and video cellular telephones, as well as other new digital platforms.

The universality of media activity has been accompanied by the entry of large corporations, such as Bell Canada, Telus, Rogers, and Quebecor into new and traditional media, opening the door to innovative forms of partnership with non-traditional partners, including the NFB. At the same time, the universal nature of digital media is inducing changes in industrial organizations by encouraging horizontal integration, vertical integration, and cross-media ownership, designed to capture economies of scale and of scope.

This raises several public policy issues. We are involved in a digital world where the buzz is all about social networking and online video. The large media sites revolve around social networking and video presentations. Globally, 100 million consumers are watching videos online every day. What they are watching is significantly American—though we talk of a borderless universe. And, of course, commercial interests are quickly figuring out ways to appropriate these sites.

This is not to deny the importance and vitality of these efforts, but to say that they cannot do what the public space can and must do; we have a duty to Canadians to provide a space for public discourse, for social networking based on public values. We need to do it in ways that leverage the particular expertise of our various public sector institutions, such as the CBC and the NFB. The private sector cannot, and will not, take on this role.

We need public policy interventions. These changes lead to increased pressure on traditional broadcast undertakings to adapt their businesses and be more aggressive in reaching and retaining audiences. To some extent, these transformations have also given rise to questions about the role of the government in our industry, such as the mandate of our regulatory body, the CRTC, and of contribution programs, such as the CTF, the Canadian Television Fund, to name a few. For this reason, we believe that any review of the agencies and crown corporations active in the audio-visual sector must be undertaken within a larger view of the overall public policy interventions of the government in the audio-visual sector.

At the NFB we are preoccupied by this changing environment, which offers numerous opportunities, but also some risk.

We strongly believe that the presence of Canadian voices, including public service oriented voices in both the new and traditional media, is central to maintaining Canadian diversity, individuality, and identity. For this reason, the safeguard, enrichment, and strengthening of national public institutions such as the NFB and our national public broadcaster, the CBC, which supply, distribute, and broadcast high-quality information and entertainment, is essential for Canada.

With respect to the mandate of the CBC, the expression “public broadcasting” covers a wide variety of activities undertaken by a range of different types of organizations. Whereas private sector broadcasting is solely concerned with delivering audiences to commercial advertisers, public sector broadcasting is characterized by a degree of distinctiveness and a notion of broadcasting as public service.

As the members of the heritage committee are aware, the main elements of the CBC's mandate are found in two subsections of section 3 of the Broadcasting Act. The overall mandate of the corporation provided in this act remains very general in nature. As mentioned earlier, current changes in the marketplace lead to increased pressure on traditional broadcast undertakings to adapt their business and be more aggressive in reaching and retaining audiences. This in turn creates additional tension between CBC's public broadcaster objectives and its need to remain competitive in an increasingly fragmented commercial industry.

We believe that the CBC mandate should focus on its public broadcaster objectives and ensure that its programming is distinctively Canadian and representative of Canadian cultural and regional diversity.

The NFB would certainly like to see more Canadian documentaries and animated films on Radio-Canada's channels. But this is more a question of interpreting the current mandate than redefining it.

I would like to say a few words about the National Film Board.

Whereas the CBC is essentially a broadcaster, the National Film Board has a different mandate, which is unique in Canada and within the world. According to section 9 of the National Film Act, “The Board is established to initiate and promote the production and distribution of films in the national interest...”. Our primary mandate is production: “to produce and distribute and to promote the production and distribution of films designed to interpret Canada to Canadians and to other nations”, by giving authentic Canadian expression to Canadian values and perspectives.

We encourage creation within underserved communities, giving voices to those who are often silenced. We ensure that Canadians have access to our films through active distribution in all media: theatrical, non-theatrical, the educational sector, consumer retail, and within the broadcast system.

There is no specific reference to broadcasting in the National Film Act. The National Film Act does say that one of the purposes of the NFB is “to engage in research in film activity and to make available the results thereof to persons engaged in the production of films”. To this end, the NFB seeks to encourage innovation and experimentation in broadcast media, new media, alternative fiction, and animation.

The NFB is a public institution that produces and distributes films of national interest. These works are high-quality, distinctive and diverse. They present an authentically Canadian point of view both to this country and to the world.

During the 2006-07 fiscal year, the NFB completed 108 original films, of which 60 were productions and 48 co-productions. The vast majority of these were documentaries or animations.

From the start, the NFB has distinguished itself by its commitment to excellence and innovation. Its strength is its ability to marry technical innovation and artistic creativity. The NFB is a living, interactive laboratory uniting creators and Canadian and international partners to find new ways of reaching out to Canadians. New technologies will allow us to reach our audience directly and ensure that NFB programming is available to all Canadians.

The NFB enjoys strategic partnerships with a number of broadcasters, both at home and abroad. Our collaborations with the NHK in Japan, France Télévision, ARTE in Europe, and the BBC have resulted in the production of many prestigious projects. ln Canada, numerous NFB productions and co-productions have been produced with the collaboration of Canadian private and public broadcasters: CTV, Global, TV Ontario, Télé-Québec, and Discovery Channel, to name a few.

Although Parliament has given very different mandates to the NFB and to the CBC, the two agencies share certain structural characteristics. Both the NFB and the CBC are the creation of distinct acts of legislation, the National Film Act for the NFB, the Broadcasting Act for the CBC, which set out their mandate, mode of governance, and the framework of rules to govern their activities. Both institutions operate at arm's length from government and report to the Minister of Canadian Heritage. Both receive parliamentary appropriations from the Government of Canada on an annual basis to fulfil their respective mandates.

The interface between the CBC and the NFB.... ln light of their differing but complementary mandates, the NFB as producer and the CBC as broadcaster have undertaken a number of projects and activities together. These include pre-sales and sales to the CBC of NFB productions and co-productions with independent producers for broadcast on one of the corporation's conventional networks or on one of its specialty services, such as Newsworld or RDU; common ownership by the NFB and the CBC of the Canadian Documentary Channel; NFB programs for minority groups that give rise to a CBC broadcast; competitions conducted jointly by the NFB and the CBC for young filmmakers or francophones living outside Quebec; and participation in the second year of a pilot project for feature-length documentary films, with the CBC, Telefilm Canada, and Rogers.

The NFB is a leader in the development of training and mentorship programs. For example, Reel Diversity is a national competition for emerging filmmakers of colour, and Doc Shop and Momentum are documentary training programs that target emerging filmmakers in communications and film studies at Quebec and Ontario colleges and universities. These projects benefit from a broadcast collaboration on CBC and CBC Newsworld.

The NFB, Radio-Canada and Telefilm Canada have also created a competition as part of the interdepartmental partnership with the official languages communities (IPOLC) of Canadian Heritage.

The aim of this is to offer filmmakers, directors and producers working in French outside Quebec the chance to develop their filmmaking skills. The aim is also to expand the pool of French-speaking professionals and artists outside Quebec.

These examples prove the extent and diversity of collaboration between the NFB and Radio-Canada as given in their respective public mandates. They detail the nature of the collaboration between the NFB and Radio-Canada in view of your current objective, which is to examine the role of a public broadcaster in the 21^st century.

Let us now discuss the importance of ensuring appropriate financing for Radio-Canada.

It is sometimes said that Radio-Canada's radio service fulfills the role of public broadcaster more closely than does its television service, especially in English. If this is so, it's because the radio isn't influenced by advertising sales as TV can be. It's not true, however, of Radio-Canada's television service, which has to sell advertising to make up the shortfall in public financing. According to a recent study prepared for Radio-Canada and handed to the Standing Committee on Canadian Heritage by the Corporation, between 1996 and 2004 government funding for culture, other than that awarded to broadcasters, increased by 39% while direct and indirect support for Radio-Canada decreased by 9%.

We understand their situation. From 1994-95 to 2006-07, the NFB saw a 40.7% drop in the amount of parliamentary allowances.

In order to emphasize public service, there is no doubt that Radio-Canada must obtain adequate and stable public financing over several years. This would allow it to reduce or eliminate its dependence on advertising revenues. In an uncertain world of staggering technological evolution, multi-year financing would allow it to keep its programming closer to its mandate as public broadcaster.

In conclusion, I would say that the universal nature of digital media favours the globalization of film production and distribution, and makes films more accessible to Canadians. Since there's no overall national strategy, Canada risks being outstripped by other countries, especially the United States and Great Britain, in the race to establish a national presence in the new audiovisual environment.

In this context it is important for all the portfolio's public institutions to work together to ensure that Canadians have a say in present and future media. Canadians must have access to high-quality productions that reflect their concerns, wherever they like and on the medium of their choice.

The presence of Canadian voices, including those in public service, is essential to maintain Canadian individuality and identity in this new context.

We believe that Radio-Canada's mandate should concentrate more on public broadcasting. However, we share their view that Radio-Canada's financing is inadequate to meet the challenges of national and regional expression during the transition to digital, digitization of archives, and conversion to high-definition production. Radio-Canada might benefit from greater clarity in the definition of its mandate, notably in section 3 of the Broadcasting Act. This could stress more the non-commercial public service aspects of the mandate. But this sort of revision would require Radio-Canada to reduce its dependence on commercial finance sources.

We thank you for your invitation and we will be pleased to answer your questions.

[The Chair, Conservative, Gary Schellenberger]

Thank you for that.

Ms. Keeper gets the first questions. We'll try to keep our questions and answers to five minutes, please.

[Tina Keeper, Liberal, Churchill, MB]

All right. Thank you, Mr. Chair.

Thank you very much for your presentation. It was an excellent presentation. You raised many points that throughout this process I have found represent concerns that not only many stakeholders have, but also that we as Canadians should have.

I'm just going to ask you to give a bit more information on some of the points you raised. I'll try to be quick.

On page 3, you said that “transformations have also, to some extent, given rise to questions about the role of the government in our industry”, such as the mandate of CRTC and the CTF. Can you just expand on that a little bit, about that point?

[Claude Joli-Coeur]

Absolutely.

We have had the chance in Canada to live in our regulated environment, which has allowed us to create a strong cultural industry, especially in the broadcast media. With what's happening with the Internet, soon those barriers will not be there to give us the place that Canadians have had to be able to get access to our Canadian programming. All of that we feel can be in jeopardy if we cannot foresee how we will produce Canadian programming in that new environment.

Our system is based on Canadian content requirements for broadcasters, special fundings. All that is a real micro-climate that works very well within boundaries. Now, with this digital revolution, with all those sites where you can see millions of videos, if there is not a public space for Canadians to produce programs that will be aimed at those spaces, we'll just be flooded with mostly American culture.

[Tina Keeper, Liberal, Churchill, MB]

So without protecting the space more, protecting as in the need for that---

[Claude Joli-Coeur]

I'm not sure that--

[Tina Keeper, Liberal, Churchill, MB]

I'm sorry to interrupt you, but I only have a couple minutes.

I also want to ask, in your presentation you speak to the declining commitment within the protected space over the last ten years. That's one of my concerns, that we've seen a decline in the commitment to Canadian content and the support of the National Film Board, support of television production, all of that as it is. So we're already on a slippery slope and now we're at even greater risk.

[Claude Joli-Coeur]

I think what we have seen over the last years.... We need to remember that when I was a kid I mostly watched the French service of Radio-Canada, but it was full of American programming. We can say that we now have less American programming on our public broadcaster.

On the other hand, the kind of programming that is being produced is getting closer and closer to what the private sector is producing. The reason they are doing that is just to get those commercial dollars they can get through advertising to keep a certain level of production.

The lack of funding, the decrease in funding for the television service, has mainly created that race. To a certain extent, that has also been unfair competition to the private broadcasters. When the public broadcaster is overbidding for certain rights, it's not right. But they have to do it to get audiences, to get advertising. It's a circular problem that I think will just increase, given the fragmentation of audiences.

To come back to the production of specific Canadian programming for non-traditional media, at the NFB we have been operating for years on a very tiny budget. Our annual budget is $70 million. Compared to the $1 billion of the CBC, it's quite tiny. But we do niche productions. With the documentaries and animation films we do, we're able to reach the audience because we can focus closely on our target audience. Most of our revenues are not from broadcasting; they are from theatrical, institutional distribution, and DVDs. It shows there is a market, a smaller market, but for Canadian programming that is not the wide broadcast media that we know. If we can find a way to create those public spaces in the new digital world, that's the only way we'll be able to survive.

I have to tell you I'm scared when I get back home and I see my kids. I have four kids, 10, 13, 15, and 19 years old. They don't watch our public television. They've been raised in an environment where my family has been in the public sector and they're watching American shows on the Internet. Last week when I came back, my daughter was watching an American show subtitled in Chinese that she got on the Internet. It's scary. If they don't have those platforms, they will find programming that is close to what we are.

[The Chair, Conservative, Gary Schellenberger]

You've gone over time.

Mr. Kotto, thank you very much for filling in for me. I heard you did a fine job last week.

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

It was a great pleasure and honour for me to sit in for you, Mr. Chairman.

[The Chair, Conservative, Gary Schellenberger]

I have competition.

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

Thank you, Mr. Chairman.

Mr. Joli-Coeur and Ms. Drisdell, thank you for being here and thank you for your presentation.

First of all, I can state that the NFB is a public producer and that the SRC is a public broadcaster. If memory serves me well, it has not always been smooth sailing between the NFB and the SRC, but if recent reports are to be believed, the situation has changed. Can you tell us more about that?

[Claude Joli-Coeur]

Yes, absolutely. The competition between the NFB and the CBC goes back to the birth of CBC television. From the outset, it was almost a family relationship: sometimes tense and sometimes very good. It is cyclical. It is true that over the last few years, thanks to the efforts of our outgoing Commissioner, Mr. Bensimon, to re-establish a good working environment, we have been able to sign agreements with Radio-Canada, particularly as far as the Documentary Channel is concerned.

Last week, we announced our participation in the Canadian Feature Film Fund with Telefilm and the CBC, which would not have been possible two years ago. Management of both agencies are showing a genuine will to work together, while each respects the framework of their mandate. However, it is inevitable, given the underfunding of institutions and the wish to fulfil our mandates pursuant to our statutory obligations, that we do encroach on another agency's territory. This can cause some friction. I can tell you that for the moment, relations are good.

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

Are you able to tell me today what is standing in the way of a perfect relationship?

[Claude Joli-Coeur]

As I mentioned during my presentation, NFB productions are also in high demand by the other Canadian broadcasters. We are working on prestigious productions with CTV and Global. For example, last week, a very highly regarded film, Faith Without Fear, was broadcast on Global.

We are not trying to have a relationship with the CBC that would be complementary to our own mandate at any cost. Rather, we are looking for a niche, and to see how broadcasting our films both on Radio-Canada or on the CBC could be as advantageous for them as it would be for us. Obviously, we would like documentaries to have a higher profile. If the CRTC approves the Documentary Channel deal, we hope that the management at the CBC will give more air time to NFB productions. Some of our productions are purchased by Radio-Canada on occasion, but they are broadcast without much promotion. More effort could perhaps be put into promoting our programs.

In any case, we are a very small player among Radio-Canada's suppliers. We do not have a critical mass. We could not ask for a daily slot on the English network because we do not have enough productions. The NFB catalogue consists of more than 13,000 films. We could therefore have a weekly NFB slot on the Documentary Channel. We are currently discussing that option with them. Management is showing an interest in doing that kind of thing. However, that willingness should not be simply something expressed by senior management as they succeed each other. The relationship between the two agencies would need to be more organic in nature.

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

I would like to move on to the governance component. We saw the perverse effects of this apparent competition with the private sector. For a public broadcaster, it is paradoxical. However, over the last few years, the Corporation's management has not publicly decried the underfunding to such a degree that it could have anticipated the study we have now undertaken, a study that should result in the CBC getting appropriate funding so that it can fulfil its mandate.

As the head of the NFB, can you tell us how it is possible that CBC management has remained silent about a situation that it should really be condemning?

[Claude Joli-Coeur]

I am having trouble commenting on that because I personally have not followed the recent events that you describe. However, having followed the CBC's situation very closely over the last 25 years, it seems to me that this is a recurring problem: the Corporation has always been short of funding, particularly stable funding.

Three weeks ago, I participated in the Mid-TV Festival in Cannes. We daydream when we see the means that public television has in Europe, whether it is ZDF, the BBC or France Télévisions, as well as the new technologies they are using. They also manage to reach out to their audience, both mass and niche. What's more, they do not have to deal with the threat of American culture, as is the case in Canada.

Because of its distinctive language, Quebec is lucky not to be threatened by American culture in the same way as anglophones in the rest of Canada. The resources that public television has in Europe, and even in Japan—I talked with representatives of the NHK—shows the importance that these governments assign to this cultural medium. I think it should inspire us in several ways.

[The Chair, Conservative, Gary Schellenberger]

Thank you.

Mr. Angus.

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

Thank you.

That was an excellent presentation this morning. I want it on the record that I'm a big fan of the work of the National Film Board. My daughters are vociferous critics of things they don't think are worth watching, and in the last few months we have watched two National Film Board documentaries, The Last Round: Chuvalo vs. Ali, and Harvest Queens, which was made in my riding. Both films got the thumbs up from the teenage section, so I think that's a definite sign of relevance.

To follow up on the issue of relevance, I think your conclusion goes to the heart of one of the key issues in this study. We're doing one of the latest in probably a long line of studies of the CBC, and every study comes up with the same issues, like the need for money, and how to compete against the Americans.

But what's starting to emerge in this study that is perhaps different from in the past is the fact--as you point out--that the universal nature of digital media favours the globalization of film production and distribution. Without a national strategy, Canada risks being outstripped by other countries in the race to establish a national presence in the new audiovisual environment.

The question we've heard a number of times is how do we move toward productions that include a long-tail plan for broadcast in new media platforms? The National Film Board has been out in front on this, so how do you monetize the National Film Board productions that are online right now, and how effective has it been?

[Claude Joli-Coeur]

We've been working for the last few years on trying to establish the right model for this vision and these exhibitions. Unfortunately, at this stage there is no real commercial model for those digital exportations. Broadcasters and ourselves are just trying to find the right angle, and at this stage all our digital exportations are free.

Our main focus is on how Canadians can access our programs. Thanks to the help of the memory fund, over the last couple of years we've been able to digitize a number of our productions and give Canadians access online to those productions.

We have filed a start-up digital strategy with our board of directors. Over the next year we will reshape our website to give more direct access to our films online and through various other modes such as e-cinema. People will be able to download our films and buy them.

We have already started to deliver some of our programming to universities and colleges through our online distribution mode. So at this stage our main focus is our mandate to give access. I think the monetizing will come in the coming years when some economic models will appear.

Specialized documentary websites currently exist where you can take out a subscription. There is advertising, and producers and distributors have access to a share of those revenues. But it's emerging now.

[Deborah Drisdell, Director, Strategic Planning and Government Relations, National Film Board of Canada]

I want to add one thing. Our sense is that if we put a lot of our programming online, we would provide links to our I-stores and DVD copies for value-added. A lot of our DVDs often have either educational resources for the teachers or other issues. So we feel that if we can give Canadians the access to see it, hopefully they will enjoy it, and then we would give them options to either download it for payment or get added-value products by going through the I-store for DVDs also.

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

One of the issues that has emerged over the last ten years is the decision for television to go from basically in-house to independent production. That has perhaps created a lot of opportunity, but now as we move to digital and online there's the issue of rights and whether or not an independent production can be held by one player, one broadcaster, for any length of time. There are a lot of questions on that, especially since we're still looking at an environment where we haven't figured out the monetizing.

I'd like to ask you a few questions. Have you been able to put it online because basically you maintain the copyright for NFB films? If that's the case, what about co-productions, say, with Global or CTV?

You're suggesting that you're using your online shorts as kind of a loss leader to sell product, which I think is a perfectly legitimate issue, but have you looked at monetizing through advertising or other ways as well of getting added value to the digital online collection?

[Claude Joli-Coeur]

First of all, given our legal status, we cannot sell advertising. We are not a crown corporation; we're not allowed to do that. But we can partner with private corporations and we are currently discussing some deals where we could share revenues.

At this stage I would say the biggest problem this industry is facing, whether it's the private producers or the co-producer with whom we are working, is really the funding of programming, because currently the model is based on broadcasting. The broadcasters are now asking for online rights for the term of their period, but those lines are kind of a second window for their main broadcast or they are a teaser for their broadcast. Everything is still linked to the main economic model of broadcasting.

What we'll be facing shortly is, if their revenues are decreasing because some advertising money is going to other kinds of productions on the net, how will we be able to maintain a level of production in Canada that will fulfill the needs of those broadcasters and also the tastes of Canadians? If the money is just falling down, with all the outlets that we have now, at the end of the day, with the Canadian content requirements, there can only be a reduction in quality of programming if there is less money to produce. So we need to find a model where we will be able to produce that new form of digital production.

To come back to your last question on the rights, the NFB owns the copyright of its entire library and we share some distribution rights. For that, which I think is the case also for the private producers, I don't see that there are any constraints legally for those exhibitions, especially recently on the English side with the agreements that were made with the guilds. It's still a problem in Quebec, but now at least on the English side the guilds issue is behind us. So there are no obstacles to that distribution, but we don't have a place where Canadians can just go and watch Canadian programs online. It's all over the place and it's for a limited period of time. We don't have those hubs.

[The Chair, Conservative, Gary Schellenberger]

Thank you for that. We went a little over time on that one.

After Mr. Warkentin, we'll have time for a couple more small questions.

Mr. Warkentin.