Canadian Heritage Committee on May 24th, 2007

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

From my point of view, everything you said about children is the crux of the problem. A child gets bigger, grows up, and develops a psychological personality. When he is fed with pictures and images in general, and when they are marked by an identity other than that of his natural surroundings, he can become alienated over time. So the United States and not Canada has another potential customer. My heart bleeds for you because you share your language with the Americans.

By contrast, Quebec has stood firm for two centuries because we have our own language. I know the problem well. I come from Africa and I have inherited several histories of colonization and cultural alienation. I know what I am talking about. You are in danger, and someone should say so.

When you say that CBC must be supported, I agree with you. The problem is simple. The problem is money. Mr. Cox rightly compared putting money into a public broadcaster like the CBC to putting money into hospitals, highways, schools and health care. It is not a profit-oriented endeavour. It is part of collective education. We can talk of public broadcasting and education in the same breath. They are fundamental. It is essential for anglophones in Canada and in Quebec to support that pillar that ensures their cultural sovereignty. In Quebec, we do what is necessary with what we have.

I would like to know if you prefer—we were talking about money—one way or another. I ask the question in advance because I do not know what will happen. Everyone agrees that CBC/SRC is underfunded. If there are other methods of funding, what are they in your opinion?

[The Chair, Conservative, Gary Schellenberger]

Could we have a very short answer, please? You forget to look at me sometimes.

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

My apologies, Mr. Chair.

[The Chair, Conservative, Gary Schellenberger]

Would someone like to answer?

Mr. Christou.

[John Christou]

Part of what we're proposing--mandatory carriage and subscriber fees for Newsworld and The Documentary Channel, if the purchase of the channel by the CBC goes through--would go a long way to helping solve that problem.

[The Chair, Conservative, Gary Schellenberger]

Okay.

Mr. Cox, could we have a very short answer, please?

[Kirwan Cox]

The CRTC just passed an order saying that the off-air broadcasters would not be allowed to get a fee out of cable. I think that's fine. But maybe for the public broadcasters, it might be worth considering a fee, like a national education fee or something, from cable. So when you hook up to cable because you're desperate to get American channels, you end up paying a dollar or something for the CBC too.

[The Chair, Conservative, Gary Schellenberger]

Okay. Thank you for that.

I'm going to move now to Mr. Angus.

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

Thank you.

Every presentation has been fascinating. Since I have very limited time, I'm going to try to really focus my questions. I'd like to keep them short so we can move through them.

Mr. Christou, I want to begin with you, because this issue of upcoming deregulation in 2009 and what possible impact it's going to have on CBC hasn't been, as far as I'm aware, brought to this committee before. Can you just clarify this, so the committee understands clearly what's at stake here?

[John Christou]

Yes. Basically what's at stake is that the channel that might suffer the most is CBC Newsworld. Right now, I think CBC Newsworld has 10 million cable subscribers. In 2009, if it's not mandatory that CBC Newsworld be carried, that number will drop by half or more, which will obviously cut enormously into the resources the channel will have to continue to operate. So it's a huge issue and an important one. It needs to have mandatory carriage or else we'll be in worse shape than we are now.

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

Okay, thank you.

Mr. Cox, I read your study, Through the Looking Glass, on the continual decrease that appears in the private broadcast licence fees and its effect on Canadian production. If I understand your findings correctly, the drop from the private broadcasters.... Was it 24% in the period, or 41% over--

[Kirwan Cox]

You're talking about the production money in constant dollars?

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

Yes.

[Kirwan Cox]

Yes, it was 41% in English over about a 17-year period, and it was 33% in French, I think.

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

So this drop in licence fees, broadcast fees--

[Kirwan Cox]

That's the drop in production budgets. In licence fees, I didn't look at it over an historical period, I don't think, but it was extremely low.

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

Okay. Then you're suggesting that this rather dramatic drop in production budgets for Canadian programming is in a way perhaps a backdoor subsidy so that they can buy American programming by pushing down the cost of their own Canadian programming?

[Kirwan Cox]

Yes. But what I think is happening is the commercial broadcasters are of course using every means they can to reduce their program expenses for Canadian programming. They do that partly by reducing the licence fees. They do it partly because they have access to certain kinds of public sector benefits, public subsidy benefits like the CTF. So they take advantage of those.

The problem is that with that money they get by pushing down the domestic licence fees, they take that money and spend it like drunken sailors in Los Angeles, hundred and hundreds of millions of dollars. Our concern is that they shouldn't be spending so much down there. In Los Angeles it's an auction. It's not like it is a car with a set price. It's like it is a car with a price that will go up as high as two or three people will push it. Consequently, Canada, as a whole, spends more money on American programming than any other country in the world. The English Canadian broadcasters spend more. I'm thinking of the off-air broadcasters especially. It's an area that no one is paying attention to—like the CRTC—in my mind. Something that has to be looked at very carefully is how can we repatriate those production dollars.

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

One of the issues that has been raised here at our committee is whether or not CBC is somehow unfairly stepping on the turf of private broadcasters, and whether they should have any role in being able to access advertising dollars, whether they should be in the local markets that private broadcasters are in. I've asked my friends in private broadcast to explain what's in it for the public benefit, for us, and I'm still trying to get a clear answer.

It seems to me we have simultaneous substitution, which puts all of our shows basically into the minor leagues. We have section 19.1 of the Income Tax Act, which gives private broadcasters a protected market and revenues of around $300 million, and specialty channels much higher. We now have unlimited commercials. We have the ability of private broadcasters to access taxpayers' dollars to produce their shows through the CTF. We have promise of further deregulation. Yet I'm not seeing anywhere in this scenario a balance where the private broadcasters are stepping up to the plate to ensure that we have competitive, interesting Canadian programming that will offset what's not there on CBC.

I throw it out to anybody. If we're going to look at a multi-channel universe, there has to be a balance between public and private broadcast. Does a balance exist right now?

[Kirwan Cox]

You got the part II licence fees, which the private guys just repatriated, which is about $60 million or $70 million more that they now have to spend in Los Angeles.

If they were doing something with all of this money that they were collecting from all the sources you just pointed out, and doing something in the public interest, as they're supposed to.... Radio frequencies are public property; they're not private property. And because they're public property, the private broadcasters are supposed to do something in the public benefit and the CRTC is supposed to regulate it. I don't think the CRTC is doing its job. I think it has been captured, frankly, by the broadcasting lobby.

The private broadcasters are demonstrating an incredible amount of greed in the way they're spending their money, and they're not doing it where they need to do it. Last year $688 million was spent in Los Angeles. Somebody has to say, “Wait a second, radio frequencies are public property. You guys aren't doing your job. We think there have to be certain standards set.” If the CRTC is supposed to set them and doesn't set them, then somebody has to take the CRTC to task, frankly, for not doing its job.

I also think that the broadcasters are a bit disingenuous, in that they make their money because it's a regulated environment. They are protected from competition. Frankly, if they were in a real open environment of free market competitiveness, NBC would come up here and set up a channel in Toronto and get CFTO by the throat. CFTO would scream and say, “Wait a second, we're in a different country. That's unfair. NBC can't come up here and do that to us.” But at the same time, they say, “Wait a second. The CBC is unfair. They're competing with us.”

Basically, they try to get it every which way they can. That's understandable. They're businessmen. That's the way they want to make their money. Great, but I don't think the rest of us have to be so gullible. I don't think you parliamentarians should be so gullible as to believe that they need 25,000 different ways of making money and they don't need any responsibilities in exchange.

[The Chair, Conservative, Gary Schellenberger]

Thank you.

Mr. Moss.

[Peter Moss]

I don't at all want to be put in a position of trying to defend private broadcasters, because my heart is with the public broadcaster, but I don't think that's an accurate portrayal of how the system basically works in Los Angeles.

One of the key problems is the 1999 decision of the CRTC, which took away the mandatory spends of private broadcasters. Going even further back, when Keith Spicer was at the CRTC, when the cable industry had the huge upswing in the eighties and early nineties, there was an opportunity to say if you broadcast in this country, you have to pay your share of the Canadian content cost. All cable channels have to pay anywhere from 30% to 47% of their previous year's revenue on Canadian content. Private broadcasters, until 1999, also had to do that. There was a time when you could have said that if you're NBC and you broadcast on a cable carrier in Canada, you too must spend a percentage of your revenue and put that money into the system. That opportunity was lost, and from that time on the system has been underfunded.

I don't think it's a question of Los Angeles. I've been to those auctions. I can't believe that we spend that much money, because I see what the British spend, and I see what the Latin Americans spend, and I have lost rights to.... It's not so much a question of the Los Angeles aspect of it as it is of the choice of how the money gets spent inside Canada. I don't think it's a question of pulling back and saying there should be less advertising.

One suggestion is to follow the Australians to a certain extent and to set up dedicated funds, so that things like the CTF are not there to cover drama and to cover documentaries and to cover entertainment and arts programming. The Australian Children's Television Foundation has money from a parliamentary allocation to provide children's programing to the system. We could have similar things here in Canada for children's programming, for documentary programming, and for arts programming. So it isn't broadcaster-controlled, it's government-controlled, producer-activated, and fed into the system to feed all the channels that can demonstrate it and broadcast it to their public.

[The Chair, Conservative, Gary Schellenberger]

We can have one really short one.

[Madeleine Lévesque]

Like last time.

What I find tragic also is that it is a missed opportunity. The private broadcasters that came in the past decade or so.... I can only speak to Teletoon. The licence fees I paid over ten years more than doubled, so I can only speak to that. Those other people who are putting money behind the shows and who are getting the ratings are proving again that it can be done, but you have to have a will to do it, and you have to pay for it.

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

Thank you.