Evidence of meeting #14 for Canadian Heritage in the 40th Parliament, 2nd Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was programming.

A recording is available from Parliament.

On the agenda

MPs speaking

Also speaking

  • Colette Watson  Vice-President, Rogers Television, Rogers Communications Inc.
  • Phil Lind  Vice-Chairman, Rogers Communications Inc.
  • Kenneth Engelhart  Senior Vice-President, Regulatory and Chief Privacy Officer, Rogers Communications Inc.
  • Anthony Viner  President and Chief Executive Officer, Rogers Media, Rogers Communications Inc.
  • Pierre Karl Péladeau  President and Chief Executive Officer, Quebecor Media Inc.
  • Pierre Dion  President and Chief Executive Officer, Groupe TVA, Quebecor Media Inc.

4 p.m.

Senior Vice-President, Regulatory and Chief Privacy Officer, Rogers Communications Inc.

Kenneth Engelhart

I would agree with that, sir. The reason that people are attracted to cable is not because of the over-the-air television signals. The over-the-air television signals are available free over the air, and 10% of Canadians don't subscribe to cable or satellite; they just use rabbit ears or antennas to pick those signals up. What we see Global and CTV doing now more and more is also putting their most popular programming free on the Internet so people can get it free another way. So it's very hard for us to attract people to cable for things they can already get for free.

In fact, our struggle is to get people to stay on the cable system and not to desert it for over-the-air, which is becoming even more attractive with digital television. With digital television now, your antenna will pull in crystal-clear pictures, and we see people in the U.S. cancelling cable for that. So the regulatory bargain that the CRTC established was that you have to carry those stations anyway, the over-the-air stations, so give them the lowest channel positions, give them mandatory carriage, give them simultaneous substitution, and that way they can greatly increase their advertising sales. We think the regulatory bargain is a good one, but it's very difficult for us to pay those fees when it would just mean that people are going to cancel cable and get those signals for free.

4 p.m.

Conservative

Dean Del Mastro Peterborough, ON

It seems to me the relationship here is inherently intertwined. The television broadcasters need the cable and satellite companies to extend their reach. They need the automatic substitution. These things provide real value to the broadcasters. And you need their product. You need to have television stations broadcasting signals so that you have something to sell. It seems as if the relationship has worked. To me, you've brought in models that show the television networks have by and large been profitable. And this is a tough year; let's face facts. It's a tough year to look at anything and say this economic model is broken. I don't believe, personally, that the auto industry is permanently broken. I think it's going through a period of transition and will re-emerge profitable. I think that's true of a lot of industries.

So I'm just curious. This relationship has worked. You inherently need each other. But this is a fundamental change of the industry, isn't it?

4:05 p.m.

Vice-Chairman, Rogers Communications Inc.

Phil Lind

I think you're right. The system has worked very well over the years. There have been minor squabbles between the various elements, but overall the system has worked happily for everyone for a lot of years. This fee-for-carriage thing is new and different, and that's disruptive of the whole sort of commaradarie we've managed to have over the years.

We're just not going to pay it. We just think it is the most insidious idea. To tax people on something they get nothing for at all is just a crazy idea.

4:05 p.m.

Conservative

Dean Del Mastro Peterborough, ON

Okay, I understand.

Mr. Englehart, what's wrong with this statement? The cable companies are profitable. They're making good money. The satellite companies are making good money. They don't have to pass this on. As a broadcaster, you're making money off my back. I want a chunk of what you're making, and I want the CRTC not to allow them to pass it on to consumers. What's wrong with that? Why do you think there's something wrong with that statement? I believe in my local broadcaster and I want my local news. Maybe I think I'm already paying a fee for my local television station. They're already receiving something out of my cable company. What's wrong with what I've just said? What's wrong with that contention?

4:05 p.m.

Senior Vice-President, Regulatory and Chief Privacy Officer, Rogers Communications Inc.

Kenneth Engelhart

First of all, I think Rogers in its forty-year history has made a profit for the last four years. We had 36 years where we were losing money and we didn't come complaining.

The struggle we have now, as the earlier questions pointed out, is to keep people on the system without going to the Internet and to keep them focused on television in an era where a lot of the stuff is available on the Internet. That requires huge investments by us. We have to bring in high-definition programming, which is widely available on Rogers, video on demand, so that people can watch what they want when they want, and inter—

4:05 p.m.

Conservative

Dean Del Mastro Peterborough, ON

I understand you've made investments, but what's wrong with your paying the fee for carriage, not customers?

4:05 p.m.

Conservative

The Chair Gary Schellenberger

Excuse me, Mr. Del Mastro, no more.

Mr. Rodriguez.

April 20th, 2009 / 4:05 p.m.

Liberal

Pablo Rodriguez Honoré-Mercier, QC

Thank you, Mr. Chair.

You spent more time talking about CTV and Global than about yourself. You really look on the defensive, and I'm wondering what are you worried about.

4:05 p.m.

Vice-Chairman, Rogers Communications Inc.

Phil Lind

It's because the proposal for fee-for-carriage is one that pits them against us.

4:05 p.m.

Liberal

Pablo Rodriguez Honoré-Mercier, QC

That's the way you see it.

4:05 p.m.

Vice-Chairman, Rogers Communications Inc.

Phil Lind

That's the way it is. The distributors are Rogers, Shaw, Bell, Cogeco, and Videotron. They're the distributors. They're the ones CTV and Global are asking to have money from, or our subscribers.

4:05 p.m.

Liberal

Pablo Rodriguez Honoré-Mercier, QC

According to your analysis, the industry is cyclical and will ultimately recover. Your approach is to do nothing and wait for the situation to work itself out.

4:05 p.m.

Vice-Chairman, Rogers Communications Inc.

Phil Lind

Well, we have the LPIF, the one percent that Konrad von Finckenstein spoke of last time, the local programming improvement fund that will dedicate $60 million or $65 million to TV stations serving small and medium-sized markets. That will—

4:10 p.m.

Liberal

Pablo Rodriguez Honoré-Mercier, QC

Do you think $60 million is enough?

4:10 p.m.

Vice-Chairman, Rogers Communications Inc.

Phil Lind

It will be of tremendous assistance to them.