Canadian Heritage Committee on Feb. 13th, 2007

[Bev Oda, Conservative, Durham, ON]

Mr. Kotto, if I could ask for clarification, your reference to the CBC's funding, is that separate from the television fund? Is it the overall stable funding we've had discussions on previously? Are you talking about the overall stable funding of CBC?

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

No, I am talking about the overall funding.

[Bev Oda, Conservative, Durham, ON]

I know that's currently one of the elements in the structure of the television fund. As you know, and as I've been informed by Vidéotron and Shaw, that is one of their concerns.

Again, I would say to you that the structure has been developed with full consultation. Before we can move forward, we have to return the stability to ensure that any body or any part of the system, particularly the system that supports Canadian content...how it can be improved and be responsive to the needs of every part of the system.

[The Chair, Conservative, Gary Schellenberger]

Thank you very much.

Mr. Warkentin.

[Chris Warkentin, Conservative, Peace River, AB]

Thank you, Mr. Chairman.

Thank you, Minister, for coming. We appreciate you're probably our most frequent visitor, and thank you very much for your attendance this morning. We know you're obviously busy with this and other issues.

The opposition has made every attempt this morning to politicize this issue. They've basically asked you to get out your magic wand and make this all disappear and come together. I would challenge them, and I think Mr. Fast has done so, to consider the actual framework of the fund, the arm's-length nature from you, and the importance of that. Many people are still calling for the policy directive. There seems to be this magic mechanism that you can or should employ, and the opposition are calling for it. I'm curious as to what they're missing in terms of what they're not understanding about the mechanisms that are available to the issue of arm's length.

[Bev Oda, Conservative, Durham, ON]

Let me first reiterate that the relationship between the regulator and the government is clearly outlined in the Broadcasting Act. It also is incumbent upon every government to have an accurate, clear assessment of any situation and then to look at the options available to it.

And it goes beyond that. When you're considering options, you also have to consider the outcomes over the short, medium, and longer term. That's what a responsible government does. It respects the roles of the agencies and it respects the Broadcasting Act. It also takes into consideration the impact on every sector--the production sector, the broadcasters, and the distributors. Ultimately our responsibility is to understand the impact on Canadians and the Canadian broadcasting system.

[Chris Warkentin, Conservative, Peace River, AB]

It seems that the opposition is interested in making good politics today rather than good sense, in terms of moving this to a positive resolution.

You talked a little about the issue with regard to Vidéotron having new proposals. There has been a proposal from Vidéotron. You've possibly looked at it; I'm not sure if you have. You have probably made it absolutely clear that you don't even want to look at proposals until we get some resolution to the circular funding, but I am wondering if you could comment a little on the proposal by Vidéotron.

[Bev Oda, Conservative, Durham, ON]

Let me be clear. My first responsibility is to ensure that there is stability in the system, to ensure that we're going to have the Canadian production we need for our broadcasters, and that the quality of the programming will be there. That's not just this year, but every year, on an ongoing basis. We have to build on our commitment to Canadian content and the Canadian production industry, and to the Canadian broadcasting system and broadcasters.

In considering any specific proposal, as I suggested, there are certainly comments that have been brought forward. I've read all the reports. On the specific proposal that was announced yesterday, I must confess I've had a quick look at it, but I have not read it. As you can appreciate, I've had a lot of reading since its announcement.

However, I would also suggest that it's not the responsibility of the minister to comment on any proposal. There are clearly proper processes to look at any proposals and to assess how they would contribute to the betterment and strengthening of the broadcasting system as a whole, the service being provided to Canadians, and the service being provided to those Canadians in Quebec.

I recognize there is a reality that's very different in Quebec, and that has been the consideration of the commission over many, many years. The governments recognize those differences. The thing is, based on historical recognition, any constructive proposal deserves to be listened to.

But in order to move this forward, we have to stabilize the situation. That's our first priority.

[The Chair, Conservative, Gary Schellenberger]

Thank you very much, Madam Minister.

Right now we'll take a short recess of maybe five minutes before we go into the next session.

Yes, on a point of order.

[Lucienne Robillard, Liberal, Westmount—Ville-Marie, QC]

I have a point of order.

First, our meeting started late. Second, could we ask the minister if she would stay another ten minutes?

[The Chair, Conservative, Gary Schellenberger]

We have another group coming after this. After that, we have three motions that have been put forward. It's only fair that we give our next people...

[An hon. member]

I don't think they would mind.

[The Chair, Conservative, Gary Schellenberger]

Everyone has the agenda in front of them. I was here at 8:50. It is not my responsibility to make sure that everyone is here on time. I waited until the bulk of the people were here. That's what it is. If we want these meetings to run on time and to run to a schedule, then let's everyone be here in order that we can start the meeting right on time.

Yes, Mr. Regan.

[Geoff Regan, Liberal, Halifax West, NS]

Mr. Chairman, as we so often hear from the Speaker, we all know very well that committees are the masters of their own houses and the committee can decide to do what it wants to do. If it chooses to change its agenda a little during its meetings, it's not a problem.

I'm sure if you were to ask the minister to stay for a few more minutes, as my colleague has suggested, I can't imagine that she wouldn't want to, in view of the importance of this subject.

[The Chair, Conservative, Gary Schellenberger]

Okay. The meeting is in recess for five minutes.

[The Chair, Conservative, Gary Schellenberger]

This meeting is brought to order.

Before we start with our witnesses, I suggest we schedule 15 minutes for motions at the end of this meeting. Our witnesses are here for 45 minutes, and you can see how long our recess has lasted. We're going to run these meetings on time and be out of here before 11 o'clock. There's another group scheduled behind us.

I welcome our witnesses. Thank you very much for coming this morning. We have the Writers Guild of Canada and S-Vox Group of Channels. I welcome your presentations.

I don't know who is going to start first. It's your choice.

[Brant Kostandoff, General Counsel, S-Vox Group of Channels]

Thank you, Mr. Chair, members of the committee.

My name is Brant Kostandoff. I am general counsel for the S-Vox Trust, Canada's foremost provider of multimedia content exploring the human spirit.

The flagship property of S-Vox is VisionTV, a national specialty television service that for almost 20 years has been celebrating the diversity of faiths and cultures that are fundamental to Canada's social fabric. VisionTV has always been made available to Canadians by cable and satellite distributors as part of the basic package of channels, and it is now delivered to more than 8.5 million Canadian households.

In a 2006 survey conducted for VisionTV, 94% of Canadians said they were proud to live in a country that was home to so many different faiths and cultures, and 93% agreed that diversity was an important part of Canadian identity. We are pleased to play a key role in reflecting and enriching the diversity of Canada through television. In a multi-billion-dollar industry, VisionTV operates on a relatively modest annual budget of approximately $25 million, and it has managed to advance the interests of a registered charity.

In “Our Cultural Sovereignty, The Second Century of Canadian Broadcasting”, this committee's 2003 report on the Canadian broadcasting system, VisionTV, along with APTN and CPAC, were found to be akin to the public broadcaster in fulfilling the objectives of the Broadcasting Act and providing a public service to Canadian citizens.

Perhaps more important, for the purpose of today's discussion we also operate as an independent broadcaster. Our ownership is not affiliated with any of the distribution undertakings or the large corporate broadcast groups. It is from that perspective, as an independent media company, that I would like to share some thoughts with you regarding the importance of the Canadian Television Fund to Canadian broadcasting.

While there are many stakeholders in Canadian broadcasting, they can largely be grouped into the four main categories of audience, content creators, broadcasters, and distributors. In addition to serving the often competing interests of those four groups, the Canadian broadcasting system also contributes to the achievement of numerous cultural priorities, as described in the Broadcasting Act.

Television remains the most powerful form of mass media for sharing cultural experiences and reflecting our national identity to Canadian citizens. In our view, it is the role of government to help, when necessary, to balance the interests of the competing stakeholders to ensure that the cultural objectives of the system are being achieved. That includes setting rules and regulations to facilitate relationships among the varied participants, largely accomplished through the CRTC; and helping to maintain what may be described as an economic balance in the industry, accomplished through various tax credit programs, funding and oversight of the CBC, and funding the Canadian Television Fund in conjunction with industry contributors.

We applaud the commitment of this government and its predecessors to funding the CTF. Over the years, the CTF has contributed to the production of hundreds of award-winning programs and the creation of tens of thousands of jobs in the Canadian film and television industry. For an independent broadcaster such as VisionTV, the CTF provides a significant enhancement to our annual investment in Canadian programming and is a critical contributor to our ability to deliver quality programming to Canadian audiences.

Each year VisionTV spends roughly $4 million on Canadian productions through pre-sale licensing with independent producers. While it varies from year to year based on a range of factors, the CTF contributes a further $800,000 spread across many of those shows. Through international co-productions and other third-party financing, we leverage our investment into Canadian productions budgeted at almost $20 million. But many of the show's VisionTV licences would not be possible without the CTF contribution.

These are not programs that will garner the two or three million viewers that tune in each week to watch CSI or American Idol. Of course, Simon Cowell is paid more to be a judge on American Idol than we have to spend on our network for an entire year. A single episode of CSI costs more than we have to spend on 8,000 hours of programming for a year. It's perhaps not a reasonable expectation, or even a fair comparison, to hold Canadian broadcasters, producers, and the CTF to those same audience standards.

Many CTF programs, many Canadian programs, are intended to enhance the diversity of Canadian television and the diversity that is made available to Canadian citizens to reflect viewpoints that might not otherwise be heard.

Just as we as a society invest in libraries even though not everyone will borrow a book, and we invest in national parks even though not everyone will take the time to visit and enjoy the green space, we should invest in Canadian production that reflects Canadian culture, and we should provide the opportunity for Canadian citizens to share in that cultural experience through television. Creating that opportunity is an important policy objective and should be regarded as an end in and of itself.

At S-Vox we go back to the need to balance the needs of the various stakeholders in the broadcasting system to achieve cultural priorities. The success of Canadian broadcasting is largely dependent on each of the participants making some sacrifice or compromise in exchange for other benefits. Contributions to the CTF by distributors and funding from the CTF for producers are important components of maintaining that balance between the economic and cultural success of the system.

Encouraging investment in Canadian culture, creating jobs in cultural industries, and helping to balance the economic interests of the participants in the Canadian broadcasting system are the reasons for having the CTF. For independent broadcasters like VisionTV, licensed to fulfill specific policy objectives, and for many Canadian producers, the CTF enables the creation of programming that enhances cultural expression and the reflection of our national identity through television.

In examining the current issues facing the CTF, in reviewing its structure and the flow of moneys, we urge this committee to look for the best means to advance the achievement of those cultural objectives. That may include a further revisiting of the board composition of the fund to ensure balanced representation that maintains sufficient independence from key stakeholders, allocating the disbursement of funds to programming that advances clearly defined cultural priorities and prioritizing funding to broadcasters and programs that advance those policy objectives. It may be that we need to direct funds through broadcasters that are committed to the highest levels of investment in Canadian programming.

In terms of the immediate funding shortfall, which is perhaps the most pressing issue for you in your examination today, it may even be necessary for this government to contemplate a loan to the CTF or an advance against the government's commitment to funding next year to bridge the gap to that August 31 date, when the regulations kick in. At that point, there is in fact a question of law to be determined rather than an interpretation of a CRTC circular. Certainly, we in the industry respect those circulars from the CRTC; they are important guidelines.

I take Mr. Barrett's point, which he made to you and has made elsewhere, that it's difficult to enforce the terms of the circular when in fact it is the regulation that is the component of law that is guiding the fund. If we were at September 1 and there had not been a contribution by the required participants, we would be having a different type of discussion at that point in time. So part of this evaluation needs to be an examination of how to bridge that gap in timing as well.

It's not our intention to be offering a comprehensive recommendation. We hope you find our suggestions from the perspective of an independent broadcaster helpful in your evaluation of the CTF.

I want to thank you for granting us the opportunity to appear this morning. I will be pleased to answer any questions you have, but it may be appropriate to call on my other panellists today to present as well.

[The Chair, Conservative, Gary Schellenberger]

Thank you.

Please go ahead.

[Maureen Parker, Executive Director, Writers Guild of Canada]

Good morning, everyone.

My name is Maureen Parker. I'm the executive director of the Writers Guild of Canada. With me today is my colleague, Kelly Lynne Ashton, our director of Industrial and Policy Research.

We're going to try to think on our feet today, so our initial presentation is more or less scrapped, based on the minister's announcement. I would like to start off on a positive note and thank the minister for making the announcement this morning that she will indeed write to Shaw and Vidéotron and ask them for their delinquent contributions. This is a very necessary move.

I will keep parts of my presentation as background, which may assist you in an ongoing struggle. I would like to believe that a letter to Shaw and Vidéotron is going to do the trick, but I don't. I don't think it's going to work at all. I think this matter has gone too far and I think it's going to be sitting in front of the committee for a time to come. So what I'd like to be able to do today is leave you with some thoughts as to what an insider in the industry would perhaps recommend as a go-forward course.

I represent the Writers Guild of Canada. That's a guild of 1,800 professional screenwriters working in English language film, television, radio, and digital media. Writer members are the creators of uniquely Canadian stories, such as the hit series Little Mosque on the Prairie, and popular movies of the week. It's important, I think, for you to know that my members do not work on service production, so my members are the writers of the Canadian content that you see on our screens. It's a very pressing point for all the writers, who live both inside and outside the country, that there is funding available for Canadian content production. But more than that, writers are part of an integrated and regulated industry. No one element of the television industry can exist on its own without all the other members—writers, producers, directors, performers, broadcasters, and cable companies. We are all interdependent.

As the country evolved, we decided it was important to have our own programming and broadcasting system distinct from that of our neighbour to the south. As a result, we created the Broadcasting Act.

I think it's very important to understand how the TV industry works, and I'm sure you've all heard this many times before, but it is regulated from the top down. Those of us who are speaking about the Canadian Television Fund are not just speaking on behalf of artists and producers, but also on behalf of major companies such as broadcasters and cable operators. They, too, are regulated and are protected from competition by those regulations. It's very important to remember that we're not just talking about a cultural community; we are talking about big business, because they are also benefiting from regulations.

The Canadian broadcasting system is made up of interdependent entities like cable operators, direct-to-home satellite providers, and broadcasters. The cable operators are protected from foreign competition under regulation because the Broadcasting Act says the system must be owned and operated by Canadians. U.S. cable operators, like Comcast and AT&T, can't come into Canada and buy them out or undercut them. All these benefits were given to Shaw, Rogers, and Bell ExpressVu in exchange for the creation and presentation of Canadian programming. Remove one element, as Shaw and Vidéotron are now trying to do, and the whole house of cards falls down.

How will this affect broadcasters if CTF is not up to speed? First of all, if all the cable contributors pull out, it will not be able to meet its mandate and basically the fund will be cut by 60%. I know you've heard that from the CTF. Right now, without Shaw and Vidéotron, we're looking at a cut of 30% to the fund.

Without new production orders for this year, up to 20,000 direct full-time jobs will be lost. This doesn't take into account indirect jobs such as catering, car rental, etc. The spinoff is massive.

What will Canadian broadcasters put on the air? Let's think about their commitment to Canadian content. How are they going to fulfill that commitment if there's going to be a cut of 30% in the funding available? Maybe they're going to put on more American programming, possibly CSI all the time. I don't know about you, but as a consumer, I'm really sick of flipping to every channel and seeing CSI: NY or CSI: Las Vegas. Enough with the CSI. Or maybe they're going to choose to rerun old Canadian programs like The Littlest Hobo. I'm kind of sick of that too.

Whatever they do, this is going to hurt broadcasters in the long run because they're going to lose audience share, and that must be important to them. They're going to lose audience share to American broadcasters with full schedules of new programming.

And then there's the impact on Canadian consumers, who are going to miss their favourite shows, like This Hour Has 22 Minutes and Degrassi. I think we can all agree that this is not the future we want to live in.

No matter how many times Jim Shaw issues a press release decrying the CTF's financing of broadcasters without accountability, he is just plain wrong. He's wrong. The system allocates envelopes to broadcasters, who commission independent producers to produce programming. These productions are based on factors such as audience rating and past funding levels, so broadcasters are completely accountable. If they have poor ratings one year, they will have less money in their envelope the next.

The CTF board and staff—and I want to really stress this—have done an excellent job in introducing policies that encourage investors to invest more in Canadian programs and accept responsibility for their programming choices. To criticize the fund as being unaccountable, as being run by those who are not experienced in production or who have no financial expertise, is not correct. It's misleading and it's dead wrong. In fact, the changes that have been made in the fund in the last two years, in terms of policy to invoke more investment, have really started to do the trick. That's why you're seeing shows that are starting to garner more audience. It's because those changes have been made at CTF.

Governance is supposedly also an issue, but it has also been addressed. The minister mentioned this morning that she addressed that in 2005. Those changes were made to ensure that this board is in full compliance with the Federal Accountability Act, and it is. So governance, in my mind, is not an issue; it's another red herring.

I'll turn it over to my colleagues to talk about their own funds.

[Kelly Lynne Ashton, Director, Industrial and Policy Research, Writers Guild of Canada]

We now know that what they really want is to direct their contributions into their own funds. Pierre Karl Péladeau not only wants to send his contributions to his own fund, but only his production company can access the money to produce programs to be aired only on his broadcasters. Let me tell you why that's not a good idea.

Shaw has the Rocket Fund and Vidéotron has the Quebecor Fund, but these funds were licensed specifically to address the needs of underserved markets, like children's programming. This is not the first time the cable operators have attempted to have mandatory contributions diverted to their separate funds. But in 1996, the government determined that this was not the best way to go, and in fact capped contributions to private funds at 20%. Why? Because diverting all of their contributions to their own funds would not ensure that Canadians enjoyed a variety of programming. This is what the CTF has been successfully doing for ten years.

Shaw and Vidéotron's proposals are a kind of gatekeeping that amounts to censorship, while allowing their own money to go directly to support the bottom line of a few media conglomerates instead of the public. We are very concerned that Shaw and Vidéotron are trying to determine what programs get produced in this country. We already know a popular show like Trailer Park Boys will be cancelled because of Jim Shaw's dislike of half-naked weed smokers. Can we allow one group's programming preferences to dictate the entire country's broadcast schedule, or should we just encourage them to change the channel?

[Maureen Parker]

Jumping to the chase, I wanted to say that I was very impressed by the calibre of everyone's questions today, and the minister's announcement. I think our industry is in good hands, and I feel encouraged after appearing before you and listening to the questions today.

I truly believe we're at the edge of the cliff, because I do not believe letters to Shaw and Vidéotron will work. It has too far gone.

I agree very much with what the minister was saying today. Stability is the key. It is the key to maintaining our industry. Timing is critical, so I'd like to make a few suggestions, one of which has already been discussed this morning, and that is enacting subsection 7(1) of the Broadcasting Act and asking the minister to ask the Governor in Council to send a policy direction.

I know there is some discussion as to why it can't work, why it may not be feasible. I think it is feasible. I'd like to say that I'm not a lawyer, but I have worked with lawyers for a long time, on many different levels, such as arbitrations, grievances, negotiations, policy. The one thing I've found is that you can get a different opinion from any lawyer in town.

What I would suggest is that you send this to your experts. You have a whole panel of experts sitting over at the CRTC that we all pay for as taxpayers. They have several hundred employees, most of whom are lawyers. I would suggest that you immediately turn this over to the CRTC and let them decide whether or not this holds water. I think it does. It talks about all contributions. It can be an industry-wide review, not just of Shaw and Vidéotron, but of all contributions made by private companies. That would catch Shaw and Vidéotron in the same net.

There is a mechanism, but my concern is that if the CRTC doesn't get on the case now, we're losing valuable time. I've worked with the CRTC, and they don't move fast. You have to give them plenty of lead time in order to get a decision, so I would suggest that this is a course of action and that this needs to be done.

My question is, how long will we wait for an answer to a letter? What time period are we going to put on that? What I want you to really think about today is that timing is critical. The envelopes that fund the broadcasting system are being decided right now, as we speak.

This is not a matter of funding being in place until March 31. Right now, CTF staff are working at calculating the envelopes for the broadcasting system. If they do not have the 30%, they will calculate envelopes as though they do not have that money. Broadcasters will be given their envelopes as of April 1, and they will have 30% less.

I'm wrapping up. I'm jumping to the end.

That 30% less will mean we're not ready for production in the spring. We work very much on a clock for development and production. We have to produce in this country while we have the weather, and that's in June, July, and August. We have to get on this right now.

The last thing I want to mention is the loan. If we do not get an answer back to the letters—and I do believe the CRTC, even if you ask them today, will take several months to respond—we need a loan. I would like to leave you with that thought. I think it's an absolutely critical piece of the puzzle. If we do not have the loan in place by the end of March, we will lose the production year. It is a matter of timing and it's a matter of stability, and we very much need your help to save thousands of jobs and ensure that we have some Canadian content on our TV screens.

Thank you very much.

[The Chair, Conservative, Gary Schellenberger]

Thank you.

I must let everyone know that we do have to be out of this room by 11 o'clock. I'm going to allow about five minutes per person, and no more than six minutes. We'll have one round of questioning.

Mr. Scott.

[Andy Scott, Liberal, Fredericton, NB]

Thank you very much to the witnesses for today.

I'd like to establish a couple of points. People are asking for a loan. It's going to be critically important, if one were to pursue that, for the government to accept responsibility for the broader issue.

I need to establish whether or not you would agree with me that, to some extent, while this problem was precipitated by the actions of Shaw and Vidéotron in the context of their refusing to make their monthly payments, it has become bigger than that now. It has become a larger problem. I'm getting interventions from people who didn't even know about Shaw and Vidéotron. They're saying their companies are feeling an unease about the possibilities for this year and so on. Beyond that, it's not just a reduction of 30%; it's something bigger, in that the fund is in some way fragile. Would you concur with that thinking, first?

[Maureen Parker]

I think we did say that it absolutely is a house of cards. I think we've all figured out that we'd better tighten up our regulations, because there's a hole. We're going to have to look after that. That's another job for the CRTC, and I hope they're working on it. That's my big concern. Absolutely. The CRTC is at arm's length, but they have to have some marching orders. I hope those are on the agenda.

There's nothing to say that Rogers, Bell ExpressVu, or any of the other cable contributors won't pull out at any time. Right now, we're just crossing our fingers.

[Brant Kostandoff]

To add to that, the concept of stability for the fund isn't just about the short term. It is very much about thinking long term and looking for long-term solutions.

There are two parts to that. The industry has been seeking long-term commitments from the government, whichever government it may be. It ends up being reviewed annually or biannually. A long-term commitment from the government to funding this kind of program would go a long way. It's the same point on tightening up the regulations so that the industry contributors are locked in. Absolutely. It needs to be done.