Canadian Heritage Committee on Feb. 15th, 2007

[The Chair, Conservative, Gary Schellenberger]

I now call this meeting to order. This is meeting number 35 of the Standing Committee on Canadian Heritage, pursuant to Standing Order 108(2), the study on the future of the Canadian Television Fund.

I welcome here this morning witnesses from the Directors Guild of Canada and from the Alliance for Children and Television.

I would ask whoever would like to go first to please introduce yourselves, and we can start. Who would like to go first?

[Pamela Brand, National Executive Director and Chief Executive Officer, Directors Guild of Canada]

Good morning, Mr. Chair and members of the committee. My name is Pamela Brand, and I am the national executive director and CEO of the Directors Guild of Canada. With me today is Monique Lafontaine, general counsel and director of regulatory affairs at the DGC.

The DGC is a national labour organization that represents key creative and logistical personnel in the film and television production industries. We have over 3,800 members across the country working in 47 different craft and occupational categories, including direction, production, editing, and design of film and television programming in Canada. The DGC appreciates the opportunity to provide the Standing Committee on Canadian Heritage with our views on the role and value of the Canadian Television Fund.

We'd like to begin by stating that the CTF is the single most important source of funding for Canadian programs in our country. It provides crucial support for both English- and French-language programs in the drama, documentary, children's, and music and variety genres.

The CTF has been a tremendous success. Since its inception in 1996 it has funded more than 20,000 hours of high-quality Canadian programs, including Da Vinci's Inquest, DeGrassi: The Next Generation, This Hour has 22 Minutes, Les Bougon, Newsroom, Instant Star, Un gars, une fille, Little Mosque on the Prairie, and Trailer Park Boys, to mention a few.

As the CTF representatives indicated to you last week, many CTF-funded programs have earned critical acclaim, impressive Canadian audiences, and licensing deals with broadcasters around the world. Without the CTF we'd surely see a significant drop in the amount of high-quality Canadian programming made in our country. Given the size of the Canadian market, it's very difficult to finance productions made primarily for Canadian audiences. Left solely to market forces, many genres of programs would not be made here.

The CTF also brings significant economic benefits to our country. In 2005 to 2006 it was responsible for 46,700 direct and indirect jobs in Canada. Additionally, the CTF plays a pivotal role in leveraging private sector investment. In 2005-06 the CTF budget of $249 million triggered additional financing worth $568 million. This resulted in $817 million in total annual production of Canadian content for Canadian television.

It is therefore crucial that the CTF remain in place now and well into the future. The Canadian government must maintain this cultural funding program.

We'd now like to turn to the crisis that the CTF and indeed the entire Canadian production sector are facing. Monique Lafontaine is going to speak to you about this.

[Monique Lafontaine, General Counsel and Director of Regulatory Affairs, Directors Guild of Canada]

Thank you, Pamela.

As the standing committee is aware, two Canadian distributors, Shaw and Vidéotron, recently stopped making their payments to the CTF. We recognize that Vidéotron has undertaken to resume making its payments to the fund. Shaw, however, has not.

CRTC regulations require medium and large BDUs to contribute a portion of their revenues to Canadian programming. The regulations also require that 80% of those revenues be directed to the CTF, and CRTC circular 426 states that those CTF payments must be made on a monthly basis.

Typically, the CTF makes its funding decisions in the spring of each year. If Shaw is permitted to continue to withhold its share of funding, the CTF will likely adjust its budget to exclude Shaw's expected contributions when they make their funding decisions in the spring of 2007.

We estimate the withdrawal of Shaw's contribution to the fund to be about $56 million. However, the impact will be much greater, because $56 million would trigger over $130 million in additional production funding from other sources. Consequently, if the CTF budget is reduced due to Shaw's nonpayment, there will be a total loss to the Canadian production sector of about $185 million in 2007-08. This is an exorbitant amount of money that will cause production activity in Canada to be severely diminished, a loss of thousands of jobs, and a drastically reduced roster of original Canadian programs available for broadcast. Indeed, the livelihoods of thousands of Canadians who work in the creative sector are at stake here.

We note for the record that if Vidéotron had continued to withhold its CTF payments of about $50 million, there would have been an additional loss to the system of over $35 million.

So what can be done? It is crucial that the Canadian government, parliamentarians, and the CRTC take a leadership role in ensuring the continued existence of the CTF. They should also take the lead in ensuring that all Canadian BDUs that come within the application of sections 29 and 44 of the BDU regulations comply with those provisions and make their payments to the CTF.

The broadcasting policy for Canada set out in the Broadcasting Act requires that each component of the Canadian broadcasting system contribute in an appropriate manner to the creation and presentation of Canadian programming. Since BDUs do not create programming, contributing to the CTF ensures that this very important public policy objective is attained.

I'll now talk to you about the DGC's recommended action plan to address this current crisis with the CTF.

With regard to the CRTC, the DGC urges the commission to take whatever measures are necessary to enforce circular 426 as soon as possible and require Shaw to make its payments to the fund on a monthly basis. We also urge the CRTC to amend any of Shaw's licences that were renewed more than five years ago to require the licensees to make their payments to the CTF each month.

Additionally, the DGC urges the CRTC to immediately start the process to amend the BDU regulations in order to enshrine the requirement that distributors make their payments to the CTF monthly.

[Pamela Brand]

With regard to the government, the DGC was very pleased that the Minister of Canadian Heritage, the Honourable Bev J. Oda, announced last month the renewal of the federal contribution to the CTF for the next two years. We commend the minister for this decisive step.

Other actions that the government could take include issuing an order in council to the CRTC, which the DGC urges the Governor in Council to do at the earliest possible time. This order in council should require the commission to investigate and report on ways to ensure that the CTF will continue to receive funding from medium and large BDUs in a timely manner.

The DGC also urges the Canadian government to provide a temporary advance to the CTF for its spring 2007 funding decisions. This will make up for the loss of funding from Shaw and allow the CTF to operate with a full budget over the next year.

[Monique Lafontaine]

As for the standing committee, the DGC urges you to issue a report to Parliament recommending the continued existence of the CTF and recommending that the government provide stable and long-term funding to this critically important production fund.

The standing committee should also recommend that BDUs continue to be required to contribute to the CTF in accordance with the public policy objectives of the Broadcasting Act and in accordance with the requirements of the broadcasting distribution regulations.

To conclude, the creation and exhibition of distinctively Canadian programming is fundamental to the broadcasting system and to Canada's broadcasting policy. The CTF must continue to exist and must have stable and predictable financing. This will help sustain and strengthen Canada's television production sector. All measures must also be undertaken as soon as possible to stop BDUs from damaging the Canadian production sector and from threatening the integrity of the broadcast regulatory regime.

We appreciate this opportunity to discuss the importance of the CTF with the committee; we look forward to any questions you may have.

[The Chair, Conservative, Gary Schellenberger]

Thank you very much.

Ms. Fortier.

[Caroline Fortier, Executive Director, Alliance for Children and Television]

Mr. Chairman, committee members, good morning. My name is Caroline Fortier. I am the Executive Director of the Alliance for Children and Television, the ACT, a Canadian not-for-profit agency that I will describe briefly to you a little bit later on in my presentation.

First of all, I would like to inform you that your jacket contains additional information about the alliance as well as an overview of a study.

At the outset, I would like to thank you for giving us an opportunity to speak this morning. I would then like to introduce you to the two members of the ACT board of directors who will also be talking to you this morning. You will be given, in English this time, a brief summary of their respective career paths.

Monsieur Peter Moss is chair of the ACT and has been a member of our board since 2005. Mr. Moss has worked in the field of children's entertainment for over 25 years. In television, he has worked in both private and public broadcasting. He has been creative head of children's programming for the Canadian Broadcasting Corporation, and VP of programming and production for YTV and Treehouse TV. He has been an executive producer for the Children's Television Workshop, now Sesame Workshop, and president of CINAR Animation.

Animation production credits include executive producer for Jacob Two-Two, Mischief City, and If the World Were a Village, and creative producer for Weird Years.

In the theatre, he has worked as a director at the Stratford Festival, among many other theatres, and was artistic director of YPT in Toronto for 11 seasons.

Monsieur Steven DeNure is vice-chair of the ACT and has been active on our board of directors for more than three years. He is also president of DECODE Entertainment, a leading producers and worldwide distributor of children's programming. Prior to co-founding DECODE, Mr. DeNure was president of Alliance Productions.

His list of credits is extensive, from animated series such as ReBoot, Angela Anaconda, and Franny's Feet, to kids' dramas such as Radio Free Roscoe, and Naturally, Sadie, as well as benchmark one-hour dramas like Due South and North of 60.

As you can certainly see, Mr. Moss and Mr. DeNure are committed, active and productive people working in the area of youth content creation. In a nutshell, these men are passionate about children's television.

I could say the same thing about all of the members of our organization, which is basically composed of Canadian creators, artisans, educators, producers and broadcasters of youth content on all platforms. They have all brought the same desire to produce high-quality Canadian youth television, an objective that the alliance has been striving to achieve with them since it was established, in 1974, through its professional training activities, its annual awards for excellence for the best anglophone and francophone production and its interventions with government bodies and other organizations, just as we are doing today.

That is, then, a brief description of ACT. I would now like to turn the floor over to Mr. Peter Moss.

[Peter Moss, President, Alliance for Children and Television]

Thank you.

Good morning, and thank you to the committee for hearing us.

I'd like to talk a bit about the state of the children's television industry and then pass it on to my colleague Steven DeNure to talk about how the CTF and the alliance work hand in hand and the influence of each on the other. Really, our concern is for consumers of the work of the CTF and ACT. That's why we speak on behalf of children.

Canada has built a strong children's television industry over the years. It's a healthy mixture of public policy and private initiative. Activity of this sort--this public-private partnership--is usually the result of a cultural need. That's “cultural” in the broadest sense of the word. It's how we behave, in the way that medicare was Canada's answer to a cultural desire for comprehensive cradle-to-grave health care for all citizens, necessity being the mother of invention.

You may ask what the cultural need was that the Canadian children's television industry answered. I think the answer can be summed up in a sentence. In Canada we have to compete for the attention of our own children. Virtually no other country is in this position. We're unprotected by geography, and in the case of English Canada, we're unprotected by language. We have a media giant as a neighbour that is able to broadcast into our airwaves. It considers our territory as a domestic market for them.

How do we compete for the attention? Our sense of being Canadian comes not only from the values and services that Canada affords, but from the optimism and opportunity to create our own social experiment collectively. Being Canadian means being part of it all--the plagues and the pleasures.

A distinguishing factor, I think, is that Canadian society provides its citizens with a form of basic trust. Basic trust is a concept I'm borrowing from the field of child development. It's an essential common ingredient that enables children to grow, to experiment freely, and to develop. It's a gift that parents give their children: a fundamental belief that the child is welcomed into the family and into the world simply for her own sake. Without this, the world is cold and inhospitable; with it, doors can open.

Canadian society strives to provide a fundamental belief that we welcome and value our citizens, and like the nurturing parent, Canadian children's television passes on that sense of basic trust. This is one of the distinguishing factors about Canadian television programs in the international marketplace. It's their tone. It's the reason channels such as PBS want anywhere from 25% to 50% of their kids' shows to be from Canada.

Canada is always being replenished with new citizens: children who experience Canada from immigrant homes with parents who pass on their personal heritage. Who will introduce them to Canadian culture, how we do things, our social expectations, how we treat each other?

Children's television is no less powerful a cultural tool than the stories read in school or passed on by parents and grandparents. Depending on your generation, who doesn't remember The Friendly Giant or Mr. Dress-Up or Bobino?

If we want future generations to feel as committed to carrying on the Canadian experiment and as connected to the process as we are, we must provide them with the opportunity to participate in the process from the beginning. By the time children have finished primary school, they have spent as many hours watching television as they have going to school. That may be unfortunate, but it's true. Shouldn't we insist that the TV they watch and the stories and characters they identify with and learn from reflect our best efforts and our best wishes for them?

I'm now going to pass on to Steven to talk about how the CTF influences the work we do.

[Steven DeNure, Vice-Chair, Alliance for Children and Television]

Thank you, Peter.

First and foremost, we need to say that the Canadian Television Fund has been a hugely important engine in the creation of television for Canadian children. Children's television is one of Canada's media success stories. Canadian producers and broadcasters draw an incredibly diverse cross-section of talented Canadian artists and technicians to produce programming that is not only relevant to Canadian children, but also to children around the world. This content creation extends beyond television to include emerging and so-called new media platforms including web-based activities and interactive games. Kids are the early adopters of new technologies and content creators need to be at the forefront of this next wave of content creation in order to continue to win the attention of Canadian children.

Many Canadian broadcasters program Canadian children's shows in priority positions in their schedules, not because they have to but because the shows compete successfully with non-Canadian programs. Given the chance and the choice, Canadian children watch programs made here, programs that reflect our culture and our values. Statistics for 2002-03 show that in English Canada, Canadian kids' programs captured 38% of the audience. In French Canada, Canadian kids' shows captured an impressive 55% of the audience.

To put this in context, drama and comedy in English Canada captured only 10% of the audience. We agree that Canadian drama needs help, but it cannot be at the expense of children's television.

A recent study entitled The Case for Kids' Programming, commissioned by our organization in partnership with the CFTPA, the National Film Board, and the Shaw Rocket Fund, demonstrates that both the dollar value of children's programming produced in Canada and the share of the overall CTF budget devoted to children's television have been declining. The research shows that the production of children's television has fallen overall, from $389 million in 1999-2000 to $283 million in 2005-06. That's a drop of 25%. From 2002-03 to 2005-06 the contribution of the Canadian Television Fund to kids' programming has decreased from 22.8% of its budget to 18.6% of its budget. That's a drop of 17%.

While we believe a strong CTF is an important component of the Canadian broadcasting landscape, we also believe that more resources need to be devoted to programming targeted at our youngest viewers, our most receptive, open audience, and that those funds need to be broadened beyond television.

Canadian children's television reaches audiences in Canada and abroad. It's an area in which Canadian creators are second to none. It reflects our culture and our values to our most receptive audience and it offers unparalleled opportunities to harness the potential of new technologies.

So why, we ask, should the funding of children's television be a second priority? We remain supportive of the CTF as a vehicle for the funding of Canadian programming, but we also believe that we need to rethink the spending priorities. Canada's children should come first.

Thank you.

[The Chair, Conservative, Gary Schellenberger]

Thank you for your presentations.

We will go to Mr. Scott for the first question.

Before you start, we'll try to stay as close to five minutes as we can for questions and answers. This session will be over at 10 o'clock. Thank you.

[Andy Scott, Liberal, Fredericton, NB]

Thank you very much. I hope that wasn't directed at my own experience personally.

Let me say thank you very much to the witnesses and also take an opportunity to speak to the broader issues that have been spoken to in terms of resources and so on.

I couldn't agree more that we need very much to invest in the Canadian reality. If we're going to have our stories told and capture the attention of children and adults, and if our drama is going to be available in a comparable way with drama that would originate in other places and so on, it's critically important that we cannot allow the market to determine these things. I think we will be overwhelmed by the force of that market. So for what it's worth, I'm glad in both instances that we had that discussion.

I know here we're to speak of the more urgent need to deal with a crisis that exists, and I will get to that. I also should say specifically to children's television that I am in the unique situation where I have kids of 20, 22, and one year of age, so I have the opportunity to compare. To whatever extent that you or the CTF are responsible for what's available now, congratulations! Not only is it appealing to me, it's also appealing to my one-year-old, which is very appealing to me.

On the idea of interim financing, I know it was recommended that we need to do something immediately. In order to make the case to the government to do that, we need to know specifically what the time-sensitive issues are upon the industry so that we can make the case, so the public can hear the case. I expect that given the nature of production, every day counts. Please inform us about that, so we as a committee can in fact cause the government to take that specific action.

[Pamela Brand]

I will speak to that issue. Our members are filmmakers, and they work in production. A production cycle can often take two to three to four years, starting with the development process and then going into the writing stage, and then into the production and the post-production stage. For that, the funds need to be available two to three years in advance: the completed production needs those funds in order just to get started. If there is a crisis of funding, if there is a lack or diminution of funding, the development process doesn't begin, because producers and developers are not sure they are going to have the financing to be able to move into the next stage of production, in which case whatever money they had spent would be lost. So that is the crisis, that the production is not starting.

With the crisis at the CTF, there was fear in the industry that there was not going to be the money. The $200 million was extremely helpful, and it certainly assuaged the situation to a large extent. At the same time, the CTF is going into deficit budgeting to keep productions going this year, but new productions are not starting. We have heard from the producers that new productions are not going into development. So a year from now—and certainly next year you'll see this—there isn't going to be the content the broadcasters need, and in the interim many people, thousands of people, will not be working in the industry.

[Andy Scott, Liberal, Fredericton, NB]

On the same question, is there anything specific or unique to the particular piece of the industry you represent that would add value to that answer?

[Peter Moss]

I can speak from a broadcast point of view, the other half of the coin. Much of my experience has been as a broadcaster. It is that the planning cycle is concomitant with the development cycle. Often you're ordering and developing shows for two and three seasons down the road.

Remember that the cable companies, particularly in the children's sector, have mandatory amounts of Canadian content that they must broadcast and mandatory amounts of money that they must spend in developing those shows. That amount of money is never enough to make the shows happen. It's necessary that the CTF be there to complete the financing and provide the financing. If there's a weakness in the CTF, the whole system crumbles, so that two years and three years down the road, there's a dry-up of all the material you need.

[Andy Scott, Liberal, Fredericton, NB]

In the likelihood of the CRTC's coming to a decision that would remedy this—beyond the remedy, at least in part, that the letter from the minister sent out Tuesday that arguably resulted in the decision about Vidéotron.... To that point, I think the government had taken the position that they were waiting on the CRTC. I would have preferred to have whatever action was taken on Tuesday taken earlier, and we wouldn't perhaps be in the circumstance we're in now.

Beyond the interim financing, which I'm sure we will be pushing the government to make effective immediately, are there any other pieces of this that you would see dealing specifically with the crisis, beyond interim funding—a directive to the CRTC to expedite the decision, to do the things that would be available to them to do? There may be some debate as to what those are, but I understand from the intervention you've made that you've prescribed a certain series of actions, and we'll probably hear from the government as to whether they would agree with your prescription.

Finally, as you know, we're doing a review of the role of public broadcasting in the 21st century as soon as this is over. I'm sure we'll see you back and we will be able to take up these issues in a broader context. I appreciate it very much.

Thank you.

[The Chair, Conservative, Gary Schellenberger]

I think that was a statement. We went a little overboard there.

Ms. Bourgeois.

[Diane Bourgeois, Bloc, Terrebonne—Blainville, QC]

Thank you, Mr. Chairman.

My first question is for Ms. Brand or Ms. Lafontaine. You stated that you represent 3,800 members. You have been working in the sector for a very long time. In your opinion, what has really triggered the current crisis? I really want to understand the situation.

[Monique Lafontaine]

In my opinion, the cable industry does not want to contribute to the fund and this has been the case for several years. When the Canadian Cable Television Association existed, this was one of the files that it defended on a regular basis. If we were to go back in time and look at their folders, we can see that, as far as this association is concerned, the CTF was not a good thing, and the association didn't want to contribute to it.

[Diane Bourgeois, Bloc, Terrebonne—Blainville, QC]

You very quickly listed a whole series of measures. I would imagine that you could provide us with a copy so that we can take a really good look at them.

What aspects do we need to give urgent attention to as far as the operation of this fund is concerned? If we wanted to reach an agreement quickly, what aspect is the most urgent?

[Monique Lafontaine]

Of all the measures that we are recommending, an amendment to the regulations would carry the most weight. We are wondering whether or not the CRTC could strengthen the guidelines in circular no. 426. This is a grey zone, and we believe that we should make it black and white. So we should amend the regulations so that payments are made on a monthly basis.

[Diane Bourgeois, Bloc, Terrebonne—Blainville, QC]

You are asking the CRTC to amend the regulations, but you asking this committee to go further.

[Monique Lafontaine]

In our opinion, that's what the people in power should do. As far as this committee is concerned, we are recommending that you do what you can to ensure that the fund continues to exist.

[Diane Bourgeois, Bloc, Terrebonne—Blainville, QC]

Your recommendation includes a political aspect; this is what I wanted to highlight.

I would like to tell Mr. Moss that I am from the generation that watched Bobino and Pépinot et Capucine, programs that I adored, by the way. Indeed, children's television must not disappear. It helps mothers a great deal and it also socializes the children.

When I listen to you, I get the feeling that you're not here so much to talk about changing the regulations but rather to tell us that you are afraid that the fund will disappear.

Are you under the impression that the fund may eventually disappear?

[Peter Moss]

First, forgive my speaking in English. I am embarrassed.

Our impression is that this is a steady erosion of the fund, and this is the first and the beginning block that's being taken away from the wall that supports it. Unless this battle is won convincingly now, there will be a steady erosion of the fund.

It took a long time to build the fund. It took an even longer time to arrange the board such that it works to its maximum benefit. As a former board member of the fund, I do believe it now does that to a large extent. I believe that the fund has always been under some attack from both the BDUs and, to a certain extent, from other contributors.

So yes, I do believe this is not a small administrative affair. I do believe the fund is under attack.

[Diane Bourgeois, Bloc, Terrebonne—Blainville, QC]

Yesterday we learned that Quebecor had decided to continue making payments to the fund, but we didn't hear anything from Shaw Communications.

What do you think about that?