Canadian Heritage Committee on Feb. 15th, 2007

[Brian Masse, NDP, Windsor West, ON]

Thank you, Mr. Chair.

I think it was important for Mr. Stursberg to bring up that point about the history of the fund. It is really the consumers' money, and it was quite a debate to get to that decision, and publicly as well. I think it's actually probably the best decision; otherwise, today we'd probably only have CSI or Law and Order across our TV screens.

I would like to back up a bit to make sure we're clear on a couple of things. Right now you don't get direct funding from the CTF. Like everyone else, you go to the CTF for programming that has been done, and everybody can dip into that. Can we get clarification on that point?

[Richard Stursberg]

Do you want the precise sum?

[Brian Masse, NDP, Windsor West, ON]

Yes.

[Richard Stursberg]

The way it works right now is that all the broadcasters receive envelopes of different sizes of the total money that's available. In the case of the CBC, as everybody has pointed out, we receive 37% of the fund for English and French together. We then contract with independent producers to make the programs we want to show on the air.

For example, if you look at the programs on the chart that Bob put out, the ones in green are financed through the fund. The fund is essentially focused on the four kinds of programming that are the most difficult to finance in the Canadian context: drama, documentaries, kids, and variety and performing arts. The ones that the fund permits us to commission are only those that are what the fund calls “distinctively Canadian”.

The way it would work is that we would meet independent producers; they would pitch us various ideas of one variety or another within the context of making those kinds of programs--documentaries, kids, drama, etc.--that are distinctively Canadian in character. We would choose the ones we want to make; then we would enter into a contract with the independent producer, and the money would flow to the independent producer--both our licence fees and the cash from the fund, plus the tax credits--to finance the production.

[Brian Masse, NDP, Windsor West, ON]

I think it's important to note that.

I've asked this of the previous delegation: what, in your professional opinion, is the motivation or the repercussion of this action that Vidéotron and Shaw, especially Shaw, continue to persist upon, and are they aware of it?

[Robert Rabinovitch]

It's very hard for me to get into their brains as to what they want to do and why.

I think it's been made very clear by the representatives of Vidéotron in particular that they may have made common cause in one respect, but they are very different in other respects as to what they're doing. From what I can understand--and this is basically from reading the press--Vidéotron wants control over all rights and wants to produce all product in-house.

As I said in my opening comments, it was government policy to encourage the development of an independent production industry, and we at CBC in particular--not as much at Radio-Canada--have basically outsourced almost all of our product to the independent producers. That was the intent of the fund. Shaw has been making much more belligerent statements in terms of not wanting to finance any Canadian content.

Again, I'm putting words in their mouths.

[Brian Masse, NDP, Windsor West, ON]

That's why there was Mr. Stursberg's analogy earlier in terms of where this actually comes from. It was the consumers' fund. It was a decision made for a lot of different reasons--about arts, culture, Canadian content programming, and the future of our country and our industry--that even set this fund up, which, once again, really belongs to consumers and not anybody else.

[Robert Rabinovitch]

It was set up by the Canadian government.

[Brian Masse, NDP, Windsor West, ON]

Exactly.

I do want to ask one question in terms of the minister's response on this file. I was a little disappointed in terms of how quickly it happened. It's clear-cut. If you're going to allow people not to pay their taxes, whether they be individuals or businesses, that's a very sensitive issue, not only to the government coffers and those who rely upon them, but also to other players in the field in both the private and public sectors.

When did you originally contact the minister on this file? Did you actually have a chance to meet with the minister about this situation?

[Robert Rabinovitch]

We met with the minister when she made it clear she would like to talk to all the participants in the fund. I think the first meeting she had was on a Tuesday, and I met with her the next Monday to discuss our concerns.

But I think the minister was trying to collect the facts, get the information. Here we have somebody who says they're not participating anymore in what is a public-private partnership, and she wanted to collect the facts as much as she could before moving ahead and making her decision. So she was engaged in a fact-finding exercise, and we discussed the matter with her with that in mind and made it very clear to her how important the Canadian Television Fund was as one of the pillars of funding the CBC.

[Brian Masse, NDP, Windsor West, ON]

Now that we've had this problem and we've gone through this process and we hope we are looking at a potential fix from all parties here, do you support the recommendations to enshrine in law the monthly payment and perhaps administrative monetary penalties for those who don't fulfil their obligations under Canadian law?

[Robert Rabinovitch]

I will have to leave that to the CRTC ultimately to decide. It is a regulation of the CRTC. It would be unfortunate if they had to use the heavy hand of regulation, but it is there for them to use if they see fit. I think that's what the new chair made very clear, that we'd do it if I have to, but we didn't necessarily want to. We're all a partnership, we should be paying monthly, and we hope we don't have to change the regulations.

[Brian Masse, NDP, Windsor West, ON]

Yes, the deal being a deal, that might be the way to go.

Thank you, Mr. Chair.

[The Chair, Conservative, Gary Schellenberger]

Thank you.

Mr. Abbott.

[Jim Abbott, Conservative, Kootenay—Columbia, BC]

Thank you.

Again, welcome to the committee. You certainly are very important witnesses.

I would like to make an editorial comment. It's always interesting in politics that when things go wrong the opposition blames the minister. When things go right, I suppose the honourable thing would be to praise the minister, and I'm hoping we will get some of that praise.

Considering the tools at the disposal of the minister and the legislative restraint on her powers, I would hope they would take note of the speed with which this emergency is coming into focus and into a process of resolution. She certainly recognizes the underlying challenges that remain and she is going to continue to be involved with that.

Mr. Rabinovitch, I think your note of the actions and the statements of Mr. von Finckenstein, along with the minister's request directly to Shaw and Vidéotron, are part of the solution.

While I think that Mr. Stursberg's rendition of history is undoubtedly accurate and certainly worthwhile for us to consider, the difficulty is that for anybody who has been involved in business, we know that the profit you made last year is the profit you made last year. It may be the basis for going forward, but it nonetheless is something that isn't recognized in business. There isn't the same gratitude toward the concept of the profit that you made last year as there is perhaps among ordinary citizens in their day-to-day life.

So I wonder, Mr. Rabinovitch, considering that we are looking at how to go forward and we have talked here at the committee and everybody is aware of the enforcement potential, there's honey and there's vinegar. I wonder, with you being the major players you are with respect to the use of the CTF, if you could give us an idea of your attitude in terms of the go forward, recognizing that there can be a really stern fist, steel, inside the glove. How would you express the attitude of the CBC to the go forward, trying to work the longer-term resolution to this?

[Robert Rabinovitch]

Firstly, Mr. Abbott, I'd like to take this opportunity to reinforce what I said in my opening comments and praise the minister. I thought the minister acted very quickly and gave a very clear signal by putting forward the $200 million--$100 million per year for the next two years. It was a very clear sign that this part of the funding had been stabilized, and it was a very clear sign of the government's intention to maintain some form of independent production industry funding. So let it not be said that I did not praise the minister.

I believe, sir, that this has been set up as a partnership among the cable operators; the satellite operators--in other words, what we call the BDUs; the independent production industry--and this is one of the main reasons it has developed to the extent that it has--and the broadcasters.

I think the CBC's role is very unique because of the fact that we have this shelf space to show the programming when people want to watch it. We don't have to show it against a hockey game on Saturday night at 10 o'clock. We can show it at 9 o'clock on a Wednesday, when people are actually watching, and give a Canadian program a chance to do well. We can also do other types of programs, like documentaries, etc., in core time.

I think the solution is a continued debate. I think the solution is for all of the partners to come to the table and discuss what is really wrong, if anything, what can be made to work better, and how we allocate in order to make sure it works better.

But also, let's not forget in those discussions the objectives of having quality Canadian programming and different kinds of Canadian programming at hours when Canadians are watching. If we put that all together, we at the CBC would be very excited people to be involved in that discussion with the various partners. And it's for the same reason, sir, that we favour the mandate review. We are a public institution, and we believe that we should be reviewed on a regular basis as to the type of programming we're doing, the extent to which we're using the various technologies, etc.

One of the major issues that has been raised by Quebecor is whether the fund is up to date in terms of its recognition of the new forms of delivery systems. We at CBC like to say that we are platform agnostic. We don't care how people get our programs; we just want people to get them. If people listen to radio programs on their iPods, all of a sudden we have a brand new generation of 18- to 35-year-olds listening to radio, because they're listening to it when they want to.

It's the same thing with the CTF. We want to use it to create quality Canadian programs in the various genres, and we want to participate in that discussion.

[Jim Abbott, Conservative, Kootenay—Columbia, BC]

The difficulty, as I understood the public utterances by Shaw, is that they have not been part of that discussion. And if I understand what you're saying here today, you think it would be useful for Shaw, Vidéotron, and other people to be more engaged, in the future, in the programming.

[Robert Rabinovitch]

I'm going to say something, and then I'm going to ask Richard, because he's been involved with the fund for so many years.

I categorically deny and disagree with Shaw's statement that they have not been involved. They sit at the table for the CTF. They discuss these issues. They push for their positions. It is not accurate to say that they have not been involved.

[Richard Stursberg]

I would just say that I was the chairman of the fund for four years. I believe I was the longest-serving chairman of the board in the history of the fund, and survived.

The way it stands now, there are four seats on the board for the cable companies and satellite companies. Indeed, when I was the chair of the fund, I was the president of the Canadian Cable Television Association. Throughout the history of the fund until very recently, in most cases the board was in fact chaired by somebody from the cable industry. The Shaws themselves have had a representative on the fund board since at least 2000, as far as I recall.

Over the course of the years, this has been related to the issue that both Sylvain and Bob have been talking about, concerning the capacity of the fund to be able to deal with problems and adjust as it goes along. The conversation we're having now is a conversation about some issues that are important issues, but the fund has been through terrible crises in the past. While I was the chair of the fund, in the previous year they had run into a terrible problem where there was a gigantic $30 million shortfall in financing. The fund had really fallen to pieces. There was enormous controversy about the way in which some parts of the money were allocated on the basis of what was really first come, first served. It was unclear what the cultural objectives of it were.

The fund board members, including the cable companies, the independent producers, the broadcasters, and the CBC, all came together at the level of the board and radically restructured the way it did its business. We put in place the rules that are now the distinctiveness rules, to make sure the financing would only go to programs that are distinctively Canadian. We restructured the arrangements between the different pieces of money to more or less make a market in the funds, to try to guarantee that the money would go to those programs that were most likely to be successful.

A couple of years ago there was a lot of controversy surrounding the fund and its structure. At that time there were two boards and two administrations, and people were very worried about governance issues, conflict issues, and this and that. Over the last little while, what the fund has done is resolve those matters. There is now one board, there is now one administration, and there are very tough conflict guidelines.

As far as I know, the Shaws were involved in all of those conversations. The cable industry was involved in all the conversations dating back to the ones that I described. As far as I know, they agreed unanimously to all of the changes that have been made.

What's been going on over the course of the life of the fund, which is now really ten years old, is that they have on at least two occasions been able to make radical improvements in the way of doing business. The cable industry was an important participant in that and participated enthusiastically as an important contributor to the solutions that were found.

[Robert Rabinovitch]

If I may, sir, the bottom line from our point of view is that the fund is extremely important. It's extremely important that it work well and that it be seen to work well. We would enthusiastically work with industry, with all of the partners, in terms of evaluating its functions.

[The Chair, Conservative, Gary Schellenberger]

Thank you.

We'll go to Mr. Scott, and then we're going to go to one more good question. Let's keep it close to two minutes, because we're going to run out of time again.

[Andy Scott, Liberal, Fredericton, NB]

I was going to respond to Mr. Abbott's request for praise.

I will acknowledge that the government provided for two years at $100 million each, while the former government did it one year at a time. The minister deserves credit for that, so I acknowledge that. I will save my praise until there is an increase commensurate with the fiscal capacity that the government now knows. That would be praiseworthy: to see the kinds of investments in culture that have been made in other areas, given the fiscal capacity.

In terms of the second part, while I agree with Mr. Rabinovitch that the minister was gathering the facts, the truth of the matter is that in terms of whatever authority she drew upon, just before appearing before the committee on Tuesday, to insist that the companies make their money payments, she could have used the same authority before, because she knew there was a problem. She knew they should do that. She said so. She said she was waiting on the CRTC to say that, but at the end of the day, whatever authority allowed her to do it last Tuesday could have been exercised two months ago. That would have perhaps mitigated some of the crisis.

So my acknowledgments come, I think, with some mixed feeling.

Having said that, I appreciate very much the explanations that have been given. As for whether the money goes directly to the CBC or to the extent to which it is the consumers' money that we are talking about, Mr. Chair, they've done a good enough job explaining the position and informing the committee, so I really don't have a particular question to put.

I did want to respond to Mr. Abbott's invitation to acknowledge the minister's interventions. Again, though, I would hope that given the capacity the Government of Canada has inherited fiscally, we could see a significant increase in support to culture as it relates to the CTF, as it relates to the public broadcaster. Hopefully, in the course of the public broadcasting review that we're about to commence, we'll hear that kind of language from the government as well.

Thank you very much for being here and for informing the committee on this very important subject.

[The Chair, Conservative, Gary Schellenberger]

Thank you, Mr. Scott.

Mr. Kotto.

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

Very briefly, I would like to come back to what Mr. Abbott said earlier.

I'll remind you that governing is planning and anticipating events. The crisis we are dealing with here today has been brewing for a long time. Nothing happened for four weeks. There was talk about the rapidity of the minister's reaction, but in this case, I would use the word inertia.

May I also remind you that Shaw has yet to be brought into the fold; much remains to be done. Having said that, I would like to know in what kind of frame of mind, what kind of diplomatic frame of mind, you will be in when you find yourselves around the table with Shaw, Videotron and the other stakeholders, talking about this fund.

[Sylvain Lafrance]

Quite honestly, I am not that worried. In the television industry, as in all industries, there are times when we get along better than others. Our interests are sometimes shared, and sometimes divergent. This is not the first time that there are diverging perspectives in this industry.

In general, we manage to sit down and rediscover our common interests. In my opinion, all of those working within this industry are aware of the fact that the public-private television system in Canada—particularly in Quebec, because of its maintaining its audience—is one of the biggest successes of the cultural industries in terms of maintaining audience share. French television in this country keeps its audience in a way that is envied by many countries around the world. I think that all of the industry players are aware of this and that they will quickly find a way to work together.