Canadian Heritage Committee on Feb. 22nd, 2007

[Tina Keeper, Liberal, Churchill, MB]

Thank you.

Thank you to the CRTC for appearing here today, because, as you mentioned, Mr. von Finckenstein, there was certainly a lot of trepidation. It's been a tumultuous time for the Canadian television production industry.

The press release issued by the CRTC regarding the task force mentioned, as you did here today, long-standing concerns; I know we heard of them from Shaw and Vidéotron as well. Could we get some sense as to how these long-standing concerns have been addressed or not addressed, what the history is and why it got to this point? How is it that this could have come to this point?

[Konrad von Finckenstein]

You heard what the concerns were when both of them were before you, so I don't need to repeat them. You had Mr. Shaw here and Mr. Péladeau here.

Why has it taken so long? You know, it's a system that works, and at least to some extent a lot of people benefit from it. There's a reluctance to change these things, and they cannot be changed overnight. I think the main thing was what your colleagues had said: it's the new media. The new media are really the driver of everything, changing the landscape. The fund, like everything else, has to adapt to the new media. This is very often a difficult change, because nobody has a crystal ball and knows how things are.... It's also sometimes painful.

I think that's the main reason why this is now on the agenda, when it wasn't before. It became urgent thanks to the new media.

[Tina Keeper, Liberal, Churchill, MB]

Well, we heard from Mr. Shaw that it was in fact governance issues, and an issue around funding being allocated for productions that were going to be on the CBC. The new media, of course, is an issue, and I know the CRTC has been looking at them. In fact, they recently did a report, right?

So I'm wondering why there wasn't a process in place or a mechanism or discussions that would have ensured something like this wouldn't happen.

[Konrad von Finckenstein]

It's a good question. Unfortunately, you're asking the wrong person. I don't have supervisory responsibility for the fund. I don't have any members of the CRTC sitting on the fund, etc. My role, or the role of the CRTC, comes in at the very tail end. Namely, our regulations say that if a licensee “is required under these sections to make a contribution to Canadian programming, it shall contribute (a) to the Canadian production fund at least 80% of its total required contribution”. That's the hook for the CRTC. A licensee is required to pay into the Canadian production fund at least 80% of its total required contribution.

What we saw was a threatening that it might not happen in August. And the interim payment, which traditionally went down on a monthly basis.... So that's how it became, de facto, an enforcement issue and why we came onto the scene.

As to why it wasn't addressed earlier, you should ask the CTF and its board of governors, or you should ask the minister. Really, I'm the wrong person to put the question to.

[Tina Keeper, Liberal, Churchill, MB]

Thank you.

We haven't had much clarity around this. The minister has repeatedly answered many questions around the issue of what her role is, what the role of the CRTC is. And you just read a section to us.

But essentially, what assurances do we have, if these companies decide to do this again, say come May or June, that there's a process in place to deal with it?

[Konrad von Finckenstein]

Firstly, I don't assume the companies are acting in bad faith. They both announced they will resume the payments, etc. Secondly, I'd expect that our task force will resolve the issue. Thirdly, a resolution, whatever it will be, will probably require an amendment to the regulations. This time we'll amend them properly to make sure the payments are done monthly.

Fourthly and lastly, I don't even want to contemplate this, but if, as you suggested, companies are acting in bad faith and suspend payments again, I will move swiftly to amend the regulation. It will take me about two weeks to do it. It's an eventuality I don't even want to contemplate, because we are not in confrontation; we are working this out and we're going to find a solution.

[Tina Keeper, Liberal, Churchill, MB]

Thank you.

[The Chair, Conservative, Gary Schellenberger]

Thank you.

Ms. Bourgeois.

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

Thank you, Mr. Chair.

Good morning, gentlemen.

I would like to go back to something you spoke about earlier. On February 20, you issued a press release which stated, and I quote:

As payments to the Fund are mandated by CRTC regulations, the CRTC has a role to play in the resolution of the concerns regarding the Fund.

Representatives of Shaw Communications told us that they have been talking about their concerns for five years and those of Vidéotron have been voicing their concerns for two years.

You may not have received formal requests, but they did refer to the CRTC. In your press release, you indicated that you had concerns about the Fund. If that was the case, why did the CRTC not take action sooner?

[Konrad von Finckenstein]

As I already said, the system is quite clear. We are responsible for ensuring the broadcasting of Canadian content. We do that by requiring cable companies and satellite communications companies to make contributions to the Canadian Television Fund. To date, that has worked and the Fund ensured that this content was present. However, when these two companies threatened to suspend their payments we had to intervene because one of our main tools to ensure that there is Canadian content, are the contributions to the fund that are allocated to Canadian productions.

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

You have established a four-person task force. What criteria were used to choose them and who chose them?

[Konrad von Finckenstein]

I chose Mr. Arpin because of his experience within the industry and the CRTC and because he knows all the players very well. Mr. Arpin chose the individuals who will be working with him. He will explain why.

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

Please go ahead.

[Michel Arpin]

The other members of the task force work for the CRTC: the Senior Director, Television Policy and Applications, who is responsible for analysing and formulating television policy; the Senior Director, Distribution Policy and Applications, who is responsible for cable, satellite or other services; and our General Counsel, a former President of the COGECO Program Development Fund and a member of the Board of Directors of the Maclean Hunter Television Fund for many years. He is very familiar with how television funds work.

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

All these people will make presentations and they will remain confidential. Given that the Government of Canada contributes $100 million to the Canadian Television Fund—you are conducting a study in this regard—, would it not be better for the hearings to be public so that it would all be out in the open?

[Michel Arpin]

First of all, these are matters of a business nature that could result in more acrimony than solutions. The purpose of the task force is to find a solution and to allow the Fund to continue operating in the best possible way. As our Chairman mentioned earlier, the report of the Task Force, which is seeking a consensus, will become a public document available for public consultation if a consensus is not reached.

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

You say that only the conclusions will be made public. Since the Canadian government provides some money—that is the issue—and consequently, the public provides some money through its taxes, it is entitled to know what is happening at the hearings. I do not wish to cast doubt on your transparency and impartiality, Mr. Arpin, but the fact that everything is going to happen behind closed doors and that only a report will be produced bothers me.

You say that the task force will proceed by invitation. You speak of several other stakeholders. Will small groups that would like to be heard be able to attend these hearings? Will it be open or will you settle for inviting certain individuals?

[Michel Arpin]

First of all, the purpose of the task force is to find a solution. The purpose is not to hold hearings and hear grievances. Our mandate is very limited. It is limited to questions of governance and operations. It is not a fundamental review of programs. We will not make value judgments about the methods used to allocate funds. The purpose of all this is to bring everyone to the table and to see if there is a consensus. If not, the task force will broaden the discussion in order to find regulatory mechanisms to re-establish order in the way the Fund works.

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

Thank you.

[The Chair, Conservative, Gary Schellenberger]

Thank you very much.

Mr. Fast.

[Ed Fast, Conservative, Abbotsford, BC]

Thank you, Mr. Chair.

Just along the same lines, I sense that we may be misunderstanding what a task force does. In my experience as a city councillor, we often established task forces to do what was essentially fact-finding, or determining on a fairly informal and flexible basis the prevailing facts that would help us come to a decision. On each occasion, there was no overtly public process. Somebody was charged with managing the task force. That individual would then go out and solicit the information that he or she needed and would come back to city council, and then the city council would determine whether public hearings were required.

Task forces, as I understand them, are more informal in their nature.

Could you comment?

[Konrad von Finckenstein]

What we have here is a crisis. We want to resolve it quickly; we want to find a solution. That's why we should have, first of all, the facts; let's get past the headlines and the public positions of people to find out what's really going on.

Secondly, we're dealing with very confidential information, commercially confidential information, that is very germane to the health of the players, which they are very reluctant to part with. So we can't do a public hearing.

On the other hand, we don't like to work behind closed doors and we have a duty to account to the public for what we're doing. So we struck the equilibrium of saying the task force will meet in confidence with the players, one by one, to find out what's going on. Then we will try to put it together to figure out if there is a consensus. Hopefully, there is. If not, we'll at least set out the options, which we will make public. So you will get the conclusions, but not the data behind them.

I would not be surprised if this committee were very interested in our report and asked Mr. Arpin and me to appear again to talk about the report and the conclusions, etc. That is your right. We will gladly share that with you.

What we are trying not to do is to share any confidential information that could lead to harm if it got into the wrong hands. But on the other hand, we need to get to the bottom of it; we need full and frank disclosure of where the issues and concerns really are.

[Ed Fast, Conservative, Abbotsford, BC]

The task force isn't replacing the public process.

[Konrad von Finckenstein]

No, not at all.

[Ed Fast, Conservative, Abbotsford, BC]

It's really a precursor to that.