Evidence of meeting #37 for Canadian Heritage in the 39th Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was crtc.
A recording is available from Parliament.
Conservative
The Chair Conservative Gary Schellenberger
Good morning, everyone, and welcome to the 37th meeting of the Standing Committee on Canadian Heritage. Pursuant to Standing Order 108(2), we are here to study the future of the Canadian Television Fund.
I would like to welcome our witnesses from the Canadian Radio-television and Telecommunications Commission.
Mr. von Finckenstein, the new chair, welcome. Please introduce your people, sir, and make your presentation.
Konrad von Finckenstein Chair, Canadian Radio-television and Telecommunications Commission
Thank you very much, Mr. Chairman and members of the committee.
I am accompanied today by the Vice-Chair of Broadcasting, Michel Arpin, and the Acting Associate Executive Director of Broadcasting, Scott Hutton.
I know that you are aware of the current situation with regard to the Canadian Television Fund (CTF). The Commission recognizes that the funds administered by the CTF play an important role in supporting the production of Canadian programs and fulfilling regulatory requirements regarding the broadcasting of Canadian content. We also believe Shaw and Quebecor have raised some serious issues that need to be resolved and that the CTF Board of Directors has yet to address.
I will not take up your time by repeating what you already know about the controversy involving Shaw, Quebecor and the CTF. Instead, let me go straight to the point that I believe you are interested in, what the CRTC can do to resolve the situation.
Let me begin with some brief background. As you know, Quebecor Media agreed last week to resume its payments to the fund, while expressing the view that significant reforms are required in the way that the CTF does business. Quebecor also announced its support for the commission's effort to find a solution that will satisfy its concerns while also meeting the objectives related to the production of Canadian content.
Two days ago, Shaw also agreed to resume its monthly payments to the CTF, stating it is sufficiently assured and confident that the CRTC will take a serious look at the suggestion it made to reform the CTF.
These decisions by Quebecor and Shaw mean that the funding for the next season is no longer in doubt. Accordingly, the commission announced on Tuesday the creation of a task force, headed by my colleague here, Michel Arpin, to work with the parties to find a solution that will address the distributors' criticism of the fund while also serving the objectives of the Broadcasting Act regarding Canadian content.
If ultimately a full solution cannot be reached by the task force, then at the very least, the task force will lay out options to deal with any remaining points of disagreement.
The task force will primarily address the following issues: what is the most effective use of the contributions of broadcast distributors to the CTF?; what is the appropriate size and structure of the CTF Board of Directors?; what are the appropriate mechanisms for dealing with real or perceived conflicts of interest at the CTF?
The task force will begin its work immediately. Between now and the end of April, it will consult the CTF, Shaw and Quebecor, other broadcasters and broadcast distributors, and several other stakeholders—including the CBC, the Department of Canadian Heritage, television production funds, producers, unions—, in short all those who have an interest in the future of the CTF.
By necessity, the work of the task force will be conducted in private so that the concerns raised by all stakeholders can be discussed in a frank and open manner and there can be no fear of retribution.
After its consultation and fact-finding are completed, the task force will make recommendations to the commission about the CTF and produce a public report--I stress, a public report. The report will spell out the concerns raised, solutions or modifications suggested, and any consensus that is reached or can be reached with further government assistance.
If there is no consensus, the report will set out various options to resolve the concerns that have been expressed. At that point, based on the task force's findings, the commission will make a decision about whether it is necessary or desirable to issue a public notice and hold public hearings. If we were to go ahead with public hearings, we would expect to complete them by the end of August.
Mr. Chair and members of the committee, I have been brief to allow as much time as possible for your questions. I would be pleased to respond to them. Thank you.
Liberal
Andy Scott Liberal Fredericton, NB
Thank you very much, and thank you for being here. The brevity of the presentation will allow us more opportunity to ask for elaboration and get into some of the details.
Could you elaborate on the comment that Shaw and Quebecor raised a number of serious issues that need to be resolved and that as of today these issues have not been addressed by the CTF's board of directors? Could you be a little more specific about that?
Chair, Canadian Radio-television and Telecommunications Commission
Well, you've had the witnesses before you. You had Shaw here. You had Quebecor here. They raised their concerns about how the fund is being administered, how it's being spent, etc. These were set out in great detail. I think they speak for themselves. I don't purport to speak for Quebecor or Shaw.
These are serious concerns that they addressed in their letters to the minister and in their appearance before you, and they need to be addressed. There is clearly a great amount of discontent. I have no idea what the solution is. I also don't take those concerns automatically as gospel truth. I just take them as what they are, assertions by those parties that there are issues to be addressed.
Liberal
Andy Scott Liberal Fredericton, NB
On the comment, though, that these issues have not been addressed, we also heard testimony from CTF that they had been working on these things. That's the point I'm trying to get at. You seem to be weighing in a little bit here, no?
Chair, Canadian Radio-television and Telecommunications Commission
No, Mr. Scott, I'm trying to do just the opposite. I'm trying not to take a position. I want the task force to take the position. I'm just pointing out that the assertions are that they have not been addressed.
I know that the CTF has taken certain steps, but obviously they have been deemed to be insufficient and not to have addressed the concerns. Whether that is the case or not, and to what extent, etc., that's exactly what the task force is supposed to find out.
Liberal
Andy Scott Liberal Fredericton, NB
To read this, though, it would suggest that. But we'll leave that.
It also says that when Shaw agreed to resume the payments that it was because they were sufficiently assured and confident that the CRTC would take this. What was the nature of the discussions between you and them that would cause them to be sufficiently assured?
Chair, Canadian Radio-television and Telecommunications Commission
I met with both Pierre Karl Péladeau and his vice-president, and I met with Jim Shaw and his vice-president to find out what their concerns were and to echo the call by the minister to resume payments. The minister, as you know, suggested that they should make payments.
I should add here that the obligation to make payments is annual. The obligation to make monthly payments is by convention or custom. It's not spelled out in the regulation. So technically, neither Shaw nor Quebecor were offside in not making payments prior to August. However, the tradition had arisen that these would be done monthly on the basis of a directive from the CRTC.
So the industry had built up on the basis that there would be monthly contributions and that's how the funding arrangements were. By their withholding the monthly payments, they really caused a disarray in the industry and a lot of uncertainty, and the production for next year, which is being done right now and has to be funded right now, was in doubt. Therefore, the minister suggested in very strong words that they should pay.
I went one step further and said, if you don't pay, I will have no choice but to amend the regulations and make you pay on a monthly basis. Probably that would lead to confrontation, and I prefer to work things out.
Here there is clearly an issue. You have raised it several times over the last two years. You feel it is unaddressed. I am prepared to address it, and what I'm prepared to do is to address it quickly so that it's resolved by August 31.
Now, I'm the new kid on the block. I didn't choose this crisis. It was imposed upon me, basically. I'm here, and I'm willing to solve it, but work with me rather than against me.
Obviously, something in my argument, whatever it was, convinced them that this was a good approach and they resumed payments. Therefore, when Shaw agreed to resume payments, I issued the press release setting out the task force's terms of reference and its timetable.
Liberal
Andy Scott Liberal Fredericton, NB
When you first told them of the option that if they didn't resume payment, in fact you'd have to amend the regulations to enforce that to happen in future, what was the sequence? When was the first time the CRTC said that to Shaw and Quebecor?
Chair, Canadian Radio-television and Telecommunications Commission
I issued the press release after the minister had publicly asked them to resume payments. I had been, at that point in time, one week on the job. I was being briefed and the minister made that comment, and obviously I read letters from several parties. For instance, the Directors Guild asked me to step in because the season was in jeopardy and asked for regular payments to be resumed.
After being briefed by my staff, understanding the legal situation and realizing that, notwithstanding all the verbiage about breaking the law, they actually weren't breaking the law--they were breaking an industry custom that had arisen--I decided I have the tool and I can use it, although I don't want to use it. I don't believe in confrontation if it can be avoided, but on the other hand we are responsible for Canadian content. We direct payments into this fund and we want the fund to produce Canadian content. That's not happening if the monthly payments aren't happening.
I think the words in our press release were very careful, saying “if necessary” we will move expeditiously to legislate monthly payments, which so far had been done on a customary basis, but not on a legally obligatory basis.
Conservative
Liberal
Andy Scott Liberal Fredericton, NB
Thank you.
In part, I was more referring to the position, because I recognize that you're new to the position. What was the position of the CRTC before you held the position you have now? What intervention did they make?
Chair, Canadian Radio-television and Telecommunications Commission
There really was no need to take a position because payments were being made on a monthly basis. I don't know when Shaw announced that it wouldn't make the monthly payments, but I think it was basically during the interregnum--my predecessor was leaving and I wasn't appointed yet--and under such a situation it's very difficult for an organization to take a firm position. I think the CRTC was essentially silent. It didn't say anything on it.
Maka Kotto Bloc Saint-Lambert, QC
Thank you, Mr. Chair.
Welcome. My question pertains to the groups or entities you will be consulting.
With regard to the issue of broadcasting, have you considered consulting experts from the universities? There are some who have followed the development of the CTF from its beginnings as the Cable Production Fund to the present. These individuals have observed very objectively the evolution of the Fund and of new technologies. The latter are the source of the crisis.
Chair, Canadian Radio-television and Telecommunications Commission
The new technologies are at the centre of the crisis, there is not doubt about that. They are the major cause. As for who we will be consulting, my colleague Mr. Arpin is in a better position to answer that question.
Michel Arpin Vice-Chair, Broadcasting, Canadian Radio-television and Telecommunications Commission
When the task force was announced, we indicated that we intended to consult various authorities in the industry. You may perhaps have noted this. We said we were prepared also to meet with other stakeholders. Some have already come forward. We definitely intend to meet with them.
Yet, no one from the universities has shown an interest in this matter. Over the years, several have looked at how the Fund operates. I admit that their opinions could be useful.
Bloc
Maka Kotto Bloc Saint-Lambert, QC
The reason for my question is that I wish to strike a balance between the industry's concerns and cultural concerns. Today, business concerns predominate. As was said recently before witnesses, the effect of all this on Canadian content has been somewhat understated.
We have seen what happened with satellite radio. The CRTC granted two licences to operators and now Quebec and Canada's share is 10%. The Broadcasting Act structure was not taken into account. A share of 10% is quite low for reserved space. At the beginning the 2.5% share was increased to 5%. In the present case we have forged ahead without considering the impact on cultural sovereignty.
Cultural sovereignty will have to be taken into consideration in the discussions of the task force. I am giving you a heads up, particularly with regard to the attitude of Shaw Communications Inc. This company is more concerned with the material aspect than the cultural aspect.
I would like to know if the CRTC has in the past received complaints from Shaw and Vidéotron with regard to this matter.
Chair, Canadian Radio-television and Telecommunications Commission
I was not there at the time; therefore I cannot answer.
Scott are you able to respond to that?
Scott Hutton Acting Associate Executive Director, Broadcasting, Canadian Radio-television and Telecommunications Commission
We did not receive an official request for changes. However, at one or another of our hearings or meetings, among others during the television review that took place last November and December, certain comments were made.
In his presentation on matters pertaining to television regulations, Mr. Shaw spoke about concerns regarding the Fund, but it was somewhat out of context.
Bloc
Maka Kotto Bloc Saint-Lambert, QC
Two groups that appeared before this committee stated that the authorities, in this case the CRTC and elected officials, had been alerted. I was surprised because we did not receive any complaints or statements.
Chair, Canadian Radio-television and Telecommunications Commission
Do not forget that we are not responsible for the Fund. It is the responsibility of the Department of Canadian Heritage. When people speak of the authorities, they are probably referring to the department. Our responsibility is limited to disbursing Fund monies.
I do not know who they spoke to but, as my colleague said earlier, no one filed a complaint or asked us to take specific action with regard to the Fund.