Evidence of meeting #43 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 programming.
A recording is available from Parliament.
9:05 a.m.
Conservative
The Chair Conservative Gary Schellenberger
Good morning, everyone. This morning we welcome our witnesses to this, the 43rd meeting of the Standing Committee on Canadian Heritage, and today, pursuant to Standing Order 108(2), a full investigation of the role of a public broadcaster in the 21st century.
In our first hour, we welcome the Canadian Radio-television and Telecommunications Commission.
Mr. Hutton, I will ask you to introduce your people and make your presentation, please, sir. Thank you.
9:05 a.m.
Scott Hutton Acting Associate Executive Director, Broadcasting, Canadian Radio-television and Telecommunications Commission
Thank you and good morning, Mr. Chairman and members of the committee.
My name is Scott Hutton. I'm the associate executive director of broadcasting at the Canadian Radio-television and Telecommunications Commission. With me today are Peter Foster, manager of conventional television, and Doug Wilson, our director of strategic research and economic analysis.
Prior to making our presentation, on behalf of our chairman, Konrad von Finckenstein, I would like to table some information as a follow-up to the last appearance of the commission at the Standing Committee on Canadian Heritage on March 1, 2007. At that time, Mr. Angus requested some additional information with respect to both our process for handling ownership transactions and details of particular ownership transactions that we had dealt with without public process.
We're tabling this report. I believe copies are being handed out to you right now par le greffier. Briefly, I would just outline that essentially our process for share transfers is conducted subsequent to the issuing of a public notice announcing that we would handle certain share transfers, transfers of control, without public process. That public notice is in your package. It outlines the criteria on which we judge whether or not to issue a public process. There is also an explanation of the internal workings that the CRTC goes through in the process of considering such issues. There is an outline of the transactions that have occurred pursuant to this process over the last two years, and in particular, on pages 4 and 5, the specific transactions raised by Mr. Angus in respect to 18 radio stations in the province of British Columbia. Regarding that particular case, I would just note that although 18 appears to be a large number of transactions, the overall audience figures and revenue figures, as compared to the level for the province, are rather small. You'll see from the details of that transaction that it was, in a way, an introduction of new players to the market, so we considered at the time that it did not raise significant policy considerations that would require a public process.
Thank you for your patience.
We'll now move on to our business of the day. We are pleased to contribute to your study on the Canadian Broadcasting Corporation and to provide our insight on how new technologies have been transforming the broadcasting industry. We have provided you with a deck on our recent report on the future of broadcasting. I won't go through it, but you may want to refer to it in questioning.
In the last few years we have seen the appearance of new technologies to distribute content to consumers, from personal music devices, such as MP3 players and iPods, to Internet-based radio stations. On the television side, the digital universe offers a multitude of pay and specialty channels, many of which are attracting a larger share of viewers. The Internet is also playing a more prominent role. You only have to look at websites such as YouTube for evidence that people enjoy being able to watch and upload short video clips. Meanwhile, conventional broadcasters are contemplating different strategies to manage the transition from analog to digital and high-definition signals.
These innovations, along with many others, are creating a competitive environment that is constantly evolving, one that presents new opportunities and new challenges. It is also an environment that places more power and choice in the hands of consumers.
What effect will it have on Canadian broadcasters, and in particular our national public broadcaster? Before I address this question in more detail, I would like to outline certain elements of the Broadcasting Act that are relevant to your study.
As you know, the CRTC's mandate is to regulate and supervise broadcasting in Canada, as set out in the act, which also describes, under section 3, the Canadian broadcasting policy. Among other things, this section reveals the role of the national public broadcaster. For instance, it states that the CBC should provide radio and television services incorporating a wide range of programming that informs, enlightens, and entertains.
As part of its mandate, the commission is responsible for issuing, amending or renewing broadcasting licences, and the CBC must submit applications like any other broadcaster. It is this activity that brings us to work most closely with the CBC.
Every seven years, the Corporation must file applications to renew the licences of its radio, television and specialty services. This provides us with an opportunity to review the CBC's overall plans and strategies for the next seven years. It tells us in specific terms what programs and services it will offer to Canadians and how it will go about meeting its objectives.
The importance of this exchange cannot be understated. Given our knowledge of the overall broadcasting system, we can draw attention to the aspects of the CBC's proposal that we feel hold the most merit. As well, our proceeding is open to the public. The last time we held a hearing to examine the CBC's licence renewal applications, we received some 4,000 submissions from citizens from one end of the country to the other--a clear indication that Canadians are very interested in the public broadcaster's future.
From time to time, the commission may propose conditions of licence in order to better meet the objectives of the act. The CBC has the option of requesting a consultation over such proposals. It is always possible that despite engaging in a consultation, the CBC will remain convinced the condition we are proposing would unreasonably impede it in the provision of programming services contemplated by the act. In this instance, subsection 23(2) states that the CBC can refer the condition to the minister for consideration within 30 days.
The Broadcasting Act also contains other provisions that explain the powers of the CBC, its financial arrangements and the constitution, mandate and responsibilities of its board of directors.
As I mentioned at the outset, the CBC is operating in an environment that is developing rapidly and that is forcing broadcasters to re-evaluate their business models. In June 2006, the Governor in Council, pursuant to section 15 of the Broadcasting Act, requested that the commission provide a factual report on the future environment facing the Canadian broadcasting system. The areas we were asked to examine are noted on page 4 of the deck.
In response to our public notice, we received 52 submissions from individuals, consumer groups, broadcasters, distributors and industry associations, and we commissioned three independent research studies.
What did we find? While the consumption of new technologies is growing, we observed that it is having minimal impact on the regulated system. Canadians still consume the vast majority of programming through regulated broadcasting undertakings and new technologies. New technologies have played a complementary role up until now.
However, given the emergence of new platforms and technologies over the last five to ten years, the only thing that will remain constant is change, and the speed at which change is occurring. Every day, we are seeing that the expectations and demands of consumers are changing. Consumers want more audio and video programming, and greater choice in how they access that programming, when they access it and where they access it.
In time, new digital technologies could potentially replace regulated undertakings. This is why it is crucial for broadcasters to explore new opportunities to bring content to consumers.
Canadians, and particularly teenagers and young adults, are increasingly accessing programming through unregulated platforms such as the Internet. In the next decade, these younger Canadians will begin to exert their full influence on the marketplace, although it is too early to predict their future behaviour.
So when can broadcasters expect to feel the impacts of new technologies and the financial ramifications that might be associated with them? We found widespread uncertainty over this question. There was also a lack of consensus over the question of what regulations may be needed or not needed for broadcasters and new media.
Section 5 of the act instructs us that the broadcasting system should be regulated and supervised in a flexible manner so that it may adapt to technological change. This explicitly recognizes that different platforms and technologies contribute to the objectives of the act in different ways. As we move forward, one of the basic considerations will be to ensure that the broadcasting system continues to achieve these same objectives.
At the present time, there is a healthy Canadian presence in new user-generated content as well as in new media programming in short format such as news and sports clips. For the expensive, long-form programming, such as drama and nation-building events, we found that the same challenges exist for Canadian content in new media as in broadcasting.
Given the evidence provided with respect to the speed and acceptance of technological change, the commission concluded that it would prudent for policy-makers to assume that broadcasting undertakings may experience a material impact within the foreseeable future.
Participants in the study raised a very important question: should new media make an explicit contribution to our social and cultural goals? If you find that the answer is yes, then the next question you must ask is whether or not public policy intervention is necessary. And finally, if public policy intervention is indeed required, what are the most effective tools to ensure that new media does its part in the attainment of our goals?
Participants were also in agreement that the detailed and ongoing monitoring of developments is essential for an informed public policy response.
The commission has already placed a greater emphasis on monitoring the impact of new technologies so that it may contribute to the formulation of the best policy and regulatory response possible. Notably, we have created a new media policy and research group.
As well, we are now in the process of reviewing our principal policies and regulations. We started by publishing, in February 2006, a framework to guide the migration of analog pay and specialty services to a digital environment. Then, this past December, we issued a revised policy on radio and we are now reviewing our policy on over-the-air television. Once we complete this review later this spring, we will be taking a closer look at our policies on discretionary services and broadcasting distribution.
After reviewing the rules for over-the-air television, we will proceed with the renewal of licences of these services, and of course those of the CBC.
Before closing, I wish to underscore the high quality of the submission that the CBC provided to our study. These submissions are available on our website under “Broadcasting, Public Notice CRTC 2006-72”.
We look forward to the results of your study and now welcome any questions you may have.
Thank you. Je vous remercie.
9:15 a.m.
Conservative
9:15 a.m.
Conservative
9:15 a.m.
Liberal
Tina Keeper Liberal Churchill, MB
Thank you, Mr. Chair.
Thank you for the presentation.
I'd like to ask you about a comment you made. You say “...when can broadcasters expect to feel the impacts of new technologies and the financial ramifications.... We found widespread uncertainty....”
On this whole issue of new technology, the impacts, I guess I'd just like to get a sense of what you found in terms of the financial impacts, and also in terms of Canadian content and the social and cultural values. I'd like to have a greater sense of what you found there.
9:15 a.m.
Acting Associate Executive Director, Broadcasting, Canadian Radio-television and Telecommunications Commission
In terms of financial impact, the impact of new media--although new media has grown tremendously--has created a space for itself out of nowhere in the last decade. It has not had a significant impact on our broadcasters. We are beginning to see maybe slower revenue growth, maybe flat growth, but you have not seen a drastic shift away from consumption of our broadcasters' products and away from providing revenue for the broadcasters.
What we found vis-à-vis Canadian content...well, naturally our regulated system continues to provide the levels that we require of it and that the system requires of it, in light of the fact that the revenue picture is still holding there. If we look at what we found in the new media area as a result of our study, we certainly found that any one of us...if you look at YouTube, if you look at short user-content-generated information, Canadians are finding their way onto the platform.
If we look at what we call short news items, news clips, sports clips, current broadcasters or certain players in the newspaper field would be putting news about Canada on their websites. That appears to be making its way through the system. Canadians, just as in radio and television, demand to know about themselves through news and sports, one sport in particular. It's finding its way there.
What is not finding its way to the Internet--and I'd venture to say anywhere on the Internet, but in particular Canadian content-- are the more high-end productions. High-end can be deemed to be Canadian drama, for example. The platform isn't quite ready, and that hasn't found itself there. We suspect that as with the key component of some of our exhibition requirements with respect to television, it's hard for our regulated enterprises to provide that or find the financial means to provide such services. We think it will be the same in the new media platforms.
9:20 a.m.
Liberal
Tina Keeper Liberal Churchill, MB
I want to continue talking about new media. I had an interesting meeting recently with a person who has worked with artists for the past 25 years, and in particular with young artists. One of the things she mentioned to me was that youth today—and I know you mention it in terms of what the impacts are going to be in the next decade with this youth population that is using the Internet and is using new media. She talked about it being its own culture almost, and that there's a particular kind of globalization or there's a particular culture being developed, and it's shifting Canadian culture in terms of the arts and in terms of how young people and young Canadians understand their culture as being tied to that, those media. Did you find any of that? Can you talk about that in any sense, and how regulations...or how is it we move forward to address those?
9:20 a.m.
Acting Associate Executive Director, Broadcasting, Canadian Radio-television and Telecommunications Commission
Definitely, younger Canadians are the early adopters in this case. Traditionally, the broadcasting system has catered more toward those who have higher incomes, more disposable incomes, families. The younger Canadians aren't finding what they want on the current broadcasting system. That's something that's been around for many years. If we go back for decades, younger Canadians consume less radio and television than their parents, let's say, for the sake of discussion.
Here we are definitely seeing—and I have to agree with you—probably a shift further away. The gap is greater. They have not abandoned traditional platforms. They are consuming somewhat fewer of them. The reduction, I would say, in the traditional platforms is much smaller than the gain that is being made in the new media. If you look at the hours of consumption of Internet services, hours spent chatting using the chat services are far greater, so that time is either creating itself or it's coming from somewhere, consuming other products that were not broadcasting services.
Certainly it is a much more wide-open environment, and Canadians are finding their way into that wide-open environment. Young Canadians are finding their way. I'd have to agree with you that things are developing on that front, and Canadian stories from these young folks are finding their place on the world wide web, if you want.
9:20 a.m.
Conservative
9:20 a.m.
Bloc
Maka Kotto Bloc Saint-Lambert, QC
Thank you, Mr. Chairman.
Welcome.
I have a series of questions for you, which I hope will be educational for us. I probably will be unable to ask them all, but in case I run out of time, I will ask them all at once and you can always provide me with written responses.
You said that the proliferation of platforms used in Canada means that the crown corporation is de facto overstepping the mandate it has under the Canadian broadcasting policy.
In our analysis of the CBC's mandate, should we consider these new platforms? Should the CRTC do so as well, in renewing the CBC's licence?
March 20th, 2007 / 9:20 a.m.
Acting Associate Executive Director, Broadcasting, Canadian Radio-television and Telecommunications Commission
All broadcasters in this country, including the CBC, have started to explore new platforms. Based on our report, we believe it is their obligation to do so, because Canadians have more choices. They want to exercise this choice and have access to the same programming through various platforms. They also want to exercise this choice from home at times, or on a mobile basis, and when they choose to do so.
For broadcasting products to get to consumers, we are of the view that all broadcasters should explore the various platforms. In the case of private broadcasters their very survival depends on it.
9:25 a.m.
Bloc
Maka Kotto Bloc Saint-Lambert, QC
The CBC deals with private companies and offers certain promotions, notably in the case of access to certain material for cell phone users dealing with a company I cannot name.
Do you consider this type of practice to be consistent with the spirit of CBC's mandate? Should this be regulated?
9:25 a.m.
Acting Associate Executive Director, Broadcasting, Canadian Radio-television and Telecommunications Commission
To date, our policy with respect to mobile services offered by cell phone companies is based on exemptions. We have given these new technologies some leeway so as not to impose regulations, which involve costs. These are new platforms. We've decided to give them the freedom to choose the programming they want to offer to Canadians as they see fit. As I stated earlier on, Canadians want services to be available on different platforms.
Our goal is to let things evolve. When it comes to our regulations, it is acceptable for the CBC to offer services through subcontracts with mobile companies.
9:25 a.m.
Acting Associate Executive Director, Broadcasting, Canadian Radio-television and Telecommunications Commission
It's consistent with the spirit of our regulations, yes.
9:25 a.m.
Bloc
Maka Kotto Bloc Saint-Lambert, QC
The Société Radio-Canada, but not the CBC, is starting to increasingly resemble private television. Do you believe that its mandate and its vested rights, for instance its guaranteed shares in the Canadian Television Fund, are still needed?
9:25 a.m.
Acting Associate Executive Director, Broadcasting, Canadian Radio-television and Telecommunications Commission
I will reserve my comments on the Canadian Television Fund, because, as you know, we have a team which is currently meeting with the various parties involved in order to try to find the right path with respect to the fund. So, I will try to avoid discussing the matter.
The Société Radio-Canada must, like all private broadcasters, compete on the market and reach its client base, diversify and renew itself in order to provide Canadians with the services they need. So, from either side—I'm not referring to the Canadian Television Fund—it has to go ahead—
9:25 a.m.
Bloc
Maka Kotto Bloc Saint-Lambert, QC
You answered my question in part, yet substantially.
Is this not a trap for CBC/Radio-Canada, in that it is unduly focused on good ratings rather than on the very essence of its mission?
9:25 a.m.
Acting Associate Executive Director, Broadcasting, Canadian Radio-television and Telecommunications Commission
When we renew their licence, we also make this value judgment. At the last renewal, we consulted with Canadians, and in the case of the CBC/Radio-Canada there were some shortcomings; some services and some types of programming that Canadians wanted, like music services and that type of programming had been abandoned by the CBC. We did pressure them in that area. So, we do exercise value judgments when it comes to the CBC/Radio-Canada.
9:25 a.m.
Conservative
9:25 a.m.
NDP
Charlie Angus NDP Timmins—James Bay, ON
Thank you very much for coming. It's a fascinating discussion.
I want to know if you've looked at the issue of how we monetize the value of what is being put on these new platforms. Have you looked at some of the models out there, such as the BigChampagne model for peer-to-peer service or other scenarios for monetizing the work artists are putting on there?
9:25 a.m.
Acting Associate Executive Director, Broadcasting, Canadian Radio-television and Telecommunications Commission
We have not done any studies as yet on that domain.
I will indicate that the business models for how to monetize rights and how to monetize product are certainly evolving right now and are in a state of flux. A lot of the changes and a lot of the issues, as our chair mentioned last time when he was here about the CTF, relate to that evolution in the market. We have not studied that matter.
9:25 a.m.
NDP
Charlie Angus NDP Timmins—James Bay, ON
Well, my daughters come home, and my daughters are abuzz about their favourite television show, Never Mind the Buzzcocks. Every night they talk about their favourite television show, and they watch their favourite television show on YouTube because the BBC has put their entire catalogue on YouTube. It's created a market around the world. They go on chat lines, and kids all over the world watch this show, and they're part of it. I think it's actually a very exciting model for television.
The question then is this, and it was at the centre of the recent actors strike. If we have such an amazing back catalogue of Canadian product that we could put on for people around the world to watch, what kind of fee can we get to ensure people are paid for their work? Have you looked at that aspect of it yet?