Canadian Heritage Committee on March 27th, 2007

[Glenn O'Farrell]

In 2005, the Office of the Auditor General published recommendations in this regard and we would like to provide an example illustrating how improved accountability and greater transparency could shed light on a debate such as the one we are having this morning.

For example, in 2005, the Office of the Auditor General noted that the Radio-Canada radio services had 8,800 hours of unused programming available for broadcast that were not put on the air. For all practical purposes, we refer to this as on the shelf, and it represents programming that has been purchased but not broadcast.

Why would a public broadcaster need to make such large program acquisitions and then shelve them? Let us go over the figures together: what do 8,800 hours of programming represent? Peak prime time, on average, consists of three hours per evening, seven evenings per week, for a total of 21 hours of peak prime time programming per week.

If all the unused hours of programming were to be broadcast during peak prime time, they would provide eight years of peak prime time programming. There may well be a very good explanation for this. But in the absence of more detailed information, we are permitted to make some assumptions. We feel we have to do so to shed light on the debate about the future of the CBC/Radio-Canada, its funding, how to fine-tune its mandate to make it more accountable and to have it finally fulfill the expectations of all Canadians in terms of being a top quality service, a public radio and television service that people are proud of.

Our discussion is one that everyone can take part in because if we had more information in front of us, our discussion this morning would be much more enlightened. The same Auditor General's report revealed that the same year, in March 2005, when she tabled her report, the CBC English network—Radio-Canada was not alone in shelving many hours of programming—had almost 6,000 hours of on the shelf programming that were not broadcast.

The question to ask is as follows: with regard to procurement practices, why is a public broadcaster stocking so many programs without airing them? There may be a good reason for this, but—

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

You speak of the role of advertising in or its contribution to CBC/Radio-Canada operations. You suggest that it should not generate advertising revenues. Do you mean absolutely none, or would you consider the possibility of the CBC/Radio-Canada having some access to part of the advertising market if it would help, as you say, fulfill its core mandate?

[Glenn O'Farrell]

The answer will be very short. In fact, before discussing advertising revenues, we need to know how parliamentary appropriations are spent and determine the extent to which these operations are in keeping with the concept of a public service that is complementary to and not in competition with the private sector.

Once this analysis has been done, and if there is a gap and other revenue is required, it will be possible to question whether or not other appropriations would be desirable or possible, or if there are other sources of revenue. I believe that the discussion should centre on this matter. It is not a question of us saying from the outset that it is fair and reasonable for these business activities to continue. Not when we do not have detailed information about how the appropriations of the federal treasury are used.

[The Chair, Conservative, Gary Schellenberger]

Mr. Angus.

[Charlie Angus, NDP, Timmins—James Bay, ON]

Thank you very much for coming this morning. I found your presentation to be fascinating.

I'm going to key in on some of your key recommendations.

You say the CBC should be required to publicly report detailed financial information relating to its owned-and-operated, etc., because, as you said, without this level of transparency it's basically impossible to know if they're fulfilling their mandate.

Now, I notice that the CRTC is refusing to provide detailed financial information on the performance of private broadcasters involved in transfers of licences, mergers, renewals. I would agree with you that without that kind of financial information, it's pretty much impossible for us to tell if any of these transfers were in the public interest. So on behalf of the private broadcasters, would you provide that information to the public, if asked?

[Glenn O'Farrell]

My understanding is we're looking at the CBC this morning, and not transfers of ownership in the private sector—

[Charlie Angus, NDP, Timmins—James Bay, ON]

Well, I'm looking at whether or not the broadcasters—

[Glenn O'Farrell]

If I can finish my answer, Mr. Angus, maybe—

[Charlie Angus, NDP, Timmins—James Bay, ON]

Well, would you answer the question then?

[Glenn O'Farrell]

Maybe you'd let me finish, and then I'd be happy to answer if you are not satisfied with my first answer.

I believe we're talking about the CBC here, and we're not talking about privately transferred...or companies that are looking to acquire each other and seeking the authority from the CRTC to make that transfer. If you want to talk about that, I think we would like to prepare responses on the basis of specific questions you may have.

The allegation you made as to the access to the public of information regarding the transactions I believe is inaccurate.

[Charlie Angus, NDP, Timmins—James Bay, ON]

Well, I'm glad that you put that on the record. We will check that. But I'm interested, because your four recommendations are basically to stay away from advertising, stay out of our local markets, stay off the Internet, and leave all CBC books open to competition.

I'm wondering what we're going to get out of this public bargain you're asking for. You're talking about public subsidies of a public broadcaster, so certainly there's an issue of accountability, but there's also the issue of public subsidy of private broadcast.

We're looking at simultaneous substitution, the Income Tax Act, section 19.1, where English-language private conventional television garners about $271 million to $331 million a year. Because of that, specialty service is probably up to $900 million a year. So certainly there's a public interest in.... We've been subsidizing the private broadcasters' bottom line substantially, I would suggest. Yet I'm looking at the programming for television, and I'm seeing that on CTV, for example, at prime time, it's a Canadian wasteland.

[The Chair, Conservative, Gary Schellenberger]

Excuse me. Let's stay on the mandate of the CBC.

[Charlie Angus, NDP, Timmins—James Bay, ON]

Well, I am staying on CBC, Mr. Chair, in that I'm asking what we get out of this bargain. If we take CBC out of commercial revenues, if we take them out of the local markets, if we're told to stay off the Internet, certainly we'd expect private broadcast to pick up the slack. I'm looking at prime time for broadcast and I'm seeing nothing except Entertainment Tonight and eTalk.

So what would private broadcast do to step in to fill this void if we pulled your major competition out of it?

[Glenn O'Farrell]

You started your remarks, Mr. Angus, by saying you were fascinated by our submission this morning, and I appreciate that comment. I'm equally fascinated with your lack of understanding of the issues you're representing and making allegations on.

Simultaneous substitution, Mr. Angus, is not a parliamentary appropriation, is not a subsidy, and if you wished to look at that more closely, I think you'd come to that conclusion. It's about copyright, sir. So for the rest of your remarks, I'm not sure what exactly you mean.

[Charlie Angus, NDP, Timmins—James Bay, ON]

Well, it's very simple. I'm looking here at private broadcast--the blue is American programming; the red, which is basically eTalk, is Canadian programming. I might be very ignorant on broadcast, but when I turn on the TV I'm not seeing the private broadcaster stepping up to the plate.

You've come before us and you've told us to basically take CBC out of any possible competition with the private broadcasters. So my question is, what are we getting out of this bargain? I might be ignorant in the question, but I don't see anything in the bargain for the Canadian public here.

[Glenn O'Farrell]

Well, my fascination, sir, is simply with the way you are seeking to contort instruments of policy and regulation that apply to the broadcasting system, and making allegations holding up charts, or whatever other prop you want to use, to make a point—

[Charlie Angus, NDP, Timmins—James Bay, ON]

Well, it's either true or it's not true.

[Glenn O'Farrell]

Do you want to carry on? Go ahead.

[Charlie Angus, NDP, Timmins—James Bay, ON]

Well, I'm just asking, is it true or is it not true? I'm not making allegations; I'm just showing you that in prime time broadcast for CTV, other than eTalk, there's basically nothing on. That's not an allegation; that's a fact.

[Glenn O'Farrell]

Where I was going with my response, Mr. Chair, is if this committee wishes to look at measures—policy measures, regulatory measures—that support the Canadian broadcasting system as a whole, we'd be happy to look at that at whatever time you choose to do so.

Quite frankly, I find your comments, sir, in holding up a program schedule this morning, are fraudulent, because here we are talking about the CBC and transparency.

Can you provide, sir, any information on the CBC as to its program funding, its revenue strategies, or how in fact the funds are actually used? This is not to make an indicting statement, Mr. Angus; it's simply to say to have a discussion about public broadcasting would be best, in our view, enlightened by a basis of fact.

We may not agree, and that's perfectly fine. We respect your right to disagree, and to disagree viscerally, but at least we would be starting from the point of view that would be shared, at least in terms of the facts. In the absence of those facts, we feel that it's a very difficult discussion. It's a very difficult discussion that frankly doesn't lead anywhere, in our view, that's all that constructive.

[The Chair, Conservative, Gary Schellenberger]

Thank you for that.

Mr. Fast.

[Ed Fast, Conservative, Abbotsford, BC]

Thank you, Mr. Chair.

I'd like to follow up in the same vein, but probably not in an adversarial manner, because I appreciate the contribution the private broadcasters make to Canadians in general.

You've made a number of statements. I've also had a chance to review The Future Environment facing the Canadian Broadcasting System, a report prepared by the CRTC. One of the issues you raised has to do with some of the regulatory obstacles your industry faces. I'd like to quote from item 280 of that report. You made pretty extensive submissions to that hearing. I'll just quote that item.

The CAB, supported by the CCSA, added that HDTV provides a ready example of the load shouldered by conventional broadcasters due to regulatory expectations. The CAB noted that “the Commission’s framework for digital and HD television is a highly detailed set of regulatory expectations relating to timelines, technical standards, and content quotas. These obligations will have a significant impact on the cost of the digital and HD transitions for broadcasters.

So it's a general statement of unease with the regulations that you have to comply with. Then you also made the statement today at our committee meeting that you would like to see CBC withdraw from reliance on advertising revenues. We also had testimony at this table from quite a number of witnesses that they feel there is a significant underfunding of CBC. When you put those last two points together, it means essentially what you're calling for is an even significantly greater subsidy of public broadcasting in Canada, well above the current $1 billion, or there's going to have to be some other model on which a new mandate for the CBC can be funded.

My question to you is this. Very briefly, just articulate some of the regulatory challenges you face that you'd like to see addressed. Even more importantly, could you answer whether your industry is prepared to be a contributor to solving the funding problems CBC apparently faces, whether by way of contributing to that funding or some other mechanism by which CBC can continue to be sustained as the mirror in which Canadians see themselves?

[Glenn O'Farrell]

I think the point you make is absolutely valid. There are tension points, frankly, in the regulatory model that make the operations of conventional and specialty private broadcasting in Canada more challenging than less challenging. This is simply because many of the policies and regulations were not necessarily conceived for where we are now in terms of our transition as a system that was once totally regulated to one that is regulated in part and unregulated in part, with so many content services and media services gaining access to consumers directly.

Where we see the debate of this committee going is to perhaps bring a frame of reference back to the discussion to the broadcasting system, and it starts with how the public broadcaster is funded. We are not suggesting nor do we have information to support the allegation that they are overfunded or underfunded, in light of the fact that we do not have the detailed information to make the assessment of how the funds are actually used.

The example that I was giving earlier to Mr. Kotto was the example of what the Auditor General found in her 2005 report, where upon doing a more in-depth analysis of the CBC's books she found that there were 8,800 hours of programming on the shelves from the French-language network's perspective, and 5,800 hours on the shelf in the English network's side of the equation.

That leads us to ask this question. How is it that a public broadcaster would need to stockpile so much programming, and is that in fact used? Because that programming was acquired; it did not flow to those shelves without some acquisition and some cost involved. Why would it be useful for that practice, for a public broadcaster, in fulfilling a mandate? Is it because it is driven by advertising revenue strategies? That might be part of the answer. Is it basically to buy up programming so that others cannot have access to it, even if it means putting it on the shelf rather than broadcasting it yourself? We don't know, and the reason we don't know is because the kind of detailed information to which we are referring would provide, if not all of the answers to those questions, at least some of the answers as to why those programming strategies were pursued.

Fundamentally, broadcasting comes down to programming strategies and marketing, and we don't understand, as this example illustrates, how those funds were deployed and what funds were used to make those acquisitions. So we don't want to leave you with the impression that we're saying they're overfunded or underfunded. We're saying before we make that assessment we have to know how the funds are being used, and the only way to do that is by more detailed accountability and transparency in their reporting.

[Ed Fast, Conservative, Abbotsford, BC]

Do you believe CBC should play a role in delivering professional sports programming?

[Glenn O'Farrell]

I'll give you the short answer. In terms of the deal that was announced yesterday, again, we have no details to know whether or not that's a good deal for a public broadcaster, but clearly professional sports is offered both on public and private television in Canada today, and it's all a matter of where it makes the most sense.

I come back to the point I was raising earlier. Is there a distortion in the commercial marketplace? And if there is, it's questionably complementary at that point in time.