Evidence of meeting #52 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 cbc.
2:30 p.m.
Conservative
The Chair Conservative Gary Schellenberger
Welcome.
We had some interesting sessions with witnesses this morning, and we welcome our afternoon witnesses. We'll try to stay on time. I would just ask you, please, to try to keep your presentations to roughly ten minutes, if we can. That will give us some time for questions.
We welcome the Association of Canadian Advertisers, Corus Entertainment Incorporated, and the Documentary Organisation of Canada.
We'll start off with the Association of Canadian Advertisers, please.
2:30 p.m.
Ronald Lund President and Chief Operating Officer, Association of Canadian Advertisers
Thank you, and good afternoon, Mr. Chairman and members of the committee.
We are very pleased to have this opportunity to participate, with our comments, in your committee's important investigation into the role of the public broadcaster in the 21st century.
The Association of Canadian Advertisers is the only association solely representing the interests of advertisers in this country. Our members, over 200 companies and divisions, represent a wide range of industry sectors, including manufacturing, retail, packaged goods, financial services, and communications. They are the top advertisers in Canada, with estimated annual sales of close to $350 billion.
Our organization is concerned, specifically, with the advertising function in our economy and the many different processes it can encompass. Your committee’s mandate for this investigation is quite broad. It encompasses CBC’s role, the services it offers, and the emergence of new media. However, our comments will be confined to the financial services area specified in the mandate.
Advertising is a significant economic force in the world. In virtually all developed countries, advertising is considered an important and necessary component of the communications infrastructure. It is estimated that total worldwide disposable advertising expenditures approached $2 trillion U.S. last year.
Advertising, as you would expect, is also a significant economic force in Canada. Advertising expenditures in 2005 were projected at $13 billion. Direct and indirect employment in this sector represents about 250,000 jobs, or about 2% of all jobs in Canada. Importantly, about 79% of total advertising expenditures remain in the Canadian economy as value added. Compared to most Canadian industries, this is a very high level of domestic content.
Advertising increases government revenues through the income tax derived from the jobs it creates and from the greater sales-tax base that results from it. In short, without the ability, via advertising, to communicate and establish strong brands, we would not be able to differentiate our benefits.
2:30 p.m.
Robert Reaume Vice-President, Policy and Research, Association of Canadian Advertisers
Clearly, advertising makes a significant economic contribution to our country. It is the fuel for Canada’s economic engine. Furthermore, advertising makes it possible for the broadcasting system to fulfill the public objectives established by the Broadcasting Act. Without advertising revenues, Canada’s broadcasting system could not survive.
It is because of this that advertisers favour universal access to media. We believe that all broadcasting, and print and Internet services as well, should permit, and indeed would benefit from, commercial advertising.
This extends to the CBC as well. Advertisers have always supported the CBC, and we are proud of the role that we have had in its success. Advertising support of the public broadcaster allows governments to be fiscally prudent while still advancing public policy goals.
CBC television, both English and French, currently supplies substantial amounts of commercial inventory to the advertising marketplace, providing advertisers with opportunities to sponsor distinctive programming that delivers value to audiences. CBC audiences are particularly interesting to advertisers since they routinely run at diminished levels of commercial clutter compared to private broadcasters.
Some have suggested that CBC-TV should reduce its reliance on commercial revenues. This is a non-starter for advertisers, since it would take some $400 million—estimated—in commercial inventory out of the market, significantly diminishing supply and inevitably leading to increased TV advertising costs that would have to be passed on to consumers.
In our opinion, there are not enough existing conventional outlets, especially at the local level, to safely replace this market inventory. Without replacement inventory that does not add to clutter, and without adequate competition, the cost of TV advertising would be driven up, and advertisers would naturally divert some portion of their spending to other, less costly media and be forced to raise prices to consumers. This would only serve to diminish overall advertising funding, add consumer costs, and ultimately end up weakening the broadcasting system.
Canada's advertisers have had to cope over the years with increasingly restricted access to Canadian audiences. Approximately one-quarter to one-third of all TV viewing in this country is to signals that cannot be commercially accessed by advertisers in Canada. A non-commercial CBC would only exacerbate this problem.
An independent third-party researcher engaged by ACA to examine the effects on advertisers of a non-commercial CBC has estimated that advertiser costs in English Canada would rise approximately 10%, and in French Canada, where SRC is more dominant, by 24%. And this estimate was done before the current round of staggering consolidation that has occurred in Canadian broadcasting, such as the CTV-CHUM merger, and the competitive and cost implications that flow from this.
There is also the question of how to fill the time that would be left open by the elimination of commercials, and of course how to pay for it as well. Taking commercials off CBC-TV, for instance, would necessitate the production or purchase of over 1,000 new hours of programming per year, obviously at significant cost. Advertisers believe that a commercialization policy should also be extended to CBC's radio service. CBC radio listeners are already quite used to commercial content in the form of free public-service-type announcements for cultural and community events, as well as many program promotion spots, a practice that is essentially, in our opinion, discriminatory.
Many unique, desirable, and commercially viable audiences are generated by CBC radio, audiences that could easily be monetized to help contribute to the achievement of a public broadcaster's goals. This need not necessarily be traditional 60- or 30-second intrusive advertising, but rather corporate recognition spots as employed, for instance, by the National Public Radio service in the United States. Corporate sponsorships currently account for a substantial part of NPR's revenues, derived from an average of only one minute and thirty seconds per hour of sponsored commercial time.
2:35 p.m.
President and Chief Operating Officer, Association of Canadian Advertisers
Advertising in general—and certainly advertising in the television medium—is and continues to be quite underdeveloped in Canada. Per capita total ad spending in the U.S., for instance, is three times that of Canada, and in the UK it is 50% higher. For television, per capita U.S. ad spending is two and a half times that of Canada, and in the UK it is one-third higher. Even Australia’s per capita ad spending on TV is almost a third more than Canada's.
Advertisers in this country need access to more commercial time, not less. We frequently hear complaints from advertisers who cannot access sufficient TV commercial inventory during many times of the year. We need to grow our advertising opportunities in Canada, not restrict them.
In summary, it is our opinion that advertising plays an essential role in the continuing economic and cultural viability of the broadcast medium. The CBC has been a terrific partner with advertisers over the years. We believe that advertising revenue on the CBC only enhances its ability to achieve the special responsibilities given to it under the Broadcast Act. Restricting commercial access on CBC would result in a no-win situation for all concerned. It would undermine the quality and variety of television programming; remove an important supply of commercial inventory for advertisers, especially in local markets; and lead to an increase in costs that would ultimately have to be borne by consumers.
We appreciate the opportunity to participate, and we wish your committee well in its deliberations. It is our hope that the results will be of benefit to all Canadians.
Thank you.
2:35 p.m.
Conservative
The Chair Conservative Gary Schellenberger
Thank you very much for that.
Now we'll go to Corus Entertainment and Mr. Maavara.
2:35 p.m.
Gary Maavara Vice-President and General Counsel, Corus Entertainment Inc.
Good afternoon, Mr. Chairman, ladies and gentlemen.
My name is Gary Maavara, and I am vice-president and general counsel of Corus Entertainment Inc. Joining me today is Sylvie Courtemanche, who is our vice-president of government relations.
We thank the committee for the opportunity to appear and provide our thoughts on your investigation of the role of the CBC in the 21st century. Corus filed a written submission on February 26. In it, we described how we see the broadcasting sector evolving over the coming years, and how the CBC should be part of our collective future.
Corus has three operating divisions: television, radio, and content. It is Canada's largest TV broadcaster to children. We operate the YTV and Treehouse specialty networks, and we have an ownership interest in Teletoon. We also own Nelvana, which is one of the world's largest producers of children's animation programming. In the last five years, Nelvana alone has spent hundreds of millions of dollars on the production of top-quality Canadian animation programming.
The Corus books subsidiary, Kids Can Press, is Canada's largest publisher of books for children. Our movie networks, such Movie Central, and services such as the W Network and CMT, establish us as an important provider of programming targeted to adults as well.
Corus is Canada's leading radio operator, as measured by audience tuning. We operate 50 stations in both English- and French-language markets. Many of our heritage news-talk stations serve the ridings represented by the members of this committee, therefore you understand how connected we are with the issues that Canadians are thinking about.
The major reason why we are here today is because we own and operate three over-the-air CBC affiliate television stations that serve Peterborough, Oshawa, and Kingston. They are the only local TV stations in those markets, and as such they play a crucial role in those communities.
The committee's present investigation of the CBC's overall current and future mandate is a very ambitious one.
2:40 p.m.
Sylvie Courtemanche Vice-President, Government Relations, Corus Entertainment Inc.
Corus believes that the success of media players in the 21st century will depend on their ability to provide relevant content that audiences want to watch. The notion that content is king becomes all the more relevant in an environment where linear scheduled analog broadcasting is evolving to a fully digital interactive environment.
In the next five years the consumption of linear television is expected to decline in favour of this interactive digital world of high-definition television, satellite, mobile, IPTV, subscription services, podcasts, and website aggregation services. Consumers will view what they want, when they want it and where they want it. We will also watch what ordinary people create. The whole YouTube and MySpace phenomenon is evidence of this change. As legislators, you are all realizing this, as you must now maintain websites, respond quickly to constituent e-mails, and worry about what someone might be saying on their blog about you or your party's policy. The world has changed for all of us.
Meanwhile, at the core of this digital interactive environment is the same rule that has always applied. Canadians expect and demand great storytelling that is relevant to their lives. They expect great news and sports coverage. They want to know what is happening at home and abroad. They also want to be entertained. New technology does not and will not change this axiom.
Corus believes that Canadian broadcast policy goals are best served when we can meet this demand. Canadians insist upon high-quality and compelling programming. Therefore, the policy strategy should be to foster the creation of this content. However, this policy should not attempt artificial manipulation of the supply chain. That means that the policy should focus on the content, not on who creates it.
Canada is a small market that borders the largest content creator in the world. Combine this with the evolving multi-media environment and it no longer makes sense to rely only on the independent production sector to provide high-quality Canadian content. This results in endless debate over the allocation of rights, rather than on the creation and exploitation of these rights. It will also mean that we won't get what we want, which is great Canadian programming.
The policy of relying on the independent production sector has not created a viable industry. it has faltered because it has not been able to attract the capital to invest in the development of projects and creative people. The independent sector does not have the strength to battle in foreign markets. Great intellectual property demands great resources. As one of Canada's largest creators and exporters of programs, we know this from first-hand experience.
Corus believes that, to succeed, fully integrated companies are what are needed to ensure that Canadian programming compares favourably with the best the rest of the world has to offer.
2:40 p.m.
Vice-President and General Counsel, Corus Entertainment Inc.
Meanwhile, we must recognize that not all programming that is appealing to Canadians will be financially viable. CBC will continue to need a stable funding base to fulfil the goals we've set for it in this regard.
The CBC should also have some freedom to evolve. We think the CBC, with its web-based services, satellite radio, and other specialty services, is taking the necessary steps to remain relevant in the new media landscape that we have described. The single most immediate technological change the CBC faces is the transition to HDTV production and transmission. There is no incremental revenue for HDTV at the moment, as it does not generate additional advertising or subscription revenues; however, all broadcasters, including the CBC, must make the transition to HDTV. This transition is well under way in the U.S.—it is less than two years away there—and we must make this important change if we expect to retain our Canadian audiences.
Corus believes that the CBC's hybrid model is the right one. It contemplates digital over-the-air broadcasting in urban areas and reliance upon Canadian distribution undertakings for other markets. This is a practical and financially viable plan that will meet the needs of Canadians.
With unrestricted access to content from all parts of the globe, the key differentiator will be the local programming made available to Canadian audiences. Corus, as an affiliate of the CBC in three small eastern Ontario markets, fully understands the importance of local reflection. This content will be a key element in ensuring the success of our local stations and the CBC as a network. Local affiliates play a meaningful role in the provision of local news and information to viewers. They also actively participate and support various community-based charities and initiatives. They are the place that citizens turn to in both good and bad times. Local broadcasters are at the core of community life. Any new policy must recognize this reality.
In conclusion, the future will be vastly different from the control and regulation we've experienced over the last several decades. This is because the way media is consumed, bought, and delivered will change dramatically. To have high-quality Canadian content, we will need to rely on all elements of the Canadian broadcasting system. The CBC can and should have an important role in this new landscape. Leveraging the CBC's assets on the various media platforms will be an important means by which to ensure the public broadcaster achieves the goals set out in the Broadcasting Act. These goals remain relevant. It is simply the manner of achieving them that will need to be diversified.
In Corus's view, a healthy Canadian media landscape will have a regulatory regime that allows Canadians to experiment. It will embrace the merits of fostering a globally competitive industry. It will reward success, and it will increase the probability of success by encouraging the creation of larger enterprises.
Thank you for your time and attention. We would be pleased to respond to any questions you may have.
2:45 p.m.
Conservative
The Chair Conservative Gary Schellenberger
Thank you for that.
We'll move on to the Documentary Organisation of Canada, Ms. Hodder.
2:45 p.m.
Samantha Hodder Executive Director, Documentary Organisation of Canada
Hello.
Thank you, Mr. Chairman, mesdames et monsieurs, for the opportunity to present here.
My name is Samantha Hodder and I'm with the Documentary Organisation of Canada. I'm the executive director. With me is Danijel Margetic, who is a member of our lobby committee of the national board.
The Documentary Organisation of Canada is a national, non-profit, professional arts association that represents almost 700 independent documentary filmmakers across Canada. They live in all provinces and territories, and they range in size and scope from the kitchen-table filmmakers to people who own companies and employ more than 50 people on a regular basis.
It's an auspicious day for us to be here before the committee, because last night was the opening of the Hot Docs Canadian International Documentary Film Festival, which we very proudly founded 14 years ago. You are probably aware of some of the aspects of this festival, but it has grown and grown. Every year it has grown 25%. This year they've added more than 20% more films and have reached an all time high of 2,000 delegate badges. I say this because, obviously, the people who are here lining up around the corner and buying industry passes and the industry that's supporting this are ample evidence that the documentary genre is growing in size and scope. People want to see this, and the Canadian public wants to watch these documentaries.
2:45 p.m.
Danijel Margetic Member, Documentary Organisation of Canada
Now, before we review the facts, it should seem fairly obvious that the historic fit between the CBC and documentaries is rather long-standing. As CBC's mandate outlines, their duty is to accomplish many of the same things that documentaries aspire to achieve: to be distinctly Canadian, to provide a means of cultural expression, to contribute to our national consciousness, and to reflect the multicultural and multiracial nature of Canada in both official languages.
However, in the past few years we have seen some alarming declines in documentary programming from the CBC. Programming hours have declined from a peak of 263 hours for documentaries in 2003-2004 to just 122 hours in 2005-2006. We have seen strand after strand cut from the CBC main network, or diminished in its extent.
For example, The Nature of Things has been significantly reduced over the years. The producers have been told that it will be reduced from its 17-hour peak to a nine-hour summer series. The Passionate Eye has decreased significantly in recent years. Life and Times, which has been the CBC premier biography series, will not have another season. Producers have been told, and it's confirmed, that Opening Night will be cancelled after the remaining unaired productions have been broadcast.
The CBC appears to be moving toward a big-ticket production schedule of productions such as Canada: A People's History or Hockey: A People's History that are produced in-house and consume a large number of financial resources that would otherwise be available to independent documentary producers.
Certainly the CBC continues to exhibit documentary programming, but in our experience there has been a rise in in-house programming to fill their programming slot. The situation is only exacerbated by a lack of transparency regarding the split between hours of programming spent on in-house versus independently commissioned documentaries.
We feel that there needs to be a balance restored, because in-house producers cannot replace, nor can they replicate, the spirit and the message of independently commissioned documentaries.
2:50 p.m.
Executive Director, Documentary Organisation of Canada
Before we go any further, I think we should clearly state that DOC does significantly support the concept of public broadcasting, both in spirit and in function. We truly aspire to live and work in a world where CBC plays a critical role and works together with the independent sector to create this vibrant programming.
The independent sector is actually a very strong and thriving industry. In the last statistic that I have—it's a little bit out of date because we haven't updated our study yet—in 2003-2004 just the independent production sector alone created $42 million of export dollars, and as well employed 14,000 full-time-equivalent jobs.
When taking the CTF into context, we receive about 17% of the funding, but translate that into 40% of programming volume. So what we're getting is a strong value for dollar and strong programming, and it's something that's heavily relied on by public broadcasters and private broadcasters alike.
As we stated in the 1999 license hearing, when the CBC was last up for renewal, we feel that there needs to be a commitment made to create a strand devoted to documentaries that are an art form and are a catalyst for social change. We call these point-of-view documentaries, and some other people call it a creative documentary. These are different from in-house productions because they have a high degree of authorial control and expression, they benefit from an independent voice, and they don't have any constraints of rules and mandates overhead.
We have seen clearly from what ends up in the theatres, what ends up on television, and what ends up being part of a consciousness that documentaries help to raise the level of discussion and discourse in our public in Canada, and we should continue to see this rise. I really believe that it has a strong public benefit.
DOC would also like to see a more specific commitment made to regional documentary production, or inter-regional co-production for documentary, both so that we have a wide expression of Canadian views seen on television, and from our point of view so that you can live in more than two or three different places in Canada and still have a viable career as a documentary filmmaker.
As a side note, I think it's important to say that many of our members have suggested that it be a little bit easier to work with both the CBC and the SRC at the same time, since documentaries are very favourable to the concept of a multilingual broadcast, and they often are subtitled to begin with, to have and aspire toward a truly national broadcast of any particular documentary.
On behalf of my board of directors and my chair, Michael McNamara; my colleague Daniel and I, and all the members of DOC across the country, we'd like to thank you for the opportunity to present these remarks before the committee.
We welcome your questions.
2:50 p.m.
Conservative
The Chair Conservative Gary Schellenberger
Thank you very much. Those were three great presentations this afternoon.
We'll go to Ms. Keeper for the first questioning.
2:50 p.m.
Liberal
Tina Keeper Liberal Churchill, MB
Thank you, Mr. Chair.
I'd like to thank everybody for their presentations, because they were great.
I have a lot of questions, but I only have five minutes, so I'm going to quickly get to them.
My first question is for Corus. I'm not sure how an affiliate station of CBC works. Could you clarify that?
2:50 p.m.
Vice-President and General Counsel, Corus Entertainment Inc.
The way it works is that we have a contract with them whereby they deliver a certain portion of the broadcast day to us, and we use the rest of the program service for scheduling our own local news and that sort of thing. We also purchase programming that we fit in around the CBC schedule. Then we sell advertising on a local basis, and they pay us a small affiliate access fee for the use of our transmitters.
2:55 p.m.
Liberal
Tina Keeper Liberal Churchill, MB
In terms of content, you said in your presentation that “The policy strategy should be to foster the creation of content. However, this policy should not attempt artificial manipulation of the supply chain.” Could you explain that to me?
2:55 p.m.
Vice-President and General Counsel, Corus Entertainment Inc.
I'd be delighted to.
Corus, for example, is one of the largest producers of children's programming, not only in Canada, but in the world. When one looks at all the various policies, whether they reside at the Canadian Television Fund or in terms of CRTC conditions of licence—For example, we're a big producer of programming. We're also one of the largest markets for children's programming. But the latest condition of licence we received from the CRTC said that in fact we could only schedule up to 25% of our service with our own programming.
We think that's really a silly idea. The reason is that as we move to an increasingly fragmented series of platforms for programming, where if we create a show such as Miss Spider's Sunny Patch Friends, which is targeted to children who are around six years old, we're going to use that on broadcasts on our own channels. We may use it on a website. We may use it on a mobile telephone and all those sorts of things. When the CTF policy or the CRTC says that we can't use it here or we can't use it there, all that's really happening is that it's infringing on our ability to make that program a success, and it forces us to enter into all kinds of complicated arrangements.
The flip side to that—The independent production sector would say that they need preferential access to the broadcast market. The analogy we look at in that context is the U.S. They faced this discussion about ten years ago with the so-called syndicated exclusivity rules. The fear was that if the broadcast networks could, in a sense, make their own programming, the studios would be shut out.
The first fundamental for every television broadcaster is that when you put a show on the schedule, it has to be a great show. For example, way back when, the ABC network tried to make all its own shows, and it realized that the creative process wasn't as predictable as that. It's not like making shoes. People come in with great ideas; sometimes they're inside the house, sometimes they're outside the house.
The second thing that happened was that in fact the broadcasters didn't become the studio plants; the studios bought the broadcasters. Universal bought NBC and Disney bought ABC, because they wanted to have the transmission system for their production content.
At the same time, Hollywood, sort of the mega-Mecca of production, if you want to call it that, still has independent producers who are enormously powerful, such as Jerry Bruckheimer, for example. The reason they're powerful is because they're creative. They're the ones who come up with the terrific ideas.
In the context of this discussion, our view is that in fact if the CBC does have a terrific idea in-house and they're capable of producing it, there shouldn't be anything in the policy that precludes that. If we have the ability to produce all our own programs for our own services, then the various policy tools should not preclude that.
2:55 p.m.
Bloc
Diane Bourgeois Bloc Terrebonne—Blainville, QC
Mr. Chairman, I have a point of order.
I know that someone in the room is using a BlackBerry. It's causing a lot of interference, and our interpreters can't do their job.
3 p.m.
Conservative
3 p.m.
Bloc
Diane Bourgeois Bloc Terrebonne—Blainville, QC
Thank you very much, Mr. Chairman.
My question is for Mr. Maavara. If I understood correctly, you have affiliated stations and are doing business with Radio-Canada, or the CBC, since we're talking about the Anglophone community.
Could you be a little more specific and tell us how that affiliation works? Do you buy programs? Do you trade them with each other? I'd really like to understand. Is this a partnership you have with the CBC?
3 p.m.
Vice-President and General Counsel, Corus Entertainment Inc.
Basically, if you look at the 24-hour day, the CBC has a portion of the day being pretty much all of the prime-time period, sort of eight o'clock to midnight, where they run their sports, their news, their dramas, and that sort of thing; and then we would have a section of the day, say between four o'clock and seven o'clock, where we would run our local programming. That's the way it works.
In markets where the CBC runs its own station, it would schedule the full 24 hours. In our case, in our three stations, we would schedule, I think, roughly six hours a day, and they schedule the balance of the day. In the programming where we schedule the time, we sell the advertising; and in the schedule that they run, they sell the advertising. We're sharing air time.
3 p.m.
Vice-President, Government Relations, Corus Entertainment Inc.
For the sake of greater clarity, we have an affiliation contract with the network in which everything is established. We get programming from the network. So that complements our local programming, and we also buy certain programs that we provide as well. There are three programs: those of the network, those that we produce locally and those that we buy and provide in the schedule.