Canadian Heritage Committee on May 1st, 2008

[The Chair, Conservative, Gary Schellenberger]

Yes, sir.

[Denis Coderre, Liberal, Bourassa, QC]

Okay. Merci.

[The Chair, Conservative, Gary Schellenberger]

Now we'll move to Mr. Del Mastro.

[Dean Del Mastro, Conservative, Peterborough, ON]

Thank you, Mr. Chair.

Thank you, gentlemen, for appearing today. I've enjoyed hearing about the vision of the CBC, moving forward.

I have a couple of questions. One was alluded to by my colleague and I want to go back to it briefly.

In March, newspapers were commenting on expenses of former CBC/Radio-Canada executives. It was an access to information request. Obviously we have a responsibility to taxpayers, and I wonder if you could comment on the policies of the corporation when it comes to the use of taxpayers' funds for expenses. I know a CBC spokesperson defended the expenses. I just want to give you the opportunity to expand on that a little bit.

[Hubert T. Lacroix]

Thank you, sir.

We have policies with respect to travel expenses. We have policies with respect to the way they are reimbursed and the use of business class.

I was saying to Madame Mourani a few seconds ago, in the context of our normal processes we are reviewing these policies—as a matter of fact, right now, because they are coming up in our schedule. We respect and understand the fact that we have taxpayers' money that we play with and use and spend, and we are respectful of that environment. We will be very transparent, sir, with the way we do this as we go forward.

[Dean Del Mastro, Conservative, Peterborough, ON]

I commend you for that.

There's a bit of a debate raging on an issue before the CRTC right now on fee for carriage. I assume you're familiar with it. I've heard both sides of the debate on this. I am concerned that costs of fees for carriage will be moved on to consumers of cable TV and satellite TV. Does CBC have a position on the fee for carriage issue? If so, what is it?

[Hubert T. Lacroix]

Absolutely. I'll ask Mr. Stursberg, who has been in this industry and has known this aspect of our business for 25 years, to help you with this.

[Richard Stursberg]

I used to also be in the cable business and in the satellite TV business.

I think what Sylvain gave you by way of an account of the situation with respect to the Quebec marketplace and the centrality of conventional broadcasters is absolutely accurate, and he puts it very nicely when he says, “it's a little bit the canary in the mine shaft”.

What's happening in the Montreal market is what is beginning to happen now across English Canada. The issue that's before us is that if we want to maintain—it's exactly the same thing in English—strong news services, regional news services, and Canadian drama, which is very expensive, the conventional broadcasters are the ones who do it.

They find themselves in a very funny situation—by “they” I mean us and CTV and Global—which is that the specialties, whether TSN or whoever it happens to be, have access to two forms of revenue. One is with the cable companies and the satellite companies, which pay them by way of fees, and the second is advertising revenues. We've said, if it matters to the system that we continue to do drama and news and regional shows and whatnot, then we should make sure that everybody has access to the same various sources of revenue.

So we've said to the commission, absolutely, you should tell the cable companies they should pay the conventional broadcasters a fee. But we've said the fee actually has to be tied to programming commitments. It has to be tied to things you're actually going to do, not just to help out your bottom line.

We recognize that a lot of people have asked whther that will make basic rates for cable go up, so the other thing we've said we think is very important is this. Right now your basic service, if you live in Toronto, consists of over 60 channels. It's an enormous basic service on which the cable companies keep piling more and more stuff. We said, why don't we make it simple? Let's make a very small basic service that would just consist of the key Canadian services.

Right now, the funny thing is—it's a sort of irony—that if you want to buy basic cable service, they force you, essentially, to buy American channels.

So we said let's make the basic service very small, and after that people could just pick whatever they want. Then, if the service comes down from being 60 channels to 12 or 10, you can see that the price of basic will collapse and the amount of freedom consumers will have to pick whatever it is they want and to control their own cable bills will be dramatically increased. That's our proposal.

[Dean Del Mastro, Conservative, Peterborough, ON]

Are the cable companies currently paying a fee for service to U.S. broadcasting networks or affiliates?

[Richard Stursberg]

No. They pay to U.S. cable channels. So for example, the Arts and Entertainment Channel would be paid a fee by the cable companies for carriage; so too the Golf Channel, or Speedvision, the racing car channel. They would all be paid fees by the Canadian cable companies.

[Dean Del Mastro, Conservative, Peterborough, ON]

Am I out of time?

[The Chair, Conservative, Gary Schellenberger]

Make it very short.

[Dean Del Mastro, Conservative, Peterborough, ON]

A very short question?

[The Chair, Conservative, Gary Schellenberger]

A very short question that will take a very short answer.

[Dean Del Mastro, Conservative, Peterborough, ON]

You've got it, Mr. Chair.

My concern on this issue is that consumers will see it as a tax. What would you say to those consumers? If you're going to reduce the basic service, by extension they're going to have to pay, if they want to maintain all the channels they have.

What would you say to them? What are they going to get in return for paying this extra money?

[Richard Stursberg]

I would say to them two things. First of all, if this is a tax, you're already paying it, and paying it for TSN and for Showcase and for everything else. So I don't think it breaks any new ground.

I think if they were to follow our proposal, what would happen is that they would not only get a much less expensive form of basic; they would also continue to get, and might get enhanced—ideally we would like to enhance—Canadian drama and Canadian news and regional services.

Over and above that, as I was saying earlier, they would be able to pick only the channels they want. Right now you buy channels in bundles. If you say, “I only want the Home and Garden TV channel”, they say, “No, you have to take the dog channel with it.” So you say, “Well I don't want the dog channel”. In our proposal you would be able to say, “I'm only going to take the gardening channel; I won't take the dog channel.” So your bill overall should shrink, since now you're only buying the things you really want to watch. Most people actually don't watch more than about 15 channels.

[Dean Del Mastro, Conservative, Peterborough, ON]

Thank you.

[The Chair, Conservative, Gary Schellenberger]

Thank you for that.

Ms. Fry.

[Hedy Fry, Liberal, Vancouver Centre, BC]

Thank you very much.

I just wanted to make a quick comment--

[The Chair, Conservative, Gary Schellenberger]

Sorry for interrupting. There's time for one good question. We have two or three minutes each for this round.

[Hedy Fry, Liberal, Vancouver Centre, BC]

Sure. I want to make a quick comment and then my question.

My comment is about the idea of classical music. As someone who views classical music as an important component of our heritage, and loves opera, etc., I also believe that classical music can be Chinese classical music, Indian classical music. So when we speak to classical music, are we merely speaking to western European classics? And if you could do a classical channel and include the demographics of Canada--its new demographics, and that classical music--would it be a costly thing to do?

And I want to ask you something--to shift from all of this--about digital. The ability for us to see Canadian drama and Canadian films and to distribute it is very compromised in Canada today, as you well know. Distribution of Canadian film is poor.

Could the CBC see itself as one day fulfilling the role of being the Canadian distributor in the way that the BBC does? If so, what would you require? Would you require getting on to digital, or the digital platforms, and what would that cost?

[Hubert T. Lacroix]

Richard--who's in the film industry, literally--can help you with that, and then we'll talk about costs.

[Richard Stursberg]

I also used to run Telefilm, so I know a little bit about the feature film business. What you say is quite right, that there is a big problem about the distribution of feature films in Canada. That's absolutely true, particularly in English Canada. In French Canada the situation is much better.

We have actually proposed a model to the industry whereby the CBC would become much more heavily involved in the support of the feature film industry. The difficulty that we confront is that the way in which feature films get released is they first all go into a cinema, then they go to DVD, then they go to the pay networks, and then they come to the broadcasters. So by the time we get the film, it may have been basically over two or three years since it was at the box office, and when Canadian films don't perform that well to begin with, people have forgotten about them after three years.

[Hedy Fry, Liberal, Vancouver Centre, BC]

Excuse me. Look at the BBC model.

[Richard Stursberg]

I know. I'm going to come to that.

So what we've said is that we would be very happy to actually promote the theatrical release of feature films, but the way it would have to work is that it would go to the movie house first, go to DVD, and then we have to get the film on the same day and the same date as pay TV. We believe that this would do no damage to the pay TV operators--because in English Canada, their business is essentially selling U.S. films--but it could dramatically strengthen the Canadian film industry.

We've had conversations with the pay TV operators; we've had conversations with the film producers in this country; and we would be delighted to move in that direction, but so far we haven't been able to get the pay operators to agree to the shift.