Evidence of meeting #37 for Canadian Heritage in the 39th Parliament, 2nd session. (The original version is on Parliament’s site, as are the minutes.) The winning word was broadcasters.
A recording is available from Parliament.
Vice-President, Strategic Policy Planning and Stakeholder Relations, Canadian Television Fund
Simulations give results that vary somewhat. In some, the cumulative shortfall over five years could be more than $100 million.
Bloc
Maria Mourani Bloc Ahuntsic, QC
$100 million over five years? That would be a tragedy, a disaster. If the Minister of Canadian Heritage accepts the CRTC decision to divide the fund in two, the government will have to put money in the public-sector fund accordingly in order to avoid a disaster in five years.
Vice-President, Strategic Policy Planning and Stakeholder Relations, Canadian Television Fund
That is what we said at the outset.
Chair of the Board of Directors, Canadian Television Fund
The decision has consequences that someone has to accept responsibility for.
Bloc
Maria Mourani Bloc Ahuntsic, QC
If the government had to provide funds, what would the total amount be? Would it be better to set a budget for four or five years and index it accordingly, or would it be better to decide how much to put into the fund each year?
Chair of the Board of Directors, Canadian Television Fund
A number of approaches are possible. If I understand your comment about indexing correctly, they would have to establish a percentage that would be the equivalent of the growth in the private-sector fund each year. There would be a base amount, accepting that there would be growth each year, then an adjustment or a top-up during the year to ensure the equivalency.
Chair of the Board of Directors, Canadian Television Fund
It bears repeating that isolating CBC/Radio-Canada is less defensible than indexing the public sector as a logical response to that CRTC decision.
Bloc
Maria Mourani Bloc Ahuntsic, QC
If the government accepted the split and agreed to increase the funding, do you think that the $96 million dollar amount for CBC/Radio-Canada alone should be looked at again? You say that when the 37% is converted, it would represent 75% to 80% for CBC/Radio-Canada. If fund x were established, would that need to be looked at again? They could always say that CBC/Radio-Canada would still have 37%.
Do you understand what I mean? After converting the 37% from a single fund, you say that the $96 million would represent, as it would, between 75% and 80%, which would be quite acceptable.
Chair of the Board of Directors, Canadian Television Fund
The danger is that we do not know the way the public-sector fund would work. It could be anything. They could say that 37% no longer makes sense and, from now on, they will give a fixed percentage to the public sector. They could say that envelopes will change annually as the result of some performance criterion about which we have no idea at the moment. Splitting the fund in two, especially with two separate boards, opens the door to a completely new and different approach that could change CBC/Radio-Canada's status.
The Department of Canadian Heritage could decide to split the fund on condition that CBC/Radio-Canada should never receive less than that percentage. Anything is possible. It would become very complicated if money from the private-sector stream could never move to the public-sector stream. If CBC/Radio-Canada were guaranteed a certain percentage, it would, at some stage, come at the expense of the educational networks, who are in the same envelope. It has to come from somewhere.
Conservative
The Chair Conservative Gary Schellenberger
I'm going to switch to Ms. Creighton.
Perhaps you'd like to respond also.
President, Canadian Television Fund
Yes, in terms of the question on a planning process.
Up until now, at least, the Canadian Television Fund has always received its contribution from the federal government on an annual basis only. With the exception of the crisis year, we've never been notified that our funding is beyond a one-year time period. In the year when the two BDUs stopped payment, the minister at that time did announce a two-year funding program for the fund. We're in the final year of that now, so the government itself would have to change the way it has historically been supporting the CTF in order to build toward a five-year plan.
If the CBC's amount were to be reassessed, the question would be, based on what? What is it that you're trying to achieve through that particular funding source? When the fund moved to the broadcaster performance envelope system, the reason that historic access originally, not only for the CBC but for all broadcasters, carried such a heavy weight was because we had to start that system somewhere. We looked at the past licensing patterns of the broadcasters across the spectrum, and historic access became one of the factors in the broadcaster performance envelope. We're moving slowly away from that as a factor that calculates the envelope, leaning much more heavily into audience.
The complexity around the CBC is because the 37% was always a certain and guaranteed amount. Their audience numbers were never factored into the calculation, although they were quite willing to do so. My only point was it would be a little difficult for us to plan out for five years when, at least historically, our funding from the federal government has been on an annual basis.
Conservative
Bill Siksay NDP Burnaby—Douglas, BC
Thank you, Mr. Chairman.
I want to thank all of you for being here today.
Mr. Gratton, if your presentation is any indication, I think the CTF will be well served. It was even comprehensible to a new person like me, who is getting a lot of these issues for the first time.
I have to say that when you were explaining the difficulty you saw with the two-board system and talking about the need for one board and two streams, you gave the example of TV producers caught between two doors and chaos ensues. It sounded like you were doing a promo for a new situation comedy that was being developed.
Chair of the Board of Directors, Canadian Television Fund
As background, I sat as broadcaster representative on the board on five separate occasions throughout its history. I have actually served under every previous chair for at least one year. I actually have been there through every significant crisis. The one I was alluding to was a major crisis—not the only one, but a major crisis where producers were really caught between administrative structures that weren't particularly communicating at that point in time. The result was chaos.
Again, as throughout the history, the same people got together and resolved the problem. Quite frankly, in this case it was an intervention on the part of Heritage Canada, which divided church and state and said the CTF, through its board, would be the repository of policy, direction, and guidelines, and Telefilm would be the administrator of the guidelines and actually have the interface with the client base. That's worked out very well, and there's been peace in the valley ever since.
The issue was having two sets of rules, which were not centrally coordinated, out there for the fund. Back in those days, Telefilm's approach to the equity investment was not filtered through the CTF board, nor should it have been, as they didn't report to us. To me, the need for coordination is fundamental, even if you accept the two separate streams. It's not because I think the sky will fall but just because something awful will happen that nobody can anticipate even with the best of intentions. It's guaranteed—that's the history of this fund.
NDP
Bill Siksay NDP Burnaby—Douglas, BC
Thank you. I think that is very helpful advice for us as we look at this.
It strikes me that your comments were ultimately very supportive of the kind of motion the committee is considering from Madame Mourani.
This is a little off the specific topic of that, but I wanted to ask about the new emphasis on audience, for the private sector stream at least. Since I am new to all this, can you or someone explain how the broadcast performance envelopes work?
There were the four criteria in the calculation. Ms. Creighton said that the push now is more towards the audience criteria. Can you talk about how that calculation is made? And when Ms. Creighton says the push is more towards the audience, how will that affect the decision-making process?
Chair of the Board of Directors, Canadian Television Fund
I think I'll let the experts take a crack at it. Things might have changed since I last stepped down from the board.
President, Canadian Television Fund
You go ahead. You've got the paper and numbers in front of you.
Vice-President, Strategic Policy Planning and Stakeholder Relations, Canadian Television Fund
It is a competitive system, which is by genre and language between the different broadcasters. We have four performance factor weights: historic access that we've talked about, audience success, regional licensing, and above average licensing. There's an incentive there for broadcasters to pay higher licence fees.
For the current factor weights in the English-language market, the highest factor weight is on audiences at 40%; above average licence fees is at 10%; regional licensing is at 20%; and historic access is at 30%. In the French market it's somewhat different, with historic access still the predominant factor at 45%, audiences at 30%, above average licensing at 15%, and regional licensing at 10%.
Each year broadcasters will submit total hours tuned submissions for programs that the CTF funded in the previous broadcast year as well as a number—and this is a bit more complex—that we call CTF-ables. They're programs that we did not fund, perhaps because the broadcaster managed to finance them without our participation, but that would have been eligible under our guidelines.
These submissions are analyzed by our staff. They are placed on a secure portion of our website for scrutiny by other broadcasters. These submissions form the basis of the calculation for the audience success. As well, the licence fees paid are factored in to calculate above average licence fees and regional licensing. You meld all of that together and, as we said before, it's a competitive system. Basically it's how broadcasters performed; their allocations will go up or down from one year to the next.
One thing that has been discussed at the hearing, as Valerie said, is that when we created the system we had to start with something, so we started with historic access, but that factor has been declining over the years. One of the suggestions in the CRTC report is that this factor now be eliminated and we focus much more on audience success and keep the regional licensing factor and the above average licensing factor, but that they be capped at 30%.
Our staff is actually in the process of simulating those results based on the last year that we have, and we'll be able to bring that forward sometime soon.
Chair of the Board of Directors, Canadian Television Fund
In simple terms, our intention is to have a yearly report card, and it's almost out of 100, so everybody gets a different score and then it affects the calibration of the funds that are available within language groups and within genres.
Vice-President, Strategic Policy Planning and Stakeholder Relations, Canadian Television Fund
And the BPE system represents about 95% of our total funding allocations.
Conservative
Ed Fast Conservative Abbotsford, BC
Thank you, Mr. Chair.
I thank all three of you for visiting us today.
I'd like to start off by trying to get a definition of ghettoization. Mr. Gratton, you referred to the word “ghettoization”. Am I correct in understanding you're simply referring to the fact that the private side of the equation will continue to grow, whereas the public side might stagnate? Is that what you referred to when you...?
Chair of the Board of Directors, Canadian Television Fund
Yes. That's perhaps a dramatic characterization, but it's taken from the lips of some of the broadcasters who would be on the public side. They feel they would be ghettoized if they were in a fund that did not grow. Quite frankly, if there were acceptance of an index, so that the public side would grow in lockstep with the private side--again, I don't want to put words into their mouths--I think a lot of their concerns would be alleviated.
The cost of production is going up at the same rate for everything that's being produced, for public broadcasters as for private broadcasters, so being caught in a fund that might not grow or might be subject even to cutbacks, depending on the political situation and what the priorities of the government are, is anxiety provoking, because these people are as proportionately dependent on the fund as the private broadcasters are. That's what I meant by ghettoization.
One would think that some of them would have responded with delight that they'd be absolved of the need to compete for audience with conventional broadcasters, which by their very nature are different and have different lead-ins and different reach with the audience and different mandates that lend themselves to rewards for having the biggest audience possible, both in terms of advertising revenue and pleasing their shareholders. Yet across the board the response from those people, including the CBC, who would be on the public side, has been that they don't really want to be there.
Even this morning I had a brief chat with Richard Stursberg of the CBC, who said, “We'd love to compete. We want to be able to grow. We think our line-up of shows has shown a lot of promise.” So it was in that sense that I used the word “ghettoization”. I was trying to characterize the negative response of the public and not-for-profit broadcasters.
Conservative
Ed Fast Conservative Abbotsford, BC
I think all three of you understand that the CRTC has made its recommendations to the minister. The minister is mulling this over and will presumably provide a response. Now, that response could be accepting all the recommendations, and it could be rejecting all the recommendations and restating the status quo. The minister also could accept some of the recommendations and come up with other proposals.
I would suggest to you that any motion to establish indexing is perhaps premature until we know what the minister's response would be. Do you agree with me?