Canadian Heritage Committee on March 25th, 2009

[Patrick Brown, Conservative, Barrie, ON]

I'm talking about caps on what the increase could be. For example, in the Toronto region, couldn't it just be said that the cap is $3.50. If it's 50¢ per signal, can't you put a cap on it?

[Konrad W. von Finckenstein]

Of course we could say how...but then you would generate less money for the companies. If we said the cap is $3.50, then you wouldn't get the 50¢ per signal that both Canwest and CTV are looking for.

Let me assure you, we are just as concerned as you about local broadcasting and local content. We want to make sure that the broadcasting.... As a regulator, I get no joy out of seeing a station being closed at all. But there's no silver bullet. It needs a comprehensive solution; that's all I'm saying now.

[The Chair, Conservative, Gary Schellenberger]

I thank our witnesses very much for being here today. As chair of the Standing Committee on Canadian Heritage, I don't get to participate in some of the questioning. I have a couple of questions, which I'd like to put through my clerk to you, to see if I can get a response. I would appreciate it if we could.

With that, let me say thank you for coming today.

Mr. Storseth.

[Brian Storseth, Conservative, Westlock—St. Paul, AB]

Mr. Chair, I want to get on the record. I am amazed and dismayed that I could sit at a committee for two hours with one witness and not have an opportunity to stand up for my local television stations and put forward some questions. I don't know whether this is the way the committee was set up in the beginning, but I am absolutely dismayed that a parliamentary committee would not allow every single member of Parliament the opportunity, in a two-hour meeting, with five-minute rounds of questions, to ask questions that are very pertinent and important to my local television stations as well.

[The Chair, Conservative, Gary Schellenberger]

May I ask, would we like one more round around the table?

[Brian Storseth, Conservative, Westlock—St. Paul, AB]

Sure.

[The Chair, Conservative, Gary Schellenberger]

Could I just ask for one question from each member?

[Carole Lavallée, Bloc, Saint-Bruno—Saint-Hubert, QC]

It's a matter of committee rules. There's a way of proceeding. That said, Mr. Storseth, on an exceptional basis, we'd be pleased to hear your concerns.

[The Chair, Conservative, Gary Schellenberger]

Shall we have one quick round?

[Carole Lavallée, Bloc, Saint-Bruno—Saint-Hubert, QC]

Without doing another round of questions, if he is the only one who hasn't spoken, we could give him five minutes.

Then I'd like to speak for a few minutes.

[The Chair, Conservative, Gary Schellenberger]

Mr. Storseth, please.

[Brian Storseth, Conservative, Westlock—St. Paul, AB]

Thank you very much, Mr. Chair. Seldom do my interventions fall on lively ears, so it's a nice change. Thank you.

I would like to talk to you about the revenue problem. Everybody around this table seems to recognize that there is not just a short-term but actually a long-term revenue problem within the industry. Mr. von Finckenstein, I did not have the impression that you see this as a long-term revenue problem. First of all, I'd like you to address that.

I'll try to be brief, because I have several questions for you. My second question is this.

As you know, in my area in rural Alberta, local programming on local stations is critically important, and it's very important that we stick up for them. As Mr. Brown said, the status quo is not working, so we need to find a way, no matter what our partisan stripe, to help save these local stations. You've been adamant that a fee for carriage will not work. In fact, you unequivocally stated that when you met with the industry and the broadcasters, they said—and tell me if I'm wrong—that they were not willing to put any of that money into local stations.

Is this true, and could you comment on it? Then I have a few more questions for you.

[Konrad W. von Finckenstein]

First of all, let me be absolutely clear: a fee for carriage alone is not the answer; that's what I've said. I have not said that you can't have a fee for carriage as part of a comprehensive solution. It may very well be the case, but we need a comprehensive solution. Just levying a fee for carriage now would not solve the local content problem and the local station problem. That's what I said.

As far as the revenue problem is concerned, as you know, the industry consists of large groupings. The largest owner of specialty channels in Canada is CTV. CTV's specialty channels are quite lucrative and quite positive. It's the conventional channels.... It's by looking at the various categories that you come to these conclusions. What I say is let's look at the whole group and also make sure that some of the obligations we impose on conventional.... Maybe they're in the wrong place; maybe we should impose them on the specialty channels and thereby free up money for conventional channels and allow them to earn revenue better. That's part of the comprehensive solution: look at the enterprise, not at the various facets of the enterprise--this one hurts; this one is doing well; I have to do something for the one that hurts.

[Brian Storseth, Conservative, Westlock—St. Paul, AB]

You are suggesting, then, that perhaps it has a role to play, but there needs to be a more comprehensive look at it.

With the local improvement fund, it's my understanding that you're talking about the $60 million that this is going to bring in. Do you have some numbers on how much a fee for carriage would bring in to the industry?

[Konrad W. von Finckenstein]

If you did a fee for carriage only on stations that carry local programming, at 50¢ per signal it would have generated $275 million. If you applied it to all conventional stations--in effect, everybody who transmits, even if they have no local programming--then it's a much larger number. It's actually $600 million.

[Brian Storseth, Conservative, Westlock—St. Paul, AB]

All right. How much were the submissions asking for? Was it $230 million?

[Konrad W. von Finckenstein]

They asked....

[Scott Hutton]

It would appear to be around $300 million, which was their estimate of the valuations. Now, somewhere between $200 million and $300 million is the proposition.

[Brian Storseth, Conservative, Westlock—St. Paul, AB]

Thank you.

I believe you talked about a date of August for the $60 million local improvement fund to be started up. Why can't we make that sooner? Why can't that start rolling out as of April 1?

[Konrad W. von Finckenstein]

It is because I am subject to due process. The fund is not there. It is part of the April 27 hearing, and we have to hear from intervenors on some of the comments, etc., and then I have to set it up. It just cannot be done any more quickly than that.

Also, as I said, we just decided to put into question whether 1% is really right, whether $60 million is enough, or whether it should be more because of the exceptional circumstances the industry is facing. I need some numbers. I need to see some financial statements from the companies as to what's actually happening in their lives.

[Brian Storseth, Conservative, Westlock—St. Paul, AB]

Then August 1 would be absolutely the quickest that you could get that money--

[Konrad W. von Finckenstein]

I think I said August 31 or September 1.

[Brian Storseth, Conservative, Westlock—St. Paul, AB]

I believe Mr. Bruinooge has one more question.

[Rod Bruinooge, Conservative, Winnipeg South, MB]

I just wanted to thank you for transparent testimony today. I look forward to hearing more from the CRTC on this matter.

[The Chair, Conservative, Gary Schellenberger]

Thank you.

We have listened to everyone who has been sitting around the table. We do have one more person who hasn't been heard.

Mr. D'Amours, could you make your questions short, please?