Evidence of meeting #11 for Canadian Heritage in the 40th Parliament, 2nd Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was programming.
A recording is available from Parliament.
Chair, Canadian Radio-television and Telecommunications Commission
Mr. Delaney can walk you through that.
To put things in perspective on the fee for carriage we turned down, CTV and CanWest asked for 50¢ per signal. In Toronto that would have meant an increase for cable subscribers of $6.50 a month; in Montreal it would have been $4.50 per month, and $6.50 per month in Ottawa.
Conservative
Dean Del Mastro Conservative Peterborough, ON
Right. I understand that.
I just want to highlight that there is a very substantial amount of support going into this fund. And certainly when we talk about fee for carriage, we have to understand it. I'm not here to suggest.... You made your findings, and I'm aware of the findings you came up with.
What nobody has asked local television subscribers is whether they are prepared to pay a tax, essentially. Are they prepared to pay an additional fee for their local networks over and above what they're already paying?
You talked about looking at the adequacy of the 1%. It seems, by the way you presented it, that you are already setting it up, saying we're likely going to increase the 1%. This is really a buried tax that subscribers are going to have to pay.
I have concerns around this. Obviously I share the concerns on local networks, but I'm also very concerned that people don't understand what they're already paying for and they haven't been asked how much more they're prepared to pay.
Chair, Canadian Radio-television and Telecommunications Commission
I'm sorry I've given you the impression that I am prepared to go above.... I'm saying that I'm opening the question of the 1%. It seems that we have a crisis, and before we restructure the system we have to make sure there's a system left to be restructured. If anything, the 1% would be for this coming year.
They have a real revenue crisis. There are other things that can be done on the revenue crisis, especially by the government, but this is one people have raised, so we said we would entertain it. I have not made a decision at all.
Conservative
Dean Del Mastro Conservative Peterborough, ON
I want to come back to fee for carriage, because Mr. Simms raised it. If we're going to talk about fee for carriage and the sensitivities around it, certainly at the subscriber level, I think there would be sensitivity. I think there would be outrage among certain groups.
Would you allow people to not have to take a given television network if there is a fee for that network? Would you allow them to take that out of their basic cable? Would it also be back on the table for automatic substitution for the providers? Would these be things that you would have to consider under fee for carriage? If they're moving toward a system like the pay networks, the specialty networks, and some of these other things that have been set up, aren't you going to have to put these things back on the table?
Chair, Canadian Radio-television and Telecommunications Commission
Absolutely. If, or when, we start our whole rethinking process--a systemic process--if people want to raise the issue of fee for carriage, which undoubtedly they will, then you have to look exactly at the point; you have to put it in context. Our biggest problem with the fee for carriage is local television in the non-metropolitan areas.
Chair, Canadian Radio-television and Telecommunications Commission
The fee for carriage does absolutely nothing for them.
The local improvement fund we have established is directly aimed at that problem. It is supposed to give money directly to the small communities, where they have a television station that doesn't thrive and it cannot produce local content because it doesn't have the revenue.
Conservative
Liberal
Ruby Dhalla Liberal Brampton—Springdale, ON
Thank you very much for coming before the committee today.
I have a couple of different questions. I know we only have five minutes.
Mr. Del Mastro, along with my colleague Scott Simms, brought up a very important question. When we're talking about issues like fee for carriage, issues of digital transition, ultimately in a time of economic crisis, not only are the broadcasters, the cable and satellite companies, suffering, but there are also Canadians suffering. They are struggling to make their mortgage payments and pay their bills and put food on the table.
On the issue of cable bills, do you think there needs to be more accountability and transparency in those cable bills so that individuals know what they are getting and what they are paying for? Unfortunately, I don't have a copy in front of me, but it basically says the amount and you pay for it. People do not have the knowledge or information they need. When you have your hearings at the end of April, do you think this issue needs to be looked at?
Chair, Canadian Radio-television and Telecommunications Commission
No, it's not part of the issue we are going to look at. We just had a major hearing on what's called broadcast distribution undertaking, which is cable and satellite. We established the rules and we said this is the minimum you have to carry. On the other hand, there are various ways you can receive your signal nowadays. Obviously, you can receive it by satellite or by the cable provider. You can get it over the telephone wires in some areas. This is going to continue to increase.
The cable companies also have considerable challenges ahead of them. We established the minimum rules for cable companies, telling them that's what they have to do, and especially, they cannot discriminate on who they carry and what...etc. But basically, this is a free market, and they can operate it as they see fit. Customers will vote with their feet. If you charge too much, they just won't subscribe to you.
Liberal
Ruby Dhalla Liberal Brampton—Springdale, ON
With regard to the transition for digital programming, I've had a chance to take a look at some of the speeches and remarks you've made in the past. One of the challenges you outlined was that broadcasters are going to have to make significant investments in infrastructure in terms of equipment and facilities.
You were proposing in your speech today a hybrid system. Who is going to be absorbing that cost for the hybrid system? Is it going to be the cable and satellite? Is it going to be the consumer? Is it going to be the broadcaster? Who is going to be absorbing that cost?
Chair, Canadian Radio-television and Telecommunications Commission
That's a good question. As you'll notice, the last paragraph in that portion says there may also be contributions from other parts. A lot of people, especially in the industry, say there should be some contribution from the government, because the spectrum was going to be auctioned off for a lot of money. Maybe that will happen, or not, but first of all, that's why we brought all the CEOs together in the room and said, work out a plan for the costing. How much would it cost for the 10% of Canadians who receive the signal over the air now to connect them with either cable or satellite? How much would it actually cost, and how would you do it? It would also be a great marketing opportunity to get new customers. So you should obviously bear the major.... And that report will be tabled with us prior to April 27. I haven't seen it yet, so I can't comment.
Liberal
Ruby Dhalla Liberal Brampton—Springdale, ON
Was that report not due in February? What has been the delay in that report coming forward? From information that we have it was supposed to be received February 2009.
Chair, Canadian Radio-television and Telecommunications Commission
Exactly. They promised me to have it on February 15. They hired an outside third party to help them negotiate. That's essentially a negotiation with--
Liberal
Ruby Dhalla Liberal Brampton—Springdale, ON
You're the boss. You have to make sure that report is delivered on time.
Chair, Canadian Radio-television and Telecommunications Commission
I tell you I wanted it on February 15. I'm told now I will get it on April 27 or before.
Liberal
Ruby Dhalla Liberal Brampton—Springdale, ON
Do you think the government's delay and inaction, perhaps from the minister to you as the head of CRTC, has resulted in the closure of all of these local television stations and regional programming? I know you've spoken about the Local Programming Improvement Fund, but it's evident when you talk to people who live in cities and municipalities like Wingham, Wheatley, Brandon, Victoria, Barrie--and the list goes on across the country--that the Local Programming Improvement Fund hasn't been able to do a lot to save local news and regional programming in those areas. Should the minister have provided direction much sooner than the hearings that are being held in April to ensure some action so that these people, these Canadians, wouldn't have to suffer?
Chair, Canadian Radio-television and Telecommunications Commission
I don't think anybody foresaw what is happening. In effect, when we held our hearings on the BDU, we didn't foresee that there would be this drastic fall in revenue. Commercial broadcasting lives on advertising--purely and simply. The biggest advertiser in Canada is the automotive industry. The automotive industry is going bankrupt. So suddenly their source of revenue shrank dramatically in a way that nobody could anticipate. That's really what we are seeing.
The broadcasting industry is no different from any other industry. They're feeling the effect of the broad economic crisis.
Liberal
Ruby Dhalla Liberal Brampton—Springdale, ON
We need to provide them with the parameters, because having multiple hearings is--
Conservative
Bloc
Roger Pomerleau Bloc Drummond, QC
Thank you, Mr. Chairman.
Thanks to the four of you for coming to present this study that, in a way, will launch the study we'll be conducting in the next few months.
I understand completely that we're dealing with a major problem: people in broadcasting aren't getting enough money. In the circumstances, the remote regions are having trouble getting local content and that's why you're establishing the Local Programming Improvement Fund.
How will that fund operate? What will be the funding criteria? How big will the funding be and who will be responsible for its use?
Vice-Chair, Broadcasting, Chairman's office, Canadian Radio-television and Telecommunications Commission
When the fund was established, the commission determined a number of criteria. It asked the Canadian Association of Broadcasters to review those criteria and to suggest others, which it did not do. It also asked the association to suggest operating mechanisms. The CAB forwarded its report to us in mid-February, and it will be part of the discussions at the April 27 hearing. The report essentially proposes that an independent fund be established with its own board of directors. Funding distribution would be managed by an independent administrator.
In its initial decision, the commission had already stated that it expected one-third of funding to go to French-language television. That's one of the criteria we established, which moreover was not challenged by anyone.
Out of a fund of $60 million, as mentioned a little earlier, $20 million will go to support local programming in the francophone market, which, with the exception of a few Radio-Canada stations, is essentially in Quebec.
Bloc
Roger Pomerleau Bloc Drummond, QC
All right.
You're currently trying to find a systemic way of addressing the problem. To that end, you're recommending that everyone propose bold, innovative and creative ideas. Who were you thinking of?
Vice-Chair, Broadcasting, Chairman's office, Canadian Radio-television and Telecommunications Commission
One proposal has already been submitted to the community because we saw it in the specialized magazines. One financial analyst suggested a fundamental review of the Canadian broadcasting system. We're asking people to send us their ideas. Are there other ways of doing things than through subscription rentals? Are there other ways of regenerating traditional television so that it can reach a satisfactory level of profitability and be redeployed?
The commission has ideas, obviously. One group of specialists is suggesting avenues, but we're also asking people who work in the communications sector and who are interested in the issue to consider this question. We're going to compile the figures next summer, analyze them, hold consultations and draw some conclusions.
