Canadian Heritage Committee on March 25th, 2009

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

I'm going to complete the five minutes.

You said earlier that you had to reduce the number of hours of local content to assist private broadcasters in keeping their local stations. Did I understand correctly?

[Michel Arpin]

No, we didn't talk about hours. Obviously, renewal proposals have been filed, but the commission hasn't advocated a reduction in the number of hours. Perhaps we referred to a pan-Canadian harmonization. We know that some networks and some stations have five hours a week, while others have 32. Perhaps we should consider harmonization.

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

Thank you.

[The Chair, Conservative, Gary Schellenberger]

Thank you.

Mr. Bruinooge, please.

[Rod Bruinooge, Conservative, Winnipeg South, MB]

Thank you, Mr. Chair.

I appreciate the testimony so far from the witnesses, and I look forward to hearing more from you today.

In Canada today we see a considerable problem with revenue streams that many of the broadcasters had counted on in the past. There are many reasons for that; however, local broadcasting and news coverage is a significant cost to many broadcasters. It is somewhat expected by local communities, but at the end of the day it is quite an expense to many of the broadcasters.

In Manitoba we have an extensive local network of reporters who put in a lot of time covering all the local stories, yet in terms of the bottom line for these important companies, they don't see a lot of revenue from that. Of course they are now looking for ways to improve their revenue streams.

Over the years we have seen--whether it's the fault of the CRTC or not--barriers put in front of the major broadcasters, the traditional broadcasters, to be able to expand revenue streams. You mentioned how the specialty channels were not necessarily seen to be major revenue drivers when they were first brought about. I'd probably disagree with you on that. The traditional broadcasters did see a lot of potential in those opportunities but were somewhat prevented from being able to take part in a meaningful way. As such they don't have a large presence in that, as you well know.

As to time shifting, it's a similar situation. The local broadcast is typically not watched as often anymore because time shifting exists. Consumers locally will watch a broadcast from B.C., whereas in Manitoba they don't see the local ads because they're watching the B.C. broadcast. So I think it's important that the broadcasters be allowed to negotiate in a good business way and that you not get in their way in negotiating with the cable companies.

My main point is that your body has significant influence over the way these broadcasters can operate. It is within your power to be able to extend new revenue streams to them. We've talked a lot about a fee for carriage today.

I want to first ask you a few questions. Wasn't it in 1971 that the CRTC actually authorized your body to extend a fee-for-carriage revenue stream to broadcasters?

[Konrad W. von Finckenstein]

Go ahead, Michel.

[Michel Arpin]

I was on staff at the CRTC in 1971, and when I left in 1979, specialty services were not yet in existence. By the end of the seventies the CRTC had received applications for pay TV services and had denied those applications. To my recollection, the first specialty services came into place in the mid-eighties.

[Rod Bruinooge, Conservative, Winnipeg South, MB]

I have a quote from an article in The Globe and Mail on July 17, 1971, that reads: “Ottawa board directs cable firms to pay TV stations for programs”. There were substantial discussions at that time. So I think it's well within your ability to offer that at this time.

[Michel Arpin]

I wasn't a commissioner, so I have no comments to make.

[Konrad W. von Finckenstein]

What is the exact question?

[Rod Bruinooge, Conservative, Winnipeg South, MB]

Should you identify that broadcasters are in peril right now, and I know they are.... In my home community we have a substantial corporate presence--Canwest Global--that is going through considerable difficulty right now. They're an important player in Manitoba. They give considerably in charitable services throughout our province and the country. Many broadcasters, including CTV, have been calling for additional revenue streams. So I think it's essential that your body assist these important businesses--which are private sector and haven't relied on government subsidies--so they can continue offering these important services to our local constituents.

[Konrad W. von Finckenstein]

If you're asking whether we have the authority to order a fee for carriage, we do. We said that unequivocally in our decision. We didn't do it for the reason I specified because it would have done nothing for what we identified as a key problem, which was local content, local broadcasting.

[Rod Bruinooge, Conservative, Winnipeg South, MB]

So you don't think the new revenue stream from that opportunity would trickle down to local broadcasts. You don't believe that these companies would trickle that money down.

[Konrad W. von Finckenstein]

Would it make them healthier? Would it trickle down? Would it give you the content you want locally? I very much doubt it.

[Rod Bruinooge, Conservative, Winnipeg South, MB]

We might not have any content soon enough.

[Konrad W. von Finckenstein]

What I'm trying to say is that I agree with you fully that they have a revenue problem right now. That's why we're putting in this one special year. It seems to me that when you think of a fee for carriage, it is actually the cable and satellite subscribers who are going to pay for it. You can be sure that--

[Rod Bruinooge, Conservative, Winnipeg South, MB]

I think the cable companies are actually raising the--

[The Chair, Conservative, Gary Schellenberger]

I'm sorry. We've come to the end. We've gone over time here.

Mr. Rodriguez, please.

[Pablo Rodriguez, Liberal, Honoré-Mercier, QC]

Thank you, Mr. Chairman.

Your presence here today is very timely. With everything that is currently happening, one could say that everything has gone wrong in the world of conventional television. There has been a disruption in the entire communications or media universe. The advent of the Internet and the fact that you can use a tiny iPod to record thousands of songs is disrupting television, music and so on.

With respect to general interest television, you get the impression that everything has gone wrong. Obviously, we're struck today by the new cuts to the CBC. We've witnessed the closing of other stations. We've also seen the precarious situation in which Canwest finds itself. One would think there is a general problem with general interest television.

Is there still a future for general interest television?

[Konrad W. von Finckenstein]

You're asking whether there is a future for conventional television?

[Pablo Rodriguez, Liberal, Honoré-Mercier, QC]

Yes. General interest television.

[Konrad W. Von Finckenstein]

As I said in my speech, we believe that the new media and television are complementary. However, television is clearly changing. The business model has to be adjusted, and that's what is happening. Some have been successful, others not.

As television regulators, we are also somewhat to blame in that we didn't react in a quick, flexible manner to prevent the situation. What we're especially seeing right now are market situations and revenue changes.

[Pablo Rodriguez, Liberal, Honoré-Mercier, QC]

For the moment, you're not in favour of the fee-for-carriage option. If we listen to the experts, they tell us that advertising revenues will continue to decline, even after the economic crisis.

What are the actual options you are aware of for securing revenues, for example, outside Canada?

[Konrad W. Von Finckenstein]

What I said is that I'm not in favour of fee-for-carriage only.

In a reformed context, there may be reasons justifying imposing fee-for-carriage. However, we first have to correct the problems that we've identified regarding local content in non-metropolitan markets. Second, there are other revenue sources. Drug advertising is not permitted in Canada, whereas it's done in the United States. You see it every day when you look at American television. I frankly don't understand. We're not protecting Canadians from what's shown on television, but, at the same time, we're depriving our industry of advertising revenue.

[Pablo Rodriguez, Liberal, Honoré-Mercier, QC]

Do you agree that advertising revenues will be reduced in any case following this crisis?