Canadian Heritage Committee on April 20th, 2009

[Pierre Karl Péladeau]

Well, adding conventional television that is strong, alive and kicking, will certainly have important impacts on local information. If the networks are dying, there is not going to be any local at all, because conventional television right now is the only piece of the puzzle or piece of the system that is creating local information.

[Scott Simms, Liberal, Bonavista—Gander—Grand Falls—Windsor, NL]

So you consider a show similar to, say, Star Académie as your idea of what the local programming goals are to be?

[Pierre Karl Péladeau]

No, I don't refer to Star Académie as having any relationship with local--

[Scott Simms, Liberal, Bonavista—Gander—Grand Falls—Windsor, NL]

So it's news and information, current affairs. Is that your idea of bolstering the local community?

[Pierre Karl Péladeau]

Yes, and we also have local stations we use to create local production that is also broadcast on the entire network.

[Scott Simms, Liberal, Bonavista—Gander—Grand Falls—Windsor, NL]

Outside of news, is it drama, that sort of thing, or just news and information programming?

[Pierre Karl Péladeau]

News and information or public service shows.

[Scott Simms, Liberal, Bonavista—Gander—Grand Falls—Windsor, NL]

Okay, I see. That's interesting.

You mentioned something about deferring the decision. You're obviously not pleased about the study being deferred to 2010. How detrimental is that going to be--time not being of the essence, obviously, because you talk about the pillars of conventional television and their suffering to that point. How detrimental is it to conventional television to defer this to 2010?

[Pierre Karl Péladeau]

We've been saying that conventional television was not going well, it was broke. TQS in Quebec went bankrupt. CTV and Global certainly have some challenges in front of them. Will we be forced, for evidence of the problem of conventional television, to see the network die, or go bankrupt like TQS did? Is this what's necessary to make sure that people understand we have a problem with conventional television? We've been saying it for the last three years. Again, there are simple facts--fragmented audiences, new technology, a young generation that's not watching television the way the generation previous was. Those facts are there, and those facts create the problems we're dealing with.

[Scott Simms, Liberal, Bonavista—Gander—Grand Falls—Windsor, NL]

But by saying that, and using the model of conventional television as a pillar, are you really chasing after something that is no longer there or is drifting away? For instance, our teenage children are not using the remote control as much as they are using the computer mouse to entertain themselves. Therefore, if you want to invest more in conventional television, are you investing in something that is slowly dying and that really has no way of resuscitating itself?

[Pierre Karl Péladeau]

We're ready to invest in conventional television—and it's related to the discussion we had around the Canadian Television Fund—only if we have the capacity to get those rights other than on conventional television. Unfortunately, the system was built such that to be able to have a contribution from the Canadian Television Fund, you buy a licence only for conventional television. The audience is not there anymore to finance that by the broadcasters; therefore, unfortunately, we're not buying them anymore, and at the end of the day the industry is suffering.

What we're asking for, and what we've been saying for the last few years, is that we need to have all the rights. We're happy to find out that we have an agreement with one of the important unions in Quebec, where we now have the capacity to get those shows other than only on conventional television.

[Scott Simms, Liberal, Bonavista—Gander—Grand Falls—Windsor, NL]

Would it be fair to say, then, that when it comes to fee-for-carriage your response is “not yet”?

[Pierre Karl Péladeau]

No. We're saying we should have fee-for-carriage for conventional television.

[Scott Simms, Liberal, Bonavista—Gander—Grand Falls—Windsor, NL]

All right.

[Pierre Dion]

Basically we're saying two things. Yes, there is a future for conventional television, under two conditions: let's have the same sources of revenue as the specialized channels have—they have two, we have one; and let's have more deregulation so that we can export our content on a multi-platform strategy, because consumers are going to the media they want, when they want, where they want. We just want to follow the consumer, and we want to have the same sources of revenue as our competition has now, which is almost a 50% market share. With those two conditions, yes. On top of that, conventional TV is investing in quality Canadian content right now. But we need those two conditions.

[The Chair, Conservative, Gary Schellenberger]

For the last question, Mr. Pomerleau and Ms. Lavallée will split the time.

[Roger Pomerleau, Bloc, Drummond, QC]

Thank you, Mr. Chair. Mrs. Lavallée will put her questions after me.

I am not a technician specializing in this particular field. My question is more theoretical and philosophical in nature. From what I've been told, you have a background in philosophy. Therefore, this should be easy for you.

The business executives who testified before you made very brilliant, intelligent and Cartesian presentations. They explained to us how profits are earned and why the market should be left to sort itself out. Then you come along. You are also prosperous business executives, but you have talked to us a great deal more about culture. Culture will eventually represent the foundations of your company. All of this leads me to believe that while culture may be a paying proposition in Quebec, it creates many more problems in Canada.

Let me clarify my statement. I have the impression that on the Canadian side—perhaps not for Canadians, but for those who distribute culture— it can be tempting to turn to the United States for program content. It is much easier to distribute these products elsewhere in Canada than it is in Quebec. Canadians have become increasingly Americanized over the past forty years. They are exposed to American books, films, music and television programs. Quebeckers, on the other hand, are focusing more on Quebec culture, on home-grown products. Culture is a paying proposition in Quebec.

Canadian content, whether produced in Quebec or in Canada, entails certain costs. I imagine that you are wondering if we are prepared to invest in this area.

[Pierre Karl Péladeau]

As I noted in my presentation, we are great believers in Canadian content. We invest significantly in this area and hope to be able to continue doing so. However, as I tried to explain, we must be in a position to continue benefiting from the system and from structures that allow us to invest and profit from this content. Aside from Radio-Canada, which is fortunate to receive $1 billion a year from taxpayers, I know of no other company that can survive when it cannot profit from the products it markets.

As far as we're concerned, we've made a choice. As you said, Quebeckers have an appetite for home-grown culture, certainly for reasons linked to history and language. There is no question that English Canadian broadcasters do not benefit from the same level of protection as broadcasters in Quebec, to the extent that they must compete with the big American networks. In Quebec, we are protected by a natural “shield“, although we could choose to invest in something other than Canadian content. Clearly, it cost considerably more to invest in a Canadian production than it does to purchase the exploitation rights to Gilligan's Island or to other Canadian productions.

We have made a choice and we would like to stick with it. However, we need to be able to sustain this level of investment in the years to come.

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

There is no question, Mr. Péladeau, that Canadian and Quebec broadcasters face different problems. You are asking that the system be restructured and that new regulatory principles be adopted, something that the CRTC refuses to do. I can't understand why the CRTC is not listening to what you have to say. If I had the time, I would put that question to officials.

Last year, Quebec's Minister of Culture Christine St-Pierre called for the repatriation of the broadcasting and telecommunications industry. As you know, she is not a sovereignist. She called for control over this sector to be transferred to the Government of Quebec. The Bloc Québécois has long been demanding the creation of a Quebec CRTC. In fact, various parties have been calling for this since 1929.

Having stakeholders who share the same problems, values and language may not resolve all of the problems faced by general interest television, but it might resolve some of them. What do you think?

[Pierre Karl Péladeau]

I'd like to comment briefly on the statements of the Minister of Culture—not necessarily Ms. St-Pierre, but her predecessors—as well as on statements made by the Minister of Finance. In Quebec, we are discriminated against when it comes to securing tax credits. Even though we make a significant contribution to Canadian programming, we are still victims of discrimination in this area. In other Canadian provinces, notably in Ontario, broadcasters are now eligible for tax credits because they contribute to the Canadian system.

As far as creating a Quebec CRTC goes, my sense is that we already have enough public servants. Having more of them will complicate, rather than simplify, matters. I think I've made my position fairly clear. I believe the solution is the deregulation of the industry. As a result of the deregulation by the CRTC of the telephone sector, at least in Quebec, Quebeckers are today enjoying landline telephone service that is just as reliable as, but much less costly than, it was when Bell held a monopoly.

The CRTC has opened the door to deregulation. Ultimately, who benefited from this move? Citizens and consumers. In our opinion, consumers and citizens always benefit from fewer regulations. Evidence of that fact can already be seen in the telecommunications sector.

[The Chair, Conservative, Gary Schellenberger]

Thank you.

Since we didn't start until 4:35, we will have a last question from Mr. Del Mastro, please.

[Dean Del Mastro, Conservative, Peterborough, ON]

Thank you very much.

Mr. Péladeau, thank you very much to you and your colleagues for appearing today. We do appreciate your taking the time to come. And frankly, you had a lot to say, and I appreciate that.

During the time you spoke, you spent virtually all of it talking about the CRTC's reluctance to change and certainly that it seems to be holding you up from a regulatory standpoint and that you could be doing better. In fact, I would argue that your comments were indicating you could be much more profitable, with more Canadian content, and putting that out on more mediums, and so forth than what you're doing right now, if the CRTC wasn't in your way.

So if I am to understand you, the CRTC is actually directly impacting the profitability of broadcasters through its regulations. Is that a fair statement?

[Pierre Karl Péladeau]

Absolutely, and again, with the fees they've been regulating for the last few years, especially on the specialty side, it is a body, at the end of the day, that will decide how profitable the specialty channels will be on a carriage basis. On tier three, or on category B, which is non-mandatory carriage, there's also some capacity for the CRTC to determine the tariff applicable.

What we're saying, and we'll continue to try to provide evidence, is that conventional television has not been able to fulfill the proper expectations for business, and moving forward will not be able to continue to invest in Canadian programming unless we have the benefit of the fees that are available right now only to the speciality channels. There's no doubt about it; they have a strong impact on the profitability of the industry, especially on conventional television.

[Dean Del Mastro, Conservative, Peterborough, ON]

It sounds to me as if a lot of people are paying fees. Broadcasters are paying fees. Broadcasters are coming back saying that they need a fee because they have the fees and they can't keep up with everything that's going on. It sounds, maybe, like a lot of money is being spent on regulation and so forth, and by Canadians, ultimately, via the cost to broadcasters. That must put the cost of your advertising up, so advertisers have to pay more. These fees, from what you're saying, are getting in the way and costing broadcasters money.

The CRTC was created 40 years ago, or a little more than that. Has its mandate changed? Is its mandate or what it has been charged with doing kept pace, in your opinion? Is it still relevant? Should we be making specific recommendations as to the mandate of the CRTC in this committee?

[Pierre Karl Péladeau]

I was not there 40 years ago, but I can say that there was no such thing as many of the alternatives citizens in Canada now have for the chance to use to inform themselves or to be entertained. Today is a new reality. The CRTC was there to regulate something that was awarded on a monopoly basis. It is still relevant, certainly, but only if it is considering the requirements of the regulation of the industry because of the alternatives that are now available to all Canadian citizens.