Canadian Heritage Committee on April 20th, 2009

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

Thank you very much.

Mr. Péladeau, when Bloc MPs found out that you would be appearing before the committee, they all made me promise to ask you if you planned to put in a bid to buy the Montreal Canadiens.

[Pierre Karl Péladeau]

The Canadian Heritage Committee is an official forum, Madam.

[Some hon. members]

Ah! Ah!

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

You can tell me. I won't tell a soul.

[Pierre Karl Péladeau]

You won't tell anyone.

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

Is your answer yes, or no?

[Some hon. members]

Ah! Ah!

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

On a more serious note, even though supporting the Montreal Canadians is akin to a religion, I mentioned earlier to Rogers officials that I was very surprised to see how they broached the issue of the evolving television industry. They view this evolution as a cycle where sometimes things are going well, while at other times, they are not going so well. There is nothing we can do about it, other than wait for the situation to right itself.

In your submission to the CRTC, you called for some major changes. You maintain that the television industry in Canada is being affected by some profound changes and that the system needs to be revamped. Rogers represents general interest television.

Why is it that your position is so very different from that of the Rogers officials? I would even go so far as to say that you are not on the same page.

[Pierre Karl Péladeau]

I would not presume to speak for Rogers officials. We are a little surprised by their position. For a number of years now in Canada, North America and throughout the Western World, general interest television networks, the pillars of the broadcasting systems in various countries, have seen their audiences shrink. The same is true for print media. The number of newspaper issues sold, along with advertisements and revenues, is also declining. These are certainly not the signs of a company or industry enjoying strong growth.

Why are fewer people tuning in? The answer would be that the Internet provides alternative forms of news and entertainment. It is impossible to deny the existence of the Internet. In fact, I frequently use this medium too. When we acquired Vidéotron, we had fewer than 100,000 Internet subscribers. Today, we have over one million subscribers. The Internet service that we offer to one million subscribers in Quebec is used for a variety of purposes, not simply to send e-mails. For a given age group, we find that people use the Internet to get information and to entertain themselves. Hours that were once devoted to the only information vehicles available at the time, namely television and the print media, are now devoted to Internet use.

The two media pillars, namely the print media and general interest television, are taking the brunt of the impact of technological change and audience fragmentation.

[Pierre Dion]

Just to clarify, but this cannot be cyclical. In the early years of this decade, specialty channels enjoyed a market share of between 18% and 20%. For the period just ended, that is January, February and March, these channels enjoyed a 45% market share. Moreover, this is generally a very good period for general interest television, what with all the reality series on the air. One percentage point of market share is easily worth anywhere from $4 million to $5 million. You do the math: That's 25 times $5 million. That represents revenues earned by specialty channels and their market share is not about to decrease. Some even estimate that their share will increase to 55%, which is already the case elsewhere in Canada and in the United States.

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

You say that there is pressure on your advertising revenues. Are you saying that you are still running as many advertisements, but that you are charging less for them?

[Pierre Dion]

There are different situations. There is pressure not only on fees, but also on advertising budgets. For example, where once $10 million was spent on television advertising, today, the budget may be only $7 million or $8 million, because sponsors have decided to diversify their advertising dollars.

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

I'm sorry to interrupt, but aside from declining advertising revenues, it seems that your problems are different from the ones that Rogers is experiencing. Besides, I don't believe you have any television stations outside Quebec.

[Pierre Dion]

We have only one station, SUN TV, in Ontario.

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

Nevertheless, your problems are not the same as Rogers', wouldn't you agree? You do not have problems producing, obtaining or broadcasting Canadian or Quebec content. I think that on that score, everything is going well.

[Pierre Karl Péladeau]

Yes. We have demonstrated that 90% of our programming is Canadian.

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

In fact, Quebec productions work the best on your television stations.

[Pierre Dion]

The problem is that home-grown productions are costly. As mentioned earlier, there is pressure on revenues, but as far as content is concerned, the cost hasn't gone down.

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

I understand that. However, audience ratings aren't a problem for you.

[The Chair, Conservative, Gary Schellenberger]

Your time's up.

Mr. Angus.

[Charlie Angus, NDP, Timmins—James Bay, ON]

Thank you.

I very much appreciate your presence here today. We had a very interesting set of discussions the last time you came, in February 2007, to discuss the CTF fund, and I'm glad to have your participation today.

In your 2008 brief to the CRTC, when you were asking for subscription fees, you didn't say whether those would be dedicated to local programming. If you got fee-for-carriage, would you commit to having those fees go into a specific fund that could be used only for local programming?

[Pierre Karl Péladeau]

At the hearings, what we were trying to mention was that conventional television was in bad shape and that we would therefore need to have fees to subsidize it.

Yes, for sure, we will be ready to commit to and create the sorts of commitment to invest in Canadian programming.

[Charlie Angus, NDP, Timmins—James Bay, ON]

But would all of the money go specifically to local programming? Would that be the commitment?

[Pierre Dion]

In our case in Quebec, a good percentage of what we do is already Canadian content. So what we're saying is that if we are to continue to aggressively invest in Canadian content, sooner or later we will need fee-for-carriage to assist us. If not, then we will have to continue reducing the dollars per show that we have been investing. The best example is the series we were doing at $800,000 or $900,000 per hour. Now, for most of the Quebec shows, we've had to drop that to $600,000. And sooner or later, we are going to have to drop it to $400,000.

So in order to maintain the quality of the content we had, part of that money will be to maintain the quality of existing content, and some of it could be to do more.

[Charlie Angus, NDP, Timmins—James Bay, ON]

Okay, some of it.... But I'm looking at CKXT, a station that covers the Toronto and Hamilton areas, where you're now offering 20 hours of local programming, a third of which is original. You're looking to cut that down by half, to ten hours, so that we'd be down to five hours a week of original programming. When the CRTC asked you how you reflected Hamilton in that, you stated that Hamilton residents regularly contributed user-generated content that appeared on CANOE Live, and that photos from several residents appeared on air after Hamilton was hit by a snowstorm. You went on to say that local human interest stories had been reported, including a story on Hamilton's animal control service being overwhelmed with stray cats.

For five hours of original programming in the Hamilton area—which you're suggesting—do you really think people should pay a fee for that?