Canadian Heritage Committee on April 22nd, 2009

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

Thank you, Mr. Chair.

Thank you very much for coming. We're very pleased that you came today. This is an issue that's very important to all of us.

You've referenced Sudbury-Timmins. Our region is dependent on CTV news coverage. They cover a vast region, and they do a great job.

I'm sure, Peggy and Don, your people do the same in your region--my colleague Mr. Masse's region--with A-Channel Windsor.

So we have a very strong commitment to our local news. The issue we're facing here, I guess, to be quite blunt, is that I've never seen so many very well-off companies coming and blaming the other guy. And that's kind of what we're hearing. If I look at your map of losses, and I flip it upside down, that's what the cable guys are going to show me as your numbers.

If you'll excuse the television expression, we're going to have to squeeze the Charmin here to make sure we get value for our taxpayers. We're hearing such remarkably different views.

In 2007 you took in $1.7 billion, 48% of the revenue of the entire English language TV system. So when we hear that local is being squeezed out by specialty and the other networks, you're basically being squeezed out by different elements of companies you already...by stations you already control. Is that not correct?

[Ivan Fecan]

No, I think that's fair. If cannibalization is going on, of course we have to be part of it. However, the businesses have to stand on their own.

I think as Mr. Péladeau said in front of this committee a few days ago, if you have five newspapers and three make money and two don't, as a business person, ultimately, if you believe those two will never, ever make money, you close them.

You know, we are a private broadcaster. We exist to make a profit from a service. We're not the CBC with their billion-dollar appropriation.

So if you determine--never mind the recession or something else that might correct itself at a certain point--that there is a 30-year pattern of decline and it's never going to get better, then you have to say to yourself, well, either we need new revenue sources or we have to cut back service. And if we cut back service, what's the point?

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

I totally understand. The reason I'm asking is that in 2007, when you bought the CHUM group, that was a bit of a controversial decision. Certainly it was problematic for us, because we worried about the idea of massive media consolidation. The CHUM group was obviously very profitable, but you picked up all those A-Channels, and now those A-Channels you're trying to ditch.

[Ivan Fecan]

I would very much like Don and Peggy to speak about that, because they--

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

Sorry, I only have five minutes. That's why I have to get to the point here.

Are you telling me that in 2007 you thought you were buying A-Channels that were really profitable, or was the plan all along that you were going to get the CHUM group, wait a year or two, and then cut the losing stations off?

[Ivan Fecan]

The plan was to buy the specialty channels and radio. That was 98% of the value of the deal.

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

And you got stuck with the A-Channels.

[Ivan Fecan]

The CRTC asked us to please try to make a go of the A-Channels as well. We wanted to keep City, and of course Rogers paid a lot of money for the City channels.

I think you really need to hear from Don and Peggy. The fact is that these stations have been financially challenged for, oh, 10, 15, 20 years. It's not getting better.

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

I will hear from you folks in a bit; sorry.

We got the same argument from Rogers, that they bought something from you and they bought a pig in a poke. Now they're saying, geez, we didn't know that we bought a pig in a poke. And now you guys bought a pig in a poke.

You guys really know your business, and yet here we are, two years later, being told there's a crisis. But you would have known those stations were losing money. So why did you buy them?

[Ivan Fecan]

The CRTC asked us to try to help out with them. And you know, we've tried. We don't see a future for them unless there is some sort of structural fix.

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

I guess I'm asking these questions because we are being asked to make perhaps a major policy change that would affect the bottom line of all our taxpayers paying a hit, if they pay fee-for-carriage or whatnot. We don't know what the bottom line is. We hear that local makes money. We hear that it brings in more advertising. You tell us it's not true. The cable guys are certainly telling us....

Would it be possible, in an in camera session, for your people to show us the books? We wouldn't disclose it publicly, but as parliamentarians, we really have to make sure that when we go back to government and make a recommendation, we know that this crisis is at the local level, that money is being lost at the local level.

Would you be willing to share those books with us?

[Ivan Fecan]

I think the CRTC, which is your instrument, has those figures. Let me think about the answer to that question, but as your instrument, they already have those figures and can make that determination.

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

We sometimes don't get great answers out of the CRTC. That's why we're appealing to you. We need to be on the same page here.

[Ivan Fecan]

Mr. Angus, I have to correct something you said. You said this would cost the taxpayers money. We're not advocating that. We believe this is an industry-to-industry solution. We are not saying this should increase cable bills. We believe there is plenty of money to pay for that.

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

There could be, but at the end of the day it's our consumers who have to pay. If we are going to go that route, we have to be able to say to them that we have seen the crisis and it is us. We're not quite sure yet what crisis we're seeing, because it's so conflicted.

[The Chair, Conservative, Gary Schellenberger]

Mr. Del Mastro.

[Dean Del Mastro, Conservative, Peterborough, ON]

I want to thank the representatives of the A-Channel for coming today. I've heard an awful lot about the A-Channel, certainly from our MPs, Patrick Brown and Ed Holder, who are here today. Mr. Holder has been making me aware of your situation. I know that Mr. Masse across the way has also been advocating on behalf of Windsor A-Channel. I'm certainly abreast of your situation, but I'm not going to ask you any questions, and don't take that as a snub.

Mr. Fecan, I want to ask you a couple of questions. I have a release from CTV on Monday, and I want to ask for some clarification. It says that CTV welcomes Rogers' support for a fee for carriage on an American retransmission consent regime. I'm sure you have that. You touched on it a bit in your presentation. You said that you welcome the idea that Rogers might accept a fee for carriage as it exists in the United States, but the American system doesn't give over-the-air television stations an automatic right to be carried by cable. If you're happy with Rogers' position, could we assume that you accept the U.S. approach, that you're willing to give up carriage rights and then negotiate both fees and carriage? It's more than carriage rights, obviously. We're also talking about automatic substitution, guaranteed priority placement on the dial, and 6% of gross revenue that goes into the Canadian programming fund. Are you prepared to put all that aside for a fee for your broadcast?

[Ivan Fecan]

We're certainly prepared to talk about it. Frankly, I was stunned on Monday when I heard Mr. Lind say they would accept this kind of thing.

I need to correct one thing you said. The U.S. regime actually says that you do have a guaranteed placement. As a TV station, every three years you get to make this election. If you elect to take that guarantee, you don't get a fee. If, however, you decide to take your chances and negotiate with the local cable guy, then you can negotiate for a fee. If for some reason you can't agree to agree, then whatever programs you have the rights to in that territory cannot be brought in anywhere else. That's something we would agree to.

[Dean Del Mastro, Conservative, Peterborough, ON]

It seems to me that you're saying you're not prepared to look at any of the other benefits you're getting. As I said at the last meeting on Monday, inherently you don't have a business without cable and satellite. Really, you don't, especially on the specialty side. And they don't have a business without the broadcasters. You're kind of in the sandbox, and we'd like you to play nice and hopefully everybody can succeed.

You want to tell the cable companies that you want an industry-to-industry solution on fee-for-carriage. You want to make the cable companies do that, but you don't want to acknowledge the business advantages that the CRTC is providing from the cable companies to the broadcasters. You can't exclude that and say there isn't any value there, can you?

[Ivan Fecan]

Let's take them one by one. Simultaneous substitution, is that an advantage? They don't have it in the U.S. Do you know why? It's because their program rights are protected and they don't need it. If we got our program rights protected, as the American stations do in their markets, we wouldn't need simultaneous substitution, because we wouldn't be seeing American signals over the air in Canada. They don't allow signals from Rochester to go into Buffalo and vice versa. We have allowed this. Simultaneous substitution is, if you will, liquidated damages. It's not a benefit. We'd just as soon not have it and not have the U.S. signals in here. No other industrialized country in the world has allowed the wholesale importation of foreign signals.

[Dean Del Mastro, Conservative, Peterborough, ON]

But, Mr. Fecan, to be honest, isn't that like we're trying to roll the clock back 30 years?

I know a property you have is CSI. If I miss the airing of CSI on Thursday night at 9 o'clock, I might choose to watch that on Sunday instead. I can go to CBS's site, and I could choose to view that. I'm not going to see anything from CTV, even though you've paid the rights to broadcast that show.

To say that if they don't give us simultaneous substitution then we're not going to let the U.S. networks in and we won't worry about it, and if people don't want to pay a fee for carriage on their cable bill, it's no problem, they just won't have CSI...except that I can go to CBS.com and watch it.

[Ivan Fecan]

Sir, you're talking about taking things back; I'm talking about taking things forward. When you go to their site, they won't let you watch if you're in Canada because the rights aren't cleared for you, as a Canadian. If you go to the ABC site, you can't watch Desperate Housewives. If you go to the NBC site, you won't be able to watch any of their programs in Canada. That's the nature of it.

But please, let me finish. We're not advocating this; Mr. Lind was advocating this.

[The Chair, Conservative, Gary Schellenberger]

Thank you.

We will move on now to Mr. D'Amours.

[Jean-Claude D'Amours, Liberal, Madawaska—Restigouche, NB]

Thank you, Mr. Chairman.

I would like to talk about the 2010 Olympic Games. We know that your organization was initially awarded the contract to broadcast the Olympic Games in Canada. We know that, in some instances, it has been difficult to determine the percentage of French- and English-speaking Canadians who will be able to watch the Games.

I concede that you have made an effort to find alternative solutions. There is no denying that you have been working on finding solutions. I am not convinced that you were necessarily obliged to do so, but I do have to thank you for the efforts you have made.

We know that a certain percentage of the population lives in rural areas. This comment essentially pertains to the development of the television industry and its impact on communities. As things now stand, the people who may find themselves with no access to Olympic Games coverage are the ones who live in those rural communities.

Are you continuing your efforts to find solutions so that all Canadian citizens will have access to Olympic Games coverage, or do you believe you have already gone as far as you can?

[Ivan Fecan]

Thank you for the question, and thank you for the compliment. I would like to point out that industry-to-industry solutions are possible. Our partner is Rogers on this effort, and sometimes we disagree and sometimes we agree. We have worked very hard to try to give as much coverage as possible; in fact I believe there has been more than ever before for French language coverage of the Olympics.

I'm going to pass this to Mr. Sparkes, who has maybe more on this file than I have.

But I would also point out before he comes on that every single minute, every second, will be available on broadband to anybody with a dial-up connection, which has also never happened. We continue to work, any way we can, to get this to every Canadian citizen, regardless of their language and regardless of where in the country they work. It's not something where we're saying we're done, it's over, we can't do any more. We are always looking for opportunities.

Paul.