Evidence of meeting #15 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 stations.
A recording is available from Parliament.
President, Shaw Communications Inc.
It's duplicate in many forms. Some of the programming is local in origin, but much of the programming is duplicated.
NDP
Brian Masse NDP Windsor West, ON
I don't believe that is the case. I've had a chance to witness the other.... They may carry a story across the spectrum, but that certainly wouldn't be the norm.
I'll move on to something else, because I think it's important. You've said that right now fee-for-carriage would be an issue. The previous delegation has basically said that you guys can suck it up. From 2002 to 2008, since deregulation, your rates for the Vancouver area have gone up 55.5%, from Winnipeg east, 90.2%, and in Calgary, 61.5%, for an overall average of 67.8%. That's the average from the CRTC report itself. Now explain, I guess, where the value is for the customer in terms of a 68% increase over six years, and second, explain why you couldn't carry the load right now that's being requested.
President, Shaw Communications Inc.
Let me talk about the actual reality of what our customers are receiving and the rates they're paying for them.
We offer telephone, we offer Internet, and we offer digital television services. In the last five years, through the bundling of those three services, our customers are actually paying less for that basket of products than they were five years ago. That's the reality.
Second, in terms of what we've done with the money we're deriving from our customers, we've spent $750 million in capital expenditures this year alone to build infrastructure, to add more services, to make the services more reliable, and to extend fibre optic cable to small communities.
We just acquired Campbell River TV Association on Vancouver Island. We've spent a few million dollars since we acquired that system to give those customers the same services we would provide customers in Vancouver or Nanaimo. Our customers are what drive our behaviour. They tell us, through their subscriptions, that they like what we're offering. They like the value, the speed of the Internet....
NDP
Brian Masse NDP Windsor West, ON
I appreciate that, and that helps to clarify that, and I would ask, at the end--
NDP
Brian Masse NDP Windsor West, ON
--I would implore you, if you actually see a way out of this, to actually drop one of your stations of foreign or something else and put the A-Channel in Windsor, and we could actually get through this.
President, Shaw Communications Inc.
Thank you very much.
Just so you know, we've dropped from the 50 channels on pay-per-view that we used to have on Star Choice to fewer than five. So we're using that as a way of adding more services.
Conservative
Conservative
Shelly Glover Conservative Saint Boniface, MB
Good afternoon. I just want to welcome you here today.
I want to let you know that I come from Winnipeg, Manitoba. I just have to say that Shaw TV in Winnipeg has been instrumental in providing us with some coverage of our flood and the sad situations that some of our homeowners and people in Winnipeg have suffered recently. I just want to point that out.
I'm going to ask a very basic question. What will happen to Shaw if fee-for-carriage comes into being?
President, Shaw Communications Inc.
Well, clearly, the fee for carriage is a cost to us, and that would be a cost we'd pass on to our customers. Our customers, for that fee for carriage, are going to get what? Nothing--nothing they don't have now.
Conservative
Shelly Glover Conservative Saint Boniface, MB
I'm glad you answered it as basically as I asked it, because our dilemma is to try to collect as many facts as we possibly can to really come to some kind of conclusion in the end.
I'm going to ask you some other very basic questions.
Of course, the broadcasters are arguing that you use their signals and that you should pay for them. Do you agree with that?
President, Shaw Communications Inc.
The answer is no, we don't agree with that.
I think the suggestion was whether we are going to go back 40 years to the genesis of broadcasting, when there were two or three over-the-air broadcasters, and Shaw, in its form at the time, provided a reach for broadcasters that they could not otherwise have enjoyed.
I've lived in Vancouver. I've lived in Rivers, Manitoba. I've lived all across this country, and the benefits the broadcasters derive through our distribution, through the commitments, through the $700 million we'll spend this year in capex, they're benefiting from.
When Mr. Fecan talked about the Internet and how they're streaming programs, they're streaming that over our network. They have a huge advantage and a benefit that comes through the investments we make in our infrastructure. That's the benefit. We're not taking anything. We're providing them with value. We're extending reach. We're going to do the same thing, as we've said, with a virtual broadcast. When they're not prepared to make the investment in their transmitters in a digital environment, we've suggested--and we've made a commitment--that we will in fact replace their transmitters through our distribution network. Get the signals to us on our cable system and we will make them available to our customers. We'll make the investments in the boxes that are necessary for customers to receive those signals, and we will do that at a nominal fee, if you will, to pay for the kind of investment we will have to make to have those available.
There's a relationship that goes back 40 years. We've provided the means for them to get to our customers.
Conservative
Shelly Glover Conservative Saint Boniface, MB
I understand. I'm sorry, I only have a couple of minutes, but I wanted to ask those two questions because I believe you may have been here when CTV was here. Of course, they talked about the use of their signals and the cost that they said would not fall upon subscribers. You've said the opposite.
You heard what they said. Please respond to what they said and where they figure there would be no cost.
President, Shaw Communications Inc.
Well, there will be a cost. We've been clear on that.
You know, this is not the first time we've talked about fee-for-carriage. It was six months ago, I think, that we were in Ottawa in front of the commission talking about fee-for-carriage. A year before that we were in front of the commission. Somebody asked “Would you open up your books to us?” The answer was that we've shown them to the commission and it's basically your arm. The commission has that information, and based on that information it chose, again, not to approve a fee for carriage, because it recognized that there was not substantial justification, if you will, in the numbers it was provided to warrant a fee for carriage, which it also knew would be passed on to consumers. We've been very clear about that.
Senior Vice-President, Regulatory Affairs, Shaw Communications Inc.
To finish off, if we have to absorb the costs, it means there's less money for investment. Those would be hard business decisions we'd have to make, because at the end of the day we have to ensure that the company remains profitable. Every year we invest over $700 million in our network, and that would be challenged.
Conservative
Shelly Glover Conservative Saint Boniface, MB
One quick question to finish: that investment you're talking about, the lowering of it, is that going to affect local programming?
President, Shaw Communications Inc.
We're trying to get away from the sky is falling scenarios. We're proud of what we contribute in the form of local programming in all of our communities. So that would not impact the programming we deliver in our community programming. What it will do, though, is mean less money we can invest in our infrastructure to buy, for instance, a new satellite to launch more services, like the Windsor service, on that satellite. We wouldn't have that capability to the extent we do now.
Conservative
Liberal
Pablo Rodriguez Liberal Honoré-Mercier, QC
Thank you, Mr. Chairman.
Good afternoon everyone. I am sorry I missed your presentation. We were involved in a television program on the subject of these hearings. The various media are very interested in what we are doing here.
However, when I listen to you, I don't have the impression that I missed much, because your comments are based very much on what Rogers told us yesterday. My difficulty in this debate is that, despite our potential partisan differences, collectively we are trying to find a solution to help out the industry as a whole. We are not trying to choose winners or losers. What we want is a profitable industry where all players can manage to survive.
As a Member of Parliament, it is difficult and ultimately worrisome to constantly hear people telling us that if we give this or we do not give that, they will cut a particular service, will not provide another, will close down a station or will no longer be involved. I think it almost amounts to blackmail—in other words, if we give in to a request made by one and not to the request made by another, the latter will do less.
Please understand that we are neither for or against Shaw, nor for or against CTV. You want to make money; we want you to make money. However, you have to find a way of communicating with one another. At the moment, I think I understand what you are opposed to. I know you are opposed to the fee for carriage concept. But exactly what option do you support? Which solutions do you favour?
President, Shaw Communications Inc.
I'll start off with what our contribution to local programming is, and we'll use Winnipeg as an example. We have a lot to contribute and we could contribute a lot more to local programming. We are the local programming in many small communities across Canada where there is no CTV. There's no CTV in Squamish or Whistler. They get their local voices through our local programming.
Alex, why don't you talk about some of the programming we do that we think is a positive contribution?
Frankly, we would prefer to be less fettered, if you will, in terms of what we could do because we're committed to doing more.
Alex Park Vice-President, Programming and Educational Services, Shaw Communications Inc.
In many of our cable communities, through our local community channels, we have actually become the local voice in many, many instances for community associations and community groups.
The channel has really been in effect for almost 40 years, and it has begun to develop as a very viable alternative voice at the local community level. So our concern, really, is to make sure that in any kind of review that's undertaken, the community channel is clearly identified as part of the solution. We believe it can be an even greater part of the solution in the future around community expression.
We have the infrastructure in place. I don't know how many of you know, but we now operate over 40 local community channels, from northern Ontario to northern British Columbia. We have 350 staff people who operate within those channels. We have hundreds of volunteers who support that activity at the local community level.
Liberal
Pablo Rodriguez Liberal Honoré-Mercier, QC
Excuse me, but we do not have...
It's difficult for you to be part of the solution if you don't recognize the problem. You're saying this is basically related to the economic problems of today. Others say it's a problem that was created before; it's more visible now because of the economic difficulties, but it will be there again in the future.
In my opinion, there has been a structural change. I do not think the economic crisis is the sole reason for this. I think that the growing number of specialty channels coupled with the advent of the Internet and other platforms have reduced advertising revenues.
If you do not recognize this problem, it is difficult for you to say that you will try to find a solution to it. However, if those who say that there is a structural problem were correct, would you be prepared to do something? Are you prepared to negotiate with CTV and Global and to say that you could agree to fee-for-carriage under certain conditions?
President, Shaw Communications Inc.
We are partners, just to be really clear. We carry all of CTV's specialty services, so we meet with them all the time. We're constantly in negotiations with them on the rates of those specialty services. They talk to us every week when they provide us with the list of services they want to have substituted, as a part of the simultaneous substitution. We do have a dialogue with them.
On getting into a hypothetical discussion on what degree of pain we would be prepared to accept with fee-for-carriage, we've said we're not prepared to accept any. You saw what happened to Phil Lind yesterday. I think Phil was answering a question on whether he would accept the American model. He told us he intended to say he wouldn't accept the American model, and clearly CTV or Canwest wouldn't accept it either because they would never accept the notion of non-mandatory carriage.
