Good afternoon, Mr. Chair and members of the committee.
My name is Mr. Rick Arnish, and I am president of the Jim Pattison Broadcast Group, from our head office in Kamloops, British Columbia.
I've been in this wonderful business for over 40 years, and our owner, Mr. Pattison, has been in the broadcasting business some 44 years. Our broadcast group consists of three conventional television stations, all small market stations, located in Medicine Hat, Alberta, Prince George, B.C., and Kamloops. Our western-based group also consists of 29 FM radio stations, all located in small markets, except for Vancouver and Canada's two most western provinces.
Speaking of television, CFJC TV in Kamloops was one of this country's first small market stations. It signed on the air April 8, 1957, with its 100-watt transmitter, bringing the 16,000 citizens their very own television station.
Community and being a local broadcaster is what we're all about. We continue being the leaders in the area of news, information, and public service, as well as being the conduit for the diversity of voices in our marketplaces for our viewers and listeners.
I appreciate the opportunity to address the members of the Standing Committee on Canadian Heritage at a time when the conventional television industry is at a crossroads in terms of whether it will survive in the 21st century.
You heard in my opening remarks that we have only three small market television stations, and you may be asking yourselves why the Pattison Broadcast Group has not increased the number of TV stations in proportion to that of our radio growth over the past 12 years in particular. The truth of the matter is that we've had a number of opportunities to acquire other television properties but have chosen not to because of my long-term concern about the future of conventional television in our country.
I'm on record as far back as 2005, when I stated this on CAB panels and through media interviews, as saying that I wasn't sure there would be true small market television stations in existence by 2015. Times were fairly good just four short years ago, and I could see some of my broadcasting colleagues rolling their eyes at what I was saying. Now, because of competitive pressures and economic challenges, they and many others are also questioning the future existence of this conventional model that has been around for over 50 years. The system as we know it today is broken.
Mr. Chair and committee members, during these proceedings I've heard some presenters state that the current financial pressure on local broadcasting is cyclical, that the advertising business we rely on will come back in spades and everything will be peaches and cream. Let me assure you that I do not share that view.
In rural Canada, the true small market conventional television station is under tremendous financial and competitive pressure. It all started a number of years ago, as far back as 1997, when the advertising market for medium and small market conventional stations shifted substantially towards the specialty services offered by the BDUs. From day one, the specialty channels not only received subscription fees, they had the ability to increase the amount of hourly advertising they could sell and air. Where did most of this national advertising revenue come from? The answer is that it came from small market stations like ours.
Another concern I have is the fact that many of them have taken on a more conventional television program schedule than a true specialty service, which again impacts the true small market conventional stations. The systemic problem is that there's just not enough revenue to go around even in a strong economy, let alone a weak one.
If it weren't for the direct-to-home small market local programming funding that Canada's 19 independent small market conventional stations have access to, I believe that a number, if not all, of these stations would not exist today. I thank the CRTC for this fund, as it has been a lifeline for our stations in Kamloops, which collectively produce 47 hours weekly of award-winning local programming.
Regarding fee-for-carriage, although we would not turn down any moneys we would be eligible for, that is really a large broadcaster issue. The big companies would benefit to the tune of millions of dollars versus thousands of dollars for our stations. The true small market independent stations have stated categorically that we would not give up the small market local programming fund in exchange for fee-for-carriage. That would be an economic disaster for all the stations.
The newly created CRTC BDU local programming improvement fund is another initiative that will certainly assist the long-term future of our three stations, as long as it's not tied to an incremental amount of local news, information, and community reflection. This new fund would go a long way in ensuring that CFJC TV in Kamloops maintains its 18.5 hours per week of true local programming as well as over 14.5 hours each week on CKPG-TV in Prince George and 14 hours weekly on CHAT TV in Medicine Hat.
Funding would also be used to facilitate the capital expenditures to move toward a virtual digital transmission platform for our stations, as the demand is growing for this type of delivery, even in our small markets.
You've also asked how the federal government could address the situation of local broadcasting, so please let me respond in a very respectful manner to the Broadcasting Act and current CRTC regulations. Regarding the true independent local small market conventional television stations across the country, if there ever were a time to deregulate, the time is now.
One way to help rebuild the audiences and revenues of Canada's small markets is to have no regulation except a minimum requirement of local reflection of, say, perhaps seven hours per week. Other than that, on all small market stations in populations of under 300,000, there should be no regulatory obligations at all, including the current Canadian content rules, where 50% of our programming must be Canadian in prime time, as well as 60% throughout the broadcast week. This would allow small markets to compete with all distant regional Canadian and American signals, along with foreign services and specialty and pay-per-view, which have severely impacted the tuning and revenues of our stations.
Today we truly have the 500-channel universe, Mr. Chair, and this is a matter of survival, committee members. The small market cable companies are currently exempt from regulation, with more changes perhaps coming for even larger cable systems, so why not a major breakthrough for small market conventional television?
Many years ago there was a hue and cry because the CRTC deregulated FM radio in this country, and many naysayers said it would hurt the radio industry. Well, we all know that the radio industry flourished and will continue to do so now and way beyond the 21st century. I'm bullish on Canadian radio.
So I say it's small market Canadian conventional television's turn, and this is something that has to happen now, not six months from now or a year from now, because if it doesn't, many of us will not be in business. Have no fear that deregulating the small markets would endanger local Canadian programming and reflection, because all these small stations will continue to reflect their markets in the best way they know how, and that is through many hours weekly of local news, information, and entertainment programming. Of course, we would expect that the current rules regarding priority carriage and simultaneous substitution would continue for our stations in the markets where we're licensed as the local station.
Another area where the government could assist us and other small market stations is to change the Broadcasting Act to ensure that all satellite BDU distributors, like their cable counterparts, have to carry all conventional small market Canadian television services. In every small market across this country, 30% to 40% of the viewing is to DTH, and if the local signal is not carried, it has a significant impact on viewership and revenues. They have the capacity and will have even more capacity in the near future. It's time to correct the DTH model.
Another area where the government could also assist the conventional industry is the elimination of the part II licence fees that we all pay, which go into general revenue. This is an additional cost, which, if eliminated, would add to the opportunities you have before you to save small town television stations. All we need are the tools to do the job right, and we won't let you down, nor the Canadian citizens we serve. We are the true eyes and ears of the cities and towns we are part of.
In conclusion, the loss of local broadcasting and local reflection built around diversity of voices in our country would be catastrophic. Canadians want, need, and desire to see themselves and their local communities reflected on their television stations. I believe the conventional industry as a whole does an excellent job. If it weren't for stations like ours in Kamloops, Prince George, and Medicine Hat, along with our other colleagues in the small markets, who would cover the daily activities in the marketplace? I'm talking about the weather, school closures, flood and fire coverage, tornadoes, community happenings, sports, entertainment, businesses talking to our viewers, their potential clients, along with the charitable support for hundreds of worthwhile causes. We truly reflect what is going on in the cities and towns we are so proudly licensed to serve.
Members of the standing committee, you have an opportunity to make history by implementing the necessary changes to ensure the survival and sustainability of true small market conventional television in Canada.
Thank you for this opportunity to appear before you this evening. I would be happy to answer any questions you may have.