Evidence of meeting #18 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.

On the agenda

MPs speaking

Also speaking

André Bureau  Chairman of the Board, Astral Media Inc.
John Cassaday  President and Chief Executive Officer, Corus Entertainment Inc.
Michel Roy  Chair, Board of Directors, Telefilm Canada
S. Wayne Clarkson  Executive Director, Telefilm Canada
Michael Harris  Vice-President and General Manager, Corus Entertainment Inc.
Pierre-Louis Smith  Vice-President Policy and Chief Regulatory Officer, Canadian Association of Broadcasters
Tara Rajan  Vice-President, Research and Policy, Canadian Association of Broadcasters
Sylvain Racine  Director of des Moulins Regional Television, Treasurer to the Board of Directors, Fédération des télévisions communautaires autonomes du Québec
Gérald Gauthier  Research and Development Officer, Fédération des télévisions communautaires autonomes du Québec
Michèle Fortin  President and Chief Executive Officer, Télé-Québec
Tim Caddigan  Manager, Regional Programming, TVCogeco Peterborough
Maureen Tilson Dyment  Senior Director, Communications and Programming, TVCogeco Peterborough
Jean LaRose  Chief Executive Officer, Aboriginal Peoples Television Network
Charles Allard  Chairman and Chief Executive Officer, Super Channel, Allarco Entertainment Inc.
Malcolm Knox  President and Chief Operating Officer, Super Channel, Allarco Entertainment Inc.
Rick Arnish  President, Jim Pattison Broadcast Group
Scott Sterling  President, Newfoundland Broadcasting Company
Douglas Neal  Senior Vice-President, Newfoundland Broadcasting Company
Stanley James  Chair, Board of Directors, Northern Native Broadcasting, Yukon
Richard Paradis  Business Affairs and Government Relations, Allarco Entertainment Inc.
Sophie Green  General Manager, Northern Native Broadcasting, Yukon

3:30 p.m.


The Chair Conservative Gary Schellenberger

Order, please.

Ms. Lavallée.

3:30 p.m.


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

Mr. Chair, I have a special request.

According to the orders of the day, we are expected to hear from the third group of witnesses for an hour and a half. Our meetings usually last two hours. I am not against hearing from all those people, on the contrary. I believe their testimonies will be highly informative.

I would like to ask for consent from committee members to hear the presentations of the last group of witnesses, and then to having only one round of five-minute questions so that we can end a bit earlier.

3:30 p.m.


The Chair Conservative Gary Schellenberger

Okay. I ask for unanimous consent to change the last hour and a half to an hour. We'll listen to the presentation from our witnesses at that particular time and we'll have one round of questioning. Do I have unanimous consent for that?

Mr. Angus.

3:30 p.m.


Charlie Angus NDP Timmins—James Bay, ON

I had heard there was going to be food. I would suggest if we are only going to have an hour, I wouldn't want to stop and be piling up sandwiches and have that cut into our time. So either we would keep going until 6:30 or we would go to....

3:30 p.m.


The Chair Conservative Gary Schellenberger

We'll keep going to 6:30, and if people have to get some food for nourishment to keep them going, we can do that as the questions go on.

Do I have unanimous consent for that?

3:30 p.m.

Some hon. members


3:30 p.m.


The Chair Conservative Gary Schellenberger

Thank you very much.

Welcome, everyone, to meeting number 18 of the Standing Committee on Canadian Heritage. Pursuant to Standing Order 108(2), we are doing a study on the evolution of the television industry in Canada and its impact on local communities. For the sake of time, I will introduce the three organizations that are before us as witnesses now, and I would ask the presenters to please introduce the people with them.

We have Astral Media Inc., Corus Entertainment Inc., and Telefilm Canada. I'll ask the folks from Astral Media to please make the first presentation.

Thank you.

3:30 p.m.

André Bureau Chairman of the Board, Astral Media Inc.

Good afternoon, Mr. Chairman, members of the committee, and committee staff.

My name is André Bureau. I am chairman of the board of Astral Media, and I'm joined today by John Riley, president of Astral Television Networks, and by Pierre Roy, president of les Chaînes Télé Astral.

I would first like to thank the committee for inviting us to be part of this review of the television broadcasting industry, an important economic sector in Canada and a pillar of Canadian identity.

Astral Media is very proud to have become a truly national Canadian media company, operating 18 pay and specialty services, 2 small CBC affiliates, as well as 82 radio stations across the country. What is distinctive about our operation is that we are a fully bilingual company with properties in both the French and English language markets.

Broadcasting is an industry with a finely regulated balance among its different constituents. So far, the committee has heard from over-the-air broadcasters and broadcast distribution undertakings. However, you have not heard from the specialty/pay television sector. We would like to take this opportunity to profile the sector and some of the specific challenges that the current context presents. We hope this will complement the information provided to the committee today.

The specialty/pay sector is the fastest growing part of the Canadian television industry, with revenues of $2.9 billion recorded in fiscal 2008. There are over 180 domestic specialty and pay services now available in Canada. These services currently draw 42% of the overall viewing audience in the French market and 38% in the English market. The sector directly employs close to 5,500 people and pays more than $406 million annually in salaries.

The sector contributes significantly to the creation of Canadian programming. In 2008, the overall specialty/pay sector invested $1.1 billion in Canadian programming. Also, 90% of broadcasters' financing for Canadian filmmaking comes from pay television services.

By way of background, specialty/pay services were introduced as cable developed in Canada and BDUs needed new and exclusive sources of content to offer consumers, and in order to justify charging for their BDU services. Broadcasting policies at the time encouraged the development of a domestic specialty/pay sector, rather than simply importing existing foreign--U.S.--services into Canada.

Fast forward two decades, and what we have now is a strong and steadily growing sector that offers Canadians access to a diversity of content, including many underserved genres that are not widely available on conventional television, such as children and documentary programming. In addition, the specialty/pay sector delivers the largest audience for Canadian programming, with 55% of the total viewing of Canadian programs coming from these services.

Since the advent of Canadian specialty/pay, the portrait of viewing has evolved significantly. Why? Because Canadians appreciate our programming. Our sector has developed in response to the specific programming needs and desires of Canadians. In so doing, we have become a thriving hub of economic activity that is viewed internationally as a unique success. It has enabled Canadian broadcasters to develop profitable businesses employing thousands of Canadians and contributing significantly to the national GDP.

However, while the specialty/pay TV sector is profitable and growing steadily, it is not without its own challenges. During this hearing, some ODA broadcasters have suggested that because specialty services have access to subscription fees, it has granted them an unfair advantage. We would caution the committee against focusing on a singular rule in isolation without looking at the broader matrix of rules that serve to produce a carefully regulated balance between the various sectors. For example, over-the-air broadcasters have access to revenues from both national and local advertising, whereas specialty advertising revenues are only at the national level. Pay services, which constitute over 50% of Astral's television revenues, have only one source of revenue: subscription fees. English language OTA benefits from simultaneous substitution. Specialty and pay do not. OTA do not have specific Canadian programming expenditure obligations, as is the case for specialty and pay. OTA also have the advantage of mandatory carriage on basic cable and DTH. Specialty and pay do not. In fact, specialty and pay do not control how they are sold to consumers. Packaging and retail pricing are decided by BDUs.

What is also important to note is that since 1983, 26 years ago, the vast majority of Astral's specialty services have not had a single increase in wholesale rate, despite numerous increases in the amounts BDUs charge to consumers.

With consolidation in broadcasting and telecommunications, BDUs have also become increasingly integrated with specialty, over-the-air, and VOD programming services. They have also been growing mobile and Internet businesses, the newly emerging platform for content consumption. This presents a particular challenge for specialty pay broadcasters in that BDUs are now, in some cases, also our competition. Furthermore, we are no longer necessarily the focus of their bundle offers, which include Internet, telephony, and television services.

The Quebec market is obviously very different from the English-Canadian market. First, and critically, Quebec is a small market that generates less revenue in absolute terms—revenue that underwrites program creation. But there is no less demand for original programming. In fact, viewership for locally conceived and produced shows is high, and loyal.

Broadcasters' investments in original programming for this market are significant—ours as well as others. In fiscal 2008, Astral's French-language specialty and pay services invested more than $85 million in Canadian content. And, because we work almost exclusively with independent producers, the vast majority of this amount was invested in Quebec's independent production community, increasing the overall impact of our dollars on domestic cultural development.

In Quebec, the BDU relationship is a challenge. Quebecor Media is the dominant BDU, and with its subsidiary, Vidéotron, represents 60% of BDU subscribers in Quebec. Quebecor is also the dominant private OTA broadcaster with TVA, and they operate a considerable number of specialty and VOD services. It is a matter of significant concern to Astral that Quebecor would suggest that if a fee-for-carriage was implemented, it should be left to the discretion of the BDU to decide where they will source the funds to pay the OTA broadcasters, which, for Quebecor, would include its own subsidiary, TVA.

Quebecor has repeatedly indicated that if they were to negotiate a fee-for-carriage, this fee would be deducted from what is paid to specialty services as part of a so-called “recalibration” of the system. They reiterated this position in front of your committee on April 20, 2009.

Economically, it makes no sense to allow BDUs to siphon money from a healthy and growing business into a struggling one.

The Canadian television industry has gradually developed because of a careful balance involving profits, rights and obligations. It may well be that we have reached a point where a rethink is required. However, it has taken 40 years to establish this balance and we should be careful to ensure that any changes that are made do not have unintended consequences.

The committee has received conflicting information regarding the state of over-the-air broadcasting. It is still unclear to us whether the challenges are cyclical or structural. If they are cyclical, short-term solutions may be required. However, if they are structural, a full review of the system is needed, and we believe that the CRTC, with its expertise, tools, and information, remains the best vehicle to conduct such a structural review.

With this in mind, we suggest that among the most helpful measures the committee could recommend to alleviate the immediate pressure on over-the-air broadcasters would be, first, to set a government priority on the settlement of the part II licence fees. It's hundreds of millions of dollars. Second would be to address the looming digital transition. Supporting hybrid solutions that take into account the specific challenge of the small market stations' transition to digital is important. As has been the case in other countries, government should work with the industry to ensure we find constructive solutions to help navigate through this particular financial challenge.

There are other possible immediate regulatory measures that could be taken, such as compensation for distant signals, the local programming improvement fund, and the rights of local stations for carriage in their local markets, all of which are currently being examined by the CRTC in a way that ensures the necessary checks and balances prevail.

Mr. Chairman and members of the committee, thank you for the opportunity to appear before you. We will be happy to answer any questions you might have.

3:45 p.m.


The Chair Conservative Gary Schellenberger

Thank you very much for that presentation.

Now we'll move to Corus Entertainment Incorporated.

3:45 p.m.

John Cassaday President and Chief Executive Officer, Corus Entertainment Inc.

Mr. Chairman, members of the committee, ladies and gentlemen, my name is John Cassaday, and I am the president and chief executive officer of Corus Entertainment. Thank you for the invitation to speak.

Before I begin, I'd like to introduce the team with me today. Michael Harris is the vice-president and general manager of CHEX-TV in Peterborough and CHEX-TV-2, which serves the people of Oshawa, Ontario. Sylvie Courtemanche is our vice-president, government relations. And Gary Maavara is our general counsel.

Corus Entertainment is one of Canada's largest media companies. This includes local broadcasting in both radio and TV. We have 52 radio stations, and we are Canada's leading operator of news or news-talk format stations in both English and French language markets. For example, these stations include CJOY in Guelph and CFPL AM 980 in London, which serve your constituents who live in the Perth--Wellington riding. Over-the-air television stations serve constituents in ridings of two cabinet members, and one member of this heritage committee, Mr. Del Mastro.

Each of our broadcast stations is an important source of local news and community information. We are an important part of the local community, serving audiences, local business, and governments.

In times of local emergency, such as the Manitoba floods this year, or in Peterborough in 2004, we are the most reliable source of timely emergency information. The flu situation is of great concern to us all. Corus has had a pandemic flu strategy in place for some time, and we are currently operating at a preparedness level 5, in step with the WHO status. We are doing so to preserve our ability to carry on business and to keep ourselves in a position to disseminate information to the public in a timely and accurate fashion.

Our stations are also important contributors to local charities such as the United Way, Easter Seals, local hospitals, and countless others through special programming such as telethons, as well as free promotion and coverage of their events.

Our stations are deeply involved with their communities. Our suppertime local news programs attract almost half of the people watching TV in these communities during that time period.

These local TV stations have had partnerships with the CBC for 54 years. We distribute the CBC national news service to our audiences and add a strong element of local news, public affairs, and other community-oriented programming to the national content.

If CBC severed this relationship, our viewers would probably be forced to watch signals delivered from Toronto or Ottawa containing little or no local reflection. We took some comfort from the statement to this committee by Mr. Lacroix last week that the CBC was prepared to maintain an affiliate relationship, although the terms are not yet clear to us. We look forward to discussions with them.

For local small businesses we are a crucial advertising partner. We create and distribute the ads that help them to compete with the large multinationals that also serve their markets. Without this relationship they would face greater hurdles in reaching their customers.

Corus also operates more than a dozen specialty and pay television services. Corus leads in programming to children through such channels as Treehouse, YTV, and Teletoon. We also program to women through the W Network, Viva, and Cosmopolitan Television.

We own Nelvana, which is one of the world's premiere producers of children's animation programming. Corus has invested more than $1 billion in the production of Canadian content programming, and we are proud of the fact that our pay and specialty networks show the best in Canadian drama in volumes not matched in the industry.

Over the past several years we have been exploring new and innovative ways to capitalize on these new technology-driven markets. Our goal is to use a variety of digital platforms to deliver our content directly to viewers, not only in Canada but around the world. Corus provides Canadian content to multi-platform channels, such as KidsCo in Europe, Asia, and Africa; and qubo in the United States, where we are equity investors.

Corus is also Canada's largest publisher of books for children.

The result of all this is that today our productions and books are available in more than 160 countries worldwide in more than 40 languages.

In this context, we appear before the committee today as a company that plays a variety of roles in the Canadian economy. Corus is a distinctive Canadian company. We are a broadcaster here and around the world, but we are also a major producer of content in a variety of forms.

The key purpose of this heritage committee hearing is local broadcasting. But local broadcasting is no longer alone. Television and media markets have become enormously complex. The companies like Corus that operate local TV have other operations that try to succeed in these markets. In this context, Corus believes that the key question should be: what can government policy do so that the Canadian television industry has the strength and flexibility to stay relevant to Canadian viewers, subscribers, and advertisers as we enter the digital age?

We come before you today with some proposed solutions and hope we can be helpful in this process. Corus is confident about its future. Television is not broken, but we believe it is time for a strategic policy direction from the government to the regulatory agencies such as the CRTC and the Copyright Board of Canada. In our recent appearances before these agencies and departments, we have argued for an approach to policy and regulation based on what we characterize as the Corus Big Six. We list them one at a time, followed by some specific policy recommendations.

First of all, we recommend that the government embrace the merits of fostering a Canadian-owned but globally competitive industry. It must be explicitly recognized that we compete in the world market even at the local broadcasting level. Of course, this has always been the case for traditional broadcasting. Our policies are built upon the realities of our small market beside a huge market. Digital media are now enlarging the challenge. Our adjacent market is now the whole world, even in small communities such as Peterborough or Timmins. Government and regulatory bodies must align their domestic policies and rules so that we can have a Canadian-owned system that's globally competitive. We can no longer shelter our domestic market. The barriers that we have built to protect Canadian media can become a confining trap if we are not mindful of this change.

Second, we encourage you to increase the probability of success of the Canadian media industry by encouraging the creation of larger and stronger enterprises. Corus is a significant player in the Canadian market, but on a global scale we are very small. Google spent roughly U.S. $1.5 billion on research and development in 2007. This amount is greater than the revenue last year of the entire Canadian radio industry. So we must all recognize that the scale problem is worse in the digital realm than it has been in traditional broadcasting. This makes it very challenging to fully participate in the new media world. Corus must invest in digital broadcasting, which means towers and digital origination equipment. But to participate in digital markets, we must also address the critical issue of the management of these digital rights. We need to make a huge investment in technology to track and protect our rights, and we need to train our employees to use this technology.

Third, we need to develop a Canadian industrial strategy for the production of Canadian content. As has been the case in other industries, we need to look at the business from a strategic perspective. Strategic thinking means making decisions about what the priorities are for the system. For example, we need to consider a policy priority that supports the creation of high-quality Canadian content from all Canadian producers, including producers that are affiliated with Canadian broadcasters.

Fourth, we should recognize that private media enterprise success is what will lead to a stronger cultural system in Canada, not the current system of progressive fees, conditions, and tariffs.

Fifth, we need to allow Canadians to experiment. Recognition of this principle is essential in the digital media world. By their very nature, digital media initiatives are risky, business plans are uncertain, and ultimate success is very much a matter of trial and error. In this type of dynamic environment, we must be able to experiment. Regulation of our digital media activities, no matter how well intentioned, can only hinder our participation in these new markets.

Sixth, we should recognize that our small market requires that government continue to support its industry through research, development, and implementation of intellectual property. In the context of this strategic perspective, we have a number of specific tactical recommendations or solutions that we would like to leave you with today.

First of all, our investment in digital rights management technologies and their implementation should be eligible for Canadian programming expense credit.

Second, our capital investments in towers and other digital broadcasting technologies should be eligible for accelerated capital cost tax treatment as well as government funding.

Third, the committee should recommend the elimination of artificial quotas requiring broadcasters to acquire large percentages of their programming from independent producers. At the very least, Canada's media companies should not face barriers to creating and distributing the high-quality Canadian content that is contemplated by the Broadcasting Act. We can create a viable production industry, and the beneficiaries will be Canadian viewers, writers, performers, and the economy.

Fourth, we recommend the abolition and reimbursement of the CRTC part II fees, which would be a positive step that would benefit local broadcasters and the rest of the system.

Fifth, we recommend the relaxation of the prohibition on advertising of pharmaceuticals. Canadians already see a plethora of these messages on foreign services. Permitting this in Canada would not only establish another revenue stream, estimated at $400 million, but would also make these messages subject to Canadian law and Canadian industry standards.

Sixth, we recommend a temporary, one- to three-year advertising tax credit of 10% on all Canadian media advertising. This would serve to stimulate the economy as a whole and be a huge help to local broadcasters.

Seventh, we encourage the CBC to maintain their local affiliation agreements. This will ensure that the CBC stays close to its constituencies of local Canadian taxpayers.

Eighth, the sale of local television advertising should remain with private broadcasters. The proposal to allow carriers to sell local Canadian advertising on foreign channels would have a huge impact on local broadcasting, both in television and in radio.

Ninth, the committee is aware of the dedication of local stations to community and charitable efforts across Canada. Broadcasters should be able to deduct airtime donations as a charitable expense under the Income Tax Act.

These are some of the things that this committee could recommend that would help to keep Canadian broadcasters competitive and relevant.

On the subject of fee-for-carriage, any change will require a fulsome analysis and discussion of all of the elements of the system, as my colleague, Mr. Bureau, has said. Negotiation of a fee regime should be made in that context. It's not something that should be imposed in a vacuum.

In closing, we should note and congratulate the Minister of Canadian Heritage for the commitment to the Canada Media Fund. This funding, and the manner in which the fund is changing, ensures that we can continue to tell Canadian stories in the new digital environment.

Mr. Chairman and members of the heritage committee, these are our submissions. We look forward to your questions.

4 p.m.


The Chair Conservative Gary Schellenberger

Thank you very much.

Now we move to Telefilm Canada.

I must just remind everyone that this part of the meeting will be over at 4:30. So to all the people who are going to ask questions, I'd like them to be short, concise, and the answers the same. I think we're going to get only one round of this.

Please, Mr. Roy.

4 p.m.

Michel Roy Chair, Board of Directors, Telefilm Canada

Good afternoon, Mr. Chair.

Honourable members of the committee, my name is Michel Roy and I am the Chairman of the Board of Telefilm Canada. Joining me here today is Wayne Clarkson, Executive Director of Telefilm Canada.

First, let me thank the committee for the opportunity to appear before you to share our views with respect to your study on the evolution of the future of television.

This is an important process that you have embarked on. The viability of local television largely contributes to the stability and health of the entire broadcasting system to the benefit of all industry stakeholders and communities across the country.

As an investor on behalf of the Canadian government in independently produced Canadian content creation, Telefilm Canada has a vested interest in the maintenance of a healthy broadcast system. Telefilm Canada's role, as you know, is to foster the creation of Canadian content regardless of platform. As the administrator of cultural development programs worth approximately $400 million annually, Telefilm is the privileged financial instrument of the government to encourage and provide support to private sector producers, distributors, writers, directors and other creative talent of the Canadian audiovisual industry. Telefilm manages the Canada Feature Film Fund, the Canada New Media Fund and the Canadian Television Fund. We manage the New Media Fund through an agreement with Canadian Heritage, and we also have an agreement with the Canadian Television Fund to manage that fund on behalf of the board of the CTF. As you know, it has been announced that those two funds would eventually be amalgamated into a single one as of next April, and the new fund would be called the Canada Media Fund. The scope of our responsibilities demands exemplary governance, and I have made it my personal mission, during the first year of my tenure as chairman of the board of Telefilm Canada, to strengthen and stabilize the corporation's governance. We now have a solid and seasoned board of directors that ensures the public and private funds we administer are managed with optimal efficiency and effectiveness.

Just a few weeks ago, Mr. Clarkson and I, along with the members of the board, met with the industry in Montreal and across the country via live webcast, and we renewed our commitment to working with all our partners to continue to bring high-quality Canadian content to audiences on the platforms of their choosing.

In our view, the elements that have contributed thus far to a thriving audiovisual industry and the creation of award-winning works, stem from fruitful partnerships among talented Canadians, independent producers, broadcasters and government funding agencies. These partnerships help Canadian content producers secure the necessary financing to produce the works that audiences appreciate. As you know, the financing of Canadian content continues to be one of the greatest challenges faced by the industry. Now, broadcasters are essential among the many players contributing to the financing of Canadian content.

Television affords more working opportunities for talented creators and provides related sectors such as feature films with a highly skilled creative workforce. Producers, writers and directors successfully navigate the porous border between film and television all the time. Over the course of their careers, popular stars like Paul Gross, Patrick Huard and Sarah Polley have appeared on both big and small screens, accumulating star value with different audiences.

Numerous screenwriters and directors cut their teeth in television. Nitro's writer Benoît Guichard got his start in music videos. Before making Borderline, Lyne Charlebois directed numerous TV shows, including the hit series Nos étés.

Canadian television, including conventional television like CBC/Radio-Canada, pay television and video on demand, has been a key platform to support our domestic film industry, largely as a result of regulated Canadian content requirements.

There is no doubt that there are challenges facing conventional television. The evolution of audiovisual technologies has profoundly changed how Canadians communicate, express themselves, and interact with various media. One observer described the changes taking place as “everything is coming out of its containers”.

The business case for conventional television has changed significantly through the expansion of viewing choices, and this fragmentation of viewing is causing ongoing erosion in advertising revenue and profitability of broadcasters. The central challenge now is that new business models are required to move those containers around.

Ironically, while this is a time of great upheaval in Canadian television, it is also a time of great opportunity for Canadian content producers, as evidenced by the popularity of Canadian drama such as Flashpoint, co-produced by Anne-Marie Latraverse and Bill Mustos with the U.S. More recently, long-time film producer Roger Frappier of Maxfilms, together with Karine Martin of MediaBiz, concluded a 12-show deal with German producer Eva for the production of action-thriller telepics.

To ensure that we have the capacity going forward to produce high-quality Canadian programming that Canadians want to watch, Canadian producers need access to international financing. One of the highest priorities of the board of Telefilm Canada now is precisely to help Canadian producers attract greater international financing and assure the continued growth of the Canadian audiovisual sector.

The Canadian broadcasting system and its use of various audiovisual technologies must remain relevant in a global digital environment. Previous innovations in new technologies provoked fundamental changes in the way content was consumed. The shift today, occurring as a result of the exploitation of digital platforms, will be even more profound.

In this regard, in creating the Canada Media Fund, Minister Moore made the decision that it should support the production of Canadian content for all platforms, including interactive digital media. There is no doubt that traditional media and new media form a continuum; supporting both means adapting to the new environment.

Telefilm is hopeful that this dialogue, which the committee has initiated through this review, will not lose sight of the importance of maintaining strong Canadian content in the audiovisual industry. A healthy environment will ensure that talented young Canadians can continue to find work and production opportunities in their respective communities. Time and time again, we are reminded that compelling stories that originate from diverse communities make the most memorable entertainment.

In summary, Mr. Chairman, we understand that television broadcasting creates revenues for a certain number of players, each of which plays a role within the system and each of which wants to receive its fair share of these revenues. Regardless of that situation, and because of the huge cultural impact that television has on the Canadian population, Telefilm believes that everything must be undertaken to maintain a substantial share of Canadian content within the Canadian broadcasting system.

Thank you for your attention. We would now be happy to answer your questions.

May 4th, 2009 / 4:05 p.m.


The Chair Conservative Gary Schellenberger

Thank you very much.

For the first question, Mr. Rodriguez.

4:05 p.m.


Pablo Rodriguez Liberal Honoré-Mercier, QC

Thank you, Mr. Chair.

Thank you to our many witnesses for appearing here today.

I will begin with you, Mr. Roy, since you have just concluded your opening remarks. I would like to make an aside before coming to the key issue. I recently met with people who told me that the Union des artistes had just completed a study and submitted it to Telefilm Canada. It shows that only 50% of shows that are produced in total or in part in Canada are dubbed here. That means that a substantial part, i.e., 50%, of the products that you finance are dubbed elsewhere.

First of all, is that correct? If so, why do we not have the capacity and the talent to ensure those services locally?

4:10 p.m.

Chair, Board of Directors, Telefilm Canada

Michel Roy

Mr. Rodriguez, if I may, I will let our executive director answer that question.

4:10 p.m.

S. Wayne Clarkson Executive Director, Telefilm Canada

Thank you.

First of all, I'll point out, as I think Monsieur Roy mentioned in his address, that it was four or five years ago that the responsibilities for television financing and programming shifted from Telefilm Canada to the Canadian Television Fund, so those responsibilities for dubbing programs fall under the mandate of the CTF.

In the case of film productions, we had a modest fund for subtitling films for theatrical release, both domestically and internationally, but in the case of broadcasting, it's no longer our responsibility.

4:10 p.m.


Pablo Rodriguez Liberal Honoré-Mercier, QC

You are therefore not responsible for that.

Who should I see then?

4:10 p.m.

Executive Director, Telefilm Canada

S. Wayne Clarkson

I would address it to Val Creighton. She is the president of the Canadian Television Fund. I'd be glad to ask her to provide you with detailed information on what resources within the CTF they have available to support that.

4:10 p.m.


Pablo Rodriguez Liberal Honoré-Mercier, QC

I am also told that 98% of the co-production material in which you invest is dubbed abroad. I will therefore wait to hear from that person.

Good afternoon, Mr. Bureau, I am pleased to see you here. You are an industry legend. You are very well known and respected. I therefore hope to benefit from your great wisdom and ask you a few questions.

Is the crisis facing the conventional television industry of a structural nature? Broadcasters are telling us that this is all because the specialty channels are increasing their market share, and advertising revenues are being shared by more and more players, including specialty channels, the Internet and the new platforms. In fact, many are blaming the specialty television channels. They say that you are awash in cash, and therefore quite wealthy. How do you respond to that?

4:10 p.m.

Chairman of the Board, Astral Media Inc.

André Bureau

Specialty channels were created because, at one point, people realized that there was growing interest for focused programming, whether for children's shows, documentaries, music programs, etc. Some players then took the risk of entering that field, but not conventional broadcasters. They did not want to enter that sector; they said that it did not make sense, that there was no future there and that it just could not work. In most cases, it was entrepreneurs and new broadcasters who took the risk of starting specialty channels. They did so, and the CRTC did want to make sure that the new sector would not put an end to conventional television. The commission therefore decided that specialty channels would only have access to national, not local, advertising. That exclusive arrangement was to protect conventional television.

The industry was launched and is thriving. People enjoy what they see; viewers are tuning in. However, we do not have the same market share as the conventional broadcasters. TVA, in Montreal, attracts close to 30% of the market, whereas our specialty channels reach about 1%, 2% or 3%.

4:10 p.m.


Pablo Rodriguez Liberal Honoré-Mercier, QC

I apologize, but I have to interrupt you because my time is being closely monitored.

According to those people, the model used in the past is no longer working. It is informative to hear from you today because, up until now, we have mostly heard from conventional broadcasters and cable distributors. Those two groups were on each other's cases all the time. We now have a different group, and we would like to get your perspective.

Almost everyone, except for cable distributors, have asked that a fee-for-carriage regime be adopted. Some have suggested that a fee-for-carriage system would be used by everyone, including TVA, CTV and even CBC/Radio-Canada. They said that, under those conditions, people could make their own choices and determine the services they want. Everyone would be on a level playing field, and there would no longer be any specific packages, as is the case today. What would be the consequences of such a regime?

If fee-for-carriage were given to CTV, CBC/Radio-Canada, TVA and others, should we provide clients with an opting-out mechanism, so that they can decide whether to pay for a certain channel or not?

4:15 p.m.

Chairman of the Board, Astral Media Inc.

André Bureau

I will start with the last part of your question. The opting-out provision already exists. The digital system allows people to purchase the services they want, and that could eventually extend to conventional channels. I think it is a philosophical question. The Canadian broadcasting system ensures that conventional channels are available to everyone. That is part of a basic service. If ever we decide to abolish that basic service, that would be a different story. As we have said, that would require an in-depth review. If ever it were to come to that, the CRTC would have to be given the mandate to carry out such a review and analyze all potential impacts. You cannot simply float an idea, as I have seen others do before your committee. It has been suggested to take what is paid to specialty channels and give it to conventional broadcasters. Honestly, who do they think they are? We have taken risks and are now enjoying success. So why should they be entitled to our revenues? If they haven't been as successful, why should we foot the bill?

4:15 p.m.


The Chair Conservative Gary Schellenberger

Thank you for that.

I remind our witnesses again that if there's a request for clarification on a question, it should be sent back through the chair so it can be distributed to all the people sitting here.

Ms. Lavallée, please.

4:15 p.m.


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

Mr. Bureau, let us continue where you left off. Your arguments are compelling, but I do think we need to remember why those carriage fees were implemented. In the beginning, people did not know whether the specialty channels would be successful. They were given a helping hand. Today, the fact is that those channels are extremely successful.

That being the case, has the time not come to review the rules of the game, because we are talking about general-interest channels, unless you find that those channels are no longer necessary and that we are headed toward a restructuring of the television industry?

4:15 p.m.

Chairman of the Board, Astral Media Inc.

André Bureau

I would never say a thing like that. I would not be able to make it back to Montreal, because Videotron people would have my hide at the provincial lines!

It is important to understand that specialty services, in the beginning... It is true that at the time, the idea was to help them launch their services, and that is why the fees were approved by the CRTC. Today, those fees are no longer approved; they are negotiated with the distributors. People seem to be saying that the fees are a godsend to the specialty channels, which received them 23 years ago, and that since that time nothing has changed. What hasn't changed is that we have never had an increase, but we have continued to negotiate our rates and have maintained them.

All businesses have seen their expenses increase over the past 26 years. They have had to spend more money for the same services, and that is also our case. People enjoy watching our shows, and that allows us to sell advertising.

If a more in-depth study is called for to determine whether or not to assist conventional broadcasters in the same way, then so be it.