Canadian Heritage Committee on May 6th, 2009

[Rod Bruinooge, Conservative, Winnipeg South, MB]

Are you saying the broadcasters perhaps don't have a case to make, or are you saying you wouldn't be interested in negotiating those rights on a going-forward basis?

[Maureen Parker]

I think, really, the answer to your question whether drama is expensive to produce is yes, it is. It's expensive all over the world. It's the most expensive form of programming. Do Canadian broadcasters have to put up a licence fee? Yes, they do. Usually it's about 35%, because they need to put in a certain amount in order to access the Canadian Television Fund. Is it more than what the rest of the world pays for drama? No. As Becky was just saying, in the U.S. they pay 100% of that.

What I think they're saying to you is that drama's really expensive. They're not sure they're seeing a return, and they would like more flexibility to make things like award shows and reality shows. Yes, it's expensive. Yes, sometimes you make a lot of money back, and sometimes you just make some money back. Is it essential to the requirement of the Broadcasting Act that Canadians have Canadian drama? Yes.

I think the key thing to remember is that these broadcasters receive all sorts of subsidies and benefits. As Mr. Angus just mentioned, there's section 19.1 of the Income Tax Act. We taxpayers help them even pay for the Canadian content with the Canadian Television Fund. So do they have some obligations? Yes, they do, and we help them get there. Can Canadians make programs that sell? Yes, we can. We've seen that with Corner Gas. We've seen that with many of our documentaries.

[Rod Bruinooge, Conservative, Winnipeg South, MB]

Speaking of Corner Gas, I'm glad you brought that up, because CTV actually raised this with me in particular, and I'm sure with others, that it's an actual show that has done quite well. It's been sold around the world, and if they actually owned the rights to it, they would have made a lot of money. Instead, they just funded its production and got it off the ground. Of course, after that, it got a bit of advertising revenue from commercials.

I have another question—

[The Chair, Conservative, Gary Schellenberger]

Excuse me, Mr. Bruinooge.

Mr. Margetic, please.

[Daniel Margetic]

If I may, a licence fee functions like a fee. So for a certain set fee, the broadcasters get the rights to a program at a certain geographical area for a certain amount of time. To compare it to a car lease, for example, if I were to lease a car and my lease expires after three years, I don't then subsequently ask GM for a portion of the profits of that particular car sale.

[Rod Bruinooge, Conservative, Winnipeg South, MB]

Well, I was in the film-making business, and the people who funded my films actually had the rights to the films. So I kind of disagree with what you're saying.

But I'm going to move on to another point, and this was something Madam Parker raised.

[The Chair, Conservative, Gary Schellenberger]

You have about a minute.

[Rod Bruinooge, Conservative, Winnipeg South, MB]

I think you were suggesting things have gone too far the other way. I think you were specifically speaking about some of the regulations that govern the broadcasters that have gone too far the other way. So I guess you're insinuating that things are rather rosy for the broadcasters. Do you think the crisis they're suggesting is untrue?

[Maureen Parker]

No, I don't think that. I think they chose to focus on local programming, because that's where they would attract the most attention. They know that's what viewers care about most, their local news and local programming. I think it was a very strategic decision.

Are they hurting in terms of conventional television? Yes, I think they are. I think a lot of that is perhaps due to decisions they've made in the past.

Are they overspending in Hollywood? Yes, I think they are.

I think the point I was trying to make is that they have plenty of flexibility with the current definition of priority programming. They need to remember that their operating businesses come with plenty of subsidies and plenty of support from the taxpayers of this country and the federal government. I think they should look at the money they've made and be happy with it.

[The Chair, Conservative, Gary Schellenberger]

Thank you.

That's the end of questioning. As I've explained to some of our previous witnesses, you're all very important to this study, and I apologize for the short time you've had to make your presentations. But thank you very much for your presentations, and thank you for answering the questions.

We'll adjourn for five minutes and try to get the new witnesses up here in five minutes, please.

[The Chair, Conservative, Gary Schellenberger]

I call the meeting back to order.

I welcome our next set of witnesses. Thank you very much for the quick change of witnesses at the other end of the table. It's great.

To our first witness making presentations, I think most of you heard earlier that we try to keep presentations to ten minutes if we can, please, because we only have one round of questions.

First will be the Association of Film and Television Producers of Quebec.

[Claire Samson, President and Chief Executive Officer, Association des producteurs de films et de télévision du Québec]

Thank you.

Mr. Chairman, committee members, my name is Claire Samson and I am the President and CEO of the Association des producteurs de films et de télévision du Québec. With me today is Brigitte Doucet, the Association’s Executive Vice-President. We want to thank you for inviting us to appear before you today and voice our views on the situation of the Canadian television industry.

To begin, I would like to tell you a little about our Association. For over 40 years now, the APFTQ has been the umbrella organization for most of he independent film and television production companies in Quebec. There are over 130 of them, working in drama, documentaries, variety, youth programming, talk shows, games, animation and advertising. We estimate that close to 95% of the annual volume of independent film and television production in Quebec comes from our members.

The APFTQ's mission is to promote independent film and television production, to encourage close cooperation among all stakeholders in the field, and to ensure that its members respect the highest possible standards of professionalism and production quality.

The various aspects of the Broadcasting Policy have a direct effect on the ability of Canada’s independent producers to provide Canadian television, radio, Internet and cell phone broadcasters with a steady supply of new content, which the broadcasters need to carry out their role responsibly. That is why we want to explain how we see the future of Canadian television.

We will look at three of the topics that you identified and that directly affect Canadian content and its survival: financial pressures on programming; the effectiveness of cultural development funds; licence renewals for private conventional television stations.

With respect to financial pressures on local and Canadian programming, when CRTC Chair Konrad von Finckenstein appeared before your Committee, he said that the multi-element broadcasting system model, with conventional television as the model's cornerstone, had worked very well for many years.

It had helped to sustain a healthy and typically Canadian television industry. But he added, "However, conventional television now finds itself under a great deal of financial pressure, which the industry claims is threatening the viability of local programming."

We realize that the committee wants to look at the problems of broadcasting from a local programming perspective. However, to judge by the remarks of the conventional broadcasters who have appeared before you, it is not simply local programming and the number of local shows that may be at risk, but Canadian programming as a whole. This is why they have for several years been calling for fee-for-carriage. The CRTC has denied them such fees because they have not been able to demonstrate a sufficiently strong commitment to using the fees to improve the Canadian broadcasting system, and local programming in particular.

Phil Lind, Vice-Chairman of the Board of Rogers Communication, said in a press release that the television sector activities of CTV and Global were profitable. He then declared, "[F]ee-for-carriage would set up the worst of all public policy solutions, a two-tier taxation solution."

The APFTQ is firmly convinced that the television industry is not in a state of crisis, as the conventional broadcasters claim. Our industry is currently undergoing structural changes that demand adjustments in the regulations so that Canada’s broadcasting system can be maintained, because it is a source of pride for all Canadians. Video on demand, the transition to digital, the new broadcast platforms of the Internet and the cell phone, should in our opinion be opportunities to rethink the broadcasting industry by refocusing on the quality and importance of Canadian content.

In Quebec, for example, Canadian programs have for many years enjoyed the biggest audiences. Pierre Dion, President and CEO of Groupe TVA, said when he appeared before you that Réseau TVA currently devotes almost 90% of its programming expenditure to original Canadian content. Canadian content must be profitable if a corporation like Groupe TVA allocates such a huge proportion of its programming expenditure to it.

However, our industry, like many other Canadian industries, is suffering a slowdown because of the global economic situation. We must all share some of the pain, unfortunately.

We urge the government not to give in to the pressures of certain industry players that are calling for quasi-total deregulation—this would save their own companies by leaving an entire sector of the industry, including independent production, to die. But in Quebec alone independent production generates almost 23,000 direct and indirect jobs.

The current system assumes that conventional television stations will produce, acquire and broadcast a significant quantity of Canadian content, including drama, documentaries and local programming. In exchange, these networks benefit from regulatory support in five areas: mandatory distribution on basic service packages provided by the BDUs; local advertising; no floor on spending for Canadian programming; access to the Canadian Television Fund, and soon enhanced access to the Canada Media Fund; simultaneous substitution.

What could justify relieving the big corporate broadcasters of any obligation for priority programming, as some people would like? We all know that priority programming is produced mainly by independent producers. Its uses Canadian creators and performers and it meets the objectives of the Broadcasting Act. It was on the basis of these principles that the Canadian Television Fund was created, to support drama, documentaries, youth programming, variety and the performing arts.

[Brigitte Doucet, Executive Vice-President, Association des producteurs de films et de télévision du Québec]

Our second topic is the effectiveness of cultural development funds.

Ever since the new Canada Media Fund was announced, we have been very concerned about its effect on achieving the objectives of the Act, which among other things requires the "maximum use, and in no case less than predominant use, of Canadian creative and other resources". Although the new Fund is to provide financial support primarily for drama series, documentaries and variety shows, the use of audience size as the unique criterion for awarding funding is perplexing.

La La La Human Steps said that the cuts to the Trade Routes budget would end their international visibility. Let’s have the courage to admit to them that they will not be visible in Canada either: the new system will fund only what constitutes a good support for advertising sales, and advertising is not (fortunately) the primary concern of this dance company, whose creativity and inventiveness are recognized around the world.

Basing performance envelopes exclusively on a single criterion, the famous ratings, is a restrictive and distorted way of allocating the Fund’s resources. It risks eliminating any notion of a level playing field. Specialty channels and educational television networks, either because of their mandates or because of their distribution, will be heavily penalized for structural reasons that are beyond their control and have nothing to do with the quality of their programming.

We unsuccessfully called upon the government to fundamentally rethink its decision to abolish the Canadian Television Fund. It seems to us necessary at the very least for the government to ensure that: the members of the Fund’s board will be genuinely independent of the BDUs; the contribution agreement that Canadian Heritage negotiates with the new Fund will contain long-term conditions guaranteeing the maintenance of envelopes for each category of programming currently supported; the method of calculating audience numbers will ensure all categories of broadcaster equitable access to funding; CBC/Radio-Canada’s terms and conditions of access to support from the Fund will not result in its becoming too exclusively concerned with ratings to the detriment of its mandate as the national public broadcaster; the access of production companies tied to a broadcaster will continue to be subject to a ceiling, and a still lower ceiling if they have, through their parent company, decision-making clout in the membership of the Fund’s Board of Directors; the funding dedicated to new media production will be determined without affecting the historical level of investment in television.

Now I'll move on to our third topic, licence renewals for private conventional television stations.

The CRTC has said—

[The Chair, Conservative, Gary Schellenberger]

Madame Doucet, you have one minute left, so if you can, please make sure we can stay there.

[Brigitte Doucet]

All right.

We would particularly like to point out that the CRTC has asked broadcasters to submit terms of trade agreements negotiated with independent production companies when the broadcasters come to renew their licences. These agreements have become necessary with the multiplication of broadcast platforms operated by broadcasters.

[Claire Samson]

To sum up, APFTQ is concerned about the future of our broadcasting system if the difficult economic situation becomes a pretext for relieving corporate broadcasters of their obligations. We continue to believe, very sincerely, that Canadian content must remain central to the broadcasting industry so as to meet the requirements of the Broadcasting Act.

Thank you for your attention.

[The Chair, Conservative, Gary Schellenberger]

Thank you.

Now we'll have the Canadian Film and Television Production Association, please.

[Norm Bolen, President and Chief Executive officer, Canadian Film and Television Production Association]

Good afternoon, Mr. Chair and members of the standing committee.

We submitted a detailed brief early last week, and we trust that you've had a chance to review it.

My name is Norm Bolen. Three weeks ago today, I was appointed president and CEO of the Canadian Film and Television Production Association. Presenting with me is John Barrack. He is the association's national executive vice-president and counsel. Fortunately for me, John has been with the organization for close to ten years, and he's well versed in all CFTPA affairs as well as in all issues related to the independent production industry.

I am privileged and honoured to be leading the CFTPA. As many of you know, we are the national association that represents some 400 Canadian independent film, television, and interactive media production companies. These companies do business in every area of the country.

Before joining the association, I was the executive vice-president, content, for Alliance Atlantis Communications. I had overall programming responsibility for 13 Canadian specialty networks. I was also responsible for Alliance Atlantis's web-based and emerging new media content and for all broadcast operations. Previous to that, I spent 21 years at the CBC. There I was a journalist and an executive, including the head of network television current affairs. Most recently, I was a director with mDialog. This is an online high-definition video-sharing service.

I also served as chair of the Banff World Television Festival. I co-chaired the Hot Docs Canadian International Documentary Festival, and I'm a director of the National Screen Institute.

Why do I tell you all that? As you can tell, my entire career has been about Canadian content, television broadcasting, and new distribution platforms. I believe strongly that television broadcasting in Canada is now at a crossroads. The key decisions to be made over the near term by officials, including the CRTC, will lay a foundation that will define our system for the next generation of Canadians.

We believe that we owe it to Canadians to ensure that a solid foundation is in place, a foundation that supports a strong, meaningful, and distinct television broadcasting system. But let us be clear: Such a foundation will exist only if Canadian independent producers and the content they create are recognized as cornerstones. This will ensure that the programming available on our broadcasting system is diverse, distinctively Canadian, and inclusive of local communities. Any deviation from such a course would relegate our television broadcasting system to little more than a mammoth pipeline to flood Canada with foreign, mostly American, content.

Looking at the communications sector from a macro perspective, it is safe to say that we are well into a digital revolution. This will undoubtedly continue to have a profound effect on Canadian society, our economy, and our culture. This is why we are advocating the need for a digital media strategy for Canada. Britain, France, and Australia have all launched such initiatives in the last year, and they have done so to secure their places at the forefront of the global digital economy. Canada must not fall behind in this area. Ensuring a concerted strategy for Canada will mean stronger social, cultural, and economic prosperity for Canadians as we move further into a knowledge-based technology era.

We encourage the standing committee to give serious consideration to recommending the launch of national consultations towards this goal. Such a review should take into account the need for a modernized legislative and regulatory framework. It should also examine the role of key federal institutions.

Lastly, the review must also look at how to improve our system of financial support to the independent production sector.

Go ahead, John.

[John Barrack, National Executive Vice-President and Counsel, Canadian Film and Television Production Association]

Thank you.

Independent producers play a fundamental role in our broadcasting system. We provide Canadian television viewers with a Canadian perspective on our country, our world, and our place in it. We help foster Canadian cultural choices and reflect the rich diversity of this country.

Independent producers are dynamic trade and cultural ambassadors who actively showcase Canadian communities to Canadians and to the world. This vital role has long been promoted through federal policy and is explicitly recognized in the objectives of the Broadcasting Act.

Our sector as a whole is big business and it makes a very sizeable contribution to Canada's economy. The hundreds of small and medium-sized businesses each year generate $2.3 billion in Canadian content production activity. They are responsible for more than $230 million in exports, and they sustain quality jobs for close to 60,000 Canadians in every region of this country and service another $1.8 billion worth of foreign location activity, which sustains an additional 44,000 jobs--over 100,000 jobs in all.

Independently produced Canadian programs are exported to hundreds of countries around the world. They receive critical acclaim both at home and abroad and they achieve audience success.

We have recently begun to see what we call a “reversed simulcast” situation. Hopefully, this is the beginning of a new and ongoing trend. This clearly demonstrates what can happen when a Canadian program is properly financed and promoted. There are shows such as Flashpoint, the first Canadian drama series since Due South to air in network prime time in both Canada and the U.S. It airs on CBS in the U.S. and on CTV in Canada. The Listener will have its North American premiere on June 4 on NBC, and it will air, too, on CTV in Canada. The Bridge will air on CBS in the U.S. and on CTV in Canada, and Copper was developed as a series for Global and has been picked up by ABC in the U.S. This production is slated to start shooting in Toronto this summer.

All of these shows were developed and financed by Canadian independent producers.

We firmly believe that the Broadcasting Act's objectives related to the independent production sector are fundamental to the success and distinctiveness of our broadcasting system. The importance of these objectives only increases as the system continues to evolve, in which new forms of content delivery are emerging and borders are evaporating. They help ensure independent producers have access to their own broadcasting system and promote a diversity of voices and ideas from across the country.

We respectfully submit that it must be a priority for the Government of Canada and all its institutions to ensure the long-term well-being of the Canadian independent production sector within a healthy broadcasting system. This can only be achieved through a solid partnership among independent producers, broadcasters, BDUs, and governments, both provincially and federally. In fact, through such partnerships our sector has grown over the last decade. Despite this growth, however, hundreds of small and medium-sized companies in our industry remain financially very fragile, and corporate capacity has not improved overall.

A number of factors hinder the growth of our sector. These include the unprecedented consolidation in the television broadcasting sector, the shift toward digital technologies and the migration to multi-platform distribution, and a significant decrease in foreign sources of financing over the last several years. These factors have a significant impact on producers' businesses. The Canadian independent production sector, which is a key component of our broadcasting system, has never faced greater challenges.

It is against this backdrop that we are surprised and disappointed with the overall direction and tone of the over-the-air television broadcasters' licence renewal applications. As we speak, these public hearings are ongoing before the CRTC. Contrary to what you may hear, the system is not broken. We recognize, however, it is under strain.

Today, rather than addressing what we believe are relatively low regulatory obligations, private over-the-air television broadcasters are attempting to reduce or outright eliminate their priority programming requirements. They also want to step away from having to acquire programming from independent producers and they want to decrease their local programming obligations. In short, independent producers have to fight for their very survival.

We are deeply concerned that broadcasters are using so-called structural problems and the current economic downturn as an excuse to reduce their commitments to Canadian priority programming and independent production. This is a rabbit hole that only leads to the dark side of wonderland. Reduced obligations would become the new status quo. This outcome would represent a significant weakening of the broadcast system that has carefully been built over the years. The current framework has served broadcasters, independent producers, the creative community, and, most importantly, Canadian audiences very, very well.

It is absolutely not the time to throw out the baby with the bathwater. It is our strong view that the solution being proposed by broadcasters to challenges they face is, without a doubt, a wrong one with respect to Canadian independent production. It would be completely inconsistent with the policy objectives of the Broadcasting Act to do so.

We note that the impact of the economic slowdown is not limited to broadcasters. It affects virtually all Canadians and Canadian businesses, including the independent production sector and the creative community. Broadcasters have stopped taking pitches from independent producers for new programs and are holding off green-lighting programs that have been in development. This is causing significant uncertainty in the Canadian independent production sector.

Norm, would you continue?

[Norm Bolen]

We acknowledge that conventional television faces some business challenges. We would point out, however, that a key factor in their financial challenges is the ever-escalating amount of money they're spending on acquiring foreign, mostly U.S., programming. Broadcasters also must accept responsibility for the huge debt loads they're carrying from major asset acquisitions. Private conventional television still draws the largest audiences in peak viewing hours. We also highlight that Canada's television broadcast ownership groups remain strong and profitable as a whole.

The most pressing economic challenges facing the television sector are mainly cyclical and short-term in nature. The economy is already showing signs of renewed life, and many economists predict that by this time next year a recovery will be solidly underway. The proposals put forward by broadcasters fail to take into account a number of measures implemented by the CRTC to help them deal with the challenges they face. I won't enumerate them here, because I'm getting the “running out of time” signal.

Broadcasters fail to take into account the additional revenues they stand to earn from cable and satellite TV companies for the delivery of their signals in distant markets, and we are certain it is germane to your committee that the proposed changes to the eligibility criteria for the local programming improvement fund could help sustain local news and programming.

Independent producers have been struggling with their own challenges long before the current difficulties related to the economy. These challenges have only been exacerbated by the significant level of consolidation that has occurred in the system. This has tilted the balance of power even further in favour of large corporate broadcast groups, and it has effectively reduced both the business prospects available to producers and the employment opportunities for the entire creative community across Canada. We therefore urge the CRTC to hold firm to the Broadcasting Act's overriding policy objectives. We've asked the commission not to surrender to the current exaggerations orchestrated by the private broadcasters. To make changes to the regulatory regime for over-the-air television as it relates to priority programming and independent production would most certainly weaken the Canadian broadcasting system and result in fewer Canadian content choices.

We would support other efforts by both the federal government and the commission to address the challenges facing local conventional television stations, particularly those located in smaller markets. These include the changes to the LPIF and the plan to move up the implementation date of the new distant-signals policy. In our view, these measures will go a long way to help strengthen the over-the-air television sector.

In closing, we would like to reiterate the need for a national digital media strategy. This will ensure that Canada is well positioned to be at the forefront of the global digital economy.

We thank the committee again for inviting us to appear and we apologize for going a little too long. We look forward to answering any questions you may have.

[The Chair, Conservative, Gary Schellenberger]

Thank you.

We now go to the Directors Guild of Canada.

[Brian Anthony, National Execuive Director and Chief Executive Officer, Directors Guild of Canada]

Thank you, Mr. Chairman and members of the standing committee.

My name is Brian Anthony and I'm the national executive director and chief executive officer of the DGC. With me is our outside counsel, Mr. Grant Buchanan, a partner in the law firm of McCarthy Tétrault.

We would like to thank you for the opportunity of appearing before you today and taking part in your deliberations about the nature and future of the television industry in Canada.

By way of introduction, I should mention that the Directors Guild of Canada is a national labour organization representing some 3,800 members working in 47 key creative and logistical occupational categories in film, television and digital media production in Canada. This industry, to put the Guild in context, provides employment for some 130,000 workers and also contributes over five billion dollars of economic activity each year.

The standing committee has wisely chosen to address the evolution of the television industry in Canada, its current state and its future prospects. They have also chosen to place particular emphasis on the viability of small stations serving small markets. With the recent planned closure of some local stations and the future of others in question, we can appreciate your decision to focus on these top-of-mind issues. While we would be happy to discuss these matters with you, perhaps in the question period that follows, we are here today to discuss some larger, but related, issues that have been obscured by decisions and discussions about small-station closures.

What we want to discuss with you is not the means of carriage, not the source of signal, but the content, Canadian content, meaning priority programming and drama in particular.

As you are well aware, the CRTC is currently holding licence renewal hearings for conventional or over-the-air broadcasters. This process was initially intended to result in renewals for a seven year period, but the CRTC, in light of current economic circumstances, decided on limited hearings to extend licences for an interim period of one year, perhaps somewhat longer.

During these hearings, and in the extensive media coverage devoted to these discussions, it has been suggested that Canadian content requirements that form part of the conditions of license for the OTAs have contributed to the current financial problems the broadcasters are facing, and that relief therefrom should therefore be considered.

Let us address that head-on. We, the providers of Canadian content, of Canadian dramatic programming, are not the problem. The problem lies elsewhere.

In what can be described as a reckless race to the bottom, Canadian OTA broadcasters have vied with each other, year after year, in paying more and more for U.S. programming. In less than a decade, expenditures on such foreign content have risen by 90%, from $389.9 million in 1999 to almost $740 million in 2008.

In comparison, OTA expenditures on Canadian programming increased a modest 22.5% during the same period, from $366.8 million to $449.3 million. Expressed another way, Canadian programming spending by the broadcasters has remained relatively flat at approximately 25% of ad revenues, while non-Canadian programming has risen over the past decade to represent now more than 40% of those revenues.

Despite declining ad revenues, the broadcasters have continued in their determined drive to outspend each other and bid up the cost of foreign programming in the process. That, coupled with other factors such as debt load and dubious business decisions, is their problem--a problem of their own making--not Canadian content requirements.

It is important to remember that despite the hand-wringing by conventional broadcasters about their financial hardships, this is still a profitable business. Revenues may have decreased last year, but the sector still realized an $8 million dollar profit--an enviable bottom-line position compared to the billion-dollar losses the economic tsunami has visited upon other industries in Canada.

It is also worthwhile to note that these same broadcasters are the owners of the highly lucrative specialty television services, which last year enjoyed a 7.6% growth in revenues and profits of $686.1 million. As these immensely successful specialty services are subject to a significantly higher set of obligations with respect to Canadian programming expenditures and exhibition, the suggestion that Canadian content requirements are in any way the cause of the networks’ financial woes should summarily be set aside.

Canadian conventional broadcasters are licensed to do business in Canada in a federally protected and supported environment, in exchange for which they must contribute to the Canadian broadcasting system by, among other things, living up to certain Canadian content requirements. That’s what makes them Canadian--as Canadian, say, as Corner Gas. The last episode of that long-running show drew 2.9 million viewers, making it the most-watched program in Canada that week, beating out such foreign hits as CSI and House.

Over the course of its long run, Corner Gas never drew fewer than a million viewers per episode, showing that, properly promoted and scheduled, Canadian programming is something Canadians want to watch and do watch. Without Canadian content being required of broadcasters as a condition of license, however, that choice will not be available to Canadian audiences.

Since the elimination of expenditure requirements for private OTA broadcasters in 1999, they have demonstrated a clear lack of desire to invest in original, high-quality Canadian content on a voluntary basis. In the place of these expenditure requirements, the CRTC created the priority programming rules, requiring the conventional broadcasters to devote eight hours a week or 30% of their prime-time schedule to high-quality Canadian programming. These broadcasters are now seeking to eliminate or relax these rules, along with seeking relief regarding their local programming obligations.

The DGC does not feel that devoting eight of a possible 28 prime-time hours is overly demanding. In fact, we believe this is less by far than should be the minimum standard for a country that expects to have a healthy domestic industry. We feel it is important to restate the obvious: that it is Canadian content that makes Canadian broadcasters, in fact, Canadian.

To be granted a licence by the public authority is a privilege. As that privilege is accompanied by the benefits of a protected broadcasting environment, it brings with it certain expectations and requirements, the cost of being allowed to carry out business as a Canadian broadcaster. It is our view that any lessening of current Canadian priority programming requirements would be wholly unacceptable and indefensible.

Indeed, we strongly feel that those expectations and requirements should be significantly increased as we move into a broadcasting future that looks and in fact is more Canadian. We would therefore encourage you, as you contemplate that future, to be unmoved by the threats of small station closings and pleas for reduced Canadian content requirements.

The DGC acknowledges that the conventional television sector is currently confronted by challenges to its business model. We are not prepared to agree, however, with the contention that the model is broken. The current economic downturn has certainly exacerbated the problems, though we would point out that all elements of the broadcasting system, including our component thereof, and indeed all Canadians, are currently challenged by the global economic situation.

In light of this, we do not believe that now is the time to make far-reaching changes to the obligations of the conventional broadcasters. In the DGC’s view, a clearer picture of what conventional TV looks like after a return to some economic stability is needed before determining any necessary changes to the sector.

Mr. Chairman, we will be following up our appearance today with a detailed submission for the consideration of you and your colleagues. In the meantime, I would like to thank you and your fellow committee members for the opportunity of appearing before you today, and would welcome—today, or at any point in the future—any questions you might have for us.

[The Chair, Conservative, Gary Schellenberger]

Thank you very much.

Thanks to everyone for keeping their presentations brief.

Our first question comes from Ms. Fry, please.

[Hedy Fry, Liberal, Vancouver Centre, BC]

Thank you very much, Mr. Chair.

I want to thank you very much for your presentations. I think this is a seminal issue, and all of the pressures coming on top of each other have created a perfect storm.

My first question is to the Directors Guild. You said you would like to give us some sort of information on how you see us dealing with the issue of local stations having to close. Do you think you have a solution to this?

Second, do you see digitalization as being the way to create a platform for distribution of Canadian programming, and is that something one can talk about forcing on anyone being assisted, in terms of infrastructure for digitalization?

[Brian Anthony]

Thank you for your questions, Dr. Fry. I'll speak to the first question and ask my colleague to speak to the second one.

We've looked at a number of ways of strengthening the broadcasting industry and local stations that the committee and the CRTC could consider. For example, the expansion of the quantum of the local programming incentives fund could be considered. There could be elimination or reduction of part II fees for over-the-air broadcasters, and a refund of the moneys currently the subject of litigation.

You could contemplate instituting some variant on fee-for-carriage, introduce some variant of Bell's “freesat”, arbitrate the distant-signal discussion, and avoid linkage with other issues. You could shrink and harmonize local programming requirements, and introduce the Sarkozy model for the CBC, which would get it out of advertising. That would cause some of those advertising revenues to flow to private over-the-air broadcasters.

Those are the sorts of things the committee might want to have a look at.