Documentaries represent an important part of Canada's national fabric. They are one of our most successful forums of cultural expression, celebrated internationally, and they are extremely popular with audiences domestically. Indeed, across the various art forms the documentary genre stands out as being distinctly Canadian and complements local news and current events programming. Where news reports, documentaries probe and enlighten. Instead of presenting current events, documentaries explore the currents under the events. Documentaries multiply the voices of diverse, hidden, distant, and at times marginalized communities and connects them to the rest of our nation visually and socially.
It is our opinion that this entire industry that has found a way to flourish within a complex business and regulatory environment would be threatened should wide-reaching regulatory changes be made under the threat of an economic downturn. It's DOC's view that although sharp, this economic downturn is temporary, which is why we urge the committee to carefully consider and weigh any measures currently proposed by all the parties, as they have the potential to dramatically impact the entire sector for years to come.
While the broadcasters have stated that their industry is in decline, it is important to point out that the overall revenue trend over the last five years, from 2004 to 2008, is a positive one. With overall revenues rising by 3.49% and total revenue from advertising rising by 2.37%, we acknowledge that during the same period the broadcasters' profits went from $111 million in 2004 to losses of $96.4 million in 2008, a total profit decline of $207 million. It must be noted, however, that during that period of time, broadcasters' annual spending on foreign programming has gone up by a similar amount, $200 million.
In response to this decline, broadcasters have requested fee-for-carriage. We find the fee-for-carriage proposal to have some merit; however, such a proposal would only be effective if it was coupled with expenditure requirements that would preclude broadcasters from simply injecting more money into foreign markets, as opposed to investing it in Canadian programming.
Several witnesses have brought up the fact that while their conventional stations are experiencing difficulties, the broadcasters are still showing strong and increasing revenues from their specialty channels. Through the course of their presentations, broadcasters have opposed any suggestion that their corporate groups should be considered as a single entity and have insisted that each of their channels should be treated as a separate business. This stands in stark contrast to their position when dealing with independent producers. When a broadcaster commissions a program for their main network, they insist this entitles them to the rights to show it on all of their specialty channels, for no additional compensation to the producer. The reason they give for this is they are treating all of their media properties as a single entity.
Broadcasters have stated to this committee that they need some small changes in regulations to make them profitable again. But what are those small changes, and how will they impact Canadians and other segments of the industry? In short, what the broadcasters are asking from the CRTC is a reduction in Canadian-content programming; a reduction in local programming; complete removal of priority program requirements, meaning the complete removal of requirements to show high-quality Canadian drama, comedy, and documentaries; and removal of requirements to source programs from independent producers.
The characterization of independent production as a financial burden on the conventional broadcasters is of particular concern to us. For the last ten years, independent production has steadily represented only 10% of broadcasters' total program and expenditures. In 2008 foreign programming represented 52% of their total expenditures. While their spending on foreign programming has increased by 35% over those five years, the increase on independently produced Canadian programming has only increased by 16%.
Most disconcertingly, this modest spending increase on independent Canadian programming has not filtered down equitably through the different genres, nor has it been applied evenly throughout the country. The spending on Canadian documentaries, independent or otherwise, has fallen on the main networks, while the spending on broadcaster-affiliated productions in our programming category group has increased by 64%.
In two regions the decrease in independent documentary production has been particularly alarming. In the Atlantic region local independent category 2 through 5 production, which includes documentaries, has dropped by 48% over the last five years.
The situation is also drastic in Quebec, where independent production has dropped by 36%. At the same time, spending on affiliated programming in Quebec has increased by 54% and the spending on foreign programming has increased by 45%.
With those numbers in mind, documentary filmmakers are particularly concerned about the recent announcement of the rebranding and amalgamation of the Canadian Television Fund and the Canada New Media Fund into the Canada Media Fund.
Speaking before this committee, Minister Moore stated that the response regarding the announced fund has been overwhelmingly positive. Unfortunately, that has not been the experience in our community. Although we welcome and support government's continued commitment to Canadian production, we fear that the new fund may have a particularly negative impact on independent Canadian documentaries for the following reasons.
First, based on the announcement issued by Canadian Heritage, the fund will put priority on drama, comedy, and children's programming while making no commitments to sustaining funding for documentaries.
Second, the fund will expand access to broadcaster-affiliated productions, and for the first time allow broadcasters to access financing for in-house productions. This is particularly disconcerting to DOC because, as we have just shown, spending on in-house and affiliated productions for documentaries has risen sharply, while the spending on independently produced documentaries has decreased. We fear the CMF will only further deepen this trend.
Third, the CTF has committed funds to preserving and stimulating regional independent production, particularly in Quebec and the Atlantic regions, which had experienced significant declines. So far there have been no commitments that the new fund will continue the investment in the regions that need it most.
Lastly, and most importantly, we are concerned about the proposed governance of the CMF. The Department of Canadian Heritage announced that the cable companies will be nominating five of the seven board members. The majority of these cable companies are also affiliated with--or own, in part or in full--various Canadian broadcasters. These are the same broadcasters who will be able to profit from accessing the new fund. We understand that the Department of Canadian Heritage is committed to ensuring that the board of the CMF will be independent. But in a situation where beneficiaries of the fund are appointing the majority of the board, a conflict of interest may be inescapable.
In conclusion, the regulatory concessions proposed by the broadcasters could have a severe impact, not just on the documentary genre, but on all independent production as well as important local programming. The result will be further job losses in the already affected regions and across the country. Most importantly, it will leave many of our fellow citizens without a voice and ultimately leave us all poorer as a culture and as a nation.
Thank you again. We look forward to your questions.