Canadian Heritage Committee on May 6th, 2009

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

One thing surprises me.

[The Chair, Conservative, Gary Schellenberger]

Madame Lavallée, one short question.

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

You're telling us you don't make any money. But you're the only broadcaster to make that remark before our committee. Why do you think the others are making money but not you?

[Mirko Bibic]

First, the cable companies have had a monopoly for decades. Second, as I stated in paragraph 4 of my presentation, the cable companies have a certain advantage in that they have a network through which they can provide three services. Our satellites can only provide one service, television. That's a distribution advantage. Lastly, building and using these satellites is really very costly.

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

Thank you.

[The Chair, Conservative, Gary Schellenberger]

Thank you very much.

Mr. Del Mastro, please, for a last question.

[Dean Del Mastro, Conservative, Peterborough, ON]

Thank you for your patience this evening in hanging in to provide this testimony to us.

Have you been following committee hearings to this point? I assume you've probably been keeping up a little bit with some of the witnesses we've had.

[Mirko Bibic]

We have been.

[Dean Del Mastro, Conservative, Peterborough, ON]

On Monday we had representatives here from the Pattison Group, which owns three local stations. We had representation from Corus, which owns local television stations and speciality networks. Are you aware that both of them came out and suggested that they're not in favour of fee-for-carriage?

[Mirko Bibic]

Yes, we are.

[Dean Del Mastro, Conservative, Peterborough, ON]

It's particularly concerning for me because of course Corus operates my local television station. They're not in favour of fee-for-carriage, yet you're saying the fee-for-carriage proposal that's been brought forward and submitted to the CRTC would cost the people of Peterborough $5 a month on their subscription--

[Mirko Bibic]

That's correct.

[Dean Del Mastro, Conservative, Peterborough, ON]

--and my local television station doesn't even want it.

[Mirko Bibic]

That's correct. What we did for your community is tally up the number of local stations in that community and assign 50¢ to each of those stations, because that's what the request is from the broadcasters. When you add up all the stations, times 50¢, you get the number you just quoted.

[Dean Del Mastro, Conservative, Peterborough, ON]

Well, especially considering that my local television station doesn't want it, and I don't think an extra $5 a month on people's satellite and cable bills would be overly popular, I can tell you which side of this issue I'm coming down on.

[Mirko Bibic]

Mr. Del Mastro, if I may, the $5 is only for fee-for-carriage. If you add the other requests that the broadcasters have made, which are to increase the local programming fund from 1% to 3% and to force the satellite companies to pay even more for what are called distant signals, I guarantee you that the $5 would go up.

[Dean Del Mastro, Conservative, Peterborough, ON]

Wow. That certainly is not going to be overly popular.

How many satellite subscribers do you have right now?

[Mirko Bibic]

We have close to 1.9 million.

[Dean Del Mastro, Conservative, Peterborough, ON]

You have 1.9 million and you're paying about $90 million in support, so if my math is right, that works out to about $45 or $47 per subscriber that you're paying in support to Canadian content.

[Mirko Bibic]

That's pretty much it. In fact, that's for the Canadian content. That $90 million is the number I use. We pay another $17 million in CRTC fees and government fees, the part II fees, so that's $103 million right there--

[Dean Del Mastro, Conservative, Peterborough, ON]

But if you're already negative on your cashflow, you must be getting that $103 million from your subscribers. So then your subscribers.... Of course, we've heard from broadcasters that you're making money on their backs, that you're not giving them anything, and that people think they're paying for it anyways.

If you're not positive on cashflow, then obviously your subscribers are already paying what would amount to about $6 a month, so they are in fact paying for local broadcasting. Ultimately, for these funds that you're paying into, they're being passed on to your subscribers. Is that not correct?

[Mirko Bibic]

Essentially on our costs, obviously, these fees form part of our cost base. We charge our subscribers as a function of our costs and the competitive price in the marketplace. Yes, obviously, we are contributing and our subscribers are contributing to Canadian programming and to the industry.

By the way, these broadcasters also own specialty services and they charge us wholesale fees, so we pay the broadcasters who own speciality services.

How many hundreds of millions a year is it?

[Christopher Frank]

It's north of $450 million.

[Mirko Bibic]

So we make commercial payments worth $450 million to the broadcasters who own speciality services.

[Dean Del Mastro, Conservative, Peterborough, ON]

Wow. Okay. To sum that up, when the case is being made, essentially, that Canadians think they're paying for over-the-air broadcasters but they're not actually paying anything for over-the-air broadcasters, they actually are, because it's in the fees that they're paying their cable companies and the satellite companies. It just isn't explicitly stated as such, but they are paying towards content and towards Canadian content.

I want to move on because there's something really important that I want to get to, and that's this FreeSat program you've proposed. First of all, I think it's tremendous. It's a really neat proposal that you've made.

I don't know if you're aware of this, but I'll tell you that in a lot of remote communities, not too far from where I call home, there aren't too many stations that you can even get over the air in those remote locations. To me, this seems to be a pretty good offer for people to receive conventional over-the-air broadcasting. I assume they just have a small equipment charge to pay for and then they'd receive these services at no charge.