Canadian Heritage Committee on May 11th, 2009

[The Chair, Conservative, Gary Schellenberger]

I call this meeting to order.

We're still waiting for one witness, but when Ms. Walker arrives we can fit her into the schedule.

We will be taking ten-minute presentations from each presenter. There'll be two rounds of questioning at the end of that, and then we'll switch witnesses.

Welcome, everyone, to this the 20th meeting of the Standing Committee on Canadian Heritage, pursuant to Standing Order 108(2), the study on the evolution of the television industry in Canada and its impact on local communities.

Our first witness is from the Alliance de la francophonie de Timmins. Mr. Lacroix, please.

[Sylvin Lacroix, Executive Director, Alliance de la francophonie de Timmins]

Good afternoon, Chair.

I am pleased to be here once again. I believe we are becoming friends. Chair, we have had the opportunity to meet and discuss this matter on a few occasions.

My presentation is extremely important to local communities. You are aware that the concentration of media reduces the opportunities for our voices to be heard in the national and even the supra-regional media. There are very few local media remaining to convey our message. It is in part for that reason that we are here today. We want to determine if it is possible to improve the situation of the local media.

The francophone community outside Quebec, including francophones in the North, is experiencing even greater difficulties because of major cuts to the CBC, our local television and radio broadcaster. Significant cuts have also been made to Timmins' French-language newspaper, Les Nouvelles, which has now become an insert in the English-language newspaper. The ability to speak to our community about our needs is being increasingly curtailed. It is extremely important for the federal government to develop a policy that will enable local media to continue to do their job.

We feel there are two recommendations of interest. The federal government should adopt a policy whereby it spends 50% of its total advertising budget on advertising in local media that directly serve communities.

For rural communities throughout Canada, the CBC is their only contact with other communities. It is often the only network in the regions. We believe that the government should also adopt a policy for the CBC that addresses two elements. First, the CBC should focus more on local communities and less on the three major centres—Montreal, Toronto and Vancouver. Second, we believe that base funding for the CBC should be increased to $50 per voter or per capita. In some parts of Europe per capita funding ranges from $134 to $150.

Rather than giving a lengthy presentation, I prefer to answer your questions. I think we can have a better discussion that way. Once again, thank you for inviting a local francophone association. For us, the media—particularly the local media—are a very important means of conveying our message. We must have a voice.

Mr. Chair, my colleague from Kirkland Lake will continue with the presentation.

[Caroll Jacques, Director General, Kirkland Lake, Alliance de la francophonie de Timmins]

Good afternoon.

I represent the Temiskaming area in the Temiskaming—James Bay sector.

With regard to French-language television we are served by Radio-Canada, TVA and TQS, but by their Montreal stations. In other words, there is no news from Toronto. We receive very little coverage, even at the regional level. When the news shifts to our area, Rouyn-Noranda, Val-d’Or and similar places, rarely, if ever, do you hear about Kirkland Lake or Temiskaming Shores. We also get TFO, which is primarily an educational station that broadcasts Ontario content.

As for radio, there is CBON Sudbury in French which, due to recent and past cuts, no longer visits the regions. Once again, they report on Sudbury and the surrounding area but, unless there is a disaster, not on Kirkland Lake. As for English radio stations, there is CJKL in Kirkland Lake and CJTT in Temiskaming Shores. On the Quebec side, there is Radio Ville-Marie, which offers a few programs once per week but does not really serve the region.

There are no French-language newspapers. In the past, we had Les Nouvelles in Timmins. However, as Sylvin explained, that newspaper became an insert in the Timmins English-language newspaper and it is no longer distributed in our region. The Kirkland Lake Northern News and The Temiskaming Speaker out of Temiskaming Shores are the English-language newspapers.

In summary, we have very few resources to provide coverage of our activities, our victories and all the rest, unless reported in another language by the media to the people in the region in order to keep them informed. Consequently, this forces francophones to purchase both English newspapers in order to find out what is happening in the francophone community.

[The Chair, Conservative, Gary Schellenberger]

Thank you for that presentation.

We move now to the Campaign for Democratic Media, and Mr. Lithgow.

[Michael Lithgow, Research Associate, Campaign for Democratic Media]

Thank you for the opportunity to speak to these hearings.

I'm here on behalf of the Campaign for Democratic Media, a national non-profit and non-partisan media advocacy group. We're a network of individual Canadians, civil society organizations, consumer organizations, labour groups, media advocacy groups, academics, grassroots media activists, and others interested in helping to create a diverse, accountable, and quality Canadian media system.

These hearings have been constituted in response to a perceived crisis in Canadian broadcasting--a perfect storm, some have called it--of new media challenges to traditional business models and economic contraction of historic proportions. The Canadian television sector is undergoing what many commentators suggest will be permanent and structural transformation.

One of the things we would like the committee to think about today is the possibility that what we are experiencing as a crisis in local broadcasting reflects in fact some of the inherent tensions between the cultural industries and democratic accountability. What I mean is that the critical importance of local programming in Canada is, in all likelihood, better understood in terms of what makes cultures democratic than it is in terms of sorting out the conflicts of local versus regional and national advertising markets.

When we talk about broadcasting in Canada, we are talking about part of the connective tissue the holds us together culturally, politically, and economically. Finding solutions that do not sacrifice one for the other of these equally important aspects of Canadian society, we believe, should be at the heart of these proceedings.

To begin, we'd like to challenge certain assumptions about what is happening in Canadian broadcasting. Broad economic factors at work as well as changes in consumption patterns in connection with new media technologies have helped precipitate the crisis. But there are also structural factors that go to the core of the current crisis, which are at risk of being overlooked. We think these problems point towards creative and long-term solutions.

For instance, local markets may not be failing so much as they are being ignored. The network affiliates threatened with closure who broadcast in these small markets have increasingly been forced to serve the needs of national networks, networks whose accumulated corporate debts and revenue strategies make small market sustainability impossible without doing away with much of local programming. Small markets can be and in fact are profitable; the problem is that they are not profitable enough to serve non-local needs. Canwest Global, for instance, is struggling to make decisions about local broadcasting while trying to service almost $4 billion of corporate debt.

To put it bluntly, the citizens of many smaller communities are facing drastic losses of local programming, one, because of corporate decisions that have absolutely nothing to do with their community, and two, because there are so few alternatives in our broadcasting system.

We have one of the least diverse broadcast systems in the world and the highest concentrations of media ownership. Canadians lack meaningful local broadcasting choices, and their ability to be informed about their own communities is being held hostage by corporate debt and corporate demands for rates of return that are unachievable. Part of the problem is that local affiliated stations function within national networks primarily as a means for national advertisers to access local eyeballs. Revenue streams depend on national advertising markets, not local markets. Advertising rates in local settings reflect national markets for national advertisers. As such, they end up prohibitively high and in fact exclude local businesses from the market. We are suggesting that the current model of affiliated local broadcasters is failing Canadians not only in terms of local programming but in terms of local advertising opportunities.

These markets may not be big enough to achieve network goals for debt, but they are big enough to sustain alternative models for the production of local television. The large affiliated centralized model for delivering local programming doesn't work, and arguably it never has. As long as there have been licence renewal hearings, there have been desperate cries to reduce local programming obligations. We need to rethink the ways in which local programs can be produced and delivered in local settings.

Perhaps the most important point we want to make today is that there is a largely unrecognized and emergent element in the Canadian broadcasting system that we believe offers the most realistic long-term solution to the crisis in local programming. The Broadcasting Act, in section 3, identifies three elements that make up the Canadian broadcasting system: public, private, and community. The community sector is rarely addressed, and yet it is here that we find new media programming strategies and hybrid models of organization that point the way forward to long-term sustainable local programming solutions. These hybrid models of organization, which are sometimes called mandate-driven media or civil society media, combine market responsiveness with professional journalistic practices and a strong ethical mandate to fulfill democratic roles, such as ensuring that public and private institutions remain accountable to the public and that the public has access to accurate, reliable, diverse, and independent sources of news and information about the communities where they live.

To be clear, these are not volunteer media organizations. They are media that work on multiple bottom lines--ethical and economic. Because they are mandate-driven, small profit margins don't equal failure but rather an opportunity.

These hybrid models of media combine entrepreneurial ingenuity with NGO commitment to public objectives and resourcefulness. In the United Kingdom, they operate under the name of community interest companies, or CICs. They are for-profit companies whose rates of return are capped and whose purpose for incorporation includes community service. In addition, and importantly, the assets of the company are locked and cannot be sold, except to another CIC. There are thousands of CICs incorporated in the U.K. that carry out a range of services: affordable housing, the arts, education and training, preschools, home support services, recycling, and media services.

A similar approach has been taken in the U.S. with the creation of low-profit limited liability companies, or what are called L3Cs. They guarantee the public nature of their work and limit dividends to investors through operating agreements. To quote Richard Bridge and Stacey Corriveau from a recent report, the primary goal of L3Cs and CICs is to introduce market solutions to community needs by providing “access to the vast pools of market driven wealth to make socially responsible investments”. Local broadcasting is an excellent opportunity for socially responsible investment, a way for the tension between democratic and industrial needs, which has so far stifled local programming, to be addressed.

In Canada, one example of a hybrid solution is the community broadcast licence. These are television stations, locally owned, either for-profit or not-for-profit, that exist to service local audience information and advertising needs. These community broadcasters are not owned by cable companies, although their signals must be carried on local cable systems. These are independently owned and operated television stations that exist specifically to provide local programming within their broadcast footprints. There are currently 10 in Canada, including CIMC-TV, or Telile Community Television, in Cape Breton; CHCT-TV, or St. Andrews Community Television, in New Brunswick; CHET-TV in Chetwynd, British Columbia; and CHMG-TV in the city of Quebec, to name just a few.

The local programming improvement fund should be made available for use by these organizations and to assist new mandate-driven community broadcasters to fill the vacuum in local programming. Towards this end, in addition to LPIF funds being made available for community broadcast programming, a portion of the fund should be allocated to one-time grants that assist in the start-up of new community media outlets.

There are also possibilities for hybrid new media strategies, online contributions by mandate-driven media production groups that focus on local programs for local audiences. As many commentators have noted in recent months, more and more Canadians source programming through the Internet. Resources should be made available through tools like the local programming improvement fund to support locally oriented media production groups that distribute primarily online. This is, in fact, the way our broadcast system is growing and where entrepreneurial innovation is leading the way in transforming structural changes into opportunities. These groups can provide locally driven creative solutions to local programming deficiencies.

A key role the federal government can play in response to these opportunities is to initiate legislative reform that would allow the incorporation of limited liability for-profit corporations, the L3Cs, as has been done in Vermont and is being considered in Georgia, Illinois, Michigan, Montana, North Carolina, Oregon, and Wyoming as well as at the federal level. We also recommend that the local programming improvement fund be increased in size through matching federal government funds. This would make more resources available to address the crisis in local programming and would give Canadians, through our representative system, more say in how these resources are spent.

The local programming improvement fund should also be made expressly accessible not only to the affiliated networks but to community broadcasters, independent program producers, and online local media groups. This is an opportunity for Canadians to expand capacity and diversity in the Canadian broadcasting system for the production and distribution of local programs. The model of broadcasting, dominated by a few networks with strings of affiliated stations, has failed Canadians. New models with greater local accountability and diversity should be encouraged.

Further, we recommend that management of the local programming improvement fund be as diverse as the Canadian broadcast system, including representation from the public, private, and community elements, and representation from independent producers and community broadcasters. Control of the fund must reflect broadcast system diversity, especially representation from sectors where the most innovation can be found.

We recommend, as we did in the CRTC's new media broadcasting hearings, that the federal government create an Internet broadcast fund to support the production of Canadian content.

We further recommend that the federal government conduct an audit of community channel funds. Community television in Canada last year received $115 million, almost double the size of the proposed local programming improvement fund. This money is required, by regulation, to be spent on the production and distribution of local reflection television. However, communities across Canada have been complaining that cable companies misuse these resources by restricting or disallowing community access. If the federal government is proposing to fix the crisis in local programming with a fund of $60 million, we must ask what has been happening with the $115 million that cable companies collect from Canadians.

On the matter of funding for broadcasters in general, on the one hand--

[The Chair, Conservative, Gary Schellenberger]

Could you quickly wrap it up, please?

[Michael Lithgow]

Okay. I guess a copy of this will be distributed? We summarize all of the recommendations.

I just want to end with a--

[A voice]

There is no more translation for me--

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

I put it over there. Is that all right?

[The Chair, Conservative, Gary Schellenberger]

I don't know if a copy has been distributed to everyone, but we can ensure that it is if you produce it.

[Michael Lithgow]

That's fine.

I just want to end very quickly with a story that probably most of you are familiar with. It's an indication of why the current structure is failing Canadians and why this other sector of the Canadian broadcast system, we think, offers opportunities for long-term solutions.

In Hamilton, CanWest Global's local affiliate is CHCH-TV. CanWest announced they wanted to either close CHCH-TV or sell it. The Hamilton community rallied to save its only local broadcaster. They brought together the requisite technical expertise, capital investment, and support from local representatives from all levels of government. The only thing left was for CanWest to sell the licence, just like CTV recently did with Shaw for their E channels. But CanWest didn't sell the licence to the community group. They've gone to the CRTC to request significant reductions in local programming. It suggests that Hamilton's communities have cynically been used as bargaining chips, with their local programming being held hostage in exchange for significant reductions in local programming commitments.

Whether or not this is the case, the network is using the crisis to reduce its local programming obligations, while a local initiative with a local focus, local ownership, a viable business plan, and sufficient capitalization is being frozen out. That's the problem.

Communities have very different interests in local broadcasting than national networks and international media groups do. We need to find a way to help locally owned initiatives that are aimed at creating and maintaining independent broadcasting and programming. We believe that our recommendations are a step in this direction.

Thank you.

[The Chair, Conservative, Gary Schellenberger]

Thank you.

I remind people that we try to stick a little more closely to 10 minutes. That was almost 14 minutes.

Mr. Morrison, please, from the Friends of Canadian Broadcasting.

[Ian Morrison, Spokesperson, Friends of Canadian Broadcasting]

Thank you, Chair. I will stick to the 10 minutes you suggested.

Friends of Canadian Broadcasting is an independent watchdog for Canadian programming in the English-language audiovisual system, supported by 100,000 Canadians. Thanks for granting us an opportunity to appear today.

The conventional over-the-air television model--acquiring U.S. network programming, wrapping Canadian ads around them, and subsidizing Canadian programming with the resulting profits--is failing. Canadian over-the-air broadcasters are competing to bid up the cost of U.S. programming at the same time as their audience is declining. And now they also report that local news programming is no longer profitable.

As you know, advertisers follow audiences. Over the past decade, a major shift has taken place within the advertising pie. Web advertising has increased in Canada from $25 million in 1998 to $1.5 billion in 2008.

CRTC data confirm that profits for private over-the-air television have been falling steadily to the point where, by mid-2008, the entire industry delivered negligible profit. What might initially have been considered a cyclical downturn has now emerged as a major structural change, threatening the viability of over-the-air television. The over-the-air broadcasters are telling the CRTC and your committee that audience is down, advertising is down, costs are up, transition to digital is not affordable, and Canadian programming obligations are unsustainable.

While some have questioned the need for over-the-air television delivery in future, Parliament and the CRTC have a responsibility to consider the needs of three million Canadians who rely on over-the-air reception. In a report commissioned by the Department of Canadian Heritage, Canadian Media Research Inc. concludes that “given the slowing trend in the past 4-5 years, it seems unlikely that the OTA segment will decline by much in coming years”. In other words, over-the-air viewing by millions of Canadians will continue to be a feature of our audiovisual system well into the future.

Cities with over-the-air viewing exceeding the Canadian average include Windsor, at 27%; Saskatoon, 15%; Montreal, 14%; and Quebec and Sherbrooke, 13%. Even in cities with a lower proportion of over-the-air viewing, the number of viewers is substantial; for example, Toronto, 477,000; Vancouver, 138,000; Edmonton, 113,000; and Ottawa, 111,000. CMRI also reports that even in households subscribing to a cable or satellite service, not all television sets are hooked up to the cable/satellite service. Over-the-air viewing accounted for 25% of TVO's audience in 2006, 16% for CBC English television, 14% for CTV, and 8% for Global.

With the advent of digital over-the-air conversion in 2011, many of these Canadians will have an incentive to become cable or satellite customers, although the CMRI study indicates that 26% of over-the-air viewers cannot afford the cable or satellite charges. Digital conversion may be expected to increase the profitability of the distributors at a time when over-the-air television providers are in crisis.

As you know, in the United States of America the federal government provided a coupon program to subsidize the purchase of digital converters. Why has no similar program been announced in Canada? And what about financial assistance to over-the-air broadcasters to help with the one-time cost of digital conversion? Even a small portion of the revenue from reselling the vacated analog frequencies would easily pay for this.

Public policy should recognize the vital contribution that Canadian over-the-air stations make to the cultural fabric of Canada and create the conditions for sustainable, therefore profitable, over-the-air services. This can only be done by ensuring that over-the-air television has the financial capacity to produce local Canadian programming.

Canadians rely on their local television stations for news about their communities, the kind of local coverage that specialty channels cannot provide. In April 2008, Friends and several partners commissioned and submitted to the CRTC a Pollara study, Canadians' Views On De-regulating Cable and Other TV Distributors, which reported the results of a survey of 1,200 cable and satellite subscribers. Page 32 demonstrates that Canadians consider local news their top television priority. And there's a graphic, Mr. Chair, that makes it clear.

At a policy hearing last year, the CRTC heard evidence from Nanos Research that 78% of respondents indicated that having local news was of high or very high value of them. The CMRI 2008 TV Trends and Quality Survey, a report on Canadians' attitudes toward TV, to which Friends subscribes, offers corroborating data. I won't go through it, it's there. Local news, among anglophone viewers at least, is by far the most important service available on television.

As you know, local programming is most threatened in smaller and medium-sized communities, where there is often only one local source. Maintaining local programming on over-the-air television requires a change in the economic model. The CRTC's local programming improvement fund, though a laudable initiative, is far too small to address this challenge. Pollara found that a majority of cable and satellite subscribers would be willing to pay $3 more per month to protect and enhance Canadian programming. You can see the data in the graphic.

Friends believes that over-the-air television should be resourced on a level playing field with the specialty channels. Over-the-air television networks should have access to the second revenue stream, a fee-for-carriage, provided they promise to use at least a portion of the money to maintain and enhance local programming. We propose that the networks commit to a three-way split among local or drama programming, digital conversion costs, and the bottom line until 2011. Thereafter the split should be two-thirds to drama or local programming and one-third to their bottom line.

Cable monopolies should not be permitted to generate very substantial profits from the sale of their cable profits driven by the over-the-air stations without being obliged to pay for the services that they then resell. Friends recommends that cable monopolies should be permitted to pass along this charge to their subscribers only if their profit before interest and tax were to descend below 15%.

We also propose that the CBC should abandon ads on TV except during professional sports coverage. Reducing the supply of advertising avails would assist the private television business. In return for vacating ads on non-sports programs, CBC Television should be refinanced either by a levy on cable or satellite distributors, to be determined by the CRTC, or through general government revenues or by some combination of the two. This would transform CBC Television into a genuine public broadcaster. This new approach could be phased in over several years, and there is substantial evidence that Canadians would approve of this reform.

A number of current members of this committee participated actively in a year-long review of the future role of the national public broadcaster during the last Parliament. You, Mr. Chair, were the chair of that committee. Last year your committee recommended in the report “CBC/Radio-Canada: Defining Distinctiveness in the Changing Media Landscape” that per capita annual funding for public broadcasting should be increased from $33 to $40, which, by the way, would bring Canada to half the average in western democracies.

Last month, in a poll of 3,361 Canadians, which Friends commissioned, Pollara found that 54% of Canadians support your recommendation, 26% reject it as too high, and 20% consider it to be too low. In other words, three-quarters of Canadians believe annual support to the CBC should rise to at least $40 per Canadian per year.

We also want to share with you a second finding from the recent poll. Pollara asked the following question: “Assume for a moment that your federal Member of Parliament asked for your advice on an upcoming vote in the House of Commons on what to do about CBC funding. Which of the following three options would you advise him/her to vote for?” One was to increase funding to the CBC from current levels, a second was to maintain funding for the CBC at current levels, and the third was to decrease funding for the CBC from current levels. As you'll see in the graphic, 47% of Canadians would advise members of Parliament to increase it, 31% would keep it the same, 9% would decrease it, and 13% have no view.

Now, Mr. Chair, I want to conclude by saying that you can imagine our concern when we recently learned that Minister Moore's April 29 assurance regarding the CBC cuts does not square with the facts. That concerned us greatly.

Thanks for your attention, and best wishes in your important deliberations.

Thank you, Chair.

[The Chair, Conservative, Gary Schellenberger]

Thank you.

We welcome to the table our next witness, On Screen Manitoba Incorporated.

I ask Ms. Walker to please lead off.

[Tara Walker, Executive Director, On Screen Manitoba Inc.]

Thank you.

Good afternoon, Mr. Chair and members of the standing committee. My name is Tara Walker and I'm the executive director of On Screen Manitoba, which is the independent production industry association for Manitoba. Presenting with me is Kim Todd. She's the chair of our board, and she's the president of Original Pictures, an independent production company based in Winnipeg, Manitoba.

Kim has been producing television for over 20 years. She started as a senior producer with Atlantis Films in Toronto, and she has produced Canadian classics such as The Diviners and A Bear Named Winnie, which were both for CBC, and fun prime time series like Falcon Beach for Global and ABC Family in the United States. We represent the film, television, and new media community in Manitoba. Our membership covers the entire production industry in our province, from the creators—that's the producers, writers, directors—to the technical and creative craftspeople who are represented by labour groups, the service and goods suppliers, and the broadcasters in our region. Our mission is to lead, build, and represent the production industry in Manitoba.

We appreciate this opportunity to address you at such a critical time in the evolution of our industry. We agree with the Canadian Film and Television Production Association, the CFTPA, in their assertion that television broadcasting in Canada is now at a crossroads, and that key decisions made by officials over the next term will lay the foundation for the future of our industry and for the system for the next generation of Canadians.

We also agree that the Canadian independent producers are the cornerstone of the system, as is the content they produce. Independent production is a means of ensuring that our broadcast system is diverse, distinctively Canadian, and inclusive of local communities.

[Kim Todd, Chairperson, On Screen Manitoba Inc.]

We address you today as members of a distinct and vibrant local community located at the very centre of Canada: Winnipeg, Manitoba. Our city and our province contain many of the diverse cultures and voices that define our country, and we've developed a mature production industry that has brought those voices into our broadcasting system.

With our unmatched financial incentives—our tax credits are the highest in Canada—our internationally renowned production companies and crews, and the strong support of the province and the city, we're able to offer broadcasters top-quality, original regional programming at bargain prices. Regional independent producers are part of the solution to the economic difficulties of conventional broadcasters. We do not accept the argument that Canadian broadcasters should carry less Canadian and regional content as a means of relieving their current economic problems.

The purpose of the Canadian broadcasting system and of these hearings, as we understand it, is to build a healthy production and broadcast industry that can create and deliver Canadian content to Canadian audiences, as decreed in the Broadcasting Act. The independent production community from across the country provides content for that system, and the broadcasters deliver it to Canadians. We are a partnership dependent on each other for the overall health and quality of our service to Canadians.

[Tara Walker]

Our production community is the fourth largest in Canada, after Toronto, Vancouver, and then Montreal. Over the last decade, Manitoba has grown faster than any other established production centre in Canada. Our total volume of film and television has more than doubled, from $68 million to $143 million.

We provide over 1,500 full-time jobs for Manitobans, and we contribute approximately $100 million to our economy each year. In fact, our soon-to-be-published economic impact study, SNAPSHOT, will show that $1 million spent on production in Manitoba results in 27 person-years of employment. That's a higher rate of job creation than most of the other major industries in Manitoba, including transportation equipment manufacturing, furniture manufacturing, construction, mining, and real estate services.

It's important also to note that Manitoba is 2,000 kilometres from most of Canada's film and television decision-makers in Vancouver, Toronto, and Montreal, and without any direct air links to Los Angeles or New York. Our success is a testament to the passion and drive of local producers to get their stories told.

[Kim Todd]

Although we have a strong, well-established production community, one that can be seen as a microcosm of our national community, Manitoba's industry is one of the most vulnerable to the current trends towards centralization and consolidation. We are, if you like, the canary in the mine shaft.

When the broadcasters pull back economically, we feel it first. They stop travelling to see us as travel funds get tight; they object to regional spending as being a restriction on them; they consolidate positions such that there's no one in the local stations who has anything to do with programming or commissioning.

Historically, Manitoba was home to a number of family-run broadcast ventures, including the Moffat family's CKY, now a CTV station; the pioneering Women's Television Network, WTN, which is now a Corus station; the Thiessens' Trinity Television, which is now an S-VOX station; the Craigs' A-Channel franchise, also owned by CTV at the moment, and the Aspers' CKND, owned by Global Network. All of these except CKND have been swallowed up by bigger owners, and all of the programming decision-makers have been moved to larger centres.

Independent producers are an entrepreneurial lot, and we've been out there on the frontier for some time now, creating for new media, using digital technology, delivering our productions in high definition, and tapping into international financing to pay for them, and to international markets to sell them.

We recognize that a perfect storm of social, cultural, technological, and economic change is causing the rapid evolution of our industry, in fact of our society and our world. We are very busy trying to find our place and the place of our Canadian programs in that world. Ideally, we see the Canadian broadcasters as partners for us in this venture.

The producer's job is to find or create the idea for a show, then interest a Canadian broadcaster in licensing it for broadcast in Canada. The Canadian Television Fund stipulates that the minimum license fee for a prime time, one-hour Canadian drama series per hour is $315,000. That means that $4,095,000 is what a Canadian broadcaster would pay for a standard 13-episode series order.

The total cost of that hour is $1.5 million or $2 million, and the total cost of that series is $19.5 million to $26 million. The producer has to find the rest of the financing after the $4 million. So the producer is left to find $15 million to $22 million. We don't object to that, but we need it to be recognized that we're doing an awful lot of work getting that content made. The producer has to take out a bank loan to finance the contracts and tax credits that will not be paid until after the show is made, and the producer is liable for that bank loan and for any budget overages, and he has to hold back his fee until all other costs and risks are covered. The producer takes the insurance, the producer protects the employees, the producer is the owner of the product. The broadcaster licenses it or rents it for five or seven years—whatever the term is—to show it on Canadian television. The producer has to go to France, Germany, Italy, or wherever else in the world to raise the rest of the money and to make sales to pay back the investors.

The broadcaster's job is to attract an audience to the show in Canada. This is done by scheduling—making sure it's aired at a time when its audience is watching—and promotion and advertising, so that the audience knows it's there. Often on Canadian private broadcasters, American shows are scheduled first, so that they can be simulcast with the U.S. networks, and Canadian shows are given the time slots that are left. Canadian shows seldom receive the promotion that U.S. shows get; then, if the Canadian show gets disappointing ratings, the conclusion is that Canadian shows do not attract audiences and do not make money. Both these statements have been recently made in support of the idea of “relieving the broadcasters” of their obligations to air Canadian shows. Yet when the Canadian series Flashpoint is given the budget, the time slot, and the promotion normally given to a U.S. show, it is a hit, of which we're all very proud.

In this digital world, when the audience can get American shows on the web, Canadian broadcasters' unique brand will be built around their Canadian shows. We do not think Canadian productions are the problem; we think they are the solution.

[Tara Walker]

At On Screen Manitoba, we're investigating a broadcast project that would be an example of the kind of local initiatives that arise across the country: an educational broadcaster or webcaster who would use low-cost digital technology to connect the far-flung communities of our province, offering high-quality education and training opportunities as well as entertainment. Projects like this might take the pressure off national broadcasters to carry local content. This could be one of the solutions, but it's not here yet, and local programming is still something that our communities need.

Our local programming from the OTA private broadcasters in Manitoba is as follows. Global runs a half-hour news show daily, which is packaged in Alberta. City TV—that's Rogers—runs Breakfast Television, a talk and news show, daily. CKY, which is CTV, runs a half-hour news show that's cycled three times a day. That's it.

If local programming is defined as local information, political coverage, and cultural reflection, we would weigh in as viewers here and say that the cuts in staff and resources mean that civic politics is pretty much left to the newspapers, and even provincial politics is not covered in any depth. Analysis, reflection, and debate have all but disappeared from the news. Given that newspapers themselves are shrinking, we fear that the essential political and social discourse of our community is not being served.

If the local programming improvement fund is going to be used to meet the needs of the local broadcasters, then we suggest that a portion of it be designated for other voices, apart from the broadcasters themselves. We also would like to state that if the fund is set at a higher percentage, any increase should not go to rebalance the BDU contributions towards the Canadian Television Fund.

[The Chair, Conservative, Gary Schellenberger]

We have to wrap up pretty quickly.

[Kim Todd]

We will wrap up, then.

In summary, we'd like to leave you with three points.

Independent producers are the cornerstone of the Canadian television industry, and regional producers within the group provide the diversity of voices that make it a truly national industry.

Two, as an example of a regional production community, Manitoba shows that we can build viable centres of production outside Toronto and Montreal that add diversity and creative and financial value to the national system. We offer our local community a voice.

Finally, in the longer term, we need a digital media strategy for Canada. We encourage you to support the CFTPA's call for national consultations on this issue.

We thank the committee for inviting us to appear, and we look forward to answering any questions you have. Thank you.

[The Chair, Conservative, Gary Schellenberger]

Thank you.

We're going to try to keep as close to time as we can in the questions and answers. Try not to go too long. Keep an eye on me. I'll hold my pencil up when we're close to five minutes.

Mr. Rodriguez, you're first, please.

[Pablo Rodriguez, Liberal, Honoré-Mercier, QC]

Once again, Chair, I will ask that you be strict with us.

Hello everyone. We are pleased to have you here today.

Mr. Lacroix, I will begin with you. You said that what is needed is a policy for purchasing local advertising. Do you mean that the government’s advertising envelope should be increased or that, out of the same envelope, more money should be given to the regions?

[Sylvin Lacroix]

I think we could start with a better distribution of the contents of the same envelope. It is vital that local media, which directly serve communities, receive a larger share.

In short, media often are owned by multinationals. The problem, in the Timmins and Kirkland Lake area, is that the money does not make it as far as the media. It is said that they do not make money and budget cuts are imposed—

[Pablo Rodriguez, Liberal, Honoré-Mercier, QC]

I understand. Thank you.

Mr. Morrison, you are very knowledgeable with regard to the CBC and also its budget.

I would like to clarify one thing. The government said that it increased the CBC’s budget. However, when we look at the budget—I asked the minister about this—we see a $62.8 million reduction. How do you reconcile these elements?