Canadian Heritage Committee on May 13th, 2009

[Richard Hardacre]

I'm sorry: additional help in what way?

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

We're not suggesting a specific solution. What I'm saying is that there are new challenges because of the Internet and specialized TV. That's real, and it's in the numbers there, so don't you think that we should do something for conventional television at large, including the CBC?

[Richard Hardacre]

Well, let's break this down: private broadcasters versus the CBC.

First, with private broadcasting, we maintain that these broadcast distribution undertakings need to be viewed upon as grouped, as an entire operation, including the specialty channels. We have the figures that show the specialty channels are indeed making healthy profits. In fact, their overall advertising revenue is not down.

This is a time of the market being fractured. People are starting to watch programming on the Internet, yes, but as far as additional help for specialty channels for the broadcasters is concerned, no, we don't—

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

Not for the specialty channels, but for the conventional channels.

[Richard Hardacre]

For conventional channels, our position is quite clear. We do not believe that, as such, the conventional channels need help. We want them to stop overspending on buying foreign programming. If indeed they can make a case that fee-for-carriage should be applied and they receive something from cable companies, we would say that would be very conditional. We would like to see conditions imposed upon that so that additional moneys coming in from a fee-for-carriage, which we are not opposed to, would—

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

On certain conditions.

[Richard Hardacre]

—have conditions. Yes.

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

I have to move on, because I have only one minute.

Private broadcasters say they have to buy American programs to attract and subsequently retain Canadians. What's your position on that?

[Richard Hardacre]

Well, certainly it's important to make a profit; we want these companies to be viable. Distributing American programs or foreign programs is fine. What we are against is the predominance in prime time--with CTV and Global being what is shown in blue here--of predominantly foreign programming and predominantly American programming. In the 28 hours a week, we have one hour of new programming on CTV and one hour on Global. So yes, have some American programming to make some advertising revenue, but we need limitations on it.

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

So the red is better—

[The Chair, Conservative, Gary Schellenberger]

Thank you. You've gone over time because we're switching to Ms. Fry for a very short question.

You only have a minute.

[Hedy Fry, Liberal, Vancouver Centre, BC]

Thank you very much, Mr. Chair.

You said in your presentation on page 5 that in 1999 “the CRTC gave in to broadcasters' demands for deregulation and reduced requirements for drama”, and as you said just now, there is very little programming in prime time. How has this CRTC decision of 1999 affected your group, ACTRA?

[Wendy Crewson]

It's interesting to note that the average income of a union member in 1999, before the policy took effect, was $15,000 a year, so obviously we're not in it to get rich. Since the policy has been in effect and because prime-time drama has dropped off so precipitously, the average income of an actor in Canada is $10,000 now. We've had a 29.1% drop in our income over the course of the 10 years since that ruling came into effect. It's been devastating.

[Hedy Fry, Liberal, Vancouver Centre, BC]

So jobs and incomes are being lost?

[Wendy Crewson]

Yes.

[The Chair, Conservative, Gary Schellenberger]

Thank you.

We move now to Ms. Lavallée, please.

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

Thank you very much, Mr. Chairman.

Mr. Hardacre, I'm pleased to see you because you accurately state the problem of English-language television, Canadian television. If a representative of the Union des artistes, which has exactly the same mandate as you in Quebec, were in your seat, he wouldn't be emphasizing the same problems in the same places.

In Quebec, the problem is not competition from Hollywood. We have excellent Quebec productions with excellent ratings. We don't have the same problems. What I like in your presentation is that it accurately states the problem with Canadian broadcasting, which is competition from Hollywood.

Can the situation change? Can your problem really be solved? We sense that it's a wheel that's turning. The fewer Canadian productions there are, the less the television networks want to broadcast them. Consequently, artists make less money and there are fewer artists. When anglophone artists succeed, they want to go to the United States because the language is the same. That's one of your problems. Can that wheel be stopped? Could the problem be solved through regulation, by government investment or by increasing the awareness of broadcasters, which currently look more like people who want to do business than people who, generally speaking, have a licence and a privilege to produce television for the public?

[Richard Hardacre]

Thank you for your question. We would like to have the same advantage as Quebec artists have.

In Quebec, there no competition for an audience with the American elephant that is beamed across the border.

Do we see a solution? Is there a light at the end of the tunnel? We believe so. We are very optimistic. First of all, some of this is reliant on the public broadcaster. We believe that the CBC, in both languages, must have stable and continuing funding.

What we do not believe is that private conventional broadcasters should look upon the obligation to have Canadian content as some kind of taxation or a cost of doing business or a penalty of some sort. It is not. It is in the Broadcasting Act. It is in Canada's Broadcasting Act, an act of Canada, that they have an obligation to champion Canadian culture en français et en anglais. It is absolutely required of them.

Also, we do not buy their arguments that their profit margins have dropped because of Canadian content. We think that is a load of something that is not acceptable in this room. They have created their own difficulties with their massive expenditure on foreign programming and their massive acquisitions, which have acquired them so much debt that they can't handle it.

So yes, we look for regulations, we look for the CRTC to impose these regulations, and we look for this committee to make some recommendations to that effect. We're not looking for handouts to the industry.

Merci.

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

Ms. Crewson, do you want to add something?

[Wendy Crewson]

Yes, I'd like to say that there is a way out of this cycle. We see it more and more. As soon as we have an opportunity, as soon as the broadcasters take it seriously in their license renewals that it's time to put a little money and effort behind a Canadian show, we see enormous success.

We have the talent. We see it in every American show. If you look at the cast list--and at the writers, the producers, and the directors--it's chock full of Canadians. It's not that we don't have talent--we need to offer them a job. If there is no work here, why would they stay? When you're making $10,000 a year, why would you stay?

If we can create this little umbrella of an idea that we can give the private broadcasters a reason—that these are the regulations and this is why you have the licence—to produce this kind of stuff, we're more than able to produce it. Once we start doing that and it becomes profitable, then we will start breaking that cycle, but as long as they say they only want to do American shows, we're never going to develop a sustainable Canadian industry.

[The Chair, Conservative, Gary Schellenberger]

Thank you.

We'll move now to Mr. Angus.

[Charlie Angus, NDP, Timmins—James Bay, ON]

Thank you. At the outset I want to apologize. Five minutes for questions is not nearly enough time, because there are so many issues from each of the presentations we've heard.

I want to begin with ACTRA because ACTRA broke the path, I think, for actors' organizations around the world in fighting for digital rights, yet the business plan we're being sold by the broadcasters seems to me incredibly digitally counterintuitive.

In the age of the Internet, content is king. People want content, yet we're being told that local is a real drag, that those are your entry-level viewers, your local audience, so they don't want to worry about them. “We don't want to have to be burdened with running Canadian shows,” they say, “and even if we are, we're going to sell them at a discount or in low markets when nobody's watching.” They just want to be able to reproduce American shows, which they don't have the long-term rights for.

It seems to me that with this future business model they're slitting their own throats. If they're not creating content and selling that content for the audience that's moving more and more online, why the heck would they ever watch them when they can watch the American version wherever they want in the world?

I'd like to get a sense of this from you because you guys have fought for this principle of digital rights. We've been told again and again about “the long tail” in business, yet the broadcasters tell us there's no money in Canadian content by creating shows and owning shows and the rights. Could you comment on that?

[Richard Hardacre]

The study we had done by Nordicity, which we published last week and which we would be happy to share with the full committee, shows that there is indeed profitability in Canadian programming. There is a long tail. The first runs of any television program do not make a profit, but they actually do when they play again on specialty, and on the main networks, and then again in new media. The profit is there and can be there.

Second, I'd like to argue that, whether it's distributed digitally or by conventional means, the argument that no one is interested in local stories is one that we just don't buy. Local news is important, but local stories are stories that mean something to all of us. There are films such as Passchendaele. It not a television program but it is a local story, and while it was set in Belgium and France it was still about local people and the local Canadian history of our forefathers. That kind of film work is a local story; it's a Canadian story.

Simply put, there is a future in digital, and we also believe that the rights we have as performers--and the writers, directors, and the producers would reinforce this--to get a return on the profit that's made from long-term digital distribution have to be protected by intellectual property rights. That's something else that this committee may be considering in the future, but there's very important work on intellectual property being done at WIPO, the World Intellectual Property Organization, and we hope this government enforces that.

[Charlie Angus, NDP, Timmins—James Bay, ON]

Thank you.

Madam Fusca, one of the issues that's come before our committee is that there seems to be a huge disproportion in regard to those who take the risks in creating a sellable product or, in your case, setting up a broadcast. Enormous risks are entailed. There's a disproportion between the risks this first group faces and those faced by the gatekeepers, who actually decide who gets to see what and how they get to see it and who actually get a disproportionate amount of the return with very little risk.

You talk about the BDUs being allowed to charge fees to carry signals. My question is twofold. First, is that part of their licence or is that extra billing? Second, do you believe that the CRTC, which is there to protect the public interest, is completely failing in one of its fundamental jobs, which is to ensure that there is a balance between the broadcasters and BDUs and the people who create the talent and the content.

[Martha Fusca]

Just to answer the first question first, I said that the act specifies that as broadcasters we're responsible to ensure that we deliver our signal to either the cable companies or the satellite companies, and we do that. I've put it on the record on numerous occasions that we are then charged an additional fee, a carriage fee, of $240,000 a year. Now, that's only by one BDU. Only one of them is doing it thus far.

I can also tell you that because ichannel is a must-carry, I could refuse to pay that fee if that were the only channel I had up there, because they'd still have to carry it. However, I have a category 2 up there as well, and if I choose not to pay the fee, that service comes down.

The CRTC knows this. I don't know why they're not doing anything about it. I've talked at length for years. I've spent hundreds of thousands dollars talking and now it's my turn to start asking the questions.

This is a situation, by the way, that isn't recent. It would be nice if we could blame the current government, but it's a situation that unfortunately has been creeping up on us over the course of the last 10 years. In terms of the CRTC, I think that whether it's the cable companies' ability to lobby so well and the broadcasters not doing such a good job.... Clearly, the broadcasters are not doing a good job, because I know both Ivan Fecan and Len Asper, and I know they do care about Canadian programming.

I also know why they're importing some of the American stuff: because if we don't import the American stuff, even though it helps to subsidize Canadian programming, the first thing you'll hear a BDU saying is that they need that programming and they have to bring up yet another American channel.

I think it's a good idea for this committee to ask the CRTC why they're going that way. Lord knows, even if we don't do a good job of explaining ourselves, the evidence out there is more than abundantly clear.