Canadian Heritage Committee on May 25th, 2009

[The Chair, Conservative, Gary Schellenberger]

Mr. Angus, just a very brief question.

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

The problem is that if we don't have monetary penalties, how do we know that the BDUs are going to live up to their public obligations, or the broadcasters, if they're in breach of their licence? It seems that if you just say it's a market model, then why do we have the CRTC?

Your job is to protect the public interest and to make sure of that balance, and if you don't have the ability to hold them to account, nobody is going to play ball.

[Konrad W. von Finckenstein]

If you want to amend the act and give us the ability to--

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

Would you like that?

[Konrad W. von Finckenstein]

I have said that many times. I think it's one of the major shortcomings of the act, that it's basically all or nothing.

We can deal with the licence. You get a licence or you don't get a licence, and no--

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

So if you had the tools, it would make your job easier.

[Konrad W. von Finckenstein]

Yes, it would make it easier.

[The Chair, Conservative, Gary Schellenberger]

Mr. Del Mastro.

[Dean Del Mastro, Conservative, Peterborough, ON]

Thank you very much, Mr. Chair.

Thank you, Chairman von Finckenstein, and your colleagues for appearing here with us today.

My observations through these hearings have brought me to the point where I think all members of the committee care about essentially three broad themes: Canadian content, as I've heard all members of this committee saying they want to make sure there's Canadian content on Canadian airwaves, including Canadian drama; local stations and news, because people care about their local stations and about their local news; and they care about the CBC. I would say, broadly, all committee members have articulated that.

I have a couple of concerns. First of all, I want to go back to your fourth point, in regard to structural reform. In paragraph 4(a) you talked about investigating alternative support mechanisms for local programming. You've created the local program improvement fund. By that, are you looking at expanding the local program improvement fund? Based on some of the hearings we've had, I think there would be support of the committee to make a recommendation around an expansion of the LPIF, broadly. I don't think we've determined what that should be. Is that what you're referring to?

Secondly, I'd like to get something else on the record. Will you be considering this committee's report in your deliberations in July?

[Konrad W. von Finckenstein]

On the first point, we established the LPIF at 1%. As part of the hearings we just finished, we have asked people whether that's sufficient, and we also wanted to know on what basis you should distribute. I mean, the distribution formula can depend on viewers, can depend on markets, can be tied to what they spent in previous years, etc. We asked for input on all of those, and we'll make a decision on that.

Secondly, in terms of your public hearings, I find them very useful, because they have echoed by and large what I've heard from people. It was interesting to see that people do not take a different stand when they're here from what they do when they appear before us.

[Dean Del Mastro, Conservative, Peterborough, ON]

So if we're making specific recommendations, you'll consider them?

[Konrad W. von Finckenstein]

Whatever you take, it will be on the public record and will be one of those things we can take into account.

[Dean Del Mastro, Conservative, Peterborough, ON]

Okay, thank you.

On part (b), “protecting the integrity of Canadian broadcaster signals”, I assume by that you mean distant signals or time-shifting. Why don't we just put an end to it? The cable broadcasters are telling me they're paying 50 cents per subscriber per month for distant signals. It doesn't have any more value than that. There's been a longstanding negotiation that's supposed to have taken place that is not moving forward. They're not going to come to an agreement on it. I think we have to be realistic about the fact that we've got two sides that are dug in. They don't agree.

I think we should put an end to distant signals, to protect local markets. I can tell you that a colleague of mine, the MP for Edmonton—Leduc, had a conversation with a CTV station manager just this past weekend. They told him distant signal has taken away 40% of their revenues. That's hurting a local television station, because it can't sell ads. Why don't we just put an end to distant signals?

[Konrad W. von Finckenstein]

For the simple reason that Canadians want it.

Distant signal came onto the scene, first of all, when you had satellite television. Suddenly you can watch the same program at 6 p.m., 7 p.m., or 8 p.m., etc, by just going to a different region. It's a wonderful convenience for people who are delayed by traffic, by the babysitting, or whatever, to catch the news or their favourite program.

[Dean Del Mastro, Conservative, Peterborough, ON]

But in an age of PVRs and so forth, Mr. Chairman, I'd suggest to you we don't need it; it's destroying local television, and we should put an end to it. Canadians might like it, might find it convenient, but if it's really hurting the system—a system that Canadians ultimately want to see succeed—then we should put an end to it.

[Konrad W. von Finckenstein]

It so happens that once satellite offered it, the cable companies turned around and all offered it, because they realized that if they didn't offer it, they were going to lose customers. So there's clearly great demand.

I don't feel it's our role to tell Canadians what they can or can't have. Let the market decide. What we're trying to do is make sure, to the extent there is value in it, that value is being given to the broadcasters. But protecting the integrity of Canadian broadcaster signals also has another aspect to it, which is lots of programming, which you see in conventional TV and you can also see on American TV, on ABC, or—

[Dean Del Mastro, Conservative, Peterborough, ON]

I'm not going to belabour this, but I am going to seek a recommendation of this committee that we put an end to distant signal because it's hurting local television stations. In fact, an awful lot of stations are just going to become retransmission centres for large networks, and they're not going to reflect local communities at all if we don't address this issue.

Now, in part (c) you talk about “exploring mechanisms for establishing through negotiation...” . I'm going to ask you a two-part question. We had a release from the cable companies on Friday that they sent you a letter complaining about the conduct of a broadcaster with respect to their advocacy for fee-for-carriage. Is that a legitimate complaint or is it not?

Secondly, why do you think this would work at all? Why do you think they'd be able to come to a negotiated settlement? I think it's just fee-for-carriage under another name. I think we've got a system. We established a local program improvement fund. You're looking at increasing that, and now you're looking at putting a fee for carriage in place, or a fee, and this is all going to be passed on. Mr. Angus talked about Canadians. I'm concerned about Canadians and I'm concerned about the amount their bills are going to go up—because they are going to go up. You certainly can't say you're going to provide money on this side and cap it on the other side. That's certainly not a free-market way of doing things.

Why do you think this would work? And was that a legitimate concern that was written to you on Friday?

[Konrad W. von Finckenstein]

Those are two totally unrelated questions. On the first one, are you talking about the Rogers complaint about CTV? That is a question of the code of ethics and whether that's being complied with by CTV or whether it has broken the rule and is in effect confusing its role as newsmakers and reporters of news. That is an issue of the code of ethics.

We have a system by which we ask the CBSC, Canadian Broadcast Standards Council, to rule on it. If the ruling is made and somebody doesn't like it, they can appeal to us. I spoke to the chairman of the council. They actually had some other personal complaints on it. They're going to look into it and they're going to deal with it as quickly as possible.

As far as your question about 4(c) is concerned, I think it is for the participants in the market to establish the rules of how much that signal is worth. Clearly it has a value; otherwise it wouldn't be distributed. What is the value? Rather than our imposing it and in effect it becomes an operating subsidy, I think the participants in the market should negotiate it. We will make sure they do negotiate it; otherwise, we won't let them distribute the signals. But they should do it.

If they cannot come to an end, then one way to do it would be perhaps to adopt something like the best ball rule. You both give me your best offer and I'll pick one of the two. It therefore puts both of them under a real obligation to come up with a realistic number.

[The Chair, Conservative, Gary Schellenberger]

Thank you. We have to move on.

Mr. Simms, please.

[Scott Simms, Liberal, Bonavista—Gander—Grand Falls—Windsor, NL]

Thank you, Chair.

I'd like to also thank the chairman for joining us once again.

Just so that I get the story straight, you fully subscribe to the fact that you are going to leave the players among themselves to decide how they are going to handle a fee for carriage--or as one of the witnesses called it, a fee for programming. Is that correct?

[Konrad W. von Finckenstein]

I wish you wouldn't use the expression “fee-for-carriage” when you're talking about the value of the signal being distributed.

[Scott Simms, Liberal, Bonavista—Gander—Grand Falls—Windsor, NL]

How about fee-for-programming?

[Konrad W. von Finckenstein]

Let's find what it is. You are the cable company and you're distributing my signal. What is the value of that signal? What are you going to pay me for it? That's what we're talking about. So it's the value for the program, and it's for the signal being distributed.

[Scott Simms, Liberal, Bonavista—Gander—Grand Falls—Windsor, NL]

All right, and Jim Shaw calls it a tax for TV. That's fine. We can all play that game all we want.

[Konrad W. von Finckenstein]

No, I'm not playing a game. I'm just trying to say what we're getting at.