Evidence of meeting #30 for Canadian Heritage in the 40th Parliament, 3rd Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was broadcasters.

A recording is available from Parliament.

On the agenda

MPs speaking

Also speaking

Konrad W. von Finckenstein  Chairman, Canadian Radio-television and Telecommunications Commission
Rita Cugini  Acting Vice-Chair, Broadcasting, Canadian Radio-television and Telecommunications Commission
Scott Hutton  Executive Director, Broadcasting, Canadian Radio-television and Telecommunications Commission
Suzanne Gouin  President and Chief Executive Officer, TV5 Québec Canada, Independent Broadcasters Group
Martha Fusca  President, Stornoway Communications
Bill Roberts  President and Chief Executive Officer, ZoomerMedia Limited, Television Division, Independent Broadcasters Group
Mike Keller  Vice-President, Industry Affairs, Newcap Broadcasting (Jim Pattison Group), Newcap Inc.
Monique Lafontaine  Vice-President, Regulatory Affairs, ZoomerMedia Limited, Independent Broadcasters Group
Joel Fortune  Barrister and Solicitor, Joel R Fortune Professional Corporation, Independent Broadcasters Group

4:40 p.m.

Bill Roberts President and Chief Executive Officer, ZoomerMedia Limited, Television Division, Independent Broadcasters Group

This decision came as a complete shock and was directly contrary to what the CRTC had stated was its plan. IBG members and others have filed--or had planned to file--applications based on the understanding that they would be heard shortly after filing, but certainly before September of 2011, which is the digital transition date for the industry, and the date when the new regulated or deregulated regime will come into effect. Indeed, we have quite an extensive library of correspondence with the CRTC on this matter.

The moratorium is deeply unfair and potentially harmful to diversity of voices and ownership in the broadcasting system, which is CRTC policy.

First, we question how a moratorium can be in the public interest and consistent with the Canadian Broadcasting Act. To be approved, by definition, a 9(1)(h) service has made an exceptional contribution to the Canadian broadcasting system and has met strict criteria.

Second, the moratorium comes at a critical time and it is exactly the opposite of what is needed. We have already explained how the CRTC decided to remove many of the rules used to ensure diversity of ownership and voices in the system and how concentration of ownership has intensified across broadcasters and networks.

Indeed, Canada may now have the most concentrated media environment in the entire western world at exactly the time that the CRTC should use all of the tools available to rebalance, including the paragraph 9(1)(h) orders for exceptional services, and to counterbalance deregulation in certain areas and the negative public policy effects of industry consolidation.

Third, the moratorium is especially harmful to small niche and independent broadcasters who want to make excellent Canadian content. If independents are going to make meaningful contributions to Canadian broadcasting and diversity, they require regulated carriage terms to reach a wide enough audience.

Fourth, the moratorium requires us to put our business plans on hold, even while the CRTC continues to add new non-Canadian services for distribution in Canada and permits the cable and satellite companies to bring forward applications for more foreign channels and their own digital specialty pay and video-on-demand channels.

Fifth and last, more than anyone, small and independent broadcasters rely for survival on transparent, understandable, relevant, and timely regulation. This change of direction by the CRTC has been anything but and has left us and our business partners questioning the CRTC's priorities.

Even more troubling, when most 9(1)(h) applicants were being held back by the CRTC for the past two and a half to three years, the CRTC has moved some to the head of the line, given them a public hearing, and granted 9(1)(h) orders. Similarly, the CRTC decided to hear Quebecor's application for special distribution status for its cable news channel this past fall, even though it had already told the industry that applications similar to Quebecor's wouldn't be considered until 2011 at the earliest.

Finally, the CRTC has just announced another application it will consider, in which the applicant requests an extension of a 9(1)(h) order that, under its current term, isn't even set to end until 2015. The effect of this fast-tracking of some applicants and dismissal of others is that the CRTC is making decisions about what programming to license and not to license without holding public hearings. These are troubling precedents for a declared public policy goal of diversity of ownership and diversity of voices.

As members of Parliament, you are aware that the CRTC intends to look at some key issues related to vertical integration at the commission hearings scheduled for May, as Konrad announced. The outcome of these important hearings will be of utmost significance to the small and independent broadcasting sector. The IBG and others will encourage the CRTC to put in place relevant and proactive regulatory measures to offset the unprecedented power of huge, vertically integrated companies.

It is early days yet, but the CRTC seems to be most focused on refining its generic “undue preference” rule. In practical terms, what this means is that independent and small broadcasters will have to complain to the CRTC on a case-by-case basis and plead for fair and equitable treatment by giant cable and satellite networks every time the independents face discrimination.

As federal politicians, you wisely understand leverage and can appreciate why this approach will not work. It is very difficult for a small player to complain about a very large player in an industry where the small player fully depends on the larger player for its very existence.

What the industry needs instead is a clear and relevant set of rules, understood in advance, that will ensure independent broadcasters get fair and reasonable access and distribution by their large, vertically integrated competitors.

There are three things that we would like to ask this important committee to kindly consider. First, we request political and regulatory recognition that small and independent Canadian television broadcasters make a valued and unique contribution to the Canadian broadcasting system, especially as regards diversity of voices and ownership; second, that independent and small broadcasters with pending 9(1)(h) applications be heard before the August or September 2011 digital switchover, and that status quo carriage continue until those CRTC decisions are rendered; and lastly, that this committee explore and recommend how the Canada media fund can better service small, niche, and independent television licensees.

4:50 p.m.

President and Chief Executive Officer, TV5 Québec Canada, Independent Broadcasters Group

Suzanne Gouin

Mr. Chairman and Committee members, we have presented to you some of the realities facing independent broadcasters today and we have tried to be as direct as possible.

Unless regulatory action is taken, the increasing concentration of ownership among television broadcasters and the networks that carry their content will do great harm to independent broadcasters and to the diversity these broadcasters bring to Canadians.

4:50 p.m.

Conservative

The Chair Conservative Michael Chong

Thank you, Ms. Gouin.

Now we'll have an opening statement from Mr. Keller from Newcap Inc.

November 18th, 2010 / 4:50 p.m.

Mike Keller Vice-President, Industry Affairs, Newcap Broadcasting (Jim Pattison Group), Newcap Inc.

Good afternoon, Mr. Chair and members of the committee.

My name is Mike Keller. I am vice-president of industry affairs for Newfoundland Capital Corporation, or Newcap, as we're commonly known.

Thank you for this opportunity to speak to you today about the challenges facing small-market and independently owned television stations in Canada in this constantly changing communications environment.

While Newcap is probably best known as one of Canada's leading radio broadcasters, given that we operate some 80 radio stations across Canada, we're also a small-market television broadcaster. We own and operate two stations in Lloydminster, on the border of Alberta and Saskatchewan, where we provide the only local TV voice in that community.

One of our stations is a CBC affiliate, while the other is a CTV affiliate. They're known as a twin-stick operation because we operate both of them out of the same facilities and share the same transmitters and the same staff. Twin-stick and even triple-stick operations are quite common in smaller markets in Canada that can't support more than one TV operator.

l'm proud to say that our CBC affiliate, CKSA-TV, just celebrated 50 years on air. It is the only small-market TV station on the prairies to reach that important milestone. Its much younger sister station, CITL-TV, which is a CTV affiliate, is only 35. Still, that's pretty impressive, because unfortunately there are not many small-market and independently owned TV stations left in this country. It is for that reason that we often work together on policy and regulatory issues. That way, we can offer a unified voice that hopefully won't get lost when decision-makers consider the future of Canadian broadcasting.

Our stations make an important contribution to providing a diversity of ownership and programming in the system, and we want to continue to do that for a long time, so again, thank you for inviting me here as part of your study.

While I speak today on behalf of Newcap, I think it's fair to say that many of our issues, concerns, and hopes are shared by my colleagues operating small TV stations in parts of B.C., in places such as Thunder Bay and Peterborough here in Ontario, and in Val d'Or and Carleton in Quebec.

There has been much debate in the last few years about the future of conventional over-the-air television in this country. Indeed, this committee has been a leader in exploring that very issue. In fact, one of my small-market colleagues from Pattison Broadcasting in B.C. spoke to this committee last year when you were studying the evolution of the TV industry in Canada.

Much has changed in the Canadian broadcasting landscape even since then; hence these hearings now. But for small-market TV stations, much has also remained the same.

Competition for viewers in our communities still comes from everywhere: from big market stations available on cable; from time-shifted stations imported by satellite distributors; from foreign stations; and from the Internet.

As operators of small-market TV stations, we have been the canaries in the broadcasting coal mine. Because we are so close to our local audiences, we were the first to sense the trouble coming from new technologies and the changing economics. We were also the first to recognize that the key to our survival was to become intensely local. We recognized that we had to provide our viewers with more local news and information, public affairs, and public service programming than anyone else. We had to provide them with the programming they wanted and could not get from anywhere else.

That is exactly what we have done. We have focused on broadcasting from our communities, to our communities, and about our communities. We connect with our local audiences through our local programming and by building and nurturing our relationship with them. We reach out to our local viewers and we listen to them. We help them, too, through, for example, the many local charitable activities we initiate and support.

It is critical for us and for our viewers that we be the local TV voice in our small markets. But it is not cheap. It is very costly to staff and operate a local newsroom, to have reporters on the street, and to have talent and producers and crew in the studio, particularly when in our communities we have a limited commercial base from which to draw advertising revenues. That is why funding mechanisms like the CRTC's local programming improvement fund, the LPIF, are so important to us. Frankly, the LPIF has saved local television, at least for the time being.

Of course small-market stations have other challenges too. For example, we must be carried by satellite DTH distributors. In our own case, in Lloydminster, almost two-thirds of viewers get their TV service from a DTH provider. That means if we're not carried by DTH, we lose two-thirds of our potential audience. That would be the end of us.

It's pretty much the same for the other small-market, independently owned TV stations in this country. Fortunately, the CRTC has put rules in place that should ensure we have and maintain the DTH carriage we absolutely need.

Ensuring that we have the funds to produce local programming and that we have the DTH carriage have long been issues for small-market TV stations like ours. A much more recent concern for a number of us is whether we'll continue to have enough programming to fill our schedules.

As small broadcasters, we do not have the clout or the resources to negotiate with Canadian producers to license the top Canadian shows, or to go down to Hollywood each year to buy the popular U.S. programs. This is why we contract with the big Canadian networks to operate as their affiliates. So they act as our program suppliers, and we make their shows and brands available in our markets. But with increased consolidation and the vertical integration, we are worried that at some point our traditional program suppliers may decide they no longer want to maintain that role.

It is not an understatement to say that the large networks have the power of life or death over affiliate stations. This is especially true in smaller twin-stick or triple-stick markets, because if a network decides that it will not renew our affiliation agreement, we have no alternative source of programming. Of course, no programming means no local station. No local station means no local news or locally produced public affairs programming or locally focused public service announcements.

Bringing television to smaller communities was and still is a risky business. It is the small independent operators who took on those risks when the larger networks weren't willing to do so. That being said, the larger networks have since benefited from the exposure we have provided for their brands and their programming.

At the outset, I proudly told you that our station, CKSA, just celebrated 50 years in the TV business in Lloydminster. We have been a CBC affiliate throughout that entire time, meaning we have been the local source of CBC programming in our community and region for the last half-century. We are currently negotiating with CBC to continue that affiliation relationship, and we are hopeful that we can work something out, going forward.

Other small-market stations are also in the process of negotiating the renewal of their program deals. We will all continue to try to resolve our program supply issues through business negotiations. However, at some point we may need the CRTC to step in and help to ensure we actually have a program schedule to offer on our small-market stations.

To end on a positive note, however, I wanted to let committee members know that our small-market TV stations in Lloydminster are currently on track to meet next year's deadline for the digital transition. A year ago, we were somewhat overwhelmed by the costs we were facing to make that transition. Fortunately, though, many of those costs have come down substantially since then. As a result, and subject to resolving our programming supply issues, we are now confident that we, alongside other Canadian broadcasters, will be turning on the digital switch next August. I think the other small-market broadcasters mandated to make the switch can say the same.

Mr. Chair, committee members, thank you for this opportunity to appear before you. I would be pleased to respond to your questions.

4:55 p.m.

Conservative

The Chair Conservative Michael Chong

Thank you, Mr. Keller.

We'll have about 30 minutes of questions and comments from members, beginning with Mr. Rodriguez.

5 p.m.

Liberal

Pablo Rodriguez Liberal Honoré-Mercier, QC

Thank you, Mr. Chairman.

Good afternoon to you all and thank you for being with us today.

I have a general question which is addressed to anyone who wishes to answer. Earlier, as you heard, I mentioned to CRTC officials that your industry is facing a number of challenges. They told me that, all things considered, broadcasters have everything they need to succeed here, provided that they are creative and are prepared to take bold action, whether they are independent or not, large or small. They told me there was not necessarily any need to make changes.

Is that your view?

5 p.m.

President and Chief Executive Officer, ZoomerMedia Limited, Television Division, Independent Broadcasters Group

Bill Roberts

I would like to answer in my own language.

There are probably more Gémeaux and Gemini awards sitting at this panel than exist at CTV or Canwest Global. So when it comes to program excellence, that's not the issue. The issue is that our business is all about distribution. When you're a small and independent broadcaster, and you don't have access to that distribution because it's controlled by your competitor, that's a problem.

We heard earlier that there are a lot of category 2 licences out there. Well, there may be--there are almost 400 of them--but we didn't ask why only about 90 have ever been lodged. Since the year 2000, the CRTC has not voluntarily stepped forward and asked for more 9(1)(h) or foundation or basic-tier Canadian licences--none, zero, never. Since 2004, that same CRTC has authorized close to 400 foreign services into this country. Why do we have a U.S. college sports channel and not have a Canadian Olympic channel? That's one of those 9(1)(h) applications that's been twisting in the wind for about three years. I'll stop there.

5 p.m.

Conservative

The Chair Conservative Michael Chong

Thank you.

5 p.m.

President, Stornoway Communications

Martha Fusca

I wanted to say as well that it is really an issue of access. When Suzanne was speaking she told you that it's not only about access, it's about price, it's about packaging, it's about marketing. You could be the best business person in the world and you can have the most innovative concept in the world, but if you don't have access you don't have anything at all.

I wanted to make a comment. Earlier the chair was saying that an increase in vertical integration is just a natural progression. I hate to disagree with our chair, but I vehemently disagree with our chair. What's happened in Canada is that the current winners of the industry have actually constructed that market. There's never been a free market. There isn't a free market. It's been constructed. I just want to make sure you all understand that.

5 p.m.

Liberal

Pablo Rodriguez Liberal Honoré-Mercier, QC

Quickly, if you don't mind, because I have other questions. I guess all of you would like to respond?

5 p.m.

Monique Lafontaine Vice-President, Regulatory Affairs, ZoomerMedia Limited, Independent Broadcasters Group

I will be as quick as I can.

Your question is whether the regulatory landscape is satisfactory for us to exist. From our perspective, it's absolutely not. The CRTC deregulated the carriage of our specialty services in fall 2008 and we're going to see that in August of next year and how that's going to translate for all of us.

Right now our flagship station is Vision TV and we're carried in close to 10 million homes because the CRTC had mandated that for 20 years. Come next year that will no longer be the case. Yes, BTUs will have to carry us, but they could put us anywhere on the dial with any package so we could basically have five subscribers. There's the distribution. The LPIF that we've been hearing about we do not have access to. The value for signal that the CRTC was going on about as something for small broadcasters, again, that's something we're going to have access to. We don't have access to carriage by DTH operators. So all of these wonderful things that they've been talking about we do not have access to to help us in this environment.

5 p.m.

Conservative

The Chair Conservative Michael Chong

Mr. Rodriguez.

5 p.m.

Liberal

Pablo Rodriguez Liberal Honoré-Mercier, QC

Do you have any examples of small independent broadcasting companies being blocked or unfairly treated by some of the major players, or do you see this as a challenge, especially in theory?

5 p.m.

President and Chief Executive Officer, TV5 Québec Canada, Independent Broadcasters Group

Suzanne Gouin

There is nothing theoretical about this. The fact is that when you have so many licence applications and so few Category 2 channels are being launched, it's clear that the reason is that a very powerful gatekeeper is preventing these channels from being distributed. I can tell you that in Quebec, it is impossible to have a winning business plan if you don't have Vidéotron as a distributor.

5:05 p.m.

Conservative

The Chair Conservative Michael Chong

Thank you, Mr. Rodriguez.

Ms. Lavallée, please.

5:05 p.m.

Bloc

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

Thank you, Mr. Chairman.

A little earlier, with CRTC officials, we were talking about the Quebec example—I don't want to say “model” because we know the difference between the two—where convergence has been underway for longer than elsewhere in Canada. Indeed, I've heard a great deal about the problems with speciality channels. Do you only represent specialty channels, or are there general-content independent channels in Quebec?

I will ask all my questions and then give you an opportunity to respond.

I've heard a great deal about the problems for specialty channels wanting to operate in Quebec if they didn't have the blessing of one of the major broadcast distribution undertakings—BDUs—that shall remain nameless. I've heard all kinds of examples in that regard.

But I don't want to get into that. I prefer to let you tell your own stories to my colleagues here and recommend your own solutions, particularly for Quebec.

5:05 p.m.

President and Chief Executive Officer, TV5 Québec Canada, Independent Broadcasters Group

Suzanne Gouin

Particularly for Quebec?

5:05 p.m.

Bloc

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

We'll start with that, and then you can solve the problem in Canada.

5:05 p.m.

A voice

And after that, the one in North America.

5:05 p.m.

Voices

Ha, ha!

5:05 p.m.

President and Chief Executive Officer, TV5 Québec Canada, Independent Broadcasters Group

Suzanne Gouin

Of the independent channels operating in Quebec, we have V which is the only private national channel operating completely independently of a cable company. As for the other independent channels, they are primarily specialty channels, like Astral, TV5 Québec Canada, Serdy Vidéo and MétéoMédia. Those are basically the independent channels in Quebec.

5:05 p.m.

Bloc

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

Aren't there channels like Évasion?

5:05 p.m.

President and Chief Executive Officer, TV5 Québec Canada, Independent Broadcasters Group

Suzanne Gouin

That's Serdy Vidéo. Évasion and Zeste are part of Serdy Vidéo.

5:05 p.m.

Bloc

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

I see. But Zeste is new.

5:05 p.m.

President and Chief Executive Officer, TV5 Québec Canada, Independent Broadcasters Group

Suzanne Gouin

Yes, that correct. The thing is that they were given a licence a long time ago. At some point, maybe they should be asked why it took them so long.