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.