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

5:05 p.m.

Bloc

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

I know the answer, but go ahead and tell us.

5:05 p.m.

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

Suzanne Gouin

If you know the answer, I will let you give it.

5:05 p.m.

Bloc

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

Yes, but tell my colleagues.

5:05 p.m.

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

Suzanne Gouin

No, go ahead.

You were asking us earlier what the solution was. I don't want to take up my colleagues' speaking time, because I think it's very important that they be able to present some cases. So, I will come back to this with reference to a point I made in my presentation.

We are trying to negotiate with the cable operators, which carry tremendous weight and have the power of life or death over our business plan. It is obvious that as independent players, we carry far less weight than the players in these large corporate groups. The fact is that if there is no regulated rate, if you have to negotiate the royalty you will be receiving with the cable TV company, and if you have to negotiate the package your channel will be included in, you are constantly at the mercy of the cable company, because your channel is not one of that company's channels. There is a very important distinction to be made between independent channels and cable company channels.

5:05 p.m.

Bloc

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

Would you go so far as to say that BDUs should not be offering specialty channels?

5:05 p.m.

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

Suzanne Gouin

The CRTC has allowed that rule to become the modus operandi in our industry. But at the same time, I think it would be unrealistic to try to go backwards. I think we should be moving forward, by imposing rules that promote diversified content and a diversity of choices with respect to programming—something this gentleman referred to earlier.

I believe it is very important for the rules to be clear and for all the players to feel as though they are on an equal footing. Even though that is not really possible, all should be more or less on an equal footing with the players that are controlled by the cable companies.

5:05 p.m.

Bloc

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

You don't need to do that; it will be done for you. We are not at the CRTC here. You don't have to press the button.

5:05 p.m.

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

Bill Roberts

Once again, I will be answering in my own language.

I think a basic or a foundation service should reflect what Canada and Quebec really are ensemble. And we have as one of our members APTN, the Aboriginal Peoples Television Network. This is a service like these services here that's not going to come from anywhere but Canada. That service isn't coming from Raleigh, North Carolina. It just isn't. That service has 9(1)(h), and when I alluded to our having a stack of correspondence from the CRTC saying we would be heard under 9(1)(h) and we'd get a fair hearing, APTN has a stack like this of being bounced from one channel to another, their viewers not being able to find them, getting no notice of where they are—they're on 260; they're on 580; there on.... You know.

So I was alluding to my colleague that I couldn't read some of my own writing in the main presentation. But the part I was trying to get at is that I think that horse has left the barn in terms of separating specialties from having BD ownership. But at least we still have some tools like 9(1)(h), which can rebalance fairly and with some business predictability to assure diversity.

5:10 p.m.

Conservative

The Chair Conservative Michael Chong

Thank you very much, Mr. Roberts.

Mr. Angus.

5:10 p.m.

NDP

Charlie Angus NDP Timmins—James Bay, ON

Thank you.

I found your presentation very interesting and very different from that of our previous witness. Mr. von Finckenstein said we shouldn't assume there's a problem. Maybe I had my facts wrong, but it seemed to me somewhere over the years the mandate of the CRTC changed, because now the market handles itself. Ms. Fusca said the market was a construction, and it was constructed with section 19.1 of the IncomeTax Act, which created a specific incentive for the broadcasters. It was used with the CRTC. I can't set up my own TV or radio network. It's an exclusive club. They shut down competition.

When the cable giants were afraid of competition, they were allowed to jack up their prices, and then when they jacked up their prices too much, rather than give the money back we created a media fund. Now they're the guys who control the media fund and now they're the same people who get to take the money out for another broadcast. So there is a market construct. There's nothing wrong with a constructed market, but we won't have access to that market.

Mr. von Finckenstein told us the pipes are dumb. But you're telling me the pipes are the gatekeepers, that the cable and satellite and telephone companies decide what people get to see and you have to negotiate with them, and now you have to negotiate with them when they're competing with you. So what are the steps we need in place so you get fair access to this market that's been constructed for the benefit of Canadians?

5:10 p.m.

President, Stornoway Communications

Martha Fusca

Thank you for the excellent question.

The difference between what we do and what Mr. von Finckenstein does is that while he's deregulating and regulating, we're actually having to live with it. That's a place to start. As to where we go to, the step they're taking vis-à-vis the hearing in May is actually very important.

Just to be clear about 9(1)(h), we're not expecting 9(1)(h) licences. We're just expecting a fair and timely hearing, something that we've been promised for several years now. That's all we're asking.

For those folks who are more market-driven, you can appreciate that the market does not like unpredictability. If you're asking for tens or maybe hundreds of millions of dollars to launch a new service, the market likes timeliness and predictability. So the step the commission is taking is an excellent one.

But what the system needs is a rebalancing. That's what we need, and we won't succeed otherwise.

5:10 p.m.

NDP

Charlie Angus NDP Timmins—James Bay, ON

This is a question that's always important with markets—making sure it's not anti-competitive when you really don't have much competition.

All the independent broadcasters aren't going to get 9(1)(h) service even if it was brought in. So I want to go back to the question of negotiating a place on the cable networks. The pipes aren't dumb, and neither are the people who make money off them. Why the heck would they give you guys channels 2, 3, and 4 when they can put their own channels on? That's what people are going to watch.

So how do you get on that dial at a fair price, when you don't have much leverage?

5:10 p.m.

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

Bill Roberts

I'm going to need a stopwatch soon.

The pipes are not dumb. Eighty-three percent of the gross revenue in the broadcasting sector is controlled by four or five major companies. Ninety percent of our Internet access is controlled by those same companies. And 97% of our mobile industry is controlled by those very same companies. So they're not dumb; they're actually pretty smart.

We have made three requests. First, recognize small and truly independent broadcasters as unique and valued within the system; second, give us a fair hearing and give us our day in court on 9(1)(h) and carriage; and third, lend us your assistance so that we can find ways of using the tools we have, like the Canada Media Fund, to support and sustain this diversity of voices in ownership.

5:15 p.m.

NDP

Charlie Angus NDP Timmins—James Bay, ON

But how does that get you carriage, fair terms, when you're competing? I didn't hear that fourth element, and I think that fourth element—

5:15 p.m.

President, Stornoway Communications

Martha Fusca

Mr. Angus, we really need to rebalance the system. If we really care about small and medium-sized businesses in Canada, and if we really care about nurturing innovation, which typically comes from small and medium-sized businesses, then you have to redress the balance.

5:15 p.m.

NDP

Charlie Angus NDP Timmins—James Bay, ON

But Mr. von Finckenstein says “non-interference”. So are there are specific steps? That's what I want to hear.

5:15 p.m.

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

Monique Lafontaine

He is saying “non-interference”, but what he often says as well is that in some instances they will regulate when they need to. And it is our view that this is an instance when regulation is necessary. And the form of regulation is these 9(1)(h) orders to ensure that smaller stations have a place on the dial, so that we can continue to provide our programming, and so that Canadians have access to our programming and our stories.

Without those orders, we are left to negotiate with these monolithic organizations for our place on the dial, for the amount of money they're going to pay us for our subscribers. Because the balance of power is so uneven, they'll be able to keep more of the revenue for themselves, which means less money for us to support Canadian programming. So it's this heavy market imbalance that we're urging you to take a look at and to correct, so that we can have access to Canadians and Canadians can have access to us.

5:15 p.m.

Conservative

The Chair Conservative Michael Chong

Thank you, Madame Lafontaine.

Mr. Del Mastro.

5:15 p.m.

Conservative

Dean Del Mastro Conservative Peterborough, ON

Thank you, Mr. Chairman.

Thank you, witnesses, for appearing today. It's a very interesting debate.

The issue of 9(1)(h) licences is relevant to me. But in the medium to longer term, I'm concerned about how viable that's going to be, if that's what your business model is constructed around. I can guarantee you, in five years' time, I won't have a cable subscription or a satellite subscription. I've seen where the technology is going, and the technology is going Internet-based. It's faster and better. The level of broadcast quality is five times better than the human eye can even detect. In fact, I think that's where the big companies are going. That's why they're investing so heavily in wireless, and it's why they're converging platforms.

If your business model is based on the hope that we can get 9(1)(h) licences, what happens if we start to move towards a more wireless-based platform? What if broadcasters are not broadcasting through something you plug into the wall?

5:15 p.m.

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

Suzanne Gouin

I would just like to make one very important point. At the present time, all the available content on the new platforms is from television. In that sense, yes, you may have different platforms on which you can watch content, but television will always be a choice vehicle.

5:15 p.m.

Conservative

Dean Del Mastro Conservative Peterborough, ON

I disagree with that entirely. I think people will want to watch broadcasts, but if I can take my BlackBerry PlayBook—when it becomes available in the new year, because I refuse to buy an iPad—and watch my beloved Toronto Maple Leafs anywhere in the world, including while sitting at home if I want, why am I going to plug into the wall?

5:15 p.m.

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

Suzanne Gouin

It's not how you're going to plug in; it's where you're going to plug in.

5:15 p.m.

Conservative

Dean Del Mastro Conservative Peterborough, ON

But we just heard the CRTC indicate an hour ago that they are not going to regulate. They said about Netflix and Apple TV--whoop-de-do, it doesn't matter.

5:15 p.m.

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

Suzanne Gouin

But then it should be a real concern for this committee in terms of Canadian content.

Martha.

5:15 p.m.

President, Stornoway Communications

Martha Fusca

I think you asked a really good question. You're absolutely right, the issue is that we don't know about the technology, the hardware that people are going to use. We know what the technology is today, but we haven't got a clue what the technology will be five years from today.

The point, however, is that it will be professionally produced content. All of the studies, even the ones the commission has commissioned, indicate that it will come from broadcasting.

The other thing the chair mentioned to you is that with very few exceptions, no one in the world has been able to come up with a model yet that generates revenue. The guys in the U.S. aren't having some of the same battles we're having here, because they can pull it off.