Canadian Heritage Committee on April 19th, 2016

[Colette Watson]

No, this is consistent with what we've filed.

[Dan Vandal, Liberal, Saint Boniface—Saint Vital, MB]

Okay.

How do you define a community TV station? You have 41 of them, I believe?

[Colette Watson]

Those are entities licensed by the CRTC, and so a cable company or a BDU, a broadcast distribution undertaking, has two options. They can take 5% of their television revenues and send them to the Canada Media Fund or they can create a terrestrial network of local community channels called for local expression.

Of that 5%, two points can be taken to fund those community channels. They are done by licence though and so what happens in Bathurst if you have—I'm pulling a number out of the air—30,000 customers on 2% of those revenues, that's the money you have for Bathurst. You can't take that money and move it to Miramichi or Saint John. You can't take the money from Toronto and move it to St. John's or Gander.

We have to operate within those licence frameworks, so we are proposing some flexibility to maybe spend less in Toronto and more in Bathurst or in Gander or Corner Brook, as need would dictate.

[Dan Vandal, Liberal, Saint Boniface—Saint Vital, MB]

Am I right that 5% of the subscription revenues from BDUs go to support Canadian programming?

[Colette Watson]

Yes, the other three points go to the Canada Media Fund.

[Dan Vandal, Liberal, Saint Boniface—Saint Vital, MB]

Okay.

In your opinion should the CRTC review it? Is that a recommendation we should be making? Should it be increased or decreased?

[Colette Watson]

No, we agree with the current. We agree with the commission saying that the 5% is more than enough within that framework. We've asked the commission for flexibility to take from Toronto and give to the smaller markets and then look at a way within a vertically integrated company, perhaps within our own group, to take from a Toronto community channel and give to a city station in Winnipeg, if that were the case.

[Dan Vandal, Liberal, Saint Boniface—Saint Vital, MB]

I understand Netflix, Shomi do not pay taxes in Canada. They're quite popular in Canada. Do you have any opinion on that scenario? Is that something we should be looking at?

[Susan Wheeler]

Just to clarify, Shomi does pay taxes in Canada. Netflix is.... The non-Canadian services do not pay taxes. Yet we believe that all services should be operating on a level playing field, so that's something I think we would agree with.

[The Chair, Liberal, Hedy Fry]

Thank you very much.

Now we move into a second round. It's a five-minute round, and we begin with Mr. Van Loan from the Conservatives.

[Peter Van Loan, Conservative, York—Simcoe, ON]

Thank you very much, Madam Chair.

I think it's fair to say Canadians have a love-hate relationship with Rogers. They love a Canadian success story. They love much of the product they get and then they have things about the company or its actions at times that drive them crazy. I think that's true probably for a lot of the people at Rogers too.

But that being said, having seen it grow to success, we want to see it continue to be successful. One of the things I have noted is that when we talk about print delivering news, we hear more and more, for example, that in the Torstar empire their local newspapers are successful, they continue to generate revenue and do well, and that's being used to subsidize the mother ship.

We're hearing an opposite message from you. I have seen evidence in my local Rogers; the people have taken some tentative steps toward delivering local news that could be in parallel. We have these very compelling political talk shows that people like us get to appear on. Of course we think those are great; I'm not sure the community loves them as much.

For example, I have seen in my own municipality, a community of about 40,000 to 50,000, the beginnings of what look like an effort to deliver local news by that Rogers community channel, but it always seems like half-efforts, tentative efforts. What are the barriers that you face technically or otherwise or in a regulatory way to taking that additional step to delivering the same kind of news that our local newspapers deliver, but on television?

[Colette Watson]

Thank you for that great question.

In your riding, we used to do a newscast. It was called “First Local”, as you may remember. In 2010 the CRTC changed its policy on community television and required us to spend on and exhibit more access programming, which is programming created by and for the community. Everything we do on community channels is created by, for, and with members of the community.

When it came to the daily news show, we felt that it needed to be produced more by the entity itself rather than being community produced. When the regulation took effect in 2010, we had to withdraw from that program in order to meet the regulatory obligations on access spending. We understood that we took away a very valuable service. We had to do that in all the 905s, embrace it, and embrace the new framework. When we appeared before the commission in January, we explained to them that if the commission felt there was a dearth of local news in smaller markets, we could reinstate these newscasts if they went back to the pre-2010 access formula.

So that would be one thing: to support our proposal at the commission to go back to the access level of 30% rather than 50% in order for us to create those local newscasts.

[Peter Van Loan, Conservative, York—Simcoe, ON]

Okay. When you say “30% rather than 50%”, you're getting into technical stuff I'm not that familiar with, so I'll invite you to expand a bit on that. It seems to me that it was a way of meeting the requirements. I look at our local television stations, and for CTV Barrie I might see one of their cameras at a community event about once every six weeks now. It used to be much more frequent than that. I would look at this and say that kind of Rogers stuff had the potential to really fill that gap and meet that community need.

Could you expand on the 30% to 50% and also identify any other barriers that you might have? I'll save the other question until you're done.

[Colette Watson]

Currently, the commission obliges us to spend 50% of that 2% that I explained earlier on access programming. Newscasts are expensive to produce. We were typically spending fully 50% on that, which means that you have no money to do your local hockey, the local high school football championship, the parades, or the political talk shows. If we were to go back to the 70% and 30%, we could afford to do it again and do it the way we used to.

That is step number one: for the commission to approve that proposal.

[Peter Van Loan, Conservative, York—Simcoe, ON]

Very quickly, you keep talking about this 2%. Is there any barrier to dipping into any other Rogers revenues/profits to make that number higher—

[Colette Watson]

No.

[Peter Van Loan, Conservative, York—Simcoe, ON]

—and to make the 5% higher? There's nothing that doesn't allow you to take money out of your general profits and plow that into local community stuff?

[Colette Watson]

No, nothing prevents us.

[Peter Van Loan, Conservative, York—Simcoe, ON]

Nothing prevents you?

[Colette Watson]

There is no regulatory barrier.

[The Chair, Liberal, Hedy Fry]

Thank you very much.

Now we'll go to Mr. Samson, for the Liberals.

[Darrell Samson, Liberal, Sackville—Preston—Chezzetcook, NS]

Thank you.

I'll start with Rogers. I have a question on your third point and your presentation to the CRTC concerning the redistribution of funds, which I think we've been talking about quite a bit so far. What was the response? Is it going to improve as we move forward?

[Colette Watson]

The commission hasn't issued its decision. We expect it later this spring. We'll know at that point.

[Darrell Samson, Liberal, Sackville—Preston—Chezzetcook, NS]

If it were to be accepted, what would be the strategy that Rogers would bring to the table to improve the services in local and regional areas?

[Colette Watson]

We would reduce the spending that we currently spend in Toronto, on the community channel in Toronto. We would increase spending on regional, smaller community channels, particularly in New Brunswick and Newfoundland. Then we would look at helping to improve the production levels in our smaller city stations.