Evidence of meeting #12 for Canadian Heritage in the 42nd Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was bell.

A video is available from Parliament.

On the agenda

MPs speaking

Also speaking

Wendy Freeman  President, CTV News, Bell Canada
Kevin Goldstein  Vice-President, Regulatory Affairs, Content and Distribution, Bell Canada
Pierre Rodrigue  Vice-President, Industry Relations, Bell Canada
Richard Gray  Vice-President and General Manager, Radio and TV, Ottawa and Pembroke, and National Head, CTV Two News, Bell Canada
Denis Bolduc  General Secretary, SCFP-Québec, Canadian Union of Public Employees
Catherine Edwards  Executive Director, Canadian Association of Community Television Users and Stations
André Desrochers  Board Member, Canadian Association of Community Television Users and Stations
Nathalie Blais  Research Advisor, SCFP-Québec, Canadian Union of Public Employees

8:45 a.m.

Liberal

The Chair Liberal Hedy Fry

Good morning, everyone. I'm calling the meeting to order.

As we can see, we have before us our witnesses from Bell Canada for our first hour.

Bell Canada, you have four presenters. You have 10 minutes to present, so you can decide amongst yourselves who is going to do it, and I will give you a two-minute notice when you have two minutes left. Following that, we have a question and answer session. Therefore, you will be up for about 50 minutes, with 10 minutes for the presentation and 40 minutes for questions and answers among everyone else. Who will begin?

Thank you, Ms. Freeman.

8:45 a.m.

Wendy Freeman President, CTV News, Bell Canada

Good morning, Madam Chair and members of Parliament.

My name is Wendy Freeman and I am the president of CTV News.

With me today are my colleagues Richard Gray, vice-president and general manager of radio and TV, Ottawa and Pembroke, and national head of CTV Two News; Kevin Goldstein, vice-president of regulatory affairs, content and distribution; and Pierre Rodrigue, vice-president, industry relations.

Every day, CTV News plays an important role in ensuring Canadians are informed about local and regional issues on our television and digital platforms. We are Canada's largest private television operator, with 31 local stations, some of which have been in operation for over 50 years. We are present in markets of all sizes, with 12 markets where we are the only local television news voice, markets such as Dawson Creek and Terrace in British Columbia; Prince Albert and Yorkton in Saskatchewan; London and Kitchener in Ontario; and Sydney, Nova Scotia.

Ratings tell us that the news these stations provide is of critical importance to Canadians. When a local news event breaks, we are there, with boots on the ground in each of our markets, to give viewers immediate information on what's happening, such as, for example, a boil water advisory in a community or a safe place to go in times of a natural disaster, such as the Calgary flood. These are but two examples of many. As such, the long-term viability of these stations across CTV and our competitors is vital to our communities and our country.

Unfortunately, our success in connecting and reflecting local communities does not necessarily translate into financial viability. Last broadcast year, all but five of our television stations lost money. In the previous year, 20 of our stations lost money. The trend is not in our favour. It's not just our stations. Local stations across the country are buckling under extreme financial pressure.

Despite these challenges—and this is a very important point I would like to make, given the topics this committee is studying—we are proud there has been no erosion in the amount of local news hours that each one of our stations provides to their respective communities. We are extremely proud of the role we play in providing local news in communities across the country.

In fact, for many years we have provided more local programming than the regulated minima in many of the markets we serve. For example, in Saskatoon, where we are required by regulation to provide only seven hours per week, we in fact air 32. In Winnipeg, we do 31.5. In Atlantic Canada, we air 18.5. Our local reporters and anchors, such as Sarah Plowman, a reporter in Winnipeg, and Tara Nelson, our anchor in Calgary, are an integral part of their communities.

But the amount of local news that we currently provide is not sustainable going forward. There is really no debate: local television is in a permanent structural decline. In fact, since 2011, advertising revenue generated by private conventional TV broadcasting stations has decreased by $325 million and $91 million at Bell Media stations alone.

Without a doubt, delivering local news is a costly undertaking. Changes are needed, and that is why, at the CRTC's recent hearing on local and community television, we made a proposal to reallocate existing money in the system and create a fund that provides an incentive to invest in local news. A previous but now defunct fund, the LPIF, was a lifeline for local TV stations, allowing many of them to keep their doors open.

Kevin.

8:45 a.m.

Kevin Goldstein Vice-President, Regulatory Affairs, Content and Distribution, Bell Canada

Local television remains the most effective way to reach a mass audience. It's where Canadians turn first for information about what is going on in their community, and it is the place where viewers expect to find the biggest shows, whether that's popular dramas, tent-pole events, or programs of national interest.

Local television is a megaphone for the discoverability of Canadian content on digital platforms. In that role, local television supports and promotes the digital ecosystem, which is why it is vitally important that it remain a viable platform.

But we must also be mindful of the business reality of local TV. With declining advertising dollars and no access to other sources of revenue, the business model for local TV is not sustainable. Local over-the-air television is the only form of regulated television that does not have any form of subscription revenue. As an advertising-only service, local television is simply no longer sustainable in its current form.

Some have argued that the growth of online news platforms is part of the solution. That is true, but the cost involved to gather and produce high-quality news remains the same regardless of the platform on which it is made available. Despite this, we still need to invest in these platforms, because it's what our viewers want, and local television newsgathering provides the backbone for us to do so.

However, the financial picture for local television has the potential to get worse in the near future.

First, in order to coordinate our spectrum policies with those of our neighbours south of the border, the government is repurposing the 600 megahertz spectrum band on which over-the-air television stations operate. While we are supportive of this initiative in general, it will cost Bell Media tens of millions of dollars, if not more, this after spending roughly $30 million five years ago for the digital conversion.

Second, the decision by the CRTC to remove the ability to request simultaneous substitutions during the Super Bowl will result in a multi-million dollar loss of advertising revenue for CTV. Even this large amount pales in comparison to the broader impact on the Canadian economy, including the impact on local advertisers, who will lose an important vehicle to promote their products and services.

The impact is not just economic. Canadian consumers will be exposed to U.S. pharmaceutical drug advertisements that do not meet Health Canada standards, as well as advertisements for financial services that may be contrary to Canada's public policy objectives. Canadian tourism will lose the opportunity to promote our country to Canadians, and we'll lose the ability to promote Canadian programs, something that we have done with great success to date.

None of this is in anyone's interest.

Pierre.

8:50 a.m.

Pierre Rodrigue Vice-President, Industry Relations, Bell Canada

This committee has also been given the mandate to look at the unintended consequences of media concentration. Media concentration is not at the root of the problems facing local television. Far from being the problem, scale has allowed larger broadcasters to support their local television stations. Just think of the 12 communities we noted earlier where Bell operates the only local TV station. Without the scale and efficiencies that come from being part of a larger operation, these stations would not survive. Overall, we believe that media concentration has been a positive for Canada.

Yet, while consolidation and scale have helped us to some extent—as well as Corus, Rogers and Québecor—we are no less immune to the structural decline in the over-the-air television sector than other licensees. As we pointed out earlier, only five of our stations were profitable last year, even though CTV remains the most watched local television group. We noticed, with interest, the comment made by one of your earlier witnesses that advertising-dependent media is in big trouble. We couldn't agree more.

8:50 a.m.

Vice-President, Regulatory Affairs, Content and Distribution, Bell Canada

Kevin Goldstein

In light of our comments, we make the following recommendations for this committee's consideration.

First, as we proposed in our submission to the CRTC, there must be a redirection of existing funds in the system to specifically support local news.

Second, given that local television does not receive a subscriber fee like speciality services do, some of the anticipated $5 billion in revenue from the 600 megahertz auction should be used to cover at least the cost of relocating transmitters.

Finally, the wide-ranging impact of the CRTC's decision on the Super Bowl must be reviewed.

In closing, local television and, specifically, local news remain important priorities for the Canadian broadcasting system for Canadians and for Bell. We look forward to this committee's report as to how the situation faced by local stations can be improved.

Thank you for the opportunity to share our views. We'll be happy to answer any question you may have.

8:50 a.m.

Liberal

The Chair Liberal Hedy Fry

Thank you very much.

I want to congratulate you on being two minutes short of your 10 minutes. That's very efficient.

We will now begin our questions with Mr. Vandal from the Liberals. I want to warn you before we time him that the seven minutes include the questions and the answers. If everyone can be as concise as you can be, we can really get in some good questions and answers. Thank you.

Mr. Vandal, you have seven minutes.

8:50 a.m.

Liberal

Dan Vandal Liberal Saint Boniface—Saint Vital, MB

Thank you very much for your presentation.

Thank you for the opportunity to speak, Madam Chair.

I represent Saint Boniface—Saint Vital, which is in the city of Winnipeg, Manitoba, and our city and our province are abuzz with the news yesterday that Bell recently purchased MTS. I'd like to ask you some questions about that purchase.

We know that MTS currently has 2,700 jobs in Manitoba, and we understand that Winnipeg will become Bell Canada's western headquarters, and I think that's positive. However, a third of MTS stores in Manitoba will be sold to Telus, I understand. Can you give me and this committee, or at least this side of the committee, some measure of comfort that there will not be massive layoffs as a result of this acquisition?

8:55 a.m.

Vice-President, Regulatory Affairs, Content and Distribution, Bell Canada

Kevin Goldstein

I'll try to answer the question. It's a bit outside the scope of the area we operate in on the media side. I think, though, that the MTS transaction is obviously a very important transaction to Bell. It's important in terms of our overall broadband strategy, and we think it's an important and a good transaction for the people of Manitoba and for the Manitoba economy.

I can't speak specifically to what the plans are related to jobs. I think we're very committed to that, and we are sensitive to the overall issue you raise, but I think it's somewhat beyond, I guess, the area that this group focuses on.

8:55 a.m.

Liberal

Dan Vandal Liberal Saint Boniface—Saint Vital, MB

Then you don't have any information on that.

8:55 a.m.

Vice-President, Regulatory Affairs, Content and Distribution, Bell Canada

Kevin Goldstein

I have no specific information, no.

8:55 a.m.

Liberal

Dan Vandal Liberal Saint Boniface—Saint Vital, MB

You can't tell me if there's going to be a net job gain or job loss or...?

8:55 a.m.

Vice-President, Regulatory Affairs, Content and Distribution, Bell Canada

Kevin Goldstein

I can't speak to anything other than what was publicly said yesterday.

8:55 a.m.

Liberal

Dan Vandal Liberal Saint Boniface—Saint Vital, MB

Is there anyone else on your side who can provide some sort of response?

8:55 a.m.

Liberal

The Chair Liberal Hedy Fry

Can nobody provide a response? No?

Thank you.

8:55 a.m.

Liberal

Dan Vandal Liberal Saint Boniface—Saint Vital, MB

Manitoba currently has wireless rates that are 30% to 40% lower than those in provinces where there is less competition. In my mind, this is clearly an acquisition that's going to result in reduced competition in Manitoba. Given that our rates are better than those of the majority of Canadians, can Bell foresee, with this acquisition, any increase in rates on the horizon?

8:55 a.m.

Vice-President, Regulatory Affairs, Content and Distribution, Bell Canada

Kevin Goldstein

Again, from the media perspective, it's hard for me to comment on that.

The only thing I will say in terms of what was discussed yesterday, both publicly and in terms of internal policy, is that right now the situation from a wireless perspective in Manitoba is that you have two fairly large players in Rogers and MTS, which have essentially most of the market share, and two relatively smaller players in Telus and Bell.

In theory, the concept of having four players and more competition may lead to lower rates, but I think you could also say the same thing in terms of having competition between three relatively sized players: that it will also lead to potentially better service for the community.

8:55 a.m.

Liberal

Dan Vandal Liberal Saint Boniface—Saint Vital, MB

Okay.

Here's another question. I understand that with this acquisition Bell has committed to investing a billion dollars to expand broadband wireless in rural and urban areas across Manitoba. Do you foresee this helping to bring broadband to areas that do not currently have the service or improving overall connectivity speeds for Manitobans?

8:55 a.m.

Vice-President, Regulatory Affairs, Content and Distribution, Bell Canada

Kevin Goldstein

I think it's going to improve overall connectivity speeds for Manitobans.

I'm not sure of the specifics as to the rollout plan. I'm sorry.

8:55 a.m.

Liberal

Dan Vandal Liberal Saint Boniface—Saint Vital, MB

You have nobody on your side who has any specifics on this acquisition? You haven't given me a lot here, and that surprises me, frankly.

8:55 a.m.

Vice-President, Regulatory Affairs, Content and Distribution, Bell Canada

Kevin Goldstein

I'm sorry. We're here to focus on the specific issues of local news and media concentration and that—

8:55 a.m.

Liberal

Dan Vandal Liberal Saint Boniface—Saint Vital, MB

Exactly. It's media concentration, which is the theme of this public hearing, and yet you come to the table with no information one day after rolling out a $4-billion acquisition. I have to say that surprises and disappoints me.

8:55 a.m.

Vice-President, Regulatory Affairs, Content and Distribution, Bell Canada

Kevin Goldstein

I'm sorry for that. The only thing I would say on that is that the transaction in question is largely a telecom transaction and is not one overly focused on the media space, other than the small level of BDU subscribers. Obviously, the broadband acquisition side of it is very important and helps in terms of the broader rollout of the digital infrastructure and the advancing of the digital economy. That obviously touches on the media space, but it's not a kind of media concentration or transaction issue.

8:55 a.m.

Liberal

Dan Vandal Liberal Saint Boniface—Saint Vital, MB

Okay. That's a longer discussion.

Manitoba Telecom Services have been very supportive of aboriginal production in Manitoba. I know that Telecom has been very supportive of APTN, which is based in Winnipeg and is one of the world's only national indigenous broadcasters.

Can you tell me if Bell intends to offer any special benefit for aboriginal producers in Winnipeg or any special benefit to the Aboriginal Peoples TV Network?

9 a.m.

President, CTV News, Bell Canada

Wendy Freeman

We currently provide APTN all our video. We have a transaction through which we provide them everything. A lot of the videos you see on their newscast and on APTN, we give them. We've been doing that for many years and we will continue to do that.

May 3rd, 2016 / 9 a.m.

Liberal

Dan Vandal Liberal Saint Boniface—Saint Vital, MB

Thank you.

My time is almost up. In closing, I'd like to say that I'm very disappointed, Madam Chair, that one day after publicly rolling out a $4-billion acquisition in Manitoba, senior executives of Bell come to this table with no information. Winnipeggers and Manitobans are concerned about the repercussions of this. I'm not predisposed to say this is going to be negative; however, I would expect some answers when they come before a standing committee.