Canadian Heritage Committee on May 3rd, 2016

[Kevin Goldstein]

That hearing, I know, and I think what you're referring to is the local news fund that we proposed at the CRTC's recent hearing on local TV and community television. What we proposed is that certain of the funding that the broadcast distributors put into their community channels, as well as a small amount that goes into the Canada Media Fund, would be redirected to form this new fund.

The new fund wouldn't just be a handout. Essentially, you would be required to spend a certain amount of money. You would then get essentially two-thirds of the cost, and you would get one-third under the fund, but only for amounts above your regulatory minimum. Stations in Canada right now have essentially no obligations to specifically provide local news; they have obligations to provide local programming. There would be a base minimum of local news established per market, and where you exceeded that amount, you would be eligible for one-third of your over-and-above costs, on a pro rata basis, to be covered.

In terms of what it would mean to us out of that fund—I'm going from memory here—I think the fund was going to be somewhere in the range of $65 million to $70 million. I'm trying to remember. I think just over $20 million would go to us to help support our local news operations.

By way of comparison, when the aforementioned LPIF existed, which was the previous fund that was eliminated in 2014, at its height we were receiving somewhere between $23 million and $25 million, and that really was a lifeline for our stations.

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

Thank you.

The other question would be more on the radio side. Have your revenues increased or decreased in the radio sector, and why?

[Richard Gray]

Radio revenues are down as well, and they're down sizably.

I'm going to use Ottawa as an example because that's the market I'm most familiar with, but it is representative of what's going on across the entire country. Over the course of the period of time since 2011, in the Ottawa market local television advertising revenue is down by 12%, and local radio advertising for our company is down 20%.

It's down for a couple of reasons, and this applies, as I said, to both television and radio. One reason it's down is that there's a fundamental change going on in local communities. The local retail landscape is very different today from what it has ever been at any time in the past. We are becoming communities of what I call boutiques and big-box stores. There is a level of business—“big small business” I call it—that in this country is disappearing. It's disappearing largely as a result of so many people adopting different shopping habits, those being shopping online.

The other big fundamental change going on in the advertising world is that “dollars to digital” doesn't necessarily mean dollars to digital advertising. What I mean when I say this is that the car dealer who's on the corner is being forced to make decisions now about how they spend every advertising dollar, and they need to be in the digital space. As a result of needing to be in the digital space, what they're doing is taking traditional advertising dollars and channelling them to website creation and maintenance and to creating and maintaining a social media presence. They're channelling those dollars to search engine optimization, and they're taking those dollars away from spending on advertising on local television and radio stations.

For my properties in Ottawa alone, my quick estimate as to the impact of that on an annual basis is $2.6 million a year, and it's growing fast. These are changes in which, no matter what I do and no matter what my staff does, we can't influence a difference. What we're talking about are fundamental structural changes in the manner in which the economy functions in this country at the local level, in communities such as Ottawa, Winnipeg, and Calgary, and Brandon, Manitoba, and Halifax, Nova Scotia. This is going on across the country from coast to coast.

[The Chair, Liberal, Hedy Fry]

Thank you very much.

Your time is up, Mr. Samson.

Now we go to the second half, but because of time constraints, I think we're going to go for three minutes only for this part, and we're going to go to you, Mr. Van Loan and Mr. Waugh. However you want to divide your three minutes would be up to you.

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

I'll start, but with only three minutes, we'll see how far we get.

The worst way that public policy gets made is by the personal anecdotes of people's own experiences, so let me indulge in that.

My constituency is York—Simcoe, north of Toronto, at the north end of York region. I have municipalities such as Georgina and East Gwillimbury that are served largely by your CTV Two affiliate, which used to be the old “New VR”, out of Barrie, CKVR. When I was first elected, I used to see a CKVR camera in my constituency just about every weekend when I was out and about. That's probably dropped to maybe once every four weeks now, though in fairness, when something big is going on, your helicopter out of Toronto will be flying overhead covering it.

In contrast, I don't think I have seen one of CBC's cameras in my constituency in literally years. When something big happens in my communities, it's generally shown by a map, and somebody on the telephone describes it as an area north of the GTA, even though, of course, it's part of the GTA. So when I hear you talk about the challenges of CBC having a $1-billion-a-year subsidy, I don't see from that experience how that subsidy is making it harder for you to compete, certainly in that market.

Can you tell me how that subsidy makes it hard for you to compete on local news?

[Wendy Freeman]

For us, it's about covering the news. If there is a story in your constituency, we'll be there. That's what's important to us. It's about being where the news is.

I can't talk for what the CBC chooses to cover, but I know that if there's news, we think it's news, and we deem it news, we will be there.

[Kevin Waugh, Conservative, Saskatoon—Grasswood, SK]

In full disclosure, I was a member of Bell until October 19, so I have a couple of things.

First of all, Wendy, it was the first time that local stations never covered the federal election, the first time in their history. You tell me how important it is, yet Toronto gave everyone the federal election results. Maybe you can comment on that, because that wasn't local. Every station in this country didn't report on it locally. Yes, they did after the election results, and they did the local news on the late-night news, but why did you make that decision?

[Wendy Freeman]

Again, it's very costly for our local stations to do what we used to call “cut-ins” during the federal election. What we did provide instead, though, was a constant local ticker in your region, and we did provide locally who was ahead and who was winning, etc., but again, it was a very costly undertaking.

Also, when we did the local cut-ins, we found that sometimes we would never get to the local station to say it, because something would be happening—a speech, or the new Prime Minister would be speaking—and we discovered that we weren't sometimes ever going to them anyway. Instead, though, we had what I thought was quite effective. We had a local ticker constantly, and in your region locally you were able to see who was ahead and who won, etc.

[The Chair, Liberal, Hedy Fry]

Thank you, Ms. Freeman.

That's it, Mr. Waugh. I'm sorry. I know. Three minutes is not a long time.

Now we have Mr. Breton, who would like to share his time with Mr. Boissonnault.

I don't know how we're going to do that with three minutes, but let's go right ahead.

[Pierre Breton, Liberal, Shefford, QC]

Thank you, Madam Chair. I will see if I can share my time with Mr. Boissonnault.

My thanks to the witnesses for joining us here today. It's a great pleasure for me to listen to you. Let me get directly to the point.

This country has a number of policies and regulations that affect broadcasting, television, and so on. In your view, what are the two best solutions or public policies that could ensure local and regional broadcasting all across the country?

[Kevin Goldstein]

I think the two best ones would be, first, a secondary revenue stream for local television, whether that's a fund or it takes the form of a value for signal fee-for-carriage regime, like they have in the U.S., where local television stations are thriving, while the second one would be to ensure that overall local television stations have the best rights of protection, such as simultaneous substitution and things like that, to ensure that out-of-market stations don't pull audience from their programs.

[The Chair, Liberal, Hedy Fry]

Mr. Boissonnault, you have one and half minutes.

[Randy Boissonnault, Liberal, Edmonton Centre, AB]

Thank you very much.

I have a question for you, Ms. Freeman. As you're embracing the digital shift, and with the work that Bell has done in convergence, if you cast out five to ten years, what are the moves you need to make now to ensure that not only is there is local programming, but that robust Canadian content is produced across the system five to ten years out?

[Wendy Freeman]

That's a good question. I can't predict even five days out anymore, to be honest.

Again, we really feel that mobile is key. As you know, for the younger generation millennials, an iPhone or a BlackBerry is part of their body, so it's important for us to be in that space at all times. Our whole future is about digital first and also about doing stories that in the end will attract people.

In the end, it's all about the storytelling, and people will watch a good story, no matter what, on any device. For us, it's about getting the most eyeballs on all devices and doing the best storytelling we can, so that people will always come. If it's good, they'll always come, no matter what.

[The Chair, Liberal, Hedy Fry]

Thank you, Ms. Freeman.

Now, to round that out, we have Mr. Nantel for three minutes.

[Pierre Nantel, NDP, Longueuil—Saint-Hubert, QC]

Thank you, Madam Chair.

Mr. Rodrigue, let me go back to the question I raised a little earlier about your investors' brochure. I find that, for some time, we have not been talking enough about how interrelated our system is.

There are champions like yourself. Often, you are asked to make an effort and you reply that you are losing money here and there. That is the reason I asked, when the representatives from Rogers appeared, whether we could be assured that, at the major meetings that the Minister of Canadian Heritage hopes to hold, there will be a conversation that is as transparent as possible about the hats that everyone involved wears. Earlier, if I understood correctly, it was mentioned that, in areas such as distribution and cellphones, the picture is wonderful.

It was also mentioned that moving to the 600 MHz band will result in costs for Bell Media, but that it is still going to generate a fantastic business opportunity for wireless telephone people.

Can we agree that it would be helpful for everyone that, when you are talking to your shareholders and selling shares, you might say that some subsidiaries are going very well and others are going quite badly. We need the complete picture. Basically, would it be helpful to have separate spokespeople for each one?

What do you think, Mr. Rodrigue?

[Pierre Rodrigue]

First, Mr. Nantel, be assured of one thing. When the minister calls, Bell, as a responsible player in whatever area we operate, will answer the call for comments on digital issues and Canadian content, whatever the platform.

Second, as regards our relationship with investors, a responsible company like Bell must be as clear as possible about the possible risks. Today, we could talk with certainty about everything innovation-related that has gone on in the past three years. However, we are not able to talk with certainty about what will be going on in three months.

Moreover, as a public company, Bell has a responsibility to criticize various regulatory decisions that may be made when it is talking to its investors, to talk about Canadians' different ways of life and about what our advertisers prefer, without knowing exactly whether another part of the company will be able to gain access to that market.

However, even if another part can gain access, how do we analyze its profitability? It does not mean that the dollars coming out of broadcasting or from advertisers—advertising revenue, for example—are automatically going to be made up elsewhere and with the same profit margin. That is why the company has the responsibility of explaining the risks once a year. It is a legal obligation, but it is also the way in which the system is built. Investors must be allowed to make their purchases at the right time.

This is all to say that, if a government, whether provincial or federal, asks those involved in the system fo their opinion, Bell will be there and will continue to be there. The solutions we offer are not always adopted, far from it. For example, your colleague asked what we said last January. Some of the solutions we proposed were adopted, but others—

[The Chair, Liberal, Hedy Fry]

Mr. Rodrigue, could you please finish your sentence?

[Pierre Rodrigue]

But you can be sure that we will be there and that we will participate.

[The Chair, Liberal, Hedy Fry]

Thank you very much. That brings an end to this session with Bell Canada.

Thank you so much for coming in and for answering questions. We have to leave and move on to the next witnesses.

We'll take a recess for about a minute so that we can clear the room and get the new people in.

[The Chair, Liberal, Hedy Fry]

We are going to begin the session. We have with us the Canadian Union of Public Employees, with Mr. Bolduc and Madam Blais, and the Canadian Association of Community Television Users and Stations, with Catherine Edwards.

I think Mr. Desrochers is with you, Ms. Edwards. Yes? Thank you.

Here's the drill. You have 10 minutes to present and then we have a question and answer session. I'm going to give you a two-minute cue for when your 10 minutes will be up so that you know you have two more minutes to go, and then I'll have to cut you off, I'm afraid. If you don't finish your presentation, you may be able to get some of your points in with the answers to the questions.

We shall begin with the Canadian Union of Public Employees.

Please begin, Mr. Bolduc.

[Denis Bolduc, General Secretary, SCFP-Québec, Canadian Union of Public Employees]

Thank you.

Madam Chair, members of the committee, thank you for inviting us to talk about local media. It's a subject that is dear to us since we represent workers that produce local content on a daily basis in Quebec, whether on the radio, on television or in print media.

My name is Denis Bolduc. I am the secretary general for the Canadian Union of Public employees in Quebec. I am accompanied by Nathalie Blais, from our research branch. In a previous life, both of us were journalists. We have prepared this statement with media workers that still work in the field, and who are both with us here today. They are Richard Labelle, a cameraman at TVA, who is also vice-president of the TV and radio workers for our communications sector, and Jean-François Racine, who is president of the union representing the editorial staff of the Journal de Québec. They will be able to answer your questions if you wish.

Today, we will not spend much time talking about the critical financial situation surrounding television and print media. I think you are all well aware of the declining advertising numbers. That said, we would like to highlight that it is actually the national advertising numbers which show a downward trend, while the local ad purchasing numbers remain quite stable. This is shown in table 2 of our report.

What we really want to talk about today is the importance of local media for our democracy and to emphasize our recommendations that aim to further support the production of local news content.

Let us start by looking at the local news landscape in Quebec.

Earlier this year, CUPE commissioned a study from Influence Communication, which was submitted as evidence to the CRTC during its consultation on local television. Here are some of its key findings.

First, in 2015, there was 42% more information from all sources circulating in Quebec compared to 2001 yet there was 88% less local news content. This means local news information that comes directly from the region of origin accounts for less than 1% of all news information available in the province of Quebec.

Second, if we compare each region, we see that the amount of local news content available varies quite a bit. This is shown in table 4 of our report. In the Saguenay—Lac-St-Jean region, for example, there is 18% of local content for about 275,000 people, whereas in Montreal, there is about 1% of available content for a population of about 2 million.

Third, the quantity of available local news content has an impact on voter turnout in elections. Influence Communication compared local news content with voter turnout during the 2013 municipal elections and found that, on the whole, voter turnout was greater in regions that had more local news content.

Local news content therefore has a direct and real impact on our democracy. This is the main reason why it is important to support the production of local content and to implement measures that will protect the expertise of the journalists and media professionals that produce it. The traditional financial model for television and print media may be weakened, but our solutions to strengthen it cannot ignore the importance of local news content and must ensure that the public interest is served.

In this era of change, some people have also changed the way in which they consume media. Those who are 44 years old or younger get most of their news online, whereas those 45 and older still prefer to read the paper or watch the news on television.

Nevertheless, the statistics show that most people get their information from multiple sources, and many from the younger generation still read the paper or watch the newscast on television. There are also those from the older generation, like me, who spend a lot of time reading the news online. Things are not black and white and all platforms remain relevant in 2016.

The biggest problem is that media outlets must shift towards digital platforms while revenues plummet and when the newer generation has become used to consuming its news content for free.

We are therefore recommending that the federal government create a new tax credit for advertising purchases on Canada's traditional media platforms, that is to say radio, newspapers and television. The tax credit's aim would be to support the communications industry during its transition to digital platforms.

Many studies have shown that advertising on traditional platforms is effective, though new trends and the smaller price tag can make online advertising enticing, even though it's harder to measure its real impact. The tax credit would rebalance things in the sense that the lower cost of online advertising—which is often offered by foreign companies like Google and Facebook—would be less appealing. These companies do not produce news content, and definitely do not produce local news content. In fact, traditional media platforms are still the source of much of the local news content on the web.

CUPE also recommends that the federal government implement a payroll tax credit to allow Canadian traditional media outlets to continue to fulfill their mandate of delivering local content despite their difficult financial situation. Newspapers, television and the radio have unmatched expertise in terms of news and information, and Canadians must still be able to have access to it, regardless of the platforms used.

This tax credit could be granted for every media worker directly involved in producing factual news content as long as the news outlets agree to adhere to an independent and well-recognized code of conduct, such as the Quebec Press Council Code of Ethics. Opinion-based journalism would not be eligible for the tax credit.

Finally, CUPE recommends that the federal government work to provide a better system for collecting data in the communications sector. Ten days ago, the Minister of Canadian Heritage launched a review of all the culture-related measures in place, including those that affect news content. However, the latest CRTC consultations on local and community television clearly demonstrated that there were gaps in the available data. For instance, we don’t know how many journalists cover local news in Canada, or even how many hours of news content or news stories are broadcast weekly on the Internet, the radio or television. In this context, outlets like CTV and Global are looking to reduce their local programming, which is mainly news.

To address the lack of relevant data, the Governor in Council could make use of subsection 7(1) of the Broadcasting Act in order to instruct the CRTC to collect more statistics on the industry that it regulates. For written press, more detailed data could be collected by Canadian Heritage.

To conclude, CUPE believes that professional journalism built upon a recognized ethical framework is an essential part of our democracy, and must be supported. Canadians deserve to know what is happening in their communities from the best sources so that they can make informed decisions. The government has the responsibility to implement measures that will ensure that all Canadians have access to news and information that is diversified, complete and of the highest quality. Access to information is an essential part of a healthy democracy.

Thank you very much for listening. It would be our pleasure to answer your questions.

Thank you, Madam Chair.

[The Chair, Liberal, Hedy Fry]

Thank you very much, Mr. Bolduc. That was well done.

Now we'll go to our next witnesses, Madam Edwards and Mr. Desrochers, from the Canadian Association of Community Television Users and Stations.

You have 10 minutes. Go ahead, please.

[Catherine Edwards, Executive Director, Canadian Association of Community Television Users and Stations]

Thank you, Madam Chair and members.

I'm Catherine Edwards, the executive director of the Canadian Association of Community Television Users and Stations, or CACTUS. With me is André Desrochers, our board member from Quebec.

CACTUS was formed in 2008 to bring it to the attention of policy-makers that Canada's formerly robust community TV sector had fallen behind the pace of technological change.

Thirty countries recognize community media as a third broadcasting sector complementary to the public and private sectors. In all countries except Canada, community broadcasting is defined by community not-for-profit ownership.

We see community ownership in Canada's community radio sector. Almost 200 not-for-profit community-owned radio stations provide local reflection in communities that are too small to support a public or private sector station as well as an outlet for a diversity of voices in urban areas.

However, community ownership is not the status quo for community TV in this country. Because Canada was the first to offer community TV in the late 1960s, before there were portable video cameras—only unwieldy and expensive studio cameras—the mandate for citizen access was placed under the stewardship of cable companies.

Over 300 Wayne's World-like cable production studios opened countrywide, serving most communities having more than 5,000 people and many smaller ones as well. Cable companies kept costs down by collocating studios with their head ends. For example, in a small place like Arnprior up the Ottawa Valley, the one employee who installed your cable was probably the same guy who opened up the studio and played back your videotape.

These channels were a huge success. They enabled free speech and a diversity of voices on broadcast TV. They offered media literacy training, incubating a generation of Canadian filmmakers, technicians, journalists, writers, and actors, such as Guy Maddin, Dan Aykroyd, and Frédéric Arnould. They also fostered civic engagement by providing unfiltered access to elected officials—such as you—to constituents through open-line “Dial-Your-MP” talk shows and election and council coverage.

All that changed when the digital transition began in the 1990s. Cable companies began to consolidate and to use fibre optics to interconnect formerly separate systems, and the head ends weren't needed anymore. More than 200 of the 300 studios that had enabled TV production in our smallest community disappeared with the head ends.

Even at the big-city studios that remained, cable companies were facing competition from satellite. Citizen access was sidelined in favour of staff-produced slick productions that cable companies hoped would help them retain subscribers.

Despite their efforts, cable penetration slipped from a high of over 80% in the 1980s to just below 60% today, so that a bare majority of Canadians can see the content on a cable community channel, let alone access a production facility to create content of their own.

More than a billion dollars in subscriber money has been spent on these channels over the last decade, yet Numeris reports that only 1.5% of Canadians watch them in a given week.

Subscribers in Montreal have even filed a class action suit against Videotron's MAtv community channel.

[André Desrochers, Board Member, Canadian Association of Community Television Users and Stations]

As far back as 1986, the task force on broadcasting policy prepared the Caplan-Sauvageau report, recommending that community channels, which had reached their maturity, obtain their own licence in the new broadcasting legislation that would be passed in 1991. Similarly, in 2003, Clifford Lincoln, on behalf of the Standing Committee on Canadian Heritage, submitted the report entitled Our Cultural Sovereignty. However, those recommendations had no follow-up.

Thanks in large part to our members and the Fédération des télévisions communautaires autonomes du Québec, it is now possible to obtain a non-profit community channel licence. Eight CACTUS members were able to obtain one, but no funding model was created to support them while the anticipated development was stagnating.

Our members survive on TV bingo, bake sales and a lot of hope. However, 46% of residents in those eight communities watch their community channel weekly. CACTUS and over 2,000 Canadians participated in the CRTC's 2010 public hearings on reviewing the community television policy. They asked that the revenue from cable subscribers—over $150 million a year—be directed to a new fund to develop non-profit community media centres.