Evidence of meeting #18 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 newspapers.
A video is available from Parliament.
Conservative
Larry Maguire Conservative Brandon—Souris, MB
Thank you.
I was most interested in a couple of things in the four items you suggested for what should we do. Can you expand a bit more on the third and fourth ones? If you could explain the fourth one to me, that would be good. Is it that we should stay away from direct funding of television news and information programming mandated by the state?
President and Chief Executive Officer, Cogeco Inc.
It's hard to encapsulate the thought in one sentence, but I guess what we're trying to get at is that you already have a CBC, which does a fine job, in our opinion, of reflecting Canadian values and broadcasting news and information from a Canadian viewpoint. They are doing an excellent job.
The problem arises if the federal government starts subsidizing every source of news. We submit—you may not agree—that this brings us a step closer to state control over news, and that's the plague. That's the point we're trying to make with that sentence.
Conservative
Larry Maguire Conservative Brandon—Souris, MB
I'm also interested in your last number. Please expand a little bit on what you were doing in regard to the North Bay model. I think it would fit into Brandon, Manitoba, pretty well.
President and Chief Executive Officer, Cogeco Inc.
What we did there is when CTV decided to shut down its station, we set up. It's a small team. It allowed us to cover local news in North Bay. We didn't have to provide international or even provincial news, because it was already provided by networks. The community was deprived of local news from an electronic standpoint, so we stepped in.
We did it by creating a news studio and having a few people attend local events and report on them once a day at 5:30 or six o'clock for half an hour. This has worked extremely well. The community has been delighted. We are prepared—and I think a lot of cable operators would be prepared—to extend that to other localities. We were able to do it by frugal means, but still it's there and it's a valuable service.
Conservative
President and Chief Executive Officer, Cogeco Inc.
Yes, we're present in 32 of them, but what we have proposed to do is deploy that service to seven communities in Quebec and seven communities in Ontario where there are no local television stations currently in operation. I could provide you the list if you wish.
Conservative
Larry Maguire Conservative Brandon—Souris, MB
No, thank you. That's what I was getting at with regard to Brandon.
The other question is for Mr. Volpe. The last comments you made were “disqualified because we publish every day”. Can you just elaborate on that a little bit?
Publisher and President, Corriere Canadese
The program allows for third-language publication and local publications, but it excludes dailies. We're a daily, even though we're a third language. We're essentially a community paper. We're a much larger community paper than most others, but we can't qualify, and that brought us essentially to ask for a presentation, in part because we agree with Mr. Audet. It's not only a question, as Mr. Breton said, about equitability; it's also about equilibrium in the marketplace. The government, through its decisions, can establish equitability, but it can also re-establish equilibrium, especially as it relates to revenues and its participation in that revenue stream.
Conservative
Conservative
Kevin Waugh Conservative Saskatoon—Grasswood, SK
I think you know where the problem is. The pie is here. You're a third party on this, so the English and French will get the most, and then you're in with the rest of them. With immigration we're seeing more and more different languages come into this country, so what is the solution? I see here, “At the very least, provide us with GST exempt status”, but when I ask the government how much that is, nobody has that figure.
Publisher and President, Corriere Canadese
The government already makes substantial contributions to the marketplace, and it does so willingly when it makes its ad buys or, as you've heard others say, what they do is tax some and not others.
The presentations this morning were pretty explicit. They said to bring equitability back. You don't want to tax everybody heavily, but at least tax those who come from outside our borders to make revenue from within our borders at the same rate you would tax us, or, as I think you heard someone else this morning say, get us some equitability here in terms of the way the GST is applied, or the HST in Ontario.
If it doesn't apply to these who come into our marketplace to take away the revenue stream that is afforded to us by advertising, at least follow the example that's being followed by the Italians and the French today. They are going after Google and Facebook in order to get a more equitable income from the taxes that they appear to be able to avoid.
For example, in Italy Google invoiced $14 billion in revenues last year and paid $11 million in taxes.
Publisher and President, Corriere Canadese
How does that help anybody's revenue stream, including the government's? If that's an action that's replicated here in Canada—and I think a presenter before us made that case—at the very least balance off what you're going to do.
How can you do it? You can tax them and thereby increase the government revenues differently, or you can not tax us in order to give us a little bit more of a competitive advantage. There are only two ways that we pay taxes. One is HST/GST and the other one is the payroll taxes that everybody cannot avoid—
Liberal
The Chair Liberal Hedy Fry
Thank you, Mr. Volpe. If you hold that thought, maybe someone will give you a piece of the action a little later on.
We will go to Mr. Nantel for the NDP.
NDP
Pierre Nantel NDP Longueuil—Saint-Hubert, QC
Thank you, Madam Chair.
Thank you to the four of you for being here this morning.
It's very clear, and we're always hearing about it. The taxation and tax policies should be coordinated at the international level for the activities of international businesses selling virtual content. The issue should be addressed by an international table, the same as Starbucks's tax avoidance—there's a price to pay—and climate change. These matters should be addressed by all the participating countries.
Cogeco is an interesting player in Quebec in terms of the major issues that concern everybody. You are like a small and very stable giant, and you chose your activities. Unless I'm mistaken, you have eliminated all your television activities. You operate in the sectors least affected by television, and I applaud you for it. You manage your assets well.
Is the market for signage, such as the large billboards near bridges, up or down?
President and Chief Executive Officer, Cogeco Inc.
As you know, we sold our signage subsidiary in January, basically because we concluded there was little opportunity for market growth. It was also becoming practically impossible to expand our activities geographically when major players were determining business opportunities to be above their actual economic value.
NDP
Pierre Nantel NDP Longueuil—Saint-Hubert, QC
We are talking about the CBSs of this world that see an advertising billboard and pay too much given the market reality.
President and Chief Executive Officer, Cogeco Inc.
Interestingly enough, it's not Americans who do that; it's Canadians.
NDP
Pierre Nantel NDP Longueuil—Saint-Hubert, QC
Really? Is that so?
You basically invest in radio and cable distribution. For radio, you have the biggest players in certain markets, at least that's clearly the case in Montreal.
What about advertising revenue at the regional level? Advertising revenue is considered crucial for local news content and coverage. How is your advertising revenue at the regional stations? Correct me if I'm wrong, but I believe things are going well in Montreal for Rythme FM and CKOI.
President and Chief Executive Officer, Cogeco Inc.
Yes. The radio advertising market is relatively stable in Canada. The income has been fairly stable at about $1.4 billion for three or four years.
The advantage of radio is that people listen to it rather than watch it. As a result, it hasn't been replaced by the Internet. That's one of the medium's advantages.
I would say that the regional markets are neither better nor worse than the Montreal market. However, the volume is clearly higher in Montreal than in the regions. I would say that most regional stations struggle along, but that's not the case in Montreal and Quebec City.
NDP
Pierre Nantel NDP Longueuil—Saint-Hubert, QC
Okay. I also imagine the radio often requires major investments and large fees for big names that draw people's interest. There's been a change in your hosts recently. You also have a secret weapon for the radio, André St-Amand, your director of programming, if I recall correctly.
However, you have another economic resource and project in the form of cable distribution. It's worth asking you the following objective question. You are less involved in content than your competitors. You have a presence in Pennsylvania and throughout the United States. Setting aside the cultural difference, the francophone and first nations cultures, which are unique to the Canadian market, I'd like to know which practices in the United States we should copy.
President and Chief Executive Officer, Cogeco Inc.
Our employees in the United States say that our regulatory body, the CRTC, helped our industry by launching the Let's Talk TV initiative and by requiring that program packages be divided into smaller units. They told us that, as Americans, they would like to enjoy the same advantage.
In this case, Canada took the lead in terms of regulations and managed to establish a system. The system is now being tested. We are currently experiencing the economic impact, since the process has been under way for only two and a half months.
NDP
Pierre Nantel NDP Longueuil—Saint-Hubert, QC
I don't want to contradict you, Mr. Audet, but for the purposes of protecting our cultural diversity, it's not a good idea at all. It's a good idea in the United States, where protecting the francophone or first nations cultures is not a concern.
President and Chief Executive Officer, Cogeco Inc.
That's an excellent question. As I was trying to tell you, the American model must be avoided. Local television stations also have retransmission fees. All things considered, programming costs are much too high in the United States for consumers.
In Canada, however, I think we have achieved success. We'll see what happens over time. The process has been under way for only two and a half months, but we are moving toward a system in which quality programming will be accessible to many people at a much more reasonable cost.
You are correct to point out that, as part of this process, some fringe players may no longer break even. In that sense, diversity may be reduced.