Canadian Heritage Committee on Oct. 20th, 2016

[The Chair, Liberal, Hedy Fry]

I call to order the meeting of the Standing Committee on Canadian Heritage.

I want to thank our witness, Mr. Blais, for coming. As you know, we're going to have a two-hour session. Mr. Blais, you know how committees work. You have 10 minutes to present to us, and then we will have an interactive question-and-answer session with you.

As you know, the committee is studying the issue of local media, access to local news and local content and to Canadian content across Canada and in the regions, what the role of media consolidation has been, and its impact positively and negatively. We are looking at all platforms, including the role of the digital platform, which is a relatively new one, and what its impact has been. What can we as a committee recommend to the government to deal with some of the challenges we're currently facing to be able to achieve access?

Please begin.

[Jean-Pierre Blais, Chairperson and Chief Executive Officer, Canadian Radio-television and Telecommunications Commission]

Thank you, Madam Chair.

I have a few opening remarks.

Thank you for inviting me to appear before the committee.

Local communities look to the media to keep them informed on the subjects and issues that matter to them. They look to the media to reflect the diversity of the people who live there.

But shifts in technology, the business of the media and consumer behaviour have created some challenges in providing the local news coverage Canadians depend on to stay informed. Your committee has been studying these issues. So have we. I would like to discuss with you today what we have done so far.

This is an important point. My presentation today will be retrospective—that is, it will be focusing on the commission's past actions. I cannot speculate about the future.

As a member of an administrative tribunal, I have a duty of deference.

As you know, after extensive public consultations, the CRTC issued in June a new policy framework on local news and community programming. It sets out new requirements to ensure robust local coverage across the country. And it re-allocates resources within the broadcasting system to support them.

Canadians value their local news and programming. They told us so during our Let's Talk TV conversation, which reached out to people across the country, beginning in 2013. They told us earlier this year during our consultation on local news and community programming. This type of programming promotes the democratic process by which citizens keep informed and keep engaged. Canadians have said they want it.

A survey for Let's Talk TV showed that 81% of Canadians value local news, but the media landscape has been changing. Online news sources and social media are easily available on multiple platforms. Canadians can easily become creators as well as consumers of content. These changes have had a significant affect on traditional media.

Advertising revenues have dropped. Newspapers have shut down or consolidated newsrooms. They have trimmed copy to make room for more photos. An alarming number of TV stations have cut the length of their newscasts. They have reduced staff and centralized news operations, shrinking their local presence.

The CRTC works to ensure that Canadians have access to a world-class communication system. Such a system must have strong coverage of all the smaller local worlds that make up our vast country.

But that coverage does not come cheap. The costs of delivering local news are outstripping the revenues derived from it. This puts pressure on the broadcasters who want to provide high-quality programming.

We do not believe that local television news can be allowed to fall by the wayside simply because it doesn't look good on the corporate balance sheet. The marketplace of products, revenues, and profits is not the only marketplace that counts—far from it. There is also the marketplace of ideas and information. That marketplace trades in another kind of wealth that supports every aspect of our Canadian society.

Local news is important as a public service. It's a privilege to use the public airwaves, and a commercial broadcaster who holds a licence has a public responsibility to provide that locally oriented service.

You may ask about digital platforms and social media. Are they providing an alternative source of local coverage? Yes and no. They're accessible and gaining in popularity, but so far they lack the funding, the experience, and the newsgathering expertise to offer the focused, professional coverage that Canadians have a right to expect.

Digital platforms certainly offer quick and easy communication. But, at least for now, they cannot provide a reliable alternative to the skills of investigation and analysis that established media have developed over the past decades. Established media also have the advantage of having journalists who adhere to professional standards and codes, and who are trained to gather and interpret facts to create valuable, intelligent news analysis. They enable citizens to participate more fully in Canada's democratic life and institutions at the local, regional, provincial, and national levels.

We know that there is money within the broadcasting system that can be reallocated to support a solid stream of local TV news and information to Canadian communities. In five metropolitan markets—namely Toronto, Montreal, Vancouver, Edmonton, and Calgary—English-language private stations are required under their current licences to broadcast at least 14 hours per week of locally relevant programming, especially news. In smaller markets, the minimum is seven hours per week.

French-language stations will continue to be assessed on a case-by-case basis, using a benchmark of five hours of local programming per week. The required programming will be supported by a re-allocation of the resources provided by television service providers, such as cable and satellite companies. The support that these companies currently provide to Canadian programming will be modified to facilitate the funding of the production of locally reflective news.

That means that starting on September 1, 2017, independent television stations will have access to up to $23 million through a new independent local news fund. The stations initially eligible are located in 18 communities across the country, including Prince George, Lloydminster, Thunder Bay, Rouyn-Noranda, and St. John's, Newfoundland.

In addition, we are giving large private broadcasters the flexibility to keep local stations open and to fund the production of local news programming. As such, up to $67 million could become available for the production of local news in 2017-18. These large integrated companies will determine where and how to best use money to ensure the presence of programming that reflects those local communities. To benefit from this flexibility, the companies will be required to keep all of their local TV stations open.

News programming will be considered locally reflective if it meets three criteria: one, the subject matter relates specifically to the local market; two, it portrays an image of the market onscreen by, for example, featuring coverage of its municipal or provincial government; and, three, it is produced by the station's staff or by an independent producer specifically for that station.

Our new policy framework also addresses community television, which is still valued by Canadians, especially in smaller communities. We are encouraging access programming—that is, programming produced by members of the community—and we are encouraging community reflection, which enables viewers to see local realities that are rarely covered by other kinds of media.

Community programming provides a means for thousands of community and amateur sports groups across the country to be seen and heard in their communities. It also provides information on municipal politics and public affairs outside the major centres. That is essential to full participation in the democratic process.

Community television will continue to be financially supported by television service providers, such as cable distributors and similar services. And we are taking measures to ensure that priority is given to programming content rather than facilities and indirect costs.

That is a brief summary of our new policy for local and community television. Establishing this policy was an important first step, but it was only the first step, because policies of the commission are not self-implementing and binding. While I've been able to discuss our policy as it was published last June, I can't comment on how it will be applied in the future, as certain implementation elements are still before us.

To implement these changes, we must establish new conditions of licence for the television broadcaster. In fact, in November we will be holding public hearings to renew the licences held by the large private ownership groups.

On November 22, in Laval, we begin a hearing to review the applications from the French-language ownership groups: Bell, Corus, Québecor and Groupe V Média.

For the English language ownership groups of Bell, Corus, and Rogers, the hearing will begin on November 28 here in the national capital region.

The fact that these hearings are pending, as I mentioned earlier, Madam Chair, means that I may not be able to answer all the questions that you would like to ask me today. The CRTC is unique in that it is not only a policy-maker but also a quasi-judicial tribunal. We have a duty to ensure that our evidence-based proceedings are conducted in an open and transparent manner. All parties have the right to rely on our procedural fairness and our impartiality as a decision-making body.

To protect the integrity of the process, the clear legal advice I have received is that I can't say anything that might give the impression of pre-judging any of the issues that may come before us in our proceedings later in November, nor can I speculate on what decisions we might make.

There are also other matters currently before the CRTC that may be of interest to the committee. I trust that you will understand that in that respect, I won't be able to discuss them for the same reasons, to the extent that we haven't finalized those proceedings.

Thank you, Madam Chair.

I am ready to answer your questions.

[The Chair, Liberal, Hedy Fry]

Thank you very much, Mr. Blais.

What we're going to do now is go into our first round of questioning, which is a seven-minute round that includes both the question and the answer.

We have a rotation agreed upon at our very first meeting, so Ms. Dabrusin will begin for the Liberals.

[Julie Dabrusin, Liberal, Toronto—Danforth, ON]

Thank you, Mr. Blais, for coming today to participate in our study on media consolidation and its impact on Canadian voices.

In the context of that study and in the context of the review that Minister Joly is doing right now of Canadian content in a digital world, I would like to talk to you about the CRTC's Canadian content decision of August 25, specifically where the decision drops the points of access to certified independent production funds to support Canadian shows and Canadian voices from eight to six.

That is a decision I've been hearing about almost daily since its release. In looking at news media and how it's reported, the decision was described by John Doyle in The Globe and Mail as “truly appalling”. In Toronto–Danforth, my riding, there are many people who work in the creative industry who are very concerned about the impact of this decision. I expect you would find that what they are telling me is what you would hear across this country from people working in the creative industry.

I'm getting emails and calls, I'm hearing it at meetings, and people stop me on the street to ask about this. What they're telling me is that they have chosen to stay in Canada or they have moved back to Canada because they wanted to contribute to what they saw as a flourishing industry for television and film and for Canadian voices. This is where they want to raise their families, here in Canada, and they want to be part of what we can develop here. They're very concerned about the impact of the CanCon points decision on the creative industry, as opposed to just the service industry.

They're not only concerned about their livelihoods, although they are, but they are also particularly concerned about the impact this is going to have on Canadian voices.

I'll give you an example. I received an email from a screenwriter who lives in my riding. He was trying to describe the impact of this points decision. This is what he wrote to me:

If Stephen King wrote a new book and it was edited, typeset, formatted, printed, and bound in Canada, would anyone call it a Canadian book? I don't believe so. The public recognizes that the authorship of a book or television or feature film determines its nationality. Apparently the CRTC believes differently.

It's not just screenwriters I've been hearing from, but actors and the whole spectrum of the industry. Just last week I met with seven ACTRA members, and they were talking to me about how the Canadian productions that we have promote diversity and the strength of the diversity of Canadian voices.

I'll focus on that word “strength”, because they also talked about the strength of our industry and how well we're doing right now. That's something I hear across the board. Just recently we celebrated the fact that Tatiana Maslany won an Emmy for a Canadian production, Orphan Black. That was something we all celebrated as showing how we are producing great productions that are getting international renown.

Going back to how our local news is reporting on things, Jessica Wong from CBC News spoke to the co-creator of Orphan Black, Graeme Manson, who called the CanCon decision from CRTC a “vote of non-confidence”. I'll quote him: “The underlying message from the CRTC is we need foreign help to tell Canadian stories. That's frankly insulting to all of us.”

That's the end of his quote, but he goes on to say that under the system from this CanCon points decision, he would have been under pressure to not hire Tatiana Maslany for her role, and I think that's something that we can agree would have been really an unfortunate thing.

I'm focusing on Orphan Black, but that's not our only success story. We have Flashpoint; Degrassi, which is based on a street in my riding; Being Erica; and Murdoch Mysteries. There are lots of great Canadian shows that are doing so well.

Shortly after the CanCon decision, I had a meeting in my office with my constituents—writers, directors, producers, musicians, and actors. We came together to talk about what their concerns were. They were concerned about the impact. Even more, they were confused about the timing of this decision, because Minister Joly is doing a review of Canadian content. They all agreed that this was a troubling decision to come in the middle of that kind of review.

My constituents said, when they came back to me, that the best outcome would be to see a pause in that decision. That's what they wanted to see: they wanted to see a pause of the CRTC CanCon decision pending the review by the minister, so that we could let her do a holistic review. That's what they came to me with. They also wanted to see evidence from the CRTC that this decision would do no harm to the industry.

My question to you is—

[A voice]

Oh, the question.

[Julie Dabrusin, Liberal, Toronto—Danforth, ON]

—how does your decision help Canadian—yes, there is a question, and it's an important one, an important one coming from my constituents.

How does your decision help Canadians, especially local communities, be informed of local and regional experiences? More to the point, knowing of the current success of our television and film industry, and hearing the concerns of people about the negative impact of this CanCon points decision, and being in the midst of a review by the Minister of Canadian Heritage of the Canadian content system as a whole, how do I explain your CanCon points decision to my constituents, people working in the industry, who are afraid of losing their jobs?

[Jean-Pierre Blais]

Thank you.

Madam Chair—

[The Chair, Liberal, Hedy Fry]

You have one minute to answer, Mr. Blais.

[Jean-Pierre Blais]

Thank you for trying to explain a very complicated matter in one minute. I understand. I was obviously—

[The Chair, Liberal, Hedy Fry]

We can flexible.

[Jean-Pierre Blais]

Okay, thanks. Good.

The first point I would make is that I think there's an important distinction between local news and information, which is under a completely different point system from the one you're asking a question about, which deals with documentaries, dramas, and comedies and only applies to those. Most local news information is deemed to be local because it's often in-house production made by producers. There's been a lot of misinformation, in my view, about the point system.

Canada has had a point system of one sort.... In fact, the British Empire has had one since the 1926 Imperial Conference, because, unlike that of a book, the authorship of a audiovisual work is a collective matter, and so you have to look at everybody who participates in that production. The standard rule at the commission since 1984 has had three elements. There's a fact sheet that is available, Madam Chairperson, and I think most members of the committee have it.

There has been some loose interpretation of the facts.

The basic rule for live-action drama and comedy is that you need six out of 10 of the key creative personnel to be considered as Canadian. It's the same rule that CAVCO, the Canadian Audio-Visual Certification Office, under the minister's jurisdiction, uses for tax credit, and so do many other funding agencies across the country. Then you have to have two 75% rules that relate to where some of the post-production costs are spent in the country. Overall that means that a lot of the resources are spent in Canada, and therefore create economic employment.

[Julie Dabrusin, Liberal, Toronto—Danforth, ON]

I believe our time is almost up. I believe we have gone over our seven minutes.

[The Chair, Liberal, Hedy Fry]

The chair's discretion will allow Mr. Blais to finish answering your question.

[Jean-Pierre Blais]

There are people and groups that have made a lot of noise about this and have put out information that is incorrect. The commission started on this process to look at how we fund Canadian-made productions in a streaming world. The origin was in 2013, when we started our Let's Talk TV proceedings. We actually held a separate proceeding on these independent funds.

One has to remember that this is part of a much wider ecosystem. The decision we issued in August, after a full public process, a very transparent public process, led us to conclude that these independent funds, which historically have always been on the cutting edge of innovation, needed more flexibility. That in no way affects the CMF, which still uses 10 out of 10, in theory, although strangely enough Orphan Black in some instances only has 8 out of 10 or 9 out of 10, because there's a wider ecosystem. There's been much ado about this particular decision when the funding from this source represents less than 2% of all the federal funding available to production.

You can do a letter-writing campaign. ACTRA actually gave people my email address. There are 23,000 ACTRA members. I am surprised you received so many contacts, because there was a call with a form letter to send letters to my personal account, and I received fewer than 50, and there are 23,000 actors.

I agree with you when you say Canadian sound stages have never been so busy. In fact, if there were another production that came along, I don't know where it would be produced, because this is a great age for Canadian production. This production fund is a small part of a much more complex financing system.

[The Chair, Liberal, Hedy Fry]

Thank you, Mr. Blais.

I will now move on to Mr. Waugh for the Conservatives.

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

Thank you, Mr. Blais, and thank you for coming. I asked in previous meetings whether you could come. You certainly had an interesting four-and-a-half-year career with the CRTC. Thank you for taking on Let's Talk TV and pick-and-pay. Consumers in this country wanted choice, but I think we have seen some loopholes used by the telecommunication companies in this country.

On the $25 and the pick-and-choose channels, you have the standard ones, and then there are the high-definition ones. Then what was considered the cheapest, at $25, turned out to be a hoax.

I've watched from Halifax to Vancouver to my home province of Saskatchewan. Each and every company fiddled with the pick-and-pay offering. How can we get this improved? Consumers need the choice. Consumers need the cheapest choice, but I don't think what you started out with is what we are going to get here in December.

[Jean-Pierre Blais]

First, one must remember that the aspect of Let's Talk TV that deals with consumer and subscriber choice is being implemented in phases. The first phase was the one in March, which dealt with smaller packages—people often talk about “skinny basic”.

The more important second phase is coming on December 1, when Canadians will have the opportunity, across all types of television service providers, to have exactly what they want to meet their particular family's needs. Not everybody is the same. Some households want big packages, and other households want something smaller, more affordable, and suited to their needs.

This is being done in two phases. The next phase is coming up, but we certainly heard the concerns about the first phase—about the $25 entry package and all the issues associated with that. That's why we held a hearing at the beginning of September on this very issue. However, this is one of the subjects, Madam Chairperson, that I can't go into, because it is still pending before us. All I can do is assure you that the matter was taken quite seriously. We had the major cable companies before us, and we asked them questions. The outcome of that is pending and should be issued in the coming weeks.

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

Is the current cable delivery in keeping with the intended goal, then—yes or no?

[Jean-Pierre Blais]

I am not giving you an answer, because I would be breaching my duty of discretion as a quasi-judicial member of a tribunal with respect to the matter.

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

The cheap packages have turned out to be the expensive packages. They are charging for everything now. Hopefully, on December 1, we'll see what consumers in this country want.

[Jean-Pierre Blais]

I can't agree or disagree with what you just said, but I can say that, on December 1, every Canadian subscriber....

Many Canadians could actually choose to get free over-the-air services. They are still available. Some Canadians might just choose to supply themselves with streaming services. That's also a choice. Others may choose to get small packages, bundles, or larger packages. The choice will be in their hands, and we have told them and provided the tools to them to demand better, and to get better, from their television suppliers.

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

You've listened to some of our comments here for the last eight months. I made a comment about the Edmonton Sun, the Calgary Sun, and the Ottawa Sun moving in with Postmedia. We've condensed the newsrooms. As the chair, did you see this coming, where Sun Media, a newspaper corporation, is no longer in business? It's the same newsroom. I'm sending one reporter to do two jobs. That's not what I envisioned, and it's probably not what you envisioned.

[Jean-Pierre Blais]

We don't regulate newspapers, so we didn't envision or review anything of this nature. I think that historically newspapers have been seen as largely within provincial responsibility, and they are certainly not the CRTC's responsibility.

That said, we often look at what the broadcasting system offers, whether radio or television, in terms of diversity of voices. By ricochet, sometimes we look at what's happening in the print sector for magazines, but we really don't have a direct regulatory—

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

That's right. In TV, then, what I have seen is that my newscast is coming out of Toronto. Is that fair to my viewers in Saskatoon? Is that fair to the viewers in Regina, Kelowna, or Winnipeg?

[Jean-Pierre Blais]

It's certainly a comment we've heard from others. As I mentioned earlier, we have the renewal of the licences of CTV, Global, and all those services at this November hearing, and this is something we will be discussing with both the intervenors and the parties seeking to have their licences renewed.