Evidence of meeting #4 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 programming.

A recording is available from Parliament.

On the agenda

MPs speaking

Also speaking

Jean-François Bernier  Director General, Cultural Industries, Department of Canadian Heritage
Helen Kennedy  Director General, Broadcasting and Digital Communications, Department of Canadian Heritage
Jeanne Pratt  Senior Deputy Commissioner, Mergers and Monopolistic Practices Branch, Competition Bureau
Paul Halucha  Associate Assistant Deputy Minister, Strategic Policy Sector, Department of Industry
Scott Hutton  Executive Director, Broadcasting, Canadian Radio-television and Telecommunications Commission

8:45 a.m.

Liberal

The Chair Liberal Hedy Fry

This meeting is called to order.

Before we begin, I just want the committee to know that we will be taking 15 minutes at the end of this meeting in order to go in camera to do some committee business that arose only a day ago, and it's urgent information that we must have, so I'm giving everybody warning.

I want to welcome our witnesses from Canadian Heritage.

The witnesses have been apprised that they will have 10 minutes to present, and then we will go into questions.

Who will begin?

Thank you, Monsieur Bernier.

8:45 a.m.

Jean-François Bernier Director General, Cultural Industries, Department of Canadian Heritage

Thank you, Madam Chair.

On behalf of the Department of Canadian Heritage, I would like to thank the committee for inviting us to appear as part of its study on the media and local communities.

My name is Jean-François Bernier, and I am the director general of cultural industries at the Department of Canadian Heritage. I am joined today by Helen Kennedy, director general of broadcasting and digital communications; Marthe Bujold, director of strategic policy in the broadcasting and digital communications branch; and Luc Marchand, director of periodical publishing policy and programs in my branch.

Our intention today is to cover two areas of interest to your study: the newspaper and broadcasting sectors—in 10 minutes.

We have prepared presentations for your attention. I'll start with newspapers, and Helen will follow with broadcasting.

Please go to page 3 of your deck.

Every year, Canada's newspapers contribute more than 30,000 jobs and nearly $3.7 billion in revenue to the economy. They create and disseminate wide-ranging content to inform and entertain Canadians. Newspapers play an important civic role, by promoting the accountability of public and private institutions.

Throughout the world, the newspaper industry is adapting to the challenges of the online environment. In Canada this has translated in recent years into revenue losses. Despite efforts to innovate, the business climate remains challenging. The Canadian newspaper industry consists essentially of community newspapers, which are mostly weeklies and free, and daily newspapers. As we see on figure 1 on page 6 of your deck, the number of community newspapers has been relatively stable over the last five years at just over 1,000 titles. For these, the main business model remains print.

Community papers have experienced a moderate decline in revenue, as demonstrated in figure 2 on page 7. In contrast, the number of daily newspapers has declined by about 15% in the last five years. Still on page 6, you can see the decline in numbers there. Most dailies are maintaining a dual business model in print and online. They have faced significant reductions in their overall revenues and readership.

Moving right along to page 8, Canadians' news consumption habits are changing rapidly. People, especially young Canadians, are increasingly turning to online content to inform themselves. As readers' attention moves online, so do advertising dollars, which have traditionally been a staple of the newspaper industry.

I would really like to draw your attention to the graph on page 9. I will not go into detail, but this shows it all.

Look at page 10. The erosion of revenues has led to closures, job losses, and consolidation. Today in Canada three main groups own almost 66% of all daily newspapers and 35% of all community newspapers.

In recent years, new business models have emerged.

For example, in conjunction with its paper version, the Winnipeg Free Press is generating revenues with a pay-as-you-read approach.

La Presse seems to have found success with a digital-only model, through its La Presse+ app. While testing innovative digital strategies, some newspaper publishers recognize that print remains the preferred choice of many readers, particularly, in rural areas with weak bandwidth and among a generation of older Canadians.

Moving on to page 12, unlike some other cultural sectors, such as broadcasting, there is no federal policy framework for newspapers. However, over the years the Government of Canada has implemented some specific measures to support this sector.

Section 19 of the Income Tax Act intends to encourage Canadian ownership in the newspaper industry. It does so by preventing Canadian advertisers from getting tax deductions for ads placed in foreign-owned print newspapers. For its part, the Investment Canada Act requires that foreign investment in the newspaper industry, like that of any other cultural industry, be of net benefit to Canada.

Lastly, since 2010, the Canada periodical fund has provided support for the production of Canadian content. More than 800 community newspapers and magazines are supported every year. Free periodicals and daily newspapers are not eligible for the program. The bulk of program funding is calculated using a formula based on the number of copies sold. In other words, the more the publication sells, the more support it receives from the Canada periodical fund.

Thank you for listening. Of course, I remain at your disposal to answer questions later in the meeting.

I am now going to turn the floor over to Helen, who will speak to the broadcasting industry.

8:50 a.m.

Liberal

The Chair Liberal Hedy Fry

Merci, Mr. Bernier.

Madam Kennedy.

8:50 a.m.

Helen Kennedy Director General, Broadcasting and Digital Communications, Department of Canadian Heritage

Thank you, Madam Chair. Good morning.

This deck provides an overview of the Broadcasting Act and information on key trends affecting broadcasting in Canada.

I will start with the Broadcasting Act, on page 4.

It dates back to 1991 and establishes the broadcasting policy for Canada. The other two main things the act does is it sets out the powers of the Governor in Council, the CRTC, and the minister in relation to broadcasting and establishes the mandate, governance, and powers of CBC/Radio-Canada.

If we turn to the broadcasting policy objectives for Canada, which are featured on page 5, the overall orientation is to ensure that Canadian content is created and accessible. Among other objectives, the act points out that the broadcasting system through its programming provides a public service; that it is essential to the maintenance and enhancement of national identity and cultural sovereignty; and that it serves to safeguard, enrich, and strengthen the cultural, political, social, and economic fabric of Canada. It also points out that programming should be drawn from local, regional, national, and international sources and that Canadians should be provided with a reasonable opportunity to be exposed to the expression of differing views on matters of public concern.

Slide 6 points out the key role that the CRTC plays. It is the body responsible for the regulation and supervision of the Canadian broadcasting system. According to the act, when the CRTC regulates, it should take into account a number of things, including that it be readily adaptable to the characteristics of the French and English language markets, that it take into account regional concerns, and that it facilitate the provision of Canadian programs to Canadians.

The next page, slide 7, presents the mandate of CBC/Radio-Canada. I won't read through every single line of it. I know the committee is well aware of the mandate of the CBC, which is a very broad and inclusive mandate oriented towards providing a wide range of programming that informs, enlightens, and entertains and towards ensuring that the programming should be predominantly and distinctively Canadian.

We group the key trends affecting broadcasting into three basic areas: industry, advertising, and audiences. With respect to the industry trends, the first thing we want to draw the attention of the committee to is that the broadcasting industry is part of a broader communications industry that generates revenues of more than $60 billion a year. Broadcasting also contributes to the GDP of the country and represents on the order of 50,000 jobs for Canadians.

It is a market that provides Canadians with a diversity of services. As you can see on slide 11, we have more than 660 TV services and more than 1,100 radio and audio services authorized to broadcast in Canada. At the same time, the industry is quite concentrated, because you can see, whether you're talking about the combined revenues of the telecom and broadcasting sector or just about the broadcasting sector, that the top five companies account for more than 80% of industry revenues.

Slide 12 is a pictorial representation of the major activities and the scope of the activities of our major communications companies. They're involved in many different but related lines of business, ranging from traditional radio and television to book publishing, mobile apps, and sports.

In terms of revenue and profitability, we see that total revenues for the broadcasting industry have grown from over $15 billion in 2010 to more than $17 billion in 2014. Revenue and profitability trends, however, vary from one segment of the industry to another. You'll see that in some cases they are more profitable than in others, and in some cases the revenues are higher than in others.

In terms of Canadian programming expenditures, we take as a starting point that the policy objectives of the Broadcasting Act require that broadcasters contribute to the creation and presentation of Canadian programming. We look at what they spend on Canadian programming and see that between 2010 and 2014 Canadian TV services increased their investments in Canadian programming, growing them from $2.5 billion to $2.9 billion, and we can see that now the pay and specialty sector spends about the same as the conventional broadcasting sector.

Now we turn to news. As we narrow down into the news genre we see that news accounts for approximately one-third of total Canadian programming expenditures. Local television stations, and we're talking about the conventional television stations, make a significant contribution to the provision of news. News constitutes an important part of broadcasters' overall expenditures on Canadian programming, and all this news is local. The CRTC has reported that approximately $470 million was spent in 2014 by local television stations on local news and local programming.

Turning to advertising, the Canadian advertising market is undergoing structural change as a result of the growth in Internet advertising, which as you can see from the graph presented, has come mainly at the expense of newspapers.

In terms of audiences, we've looked at what's going on with consumption, what audiences are consuming and where they are consuming it. In 2014 Canadians spent on average 27.4 hours watching TV. The average weekly hours have been decreasing over the last few years, particularly among millennials, the 18 to 34 years of age group. More and more Canadians also are watching television online, and millennials in particular are more likely to watch Internet television. They're also very mobile, with 90% of them owning a smart phone.

Finally, we looked at the consumption of news. In 2013, television was the type of medium most often used by Canadians who followed news and current affairs. The use of the Internet to follow news and current affairs grew from 30% in 2003 to 59% in 2013. We see that younger Canadians use the Internet in greater numbers than their older counterparts to obtain news and information.

There you have a quick overview of key trends and the policy parameters set out in the Broadcasting Act.

Thank you.

9 a.m.

Liberal

The Chair Liberal Hedy Fry

Thank you very much, Madam Kennedy.

We will begin questions and answers for a seven-minute session each, beginning with Mr. Vandal.

9 a.m.

Liberal

Dan Vandal Liberal Saint Boniface—Saint Vital, MB

Thank you so much. I feel we've dive-bombed some significant issues here in 10 minutes given that we only saw this material 10 minutes ago.

I'm going to go to newspapers first. For my sake, and for the sake of other people, can you review the closures that have occurred in the last eight years? You did speak somewhat about it and there is a slide on it, but could you review that for my information?

9 a.m.

Director General, Cultural Industries, Department of Canadian Heritage

Jean-François Bernier

When you say closures, there have been 22 closures in dailies in the last five years. It's about a 15% reduction in terms of the number of titles.

How does that translate into jobs? We don't have that precise information.

9 a.m.

Liberal

Dan Vandal Liberal Saint Boniface—Saint Vital, MB

In the last five years there have been 22 dailies across Canada that have closed. They have been consolidated and have been purchased, but closed. You don't know how many jobs have been lost.

Early on in your presentation, it struck me that newspapers play an important civic role by promoting the accountability of public and private institutions. Are you able to comment on how the closures have affected this important public policy objective?

9 a.m.

Director General, Cultural Industries, Department of Canadian Heritage

Jean-François Bernier

I'm sorry, my answer to that is no.

9 a.m.

Liberal

Dan Vandal Liberal Saint Boniface—Saint Vital, MB

Okay.

Nevertheless this is an excellent base of information. I think it's going to be good going forward. Once we have the time to go through it in a detailed way, I will have more questions.

On the broadcasting side, can you quickly mention to me which policies or departments you have that encourage Canadian content?

9 a.m.

Director General, Broadcasting and Digital Communications, Department of Canadian Heritage

Helen Kennedy

The main instruments in the tool kit for promoting Canadian broadcasting policy are enunciated in the Broadcasting Act. The objectives are set there.

The CRTC is mandated under the act to regulate the system to achieve those objectives. You'll be hearing later on from the CRTC a little on how they do their thing. A big part of the tool kit of course is the Canadian Broadcasting Corporation, which is given a mandate to create and present Canadian programming. Those are the two main instruments that support Canadian programming.

9 a.m.

Liberal

Dan Vandal Liberal Saint Boniface—Saint Vital, MB

Could you review for me again how Canadian production has trended over the last 10 years?

9 a.m.

Director General, Broadcasting and Digital Communications, Department of Canadian Heritage

Helen Kennedy

If you look at our slide depicting the expenditures on Canadian programming, we track those expenditures with the CRTC data and we see that expenditures on Canadian programming have increased, growing from $2.5 billion to $2.9 billion in 2014. Here, we're just talking about what the broadcasters are spending on Canadian programming.

In terms of Canadian production more generally, Jean-François may want to speak to that.

9 a.m.

Director General, Cultural Industries, Department of Canadian Heritage

Jean-François Bernier

There's been a significant increase over the last 10 years in Canadian content productions. I don't have that chart here, but I would invite the committee to consult the industry profile which the Canadian Media Producers Association publishes every year. There are a lot of details there.

9:05 a.m.

Liberal

Dan Vandal Liberal Saint Boniface—Saint Vital, MB

Is that an increase in dollars spent? Is that the only way it's measured? Is actual screen time measured as well?

9:05 a.m.

Director General, Cultural Industries, Department of Canadian Heritage

Jean-François Bernier

It would be all of those. The amount spent, the total volume of production, and the number of hours.

9:05 a.m.

Liberal

Dan Vandal Liberal Saint Boniface—Saint Vital, MB

Do you have information on the number of hours?

9:05 a.m.

Director General, Cultural Industries, Department of Canadian Heritage

Jean-François Bernier

That would be in the profile. We could get back to the committee on that. That information exists.

9:05 a.m.

Liberal

Dan Vandal Liberal Saint Boniface—Saint Vital, MB

I'd like to go back to newspapers.

We have all kinds of figures here, but do they include periodicals targeting minority francophone communities, such as the Manitoba-published newspaper La Liberté?

I know the newspaper has recently been hit by cuts. Do these figures include French-language periodicals throughout the country?

9:05 a.m.

Director General, Cultural Industries, Department of Canadian Heritage

Jean-François Bernier

Yes.

They include all periodicals, be they community newspapers or magazines. The La Liberté newspaper is included in the 1,083 titles in the community newspaper category. So the Canada periodical fund also supports the community newspaper you are referring to.

9:05 a.m.

Liberal

Dan Vandal Liberal Saint Boniface—Saint Vital, MB

I have another question for you.

Moving back to broadcasting, more people, especially young people, are watching their programs on the Internet. Do we have any way to measure the numbers of that trend?

I notice we've measured the advertising dollars in here, but do we know the number of people who are actually watching those productions?

9:05 a.m.

Director General, Broadcasting and Digital Communications, Department of Canadian Heritage

Helen Kennedy

What we have presented here is the percentage of Canadians who watch Internet television. This is obviously based on numbers. It's a challenge to measure the online consumption. There's no central system for measuring it as there is in the traditional world. We do have the percentage of Canadians who are watching Internet TV. That's what we've provided to the committee.

9:05 a.m.

Liberal

The Chair Liberal Hedy Fry

Thank you very much.

Now I go to Mr. Maguire for seven minutes.

February 23rd, 2016 / 9:05 a.m.

Conservative

Larry Maguire Conservative Brandon—Souris, MB

Thank you very much, Madam Chair.

I appreciate the condensed overview of these sectors that you've both brought forward very succinctly today.

Because of our time constraints, I have a couple of quick questions, and then maybe some written ones that will require a little more detail, which I'd like to provide the whole committee when we're done.

First of all, have you received any direction from the Privy Council or the Prime Minister's Office, or the minister's office, in regard to evaluating the current Canadian Heritage programs? Are they sufficient enough to ensure Canadians have access to local and regional media? Has there been any direction in that regard?

9:05 a.m.

Director General, Cultural Industries, Department of Canadian Heritage

Jean-François Bernier

Madam Chair, I would like to decline answering that question. It's above my....