Canadian Heritage Committee on March 12th, 2021

[The Chair, Liberal, Scott Simms]

Welcome, everyone, to the Standing Committee on Canadian Heritage. Pursuant to the order of reference of Tuesday, February 16, we are now studying Bill C-10, an act to amend the Broadcasting Act and to make related and consequential amendments to other acts.

I'd like to remind everyone that we are still in a hybrid format. We are all online, by the looks of things, with the exception of me. I would remind all of you that you are not allowed to take pictures or snaps of the screen for distribution. Thank you so much.

Now, this is the part where I normally say welcome to the committee, but today, I have to say welcome back. As you know, we were waylaid in the last meeting we had, so we're holding this over because we missed out the last time.

So here we are and we start again with our first three witnesses as we did last time. From the Alliance des producteurs francophones du Canada, we have Carol Ann Pilon, who is the executive director. From the Canadian Association of Broadcasters, we have Kevin Desjardins, who is the president. From the Independent Broadcasters Group, we have Joel Fortune, who is the legal counsel, and Monsieur Luc Perreault, strategic adviser. Thank you so much again.

As you know, we do the five-minute introductions, as before, except that this time we'll actually get to questions.

We're going to start off with Madame Pilon.

Ms. Pilon, you have the floor for five minutes.

[Carol Ann Pilon, Executive Director, Alliance des producteurs francophones du Canada]

First of all, I want to thank the committee for having me once again.

Since I've previously made a presentation that was entered into the public record, I will simply summarize it briefly and highlight what we feel are its essential points.

In our initial presentation, the Alliance des producteurs francophones du Canada, or APFC, outlined three fundamental principles.

First, it is absolutely necessary to put a stop to the current unfair treatment exempting online businesses from any obligation to support the creation and broadcasting of Canadian content.

Second, it is essential that the act include provisions designed to give the entire Canadian broadcasting system a clear mission to reflect the situation of the official language minority communities, the OLMCs, and to encourage the creation of programs produced by their members.

Third, it is undeniably important that the act include meaningful provisions designed to strengthen the position of original French-language programming within the Canadian broadcasting system.

We have attached to our brief specific proposed amendments to the wording of sections of the act and amendments giving effect to those proposals.

The culture is a strong concept that embodies the aforementioned principles. By that I mean the culture that promotes our development, enhances our identity and gives expression to our language. This same great principle of diversity of cultural expression should constitute the foundation of the Canadian broadcasting system and be the essential feature of its orientations.

Since our first appearance, Minister Joly has tabled a white paper that could eventually lead to a review of the Official Languages Act. Some claim this potential review may be enough to ensure that the objectives of our second principle are achieved.

Although this reform acknowledges that it is important to support the creation and broadcasting of francophone content and to improve access thereto, that objective must be included in the relevant legislation, the Broadcasting Act, so that it is set forth in express terms in the regulations made by the Canadian Radio-television and Telecommunications Commission, the CRTC, and stated in the clearest possible terms so that it applies to the broadcasting system as a whole.

Experience has shown that the Official Languages Act has thus far failed to compel the CRTC to introduce measures that have an actual impact in responding to the needs of the OLMCs. The figures speak for themselves since francophone minority production amounts to 4% of total production, even though we represent 14% of Canada's francophone population.

The Minister of Canadian Heritage suggested during his appearance that, under the present wording of the act, the CRTC was able to provide adequate support for original Canadian French-language content on the broadcasting system.

I must emphasize that this production is mostly from Quebec and that it has not necessarily achieved the same success elsewhere in Canada. This phenomenon is not solely attributable to the CRTC's decisions but also stems largely from Quebec's cultural policy, which, for many years now, has encouraged the creation of French-language cultural products. Minority francophones do not enjoy equivalent support, which is why the act must ensure that original French-language programs can be created, produced, presented and discoverable all across the country.

In your discussions with Canadian broadcasters, many have sought significant relief from their present obligations. If such relief is granted, we fear that millions more dollars from online businesses will in fact be used to substitute for proper funding.

In other words, we are afraid the entire exercise may be only a zero-some game in which licence-holding broadcasters' contributions to the financing of Canadian content are reduced by an amount equivalent to contributions from digital businesses.

The Canadian Heritage minister and representatives clearly stated that this was not the intent of the bill, but nothing in the text of the act so indicates or guarantees. This concerns and troubles us, even more so given the emphasis placed on flexibility in the Directions to the CRTC issued yesterday.

This is why we believe it must be stated in the preamble to the act or in the Directions to the CRTC that the objective is to increase the total resources available to finance the creation and production of high-quality Canadian content and to ensure that it is disseminated and promoted.

In conclusion, I would like to say that we welcome Bill C-10 and encourage the government to adopt it as soon as possible. This major bill is inclusive and an exceptional opportunity to give a voice to all Canadians across the country.

Thank you for your attention. I will be pleased to answer your questions.

[The Chair, Liberal, Scott Simms]

Thank you, Ms. Pilon.

Now we go to the Canadian Association of Broadcasters and Mr. Desjardins, please, for five minutes.

[Kevin Desjardins, President, Canadian Association of Broadcasters]

Good afternoon, Mr. Chair and members of the committee.

Thank you for the opportunity to return today on this important piece of legislation that I am pleased to be able to address.

My name is Kevin Desjardins and I'm the president of the Canadian Association of Broadcasters.

The CAB is the national voice of Canada’s private broadcasters, representing the vast majority of private radio and television operators in communities large and small and in both official languages.

For nearly a hundred years, Canadian private broadcasters have been a part of the cultural and economic fabric of the nation. They have provided a platform for Canadian stories, invested in Canadian talent, employed Canadian workers, reflected Canadian diversity, paid Canadian taxes, entertained Canadian audiences and informed Canadian citizens.

The legislation we are here to study comes at a critical moment for our sector. Over the past decade, the competitive landscape for Canada’s broadcasters has fundamentally changed. Unregulated digital competitors have moved into the Canadian market without hindrance or oversight. They have fragmented audiences, driven down revenues and driven up programming costs. In short, they have turned traditional broadcasting business models on their heads.

The advertising marketplace has changed radically, with online platforms now consuming half of those advertising dollars. In fact, private, conventional TV stations posted a negative margin of 7% in 2018-19, which was the seventh consecutive year of losses. That was before COVID-19.

Similarly, nearly as many Canadian viewers are watching Internet streaming services as are watching television through cable or satellite providers. In addition to decreasing audiences and subscriptions, these new over-the-top entrants have fundamentally changed consumer behaviour.

These structural challenges require structural solutions. Broadcasters are doing their part by investing in new content and technologies and following audiences onto new platforms. However, they remain hindered by unsustainable and inequitable regulatory obligations. This is why we welcome Bill C-10.

The Broadcasting Act is 30 years old and it still presumes a reality for the sector that has long since become a remnant of history. It assumes that there are limited ways for content to reach Canadians, as was the case when Canadians could only watch or listen to programs over the public airwaves. Because licences to operate broadcasting channels over those airwaves were scarce, they were highly valuable. Broadcasters’ regulatory obligations, especially with respect to Canadian content, were proportionally high.

Today, because audiences have a multitude of content platform options, the value of traditional broadcasting licences is much less than it once was. Nevertheless, regulatory obligations have remained as onerous as ever and in some cases have become more burdensome. This has left Canadian broadcasters as some of the most heavily regulated businesses in Canada, attempting to compete in one of the most profoundly disrupted industries in the world.

These trends have created an existential crisis. A study published last year estimated that television and radio broadcasters stood to lose more than $1 billion in revenues between 2020 and 2022.

Canada’s private broadcasters are not interested in turning back the clock. They are optimistic about the future. They want to continue evolving with Canadians, providing cultural and economic value to the nation. However, they cannot continue to shoulder their significant obligations alone.

Bringing digital broadcasters into the regulatory system is a necessary first step, which Bill C-10 gets right. It is not enough to simply apply a parallel regime to extract additional dollars from digital giants. We need to rebalance obligations and create a modern, agile and sustainable regulatory framework that will allow Canadian broadcasters to adapt to the new realities.

These changes are particularly vital for sustaining one of the most important public services that our domestic broadcasting industry continues to provide, which is local news.

Canadian private broadcasters remain especially proud to be the primary source of news and information in communities across the country. In an era of misinformation and global pandemics, it is critical that we identify ways to continue to support local news voices that reflect the realities of their communities and reflect a fair and accurate vision of Canada back to Canadians. We know that the digital giants will have little interest in delivering the evening news from Lethbridge, Saskatoon, Peterborough or Quebec City.

Ultimately, Bill C-10 needs to support local news and help us find ways to ensure that these critical Canadian stories are funded across the country in markets large and small.

[The Chair, Liberal, Scott Simms]

Thank you, Mr. Desjardins. I'm sorry, I have to leave it there. We're well over your five minutes.

I'm now going to turn to the Independent Broadcasters Group.

Mr. Perreault, you have the floor for five minutes.

[Luc Perreault, Strategic Advisor, Independent Broadcasters Group]

Mr. Chair and members of the committee, thank you for the opportunity to complete our presentation.

I am a strategic advisor with the Stingray Group, which is a member of the Independent Broadcasters Group, the IBG. I am here with Joel Fortune, legal counsel to the IBG.

The group supports Bill C-10 but requests that it be amended before it is adopted. The bill gives the CRTC the necessary authority to supervise online programming services, such as Netflix, that offer individual programs to subscribers. The bill confers significant powers on the CRTC but withdraws the power to supervise online distribution services at the very moment the major cable companies in Canada are preparing to offer Internet distribution services in conjunction with their established cable services.

This lack of supervision also affects global platforms such as Netflix, Amazon and Apple TV, which also offer distribution platforms that include applications and services provided by other businesses. Many of those, such as Pluto TV, also offer services including programming guides and linear content.

The CRTC currently has the power to ensure that Canadian services are fairly treated in this online environment. Bill C-10 eliminates that authority. The few changes that we have proposed will solve this problem.

Why is this regulatory authority so important?

As independent broadcasters, we know how essential it is to have fair access to distribution platforms. I will leave it to my colleague Joel Fortune to explain why the future of independent broadcasters and independent distributors depends on those amendments.

[Joel Fortune, Legal Counsel, Independent Broadcasters Group]

IBG recently completed a study that demonstrates some of the problems with Canada's existing broadcasting system. Between 2015 and 2019, some Canadians cut the cord and the base of Canadian subscribers fell by about 6.5%. IBG's study finds that over this same time period, the revenue of non-mandatory, Canadian independent television discretionary services fell faster, by 20%. Meanwhile, the revenue of the large, vertically integrated discretionary services actually rose. The collective per-subscriber wholesale rate for these services increased by more than 20% over this same time period. This is more than twice the rate of inflation.

These differences suggest strongly that the market power of Canada’s large, vertically integrated BDUs is distorting the Canadian market. This kind of discrepancy in revenue is not sustainable. It is undermining diversity in the Canadian system. We believe that the CRTC’s rules in this area need attention, but at least the CRTC has the authority to do what is required. Under Bill C-10, they won’t in an online environment.

In an online environment, it's imperative that the CRTC have clear jurisdiction to ensure the fair treatment of all players, including in the ever-changing use of algorithms and in the fair use of data. We are not alone in our concerns. The Canadian Communication Systems Alliance, CCSA, represents independent cable and IPTV companies. They're on one side of the independent broadcasting coin in Canada and we are on the other.

In its submission to you, the CCSA underlines the importance to this committee’s work of the market power of Canada’s own media giants. We support the CCSA’s comments, which echo our own, and the changes the CCSA is proposing in addition to our own. CCSA suggests an amendment to proposed paragraph 9.1(1)(f) to add a reference to contracts between broadcasting undertakings.

CCSA also proposes that the CRTC’s authority to protect against undue preference and disadvantage in the distribution environment be brought into the bill. Both changes respond to the reality of the consolidated broadcasting industry in Canada.

Lastly, I will follow up on some other points of discussion we have been following in this committee. On the question of Canadian ownership, of course Bill C-10 should include Canadian ownership of all types of services as a policy objective. It should be updated, not removed as a policy. On the question of the role of Canadian broadcasters, we've heard words of support for Canadian broadcasters and the important role we play as the bedrock of the system, but the bill omits the most important issue for most broadcasters: fair access to the means of distribution.

Thank you for the chance to appear. We’d be happy to answer your questions.

[The Chair, Liberal, Scott Simms]

Thank you so much for that.

We're going to go now to our questions.

I'd like to remind my colleagues about addressing your question directly. If you name the person, since we are all in a virtual format, it makes it much easier.

We're going to go to the Conservatives, Mr. Waugh, you have six minutes.

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

Thank you, Mr. Chair. I welcome back all three groups as we had them earlier. We were interrupted with votes at that time.

Ms. Pilon, thank you for all your work, and bringing forth these six amendments that your organization would like to see.

We have all heard the concerns of your organization, your province, and those outside of Quebec, who speak French and want French culture.

Could you please speak to that, because there seems to be a concern with OLMCs? You have provided six very good amendments that your organization would like to see included in this bill.

[Carol Ann Pilon]

The Alliance des producteurs francophones du Canada represents producers working in French outside Quebec. Our members are established in eastern Canada, western Canada, Ontario and the territories. The volume of production from independent producers outside Quebec currently represents approximately 4% of the volume…

[The Chair, Liberal, Scott Simms]

Ms. Pilon, my sincere apologies for interrupting.

Please move the microphone a bit further away, because there's a lot of popping on your microphone. This is for the sake of our interpreters.

Thank you.

[Carol Ann Pilon]

Our producers work outside Quebec. The volume of independent production outside that province represents approximately 4%. Despite the fact that the francophone population outside Quebec…

[The Chair, Liberal, Scott Simms]

I'm sorry, Ms. Pilon. I apologize again.

You have to bring it down a bit further. We can't hear you now.

Please, go ahead.

[Carol Ann Pilon]

The francophone population outside Quebec represents 14% of the total francophone population of Canada. The Broadcasting Act currently contains only one reference to linguistic duality. Under this bill, that is the only provision that confers a status on us. It is therefore very important to make express mention of the official language minority communities to ensure that content is produced and access is provided to that content in communities outside Quebec.

Some say the Official Languages Act confers a particular status on us by virtue of the fact that it is a quasi-constitutional statute. However, CBC/Radio-Canada is the only broadcaster that is required to spend money on Canadian programming or that, under the act, has mandated obligations toward francophone minority communities.

The large private groups don't have those obligations. However, the CRTC has elected to interpret linguistic duality in a fairly vague manner as it regards those groups. It imposes certain expectations on them and offers incentives that have done very little to meet the needs of the OLMCs.

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

I'm going to move to Mr. Desjardins.

It seems the CAB is getting smaller each year. It's listed here that you have 401 radio stations and 78 TV stations. We have spoken to each and every one of those organizations, and they feel the CRTC is heavily regulated. This is an issue going forward with this bill.

The CRTC will have full control, but the regulation right now in your sector, especially for the Canadian Association of Broadcasters, has been heard loud and clear. It's too regulated right now. Do you agree with that?

[Kevin Desjardins]

Yes, I think absolutely.... We would say that we don't see Bill C-10 as an opportunity to find new rules and regulations to impose on our domestic private broadcasters. As I say, we feel there is an abundance of obligations and requirements—reporting requirements—that are already there. There is certainly a long list of these that apply to private broadcasters already. I don't think we see anything within the bill that is going to create those obligations and requirements on the online streamers.

I don't think this is a time for us to look at it as an opportunity to extract more value from the private broadcasters, especially at a time when, as I said at the outset, our business is really being challenged on all sides of our value chain. We are sharing the audience with these international players who have walked in unfettered into the market.

Obviously, for us, if anything we would hope that there would be an ability to create a lighter regulatory framework for Canada's private broadcasters and not find a number of new obligations and rules for them.

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

Thank you.

I'll move to the Independent Broadcasters Group.

Gentlemen, certain terms, such as “terms of service”, “discoverability” and “social media”, are not defined in this bill. Should they be?

I'll ask that of Mr. Perreault or Mr. Fortune.

[Joel Fortune]

Maybe I'll take that one.

There's a lot that isn't defined in the bill. “Internet” isn't necessarily defined in the bill. These are terms that are generally understood and can be given meaning when the act is interpreted in its normal course.

With regard to “terms of service”, for example, if you're talking about terms of service between broadcasting undertakings, those are the terms that are negotiated by broadcasting undertakings. If you're about talking terms of service to consumers, generally it's the contractual terms offered to consumers. We can get tied up in all kinds of definitional issues.

There are a few extremely important definitions in the act. Those are the ones that deal with online undertaking, programming undertaking, distribution undertaking, network and many others. It's important to—

[The Chair, Liberal, Scott Simms]

Sorry, Mr. Fortune, I have to stop it right there.

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

Thank you.

[The Chair, Liberal, Scott Simms]

Next up is Mr. Housefather, for six minutes, please.

[Anthony Housefather, Liberal, Mount Royal, QC]

Thank you very much, Mr. Chair.

Thank you very much to all of the witnesses for coming back again today and finally getting a chance to do your full presentations.

I'm going to concentrate my questions with Madame Pilon.

As a member of the committee who comes from an official-language minority community and who cares very much about this issue, one of the themes that I believe most needs amendment in this law is the recognition of the place of official-language minority communities in Canada.

In Quebec, as we know from previous testimony, we used to have more than 25% of the original English content in Canada created in Quebec; now it is less than 7%.

In the rest of the country, only 4% of francophone content is created by francophones outside Quebec, and I don't think that's enough. We have to find a way to ensure both that the creation, production and presentation of original French-language programming flourishes across Canada, including in French in Quebec, and that the act recognizes the francophone communities outside Quebec and the anglophone community in Quebec.

Ms. Pilon, then what would be the actual consequences of not expressly naming Canada's official language minority communities in the act? I imagine you heard me when I asked Minister Guilbeault the same question. He told me the CRTC's regulations guaranteed those things. However, I think it's preferable to state it expressly in the act.

Do you agree with that?

[Carol Ann Pilon]

We entirely agree on that subject. We propose two principles to guarantee that protection. The first actually concerns the official language minority communities, both anglophone in Quebec and francophone outside Quebec.

We also propose that a provision be added to section 3 precisely to ensure that content is created by and for the official language minority communities and to guarantee access thereto. We use words such as "ensure" and "guarantee," which are clear, precise and firmly imperative.

Linguistic duality has frequently been interpreted very broadly in decisions concerning our communities and in consultations with the CRTC, as I said earlier.

Some might claim that linguistic duality can be secured by providing francophone content in Quebec and anglophone content in the rest of Canada.

The only place where the official language minority communities are named in the present act and in Bill C-10 is in CBC/Radio-Canada's mandate.

I'll go even further. When CBC/Radio-Canada's mandate was last renewed, a condition was added, providing that a certain percentage of the broadcaster's spending be earmarked for productions outside Quebec. As a result of the way that condition was interpreted, the corporation, in its reports to the CRTC, included English-language productions dubbed in French in that category in order to meet its obligations.

Failure to be precise and to put accurate names on things can result in all kinds of interpretations. This is what we want to avoid. We want the bill's provisions to state clearly that the official language minority communities have value and that they acknowledge they are a part of the Canadian identity and of the broadcasting system.

[Anthony Housefather, Liberal, Mount Royal, QC]

I entirely agree with you.

What impressed me about your amendments, which are very specific, is that you've worked with both the members of your organization outside Quebec and Quebec anglophones, such as the…

Quebec English-Language Production Council.

You've also worked with francophone broadcasters from Quebec. Consequently, you've worked with all those groups in an attempt to strike a balance in the wording of your amendments in order to protect French across Canada, including in Quebec. Your objective is also to protect the official language minority communities in Quebec and elsewhere in Canada. I think that's very good.

My next question concerns a matter you haven't addressed.

What are your fears given the absence of any provisions in the bill that would enable the CRTC to oversee contractual relations between independent producers and broadcasters?

[Carol Ann Pilon]

The current balance power between independent producers—especially those that are members of the APFC—and the broadcasters is very lopsided.

These small businesses still find it hard to carve out a position in the broadcasting system. It's obviously a lot harder to negotiate when that balance clearly favours broadcasters. It's the creators that get funding from the Canada media fund. However, 97% of independent francophone minority production sees the light of day thanks to that support from the Canada media fund.

When the system opens up to new players, broadcasters and foreign businesses, bargaining power is definitely weakened. We already know that most of those businesses are seeking a larger share of operating rights over…