Evidence of meeting #19 for Canadian Heritage in the 43rd Parliament, 2nd Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was crtc.
A recording is available from Parliament.
1:55 p.m.
Liberal
Lyne Bessette Liberal Brome—Missisquoi, QC
Thank you very much.
I'd like to put the same question to the Independent Broadcasters Group.
Do you agree that the act must be modernized immediately?
If Bill C-10 were passed, what effect would that have on the broadcasters you represent?
1:55 p.m.
Strategic Advisor, Independent Broadcasters Group
I think it's very important that we move this bill forward. If global platforms are really the way for all Canadians to access content in five years, we'll clearly be facing a serious problem. Those big global platforms pay no taxes in Canada. Canada derives no tax benefit from the revenue they earn.
Furthermore, they're the ones that will have the last word about our cultural sovereignty. That will mean major decisions concerning the content that's offered. The algorithms that direct Canadians to content via various apps are created outside the country for global platforms. Those major platforms are therefore of no particular interest to Canada.
It's important that we begin to supervise this ecosystem to ensure the discoverability of Canadian content. We have to see to it that Canada and Canadians have access to Canadian programmers, not programmers who sign global, worldwide agreements with certain services.
Consider Stingray, for example. It's very hard to access its global platforms because it tends to sign agreements with Spotify, among others. Those decisions are made outside Canada. All Canadian artists, creators and broadcasters will therefore be in trouble if we can't quickly oversee the major global platforms ecosystem.
1:55 p.m.
Liberal
Lyne Bessette Liberal Brome—Missisquoi, QC
Thank you very much.
Ownership is still concentrated among a few major broadcasters. In fact, the smallest players, the independent broadcasters, for example, represent a declining share of the market. Could you tell us how important it is for ownership of the cultural industry to be diverse?
1:55 p.m.
Strategic Advisor, Independent Broadcasters Group
Diversity also means diversity of ownership. Ownership of radio and television broadcasters in Canada is held by some major interests. However, independent broadcasters are entrepreneurs that, for example, will invest in platforms that don't belong to conventional niches and thus add to cultural diversity.
Take the OutTV channel, for example, which represents the LGBTQ2 community and signs agreements with Apple and in Australia. Consider the Pelmorex corporation as well, which broadcasts the weather in Canada, Spain and Portugal and is targeting the Latin American market. These entrepreneurs create solid corporations, like Stingray, which is established in more than 100 countries and has hundreds of millions of subscribers outside Canada. That's not what the major platforms like Bell, Vidéotron and others do, but the entrepreneurs that belong to the Independent Broadcasters Group invest and export.
1:55 p.m.
Liberal
1:55 p.m.
Bloc
Martin Champoux Bloc Drummond, QC
Thank you, Mr. Chair.
Mr. Perreault, it's quite a challenge to ask a question and have it answered in two and a half minutes.
I'm going to draw on your extensive industry experience. First, conventional broadcasters would like some relief from the obligations to which they are subject. Obligations should also be imposed on online broadcasting businesses. We ultimately want to protect the cultural industry as much as we can.
Do you think that, despite the lack of time we have to examine this bill, we can still strike a balance on this matter that meets the hopes and expectations of all parties?
1:55 p.m.
Strategic Advisor, Independent Broadcasters Group
I think that if we all work together to promote the discoverability of Canadian content with a view to providing our communities with the kind of programming they want, we'll be able to achieve something.
Some broadcasters find Canadian content regulations and requirements onerous, but it's important to provide this content to Canadians. All of this could also be managed via the new contributions that online broadcasters will contribute. Thus if a broadcaster is receiving a lot of money for production, it is only to be expected that it will have more demanding obligations.
2 p.m.
Bloc
Martin Champoux Bloc Drummond, QC
Of the obligations currently placed on traditional broadcasters, are there any that we could eliminate to enable broadcasters a greater degree of flexibility to operate in this digital world?
March 12th, 2021 / 2 p.m.
Strategic Advisor, Independent Broadcasters Group
Take Stingray, for example, which I represent. We receive tangible benefits from transactions in the radio sector, amounting to millions of dollars per year. We are the last broadcaster to have benefits of this kind, but our radio stations have lost 50% of their revenue because of the pandemic. We may find ourselves with millions of dollars in invoices that will be difficult to pay. The Broadcasting Act should be flexible enough to adapt to the circumstances. Things don't always have to be written in stone.
2 p.m.
NDP
Heather McPherson NDP Edmonton Strathcona, AB
Thank you very much, Mr. Chair.
I will follow up on some of the comments that my colleague from the Bloc was just talking about.
Mr. Desjardins, I'm hearing that broadcasters not only want to bring streamers into the tent, but also want to reduce their own commitments. Of course, this concerns me as far as CanCon goes. I understand that the regulations that exist now are relatively flexible, meaning that your CanCon commitments are tied to your revenues and not just an arbitrary number.
Does reducing CanCon obligations across the board concern you at all?
2 p.m.
President, Canadian Association of Broadcasters
I think I would want to reframe that and say that it's not about reducing CanCon. That's not what we've been talking about. I think it's about being more flexible about the sorts of CanCon that Canadian broadcasters can invest in. Right now there are fairly strict rules on what sorts of programs have to be supported and who it is that broadcasters have to support.
I think one of the things that concern me is that when you have a number of spending obligations on the one side and you have reductions in your advertising revenue on the other side, what ends up getting squeezed is the internal production that gets done by broadcasters, and that's news. Frankly, we don't talk about news as Canadian stories nearly enough. That is the most essential Canadian story. In fact, more Canadians turn to broadcasters for news—more than papers—than anywhere else. For us, I think allowing us to be able to reinvest internally into broadcasters' own news and information programming is really what we would be looking for.
It's not about reducing CanCon. I mean, that's absolutely a canard. It's about allowing broadcasters to invest in programming that is their own and to not necessarily just have to spend externally.
2 p.m.
NDP
Heather McPherson NDP Edmonton Strathcona, AB
I'd love to ask that of the Independent Broadcasters Group as well, but I know I'm running short on time.
Mr. Chair, do I have a moment?
2 p.m.
Liberal
The Chair Liberal Scott Simms
I'm afraid you don't, ma'am. We're running behind.
I'd like to say thank you very much to Monsieur Perreault, Mr. Fortune, Mr. Desjardins and Madam Pilon.
Thank you very much.
We will break for just a few moments and see you soon.
2:10 p.m.
Liberal
The Chair Liberal Scott Simms
Welcome back.
Welcome to the second round of today's meeting. We are discussing Bill C-10.
We will go ahead with testimony. We are running tight on time. I'm hoping to get two rounds in. I may ask for permission to cut down a little bit on the time in the second round. Please bear with me. We will get to that a bit later.
In the meantime, I want to introduce our guests. From the Coalition for the Diversity of Cultural Expressions, we have Nathalie Guay, executive director, and Bill Skolnik, co-chair. From the Motion Picture Association-Canada, we have Wendy Noss, president. From the International Alliance of Theatrical Stage Employees, we have John Morgan Lewis. Finally, from Quebecor Media, we have Pierre Karl Péladeau, president and chief executive officer, and Peggy Tabet, vice-president of public and regulatory affairs.
We will start with the Coalition for the Diversity of Cultural Expressions.
Mr. Skolnik, you have five minutes, please.
2:10 p.m.
Bill Skolnik Co-Chair, Coalition for the Diversity of Cultural Expressions
Thank you very much, Chair.
Thank you to the committee for inviting us here this afternoon. My name is Bill Skolnik. I'm co-chair of the Coalition for the Diversity of Cultural Expressions, CDCE. We are a coalition of 43 organizations representing more than 200,000 creators, performers and professionals in trade associations, music and screen production, publishers, unions and collectives.
For more than 20 years, our members have been working together to protect and promote Canada's diverse cultural expressions. My colleague Nathalie Guay and I have been CSO delegates at several UNESCO assemblies on this topic. This crucial protection and promotion requires the exercise of cultural sovereignty. The review of the Broadcasting Act is an essential part of the tool kit that can return some balance to our ecosystem. It is worth noting that the maintenance of cultural diversity was deliberately included in the terms of reference for the Yale commission.
Recently, it was reported that one in four people working in this sector lost their jobs in 2020 due to the pandemic. Meanwhile, companies providing access to cultural expressions online have made substantial profits. Netflix's revenues increased by more than 22% during 2020. It was a great year for Spotify too. They saw their total subscriptions rise by 27%.
The CDCE applauded the tabling of Bill C-10 on November 3, 2020, and welcomed the agreement of all parliamentarians to move the bill forward at an accelerated pace. To us, this represented agreement on the urgency to act.
Many of the people who have appeared before you have referred to our proposals to improve the bill. We have gone to the heart of the matter to ensure that the Broadcasting Act truly allows Canada to maintain cultural sovereignty. The changes that we ask you to contemplate are the result of an unprecedented consensus created by our multi-faceted and eclectic membership. We will respond to the draft policy direction with the same objectives. The Broadcasting Act is not just for regulation; it's cultural policy, and it has to remain cultural policy.
I will now turn the floor over to Nathalie, who will present these proposals to you.
Thanks.
2:10 p.m.
Nathalie Guay Executive Director, Coalition for the Diversity of Cultural Expressions
Thank you, Mr. Skolnik.
Good afternoon, everyone.
My name is Nathalie Guay and I'm the Executive Director of the Coalition for the Diversity of Cultural Expressions.
You've received our seven main proposals for the improvement of Bill C-10. I'll go over them quickly and I'd be happy to hear any comments or questions you may have.
First of all, distribution services provided by online companies need to be included, as was mentioned earlier today, and social media need to be included unambiguously. We understand that the intent is to include social media, and the role they play, in organizing professional content, but we find that the exclusions in Bill C-10 are causing confusion. Our approach would included them from the outset, so that the Canadian Radio-television and Telecommunications Commission, the CRTC, can fully exercise its new powers to collect information from these companies, and determine whether they should to be required to contribute to our ecosystems and how they should do so.
Second, the system ought to be under Canadian control, for our cultural sovereignty, our identity and our social cohesion. The CRTC direction that has generated so much discussion does not apply to undertakings that don't need a licence. The system can be essentially Canadian, in spite of the presence of a number of foreign undertakings.
Third, the act must continue to promote Canadian talent. The wording of paragraph 3(1)(f) under subclause 2(3) of the bill, could mean that Canadian broadcasting undertakings would no longer have any obligation to use Canadian talent, whereas the current wording already allows for factoring in the nature of the undertaking.
Fourth, we think that opportunities for reference to the Governor in Council should be broadened. Bill C-10 assigns many powers to the CRTC. We need to strike a better balance by allowing civil society organizations to have recourse to review a CRTC decision.
Fifth, more robust provisions are required to ensure that original French-language content is created rather than simply translated content or content subtitled in French. For proper service to the cultural diversity, original French-language programming from francophone minorities is needed, as well as programming in indigenous languages.
Sixth, orders should be applicable for a maximum period of time and be subject to amendment, to allow broadcasters and producers to plan their programming and their productions more effectively, and also to ensure that the conditions are reviewed and that all intervenors can have input concerning a service.
Seventh, a move towards the lowest common denominator should be avoided. The wording in paragraph 5(2)(a.1) under subclause 4(1) of the bill, for example, opens the door to undertakings being able to compare themselves to others more easily with a view to obtaining less restrictive conditions. It may be more logical and beneficial to adapt spending requirements to specific undertakings rather than regulate what might appear to look like a minimum applicable to all. We would also like to have a public hearing process for issuing orders.
Two other modifications might also be made. The CRTC should continue to rule on the percentage of programs in various genres; otherwise, programs of national interest, children's programming, dramatic programming and documentaries are likely to be neglected at the expense of less expensive programs like sports and reality shows.
The CRTC must also be able to oversee contractual practices between independent producers and programming undertakings, including the music sector. That proposal from the Yale report should be included, given the size of some of the players that will be subject to CRTC orders and regulations.
Thank you.
2:15 p.m.
Liberal
The Chair Liberal Scott Simms
Thank you very much.
From the Motion Picture Association-Canada, we have Ms. Noss and Mr. Lewis.
Ms. Noss, go ahead, for five minutes, please.
2:15 p.m.
Wendy Noss President, Motion Picture Association-Canada
Thank you, Mr. Chair, and members of the committee.
I appreciate the offer to provide you with a shared perspective of the global studios represented by the Motion Picture Association in Canada. These include Walt Disney, ViacomCBS/Paramount Pictures, Sony Pictures Entertainment, Netflix, NBCUniversal/Universal Pictures and Warner Brothers.
All are major investors in Canada's creative economy through the production of television and streaming series, feature films, world-class post-production, visual effects and animation projects, employing over 94,000 Canadians a year and supporting over 23,000 Canadian businesses.
Here with me today, albeit virtually, is John Lewis, who leads the IATSE in Canada. The IATSE is the largest union representing Canadian entertainment workers, costume and set designers, editors, cinematographers, visual effects artists and virtually all of the crew.
We both thought it would be useful to highlight that our major studios, and this major labour organization, are aligned on why modern cultural policy must take into account opportunity for all Canadians who create film, television and streaming entertainment in Canada, and the importance of foreign investment to Canada’s creative sector.
MPA members have for many years been partners and investors in Canada’s creative community, and today they offer Canadian consumers diverse choices online, including the global entertainment on Netflix; the much-loved Disney brands on Disney+; the all-reality show hits of NBCUniversal's Hayu; the ad-supported Pluto TV service from ViacomCBS and their new Paramount+ service; and the most popular Japanese anime streaming service in the francophonie, Sony's Wakanim.
It is with that broad perspective that we recognize a lot of good thinking went into the complex issues at the heart of Bill C-10. We want to commend the government for recognizing that a flexible approach is the logical way to create a modern broadcasting policy, given the rapidly and constantly changing dynamics in the marketplace.
Global streaming services bring opportunities for Canadian creators, contribute to economic growth and offer appealing entertainment for Canadian consumers. Allowing the CRTC to tailor conditions of service flexibly, based on how best each of these services can or should contribute to Canada, is a modern, sensible approach.
To fully modernize broadcasting policy, we recommend three criteria be added to the factors that the CRTC must consider in future decision-making prescribed in section 5 of the act.
Specifically, Parliament should require the CRTC to do the following: first, encourage competition and innovation; second, ensure that the regulation of online undertakings promotes choice and affordability for Canadian consumers; and third, recognize that competition and the growing choice of programming made available online contributes to broadcasting policy objectives.
By adding these criteria, the legislation will move beyond perpetuating decades-old broadcasting policy, and create more choice for consumers and more opportunity for Canadian creators and film workers.
Some argue that Bill C-10 should simply impose the same like-for-like obligations on online undertakings as Canadian broadcasters. This argument implies that nothing has changed in decades, from a time when the Broadcasting Act was designed to limit consumer choice. This approach ignores the many policy benefits that broadcasters have long enjoyed. It doesn’t take into account the very different business models of streaming services, their content offerings, and it doesn't recognize the unique benefits that global studios bring to Canada through investment in production.
While some are asking you to amend the bill to reduce flexibility, we believe the right way to serve Canada's creators, workers and consumers is to develop a policy framework that embraces change and helps Canada benefit from it.
Online undertakings create global entertainment, and reflect a wide range of viewpoints and experiences. This content is made in Canada with Canadian creativity. It is part of a global content marketplace that has led to foreign investment in production in Canada of over $4.8 billion annually. Almost 90% of the growth in production investment in Canada over the last five years, and more than half of all production in Canada, comes from global studio investments fuelled by these new undertakings.
Talented Canadians, who want to stay in Canada, develop their skills, work at the top of their craft and help create stories that resonate with audiences around the world, need this policy to be flexible and adaptive. Viewers, who want the best stories from Canada and around the world, need this policy to be forward-looking and consumer-friendly.
A modern approach that promotes investment, competition and innovation over protectionism will make for a bigger creative marketplace in Canada, more talent development opportunities for Canadian creators, more jobs for Canadian workers and benefits for Canadian consumers.
Thank you for allowing us to share this perspective. I'd be pleased to answer any questions.
2:20 p.m.
Liberal
The Chair Liberal Scott Simms
Thank you, Ms. Noss.
Now we go to Quebecor Media. We have Mr. Péladeau and Madame Tabet.
Mr. Péladeau, you have the floor for five minutes.
2:20 p.m.
Pierre Karl Péladeau President and Chief Executive Officer, Quebecor Media Inc.
Thank you, Mr. Chair, and members of Parliament.
My name is Pierre-Karl Péladeau, the President and Chief Executive Officer of Quebecor Media. With me is Peggy Tabet, Vice President, Public and Regulatory Affairs of Quebecor Media.
Bill C-10 is a long-awaited overhaul of the Broadcasting Act. Since the act was last updated in1991, 30 years ago, the broadcasting landscape has changed dramatically and irreversibly with the appearance of foreign online streaming services such as Netflix, Disney+ and Amazon, whose market capitalization totals several hundred billion dollars. We're talking about $1.5 trillion for Amazon and $357 billion for Disney+. To put these amounts in perspective, the figure for Quebecor Media is $8 billion.
In 2020, 68% of French-speaking Canadians were subscribed to an online streaming service. One out of two were subscribed to Netflix.Globalized competition from web giants such as Facebook and Google has destabilized our broadcasting system and, more than ever, traditional domestic players such as TVA and Videotron are facing unjustifiable and unsustainable inequities
When Bill C-10 was tabled, the Department of Canadian Heritage’s presentation document promised, and I quote, to “address regulatory asymmetries” and “provide flexibility and predictability”. However, it is clear that the consequences resulting from the bill in its current form go against these objectives.
For traditional broadcasters, those that showcase our Quebec and francophone culture, and the resulting economic benefits, the bill imposes new regulatory restrictions that will not redress the unfair conditions they have been coping with for years and will only pull them even deeper into the financial abyss and a Kafkaesque universe of regulation. From 2010 to 2019, the profits before interest and taxes of Canada’s main private over-the-air television broadcasters plunged by a combined total of $223 million. By 2020, the decrease was even more drastic, totalling $336 million.
The original and legitimate intention of the legislator to regulate television broadcasting had, as a corollary, the granting of a licence and the holding of a privilege. Today, and for many years now, technology has made it possible to broadcast without borders and without a licence. Trying to regulate what cannot be regulated is unrealistic. That's why the bill should provide traditional players with the regulatory flexibility they need and lighten their administrative and financial burden by removing unnecessary requirements. Quebecor believes that to modernize the Broadcasting Act and make it fair for Canadian businesses, regulation should be eased when market forces are operating effectively, and regulated only when necessary.
We cannot leave unmentioned a point that is notably absent from this bill: a refocused mandate for CBC/Radio-Canada. Recently, the CRTC held public hearings on the renewal of CBC/Radio-Canada’s licences. One after the other, more than 70 industry stakeholders said the public broadcaster has gone off the rails. Add to that all the complaints filed with the CRTC on this issue and the Friends of Canadian Broadcasting petition against the new Tandem branded content service, which was signed by more than 16,000 people
CBC/Radio-Canada’s unbridled pursuit of ratings, its commercial ambitions and its insatiable thirst for revenue are undeniably undermining the future and the sustainability of private broadcasters and the diversity of content. Each player in the system must play its role. For this to happen, it is more important than ever that Parliament overhaul the public broadcaster’s mandate.
Today, after a 30-year wait, the government is proposing to regulate foreign players instead of deregulating domestic broadcasters. We have serious reservations about the CRTC’s ability to enforce these new regulations and restrict the behaviour of foreign online services. If this new act is not to be totally ineffectual, Parliament must urgently amend its laws to allow the creation of a flexible ecosystem with fair regulations and taxation in order to keep our businesses viable and our culture strong
Thank you, Mr. Chair.
2:25 p.m.
Liberal
The Chair Liberal Scott Simms
Thank you, Mr. Péladeau.
Now we go to our questions and answers very quickly.
I'm going to be a little strict on time, folks, I'm afraid to say.
Mr. Rayes, you have the floor for six minutes.
2:25 p.m.
Conservative
Alain Rayes Conservative Richmond—Arthabaska, QC
Thank you, Mr. Chair.
I'd like to thank all the witnesses who took the time to be here with us this afternoon.
My first question is for you, Mr. Péladeau.
In your conclusion, you said that you had serious reservations about the CRTC’s ability to enforce the new regulations in Bill C-10. You maintain that Parliament should at the outset have begun by reducing the regulatory burden on traditional distribution undertakings to restore a balance between them and the web giants before giving any consideration to regulating online players.
Where would you have liked to see more regulatory flexibility? Can you give us more information?
2:30 p.m.
President and Chief Executive Officer, Quebecor Media Inc.
There are all kinds of regulations that apply not only to broadcasters, but also cable operators. These regulations seriously penalize the Canadian undertakings that create jobs, get Canadians working and contribute heavily to funding Canadian television and culture.
You are probably aware of the fact that Canadian cable operators play a major role in providing funding for television. Some of the people who spoke ahead of me addressed the issue of cord cutting, or unsubscribing from cable. Cable operators are losing customers because they are subject to regulations in various areas, including basic cable service. No foreign companies are subject to this. This has accelerated the cord cutting phenomenon. The end result Is that there is currently no money for the Canada Media Fund, which helps to finance Canadian undertakingsxx.
Basic service is one aspect. As for broadcasting funding, I'll give you an instance of this. One might wonder how such a thing might still exist, but to give you an example, there are people who time the length of audience applause during programs to determine whether or not broadcasters can get a tax credit. This was something that used to be done when awarding a licence, or a privilege, but it no longer exists. Now, distribution is over the Internet.
Luc Perreault, a colleague I know well and have a lot of time for, spoke earlier about an Internet regulation exemption. How could Parliament regulate the Internet and determine what is accessible? It could certainly be done under the provisions of the Criminal Code, but that's different kettle of fish. How could one ever attempt to regulate the Internet, including companies like Netflix and Disney+?
Ms. Noss, who spoke earlier, mentioned the important role now being played by American—most of them are American—companies with respect to streaming. We too made efforts. There was Club illico, but as you probably know, it was subject to the goods and services tax, the GST, and the Quebec sales tax, the TVQ, while the foreign streaming companies were not. This question was shunted aside by discussing a Netflix tax.
I believe that Parliament needs to shoulder its responsibilities. Otherwise, by the end of this year, Canadian industry and culture—and Quebec culture in particular—will be seriously affected.