Canadian Heritage Committee on May 31st, 2022

[The Chair, Liberal, Hedy Fry]

Thank you, Mr. Desjardins.

Thank you, John.

Now I will go to the Liberals and to Tim Louis for six minutes.

Go ahead, please, Tim.

[Tim Louis, Liberal, Kitchener—Conestoga, ON]

Thank you, Madam Chair.

Thank you to all of our panellists. I really appreciate your being here and your expertise.

I'm sitting right next to you, Mr. Desjardins. Maybe I can continue talking to the Canadian Association of Broadcasters.

I want to ask you about the size and scope of the Canadian Association of Broadcasters, how much content you're making, how much you're already contributing to production funds across Canada, and just about the size and scope of where you are as an organization.

[Kevin Desjardins]

I would make the distinction and say not “production funds” but rather “production” itself. There is that distinction.

In terms of how much is being put into production, it's just under $2 billion per year. That doesn't include news, which, between TV, radio and specialty, is somewhere in the range of about $622 million per year.

In terms of who is investing the most in Canadian content and telling Canadian stories, I think that for some time it has been private broadcasters in Canada.

[Tim Louis, Liberal, Kitchener—Conestoga, ON]

One thing you mentioned in your opening statement was that entertainment programming is what's sustaining news programming. That's something I think we have not heard enough about, how not doing anything to update the Broadcasting Act would hurt not only our cultural sovereignty and our stories but also our news. Can you elaborate on that, on how the entertainment helps support the news ecosystem?

[Kevin Desjardins]

Yes. I think that on the one side you have big challenges for the advertising dollar for broadcasters, as the advertising market now is about 50% made up of digital platforms. On the other side, many of the regulatory obligations that have been there for years remain in place. If you think about where the squeeze happens in-between that vise, it's on the internal productions, and those internal productions are generally the newsrooms within the broadcasting companies themselves. That's a squeeze.

The other thing is again in terms of programming rights. As large global players are no longer licensing their programs through Canadian broadcasters and are circumventing and going directly to the consumer, what that does, especially if that trend were to continue, is that it would eliminate some of those valuable entertainment properties that can help to bring in the funding that helps to go out and support news. Something like Survivor is not Canadian content, but its success in Canada helps to sustain something like Global News.

[Tim Louis, Liberal, Kitchener—Conestoga, ON]

Fantastic.

Now, some are taking the approach that legacy broadcasters have seen their time and they're done. We still have the spoken word, right? Writing is not going anywhere. Television was supposed to take out the movie industry, and that didn't happen. Can you tell me about your relevance moving forward and your vision of what the future of Canadian broadcasting is going to be?

[Kevin Desjardins]

Yes, that's certainly something that I hear at times. Especially, too, people will make comments along the lines of, “Nobody listens to the radio anymore.” Well, we have numbers saying that about 70% of Canadians in the run of a week are listening to the radio in some way, shape or form. They can do it in all sorts of different ways now. When it comes to television, we'll hear about cord-cutters, but still there are approximately 70% of people who are still subscribing to some sort of cable or satellite service. There are still millions of people who are watching Canadian programs, who are listening to Canadian radio each and every day and who are getting the news and the information on what's happening in their community.

We can certainly see a future where we're in some ways sharing the broadcasting ecosystem with other players—with foreign players—but what's really important for us is just that certainly we move beyond where we are right now, where there are no rules on those folks, and we move to a place where there are fair and equitable rules between us.

[Tim Louis, Liberal, Kitchener—Conestoga, ON]

In other words, you don't mind sharing the system. You just want to share the responsibility and share that...?

[Kevin Desjardins]

Yes, for sure, and I think it's the responsibility for helping to prop up and support Canadian content generation, whether it's music or television, or film as well.

[Tim Louis, Liberal, Kitchener—Conestoga, ON]

Another thing we've heard is that sometimes they would say that our legacy organizations are here just to protect their own jobs, but can you explain that these are jobs for Canadians in our community and how you're working to be more nimble in this digital age in growing your own industry?

[Kevin Desjardins]

I think of what happened with radio within the context of a global pandemic. Radio advertising got hit really hard, because a lot of its advertisers are local. At the same time, it really stepped up to provide the information that people needed.

That's not necessarily the newscast at the top and bottom of the hour. Oftentimes, it's even just the on-air crews who are sharing and saying that “this is a global pandemic but here's what's happening in your backyard and here's what you need to know”. I believe there are more radio stations than there are newspapers in Canada at this point. I apologize if I've messed that up, but certainly I know that we have about 600 radio stations where—

[The Chair, Liberal, Hedy Fry]

Thank you very much, Mr. Desjardins.

We now go to the Bloc Québécois and Martin Champoux for six minutes, please.

[Martin Champoux, Bloc, Drummond, QC]

Thank you, Madam Chair.

Mr. Desjardins, I'd like you to describe for us the repercussions that the arrival of the digital giants has had on the conventional broadcasting sector. Talk, if you would, about their gradual entry into the broadcasting space and the fact that they have been able to profit without having to adhere to a regulatory framework.

Can you give us some actual examples of the effects on the broadcasting sector?

[Kevin Desjardins]

The biggest impact has been felt in advertising.

As I said, about 50% of the advertising market in Canada is held by foreign platforms, Google, Facebook and the like. That has had serious effects, including devaluing the advertising on the market. It has also driven up the prices of program rights, whether for dramas, comedies or sporting events.

[Martin Champoux, Bloc, Drummond, QC]

You have a harder time selling advertising, and you have to sell it for less in order to compete. In concrete terms, that means radio and television broadcasters have less revenue, if we zero in on the issue. I imagine that the provision of services has also been affected, including news coverage.

What have the repercussions been on regional news coverage and the jobs of journalists working in the newsrooms of smaller stations?

[Kevin Desjardins]

Throughout the decade when foreign platforms were able to enter the Canadian market completely unfettered, we did not see spending on news go up, but we didn't see it go down down a whole lot either. However, the costs of news and information programming definitely increased.

During the pandemic, broadcasters were under tremendous pressure, but they kept up their investments in news programming. As I said, the level of spending stayed the same; it didn't go up.

[Martin Champoux, Bloc, Drummond, QC]

Mr. Desjardins, I want to turn to the amendment you are proposing to subclause 3(4) of the bill, which would amend paragraph 3(1)(f) of the Broadcasting Act. According to the bill, as it's currently worded, “each Canadian broadcasting undertaking shall employ and make maximum use…of Canadian creative and other human resources”.

You are recommending removing that part and keeping just the part that requires those undertakings to contribute in a significant way to the creation and production of Canadian programming.

The cultural sector is calling for the opposite, in other words, specifying the requirement to make maximum use of creative and other human resources.

How do we balance what you are proposing with what the cultural sector is calling for?

[Kevin Desjardins]

I appreciate that balancing the two requests isn't easy, but our recommendation is consistent with establishing rules that are fair and equitable for Canadian and foreign companies.

In our view, the provision could create two sets of rules, one for foreign companies and another for Canadian companies.

We are also calling for transparency when it comes to how foreign companies spend their programming investments. They shouldn't be able to claim that their Christmas movie in Vermont is a Canadian production because it was filmed in Dieppe, New Brunswick.

[Martin Champoux, Bloc, Drummond, QC]

I agree with you.

I have one last question for you about paragraph 3(1)(f) of the Broadcasting Act.

You said you were worried about an approach that would create a two-tiered system between conventional broadcasters and online companies.

Say we were able to pass a robust and well-designed amendment to ensure that the same set of rules applied and that online companies were under the same obligation to employ, and make maximum use of, Canadian creative and other human resources. Would you be satisfied?

[Kevin Desjardins]

I would have to see how the amendment was worded before I could say for sure.

It's a complex issue, but we are open to considering such an amendment.

[Martin Champoux, Bloc, Drummond, QC]

That's great.

Thank you, Mr. Desjardins.

That's it for me, Madam Chair.

[The Chair, Liberal, Hedy Fry]

Thank you very much, Monsieur Desjardins.

I go now to the New Democratic Party and Peter Julian for six minutes.

[Peter Julian, NDP, New Westminster—Burnaby, BC]

Thank you very much, Madame Chair.

Thanks to all our witnesses for their important testimony.

I'm going to follow up with you, Mr. Desjardins.

You've talked about 10 years of unregulated foreign players. Can you tell us a bit about employment in the broadcasting industry over that 10 years?

[Kevin Desjardins]

Yes. I don't want to get too specific in terms of the numbers. I can follow up with the committee to give some more specific numbers.

I would say that, again, it's not growing, and I think that in radio, especially over the last few years as their advertising numbers have been hit particularly hard, it's been going down.

Employment numbers, in aggregate, I would say have been going down in the broadcasting sector over that time. Again, it's that challenge that there is money that has to go out the door to independent producers, and there is advertising money that's not coming in, and the squeeze comes internally with the stations and the services themselves.

[Peter Julian, NDP, New Westminster—Burnaby, BC]

Okay, so there has been a negative impact, there's no doubt.