Canadian Heritage Committee on Feb. 16th, 2022

[The Chair, Liberal, Hedy Fry]

Welcome to everyone.

I know it's a long thing to get all the sound checks going, but c'est la vie . We've been trying to deal with this ever since we've gone to virtual meetings.

I call the meeting to order.

I would like to acknowledge that this meeting is taking place on the unceded traditional territory of the Algonquin Anishinabe people.

Pursuant to the motion adopted by the committee on Monday, January 31, 2022, the committee is meeting on the issue of the Shaw-Rogers amalgamation.

I want to give you just a couple of housekeeping rules here.

Today's meeting is taking place in a hybrid format. Members are attending in person in the room and remotely using the Zoom application. The proceedings will be be made available via the House of Commons website.

Given the ongoing pandemic situation and in light of recommendations from Health Canada as well as the directives of the Board of Internal Economy on Tuesday, October 19, 2021, to remain healthy and safe, all those attending the meeting in person must maintain a two-metre distance and must wear a non-medical mask when circulating in the room. It's highly recommended that the circulation be brought down to a minimum, that a mask be worn at all times, including when seated and when speaking. One must use the hand sanitizer in the room.

As the chair, I will be enforcing these measures for the duration of the meeting, and I thank members in advance for their co-operation.

For those participating virtually, I'd like to outline a few rules to follow.

You may speak in the official language of your choice. Interpretation services are available as the floor, English or French. If interpretation is lost, please inform me as soon as possible, and we will restore the sound before resuming proceedings. Before speaking, please wait until I recognize you by name. When speaking, please speak slowly and clearly. When you are not speaking, please mute your mike. I also remind you that all comments by members should be addressed through the chair.

We are now going to begin. There has been a change in the meeting. The first panel, the CRTC, will not be appearing today, but another day. We will begin with the witnesses who are appearing virtually.

For witnesses, I want you to know that there are a couple of rules. The rules are that you have only five minutes to present. If you have two people from your group wanting to present, you are going to have to find a way to split that time. After five minutes of presentation, I will give you a one-minute warning. You'll just hear my voice in the ether saying, “one minute”, and that gives you time to wrap up.

What we will do is go on afterwards to questions and answers by members of Parliament. Questions and answers will, in fact, be included in the question and the answer time; therefore, the time period for that is not two separate times, but one time, and I will tell you what that is before the questions begin.

We begin by recognizing Catherine Edwards, executive director the Canadian Association of Community Television Users and Stations.

You have five minutes, please, Ms. Edwards.

[Catherine Edwards, Executive Director, Canadian Association of Community Television Users and Stations]

Thank you for inviting us.

I'm Catherine Edwards with the Canadian Association of Community Television Users and Stations.

With me is Amélie Hinse, the executive director of the Fédération des télévisions communautaires autonomes du Québec.

Our organizations advocate for access to digital media training, production support and distribution, so that individuals and communities can express themselves. The not-for-profit community element employs 1,000 staff, trains more than 20,000 volunteers annually, broadcasts in 80 languages and produces a million hours of local content over the air, on cable, on satellite and online for one-tenth of the cost of an hour of production in the public and private sectors.

We believe community-owned media is the best way to serve communities with local news and to ensure that a diversity of voices continues to fill our airwaves. We're pleased to provide comments on the Rogers-Shaw merger, because community TV and, consequently, access to local news for more than 300 communities that community TV once served has been decimated over the last 20 years by prior mergers undertaken by these companies.

Of the more than 300 cable community TV stations that once formed the backbone of the community element, over 75% have closed as Canada's cable giants have withdrawn production infrastructure to the cities and focused their energies on specialty channels and selling TV subscriptions and mobile services. For example, Rogers used to have 12 neighbourhood community TV offices around the Vancouver Lower Mainland. They were closed in 1998, when Rogers sold its western systems to Shaw. Vancouverites from White Rock to North Van were expected to make their way to Shaw corporate headquarters for access to our broadcasting system.

Since New Westminster's Shaw community TV studio was shut, Mr. Julian has volunteered to help cover events for the NewWest.tv not-for-profit start-up, a CACTUS member attempting to fill the gap left by Shaw. These stations ensure that you, as parliamentarians, can reach your constituents to talk about the issues that are important. They are not sound bites meted out to you by megacorporations more interested in blockbuster U.S. series, but community-owned entities committed to supporting local democracy.

Mr. Coteau, the same happened in Toronto. Rogers, like Shaw, consolidated all of its community TV production studios into one corporate headquarters, before finally closing in 2017.

Mr. Bittle, up until 2003, there was a Cogeco community channel devoted to St. Catharines that disappeared by 2011. Subscribers in St. Catharines now see a community channel from Niagara, which is also shared with Grimsby.

This process of zoning former distinct community channels into a single regional channel has been permitted by the CRTC following the urging of Rogers in 2006. Mr. Nater, Ms. Lewis and Mr. Louis, Rogers claimed to have distinct community channels on its website in Waterloo, Kitchener, London, Stratford, Guelph and Cambridge, but, in fact, a single zoned channel serves all these mid-sized cities, with only occasional insertions of content specific to each city.

Rogers and Shaw have told the CRTC that they couldn't afford to keep separate stations open, but communities were never asked whether they'd like the opportunity to run the channels in a more cost-effective model. Rogers has been particularly vicious in eliminating competition for its own regional community channels.

In New Brunswick, which used to have over 30 community TV stations, Rogers shut down all but six when its fibre optic connected the province. The community-owned station in Chatham was told by Rogers that fibre optics would no longer enable two-way programming. Chatham residents could continue to receive Rogers TV from across the province, but they would no longer be able to see Chatham's community-produced content. It was a lie.

When Rogers shut down production studios in St. Stephen and St. George, two of the three villages in Charlotte County, and started piping in its provincial Rogers TV, our St. Andrews member was told by a Rogers technician that Rogers had inserted a cable trap at the St. Andrews boundary to purposefully limit distribution of the community-owned signal.

In 2017, under intense lobbying by Rogers, the CRTC gave cable companies the green light to redirect most of Canada's community TV, or local expression, budget to support their failing private news properties by the independent local news fund. Shaw invested its Vancouver, Edmonton and Calgary local expression budgets in Global, and—

[The Chair, Liberal, Hedy Fry]

You have one minute left.

[Catherine Edwards]

Okay. I'll jump ahead.

We all know that local news is in trouble, but we've been erroneously handing money to vertically and horizontally integrated giants to solve the problem. At each hearing, they promised that with deeper pockets they would be able to support local production, but they don't. The local journalism initiative by the Department of Canadian Heritage has finally recognized that if you want to ensure communities have local news, you resource not-for-profit community media that are located in and committed to serving communities over the long haul.

CACTUS, the Fédération and the Community Radio Fund of Canada are generating news under LJI for a tenth the cost of public and private sectors, hour for hour, so we do not support further consolidation. It's bad for information diversity and it's also bad because the bigger the companies get, the more they capture our regulator. The CRTC staff openly refer to them, not the Canadian public, as their clients. The rot has gone so far up that we're being told not only by the CRTC, but by Canadian Heritage staff working on Bill C-11, that they cannot recognize not-for-profit broadcasting in a new broadcasting act, because other big entities think it's a zero-sum game. If they recognize that we exist, there's less money for them. The legal structure of our country is caught in their net.

We've elected you to defend the public interest when our bureaucrats and regulators are captured by industry. Should the merger go ahead, however, we urge you to support initiatives that ensure a diversity of information—

[The Chair, Liberal, Hedy Fry]

Ms. Edwards, can you wrap up? Thank you.

[Catherine Edwards]

—and service for smaller communities outside of the control of Rogers and other BDUs, including a local journalism initiative and the establishment of a community access media fund to support not-for-profit community media.

We currently have a proposal for such a fund before the CRTC, which hasn't been gazetted. It would enable communities themselves, especially indigenous, rural and diverse—

[The Chair, Liberal, Hedy Fry]

Ms. Edwards.

[Catherine Edwards]

—to apply for and fund.

Yes. We're finished.

[The Chair, Liberal, Hedy Fry]

Thank you.

[Catherine Edwards]

We had very little time to prepare—one day.

[The Chair, Liberal, Hedy Fry]

Ms. Edwards, you will have an opportunity when questions are asked of you to elaborate and expand on what you were planning to say at this beginning session.

Now I will go to the Community Radio Fund of Canada, and Alex Freedman, executive director.

We have Mr. Freedman for five minutes.

[Alex Freedman, Executive Director, Community Radio Fund of Canada]

Thank you, Chair.

It has often been said that democracy dies in the dark. Without reliable and accurate local news and information, people can simply not make informed decisions. This applies to all Canadians, and it's why the question you wrestle with today is so incredibly important.

The gutting of local news has been ongoing for many years, but has accelerated dramatically over the last decade, and the consequences are terrifying. A full one-third of U.S. citizens believe their election was stolen. Horse medication flies off global shelves as an anecdote to COVID, because of one statement by an uninformed U.S. president; and a grand total of about a dozen accounts are responsible for more than 80% of the vaccine disinformation available on social media.

I have a great deal of experience in journalism—15 years with the CBC as well as chief of staff at Laurentian University and at the Assembly of First Nations. I am now executive director of the Community Radio Fund of Canada. What I can tell you is that while journalism is a keystone for a functional society, it is not profitable. The truth, while critical, is not nearly as attractive or intoxicating as questionable narratives that an algorithm has determined fit into a person's echo chamber. When access to local news and information is left in the hands of corporations focused on profit over public good, the outcome shouldn't be a surprise.

Corporate concentration in the media hurts Canadians' access to local news and information.

We have seen this play out with Bell recently closing entire newsrooms in Montreal and Toronto, firing hundreds of journalists as those funds are diverted to supporting streaming services. A few years earlier it was Citytv closing newsrooms and gutting Breakfast Television. According to the Local News Research Project, since 2008 a total of 451 news operations have closed in 324 communities across Canada.

I won't be taking a position today on whether or not this merger should proceed. Rather, I'm hear to say that if it does, the consequences will be damaging for local news and information, and this government has a responsibility to insist on remedies to ensure that Canadians get the news they need and deserve.

In a recent article in The Star some of the challenges were highlighted. Global News, whose newscasts are watched by 20% of the viewers in B.C. and Alberta, stands to lose $13 million out of its $138-million annual budget. That money will go to Citytv, which is owned by Rogers. This is because, according to a Rogers' vice-president, the company cannot “get our head around” the idea of funding a competitor. No concern for viewers. This is about profits. As a consequence, Global will likely be forced to seek a significant portion of the independent local news fund, which will further impact local news.

In one fell swoop this transaction will gut one station, and the funding set aside for independent news outlets will be cut by more than a half, and that's just the beginning.

A review of the tangible benefits associated with this transaction meant to support Canadian voices shows $8.5 million will be invested in the ILNF once. After that the fund is on its own, and a significant portion, as I mentioned, will be absorbed by Global. Of note, this fund was set up by funding that was originally intended for community television.

The rest of the benefits will go to the Canada Media Fund and an assortment of important film festivals, but there's next to nothing to support local news.

What does this committee do about it? I propose that it needs to ensure there are mechanisms to protect local news, not just corporate interests.

The Community Radio Fund of Canada provides funding to community campus and indigenous broadcasters to hire journalists in news deserts. Next year we will supply salaries for journalists to be hired in 39 community-based radio stations through, as Cathy mentioned, the local journalism initiative. This is a fraction of the need.

If this transaction is approved, the government must extend and expand the funding for the LJI, and it should be up to the corporations benefiting from the gutting of local news to pay for this.

This committee should also ensure that tangible benefits go to organizations such as—

[The Chair, Liberal, Hedy Fry]

You have one minute left.

[Alex Freedman]

—the Community Radio Fund and are earmarked to support the production of independent local news.

This is important because Rogers cannot stomach the idea that they would give money to their competition, but we are independent broadcasters, we are community broadcasters and we are not the competition.

The network of more than 230 community-based broadcasters can and should be part of this solution.

In closing, I will quote Tim Franklin, the head of the Medill local news initiative at Northwestern University. He puts this challenge in some very plain language, saying that “The diminishment of local news is to democracies what climate change is to the environment.... It's a slow-motion crisis, the effects of which we are just beginning to see.”

Madam Chair, thank you for your time. Colleagues, I do look forward to your questions.

I'd be pleased to answer in English or French.

Thank you.

[The Chair, Liberal, Hedy Fry]

Thank you, Mr. Freedman. That was absolutely on time.

I'll go now to the next witness. Thomas Saras is president and chief executive officer of the National Ethnic Press and Media Council of Canada.

You have five minutes, please, Mr. Saras.

[Thomas Saras, President and Chief Executive Officer, National Ethnic Press and Media Council of Canada]

Thank you very much, Madam Chair.

In 1792, James Madison expressed his concerns about the fate of the democratic experiment. He warned of a real domination of a few under an apparent liberty of the many, deploring “the daring depravity of the times” as private powers became “the praetorian band of the government”, at once its tools and its tyranny.

Echoing the previous speakers, on behalf of the National Ethnic Press and Media Council of Canada, I want to bring two things to the attention of the members. The first is clearly political. It is a message that reflects democracy and the kind of democracy we want to have in this country. The other one is economical. By concentrating all those corporations together, we're going to have a monopoly. A monopoly is really bad because the moment they achieve whatever they want, the prices move up.

Speaking about Rogers, I have in front of me one of its invoices. Three years ago they approached someone and offered him a deal for $250 a month for telephones and everything in the house. This month, he received another bill for $370. The same services moved from $250 to $370. I'm wondering if the Canadian people can afford to pay to Mr. Rogers, or anybody else, $400 a month just to have television or to have the telephone lines connected to the system.

This is the reason that the National Ethnic Press is against this amalgamation. It is bad for the state. It is bad for the people. It is bad for our justice and our security. We have to stand up for the freedom of the press. Freedom of the press means diverse voices that this country has to show all over the world.

My organization represents 1,200 media outlets all over Canada in 103 different languages. We try to inform our readers with our best ability and our ability to express and serve the Government of Canada and their people.

[The Chair, Liberal, Hedy Fry]

You have 30 seconds left.

[Thomas Saras]

I don't think I have to say anything else. The message is there. I hope you got it.

Thank you very much.

[The Chair, Liberal, Hedy Fry]

Thank you, Mr. Saras.

Now we go to OpenMedia. Matthew Hatfield is the campaigns director and Erin Knight is the digital rights campaigner.

You have five minutes. I don't know who's going to start, but I am starting the clock ticking.

Thank you.

[Matthew Hatfield, Campaigns Director, OpenMedia]

Good afternoon. I'm Matt Hatfield. I'm the campaigns director at OpenMedia, a grassroots community that works for an open and accessible Internet. I'm joined today by our lead Internet access campaigner, Erin Knight.

I am speaking from the unceded territory of the Sto:lo, Tsleil-Waututh, Squamish and Musqueam nations. My colleague is calling in from Treaty No. 1 territory, the traditional territory of the Anishinaabeg, Cree, Oji-Cree, Dakota and Dene peoples and the homeland of the Métis nation.

We're here today to talk about the Rogers-Shaw deal and how it will impact local news. I need to emphasize that no government body in Canada is looking squarely at the full implications of this deal, the sixth-largest in Canadian history—not the CRTC looking at broadcast implications; not the Competition Bureau, armed with our anemic Competition Act; and unfortunately, not this hearing.

We are not economists or lawyers—we're a citizens' group—but we want to highlight what should be obvious to everyone, that Rogers' plan to buy Shaw is a disaster for competition, diversity and innovation in our country. It will lead directly to increased consumer prices for telecom services, loss of jobs in news media and in telecom, and a consolidation of power over our media like we've never seen. It will put one man, Edward Rogers, in charge of the Internet and broadcast service of nearly half of English Canadian Internet users. It will further concentrate and reduce diversity of perspective in a media market already ranked the third-most concentrated amongst 28 countries in a recent study. As a point of comparison, while the top four media companies in the U.S. hold 29.8% of market share, in Canada the top four hold an astonishing 52.3%.

I don't have to tell anyone here that news, and particularly local news, is in trouble. Some people will tell you that this is because Internet platforms are stealing their news content, but the reality is that quality news production has never been profitable. News used to be bundled with all of people's needs for classifieds, entertainment, sports and more. Now that those non-news functions are fulfilled by dedicated online services, the budget the market provides for news alone isn't up to the task.

That's hurting all news outlets, but it is devastating local news. From 2008 to 2021, over 450 media outlets closed, the vast majority of them small community papers. Of course, open your phone and you're bombarded with more news than ever, but we increasingly lack crucial local news that connects us with our neighbours and holds local government and corporations to account.

Approving the Rogers-Shaw deal means further slashing into local news. We know that this will happen directly through cutting Global News funding to give it to CityNews. We also share the concern of other stakeholders that Corus will be forced to seek support from the independent local news fund, which could potentially absorb 60% to 80% of those very limited funds that are intended for small outlets.

Even if those concerns are addressed, further unannounced news cuts are predictable and inevitable. To afford the purchase, Rogers is taking on immense levels of debt—debt that needs to be paid off by cutting costs or raising prices. Given that local news is already barely economically viable, that won't come from increasing news prices. It will come from slashing programming and jobs.

Rogers' previous CEO made a number of promises to expand news content and hire indigenous reporters as part of the deal. We'd suggest to you that these are sops, an attempt to bamboozle you, not meaningful commitments to local news. They're entirely short term, legally unenforceable, and likely to be ended as soon as the company can.

The combined Rogers-Shaw will be a company of unprecedented power in Canadian history. Canada already has an unusually serious problem with vertical integration, in which key telecom companies like Rogers and Bell sell both access to wireless networks and a great deal of the content Canadians consume on those networks. High levels of vertical integration create strong incentives for clearly anti-competitive behaviours that hurt smaller media and telecom competitors and also consumers. A combined Rogers-Shaw would exert market power on another level, with 47% of English-language subscribers and broadband service reach to 80% of Canadian households. The last thing we need in Canada is this further concentration.

Canadians know that. We do not, as group, want this deal. Public polling has consistently found that a majority oppose the deal, particularly in the west, where Shaw does business. Last year over 61,000 people signed petitions calling on the federal government to block the Rogers-Shaw deal. The Competition Bureau set new records for public engagement around it.

[The Chair, Liberal, Hedy Fry]

You have one minute remaining.

[Matthew Hatfield]

People in Canada are looking to see whether public officials like you are going to represent us and our concerns or side with Edward Rogers. Inaction on the file is a choice. Choosing not to stop this deal is a decision to side with the further monopolizing of our economy and news over diversity, innovation and the best interests of Canadians. For these reasons, OpenMedia is urging you to take action to block Rogers Communications from buying out Shaw Communications.

Thank you. We look forward to your questions.

[The Chair, Liberal, Hedy Fry]

Thank you very much, Mr. Hatfield.

The final witnesses in this group, from Quebecor Media Inc., are Pierre Karl Péladeau and Peggy Tabet.

Monsieur Péladeau, you have five minutes, please.

[Pierre Karl Péladeau, President and Chief Executive Officer, Quebecor Media Inc.]

Madam Chair, thank you.

My name is Pierre Karl Péladeau, and I am the president and CEO of Quebecor. With me today is Peggy Tabet, vice-president of regulatory and environmental affairs.

A few weeks ago, the CRTC held its hearings on the Rogers–Shaw deal. Quebecor did not participate in the hearings because we believe our issues have more to do with telecommunications than with broadcasting. We did not weigh in on the proposals put forward by Rogers regarding local news; nor will we do so today.

However, what I can tell you is that the CRTC is doing nothing to ease the regulatory burden on Canadian companies operating in an increasingly vulnerable sector. The television and local production sector is being undermined economically and financially, with local news and the entire news industry paying the price. The industry plays an essential role in upholding a strong and vibrant democracy, but it's survival is at stake, unless everyone wants CBC/Radio‑Canada to be the only one fulfilling that mission.

Bill C‑11 must take that into account. The regulatory and financial burden on broadcasting undertakings is no longer sustainable. The regulation of basic services, the requirements to contribute to a range of funds, expensive regulatory fees, broadcasting and spending quotas for Canadian programming, and endless reporting are just some of the conditions we must adhere to.

According to the Académie de la transformation numérique, 2021 marked the first time that more Quebec households had online video service subscriptions than cable TV subscriptions—71% versus 66%. That means less and less funding is available for the Canada media fund, since the web giants—Google, Amazon, Facebook, Apple and Netflix, a.k.a. GAFAN—make no contribution whatsoever to the Canadian production ecosystem. Less funding means less local production, more foreign production and, of course, less local economic activity.

In the face of such worrisome data, how can broadcasting undertakings and local news survive under the weight of so much bureaucracy, while GAFAN operates free and clear of the crippling and outdated regulatory controls? It is high time that we, too, enjoy the same regulatory and commercial freedom.

If you find the broadcasting picture I just painted troubling, I have some more insight to share. I'm referring to the major repercussions of the Rogers–Shaw deal for the entire broadcasting landscape.

Keep in mind that Videotron's entry into the cellular mobile telephone services market, in 2006, had a disruptive effect, and Quebeckers benefited. They were among the first in the country to pay 35% to 40% less for wireless service than consumers in the rest of Canada. In recent years, the company has invested more than $4 billion to build a robust and powerful network, complemented by outstanding customer service. At the same time, Videotron has been a driver of innovation, creating Fizz, Canada's first all-digital mobile and Internet service brand.

Those achievements are all thanks to the measures put in place by the federal government, in 2007, aimed at breaking up the oligopoly of the big three telecommunications companies. Under the measures, Quebecor was able to acquire blocks of spectrum in the last auction with a major investment of nearly $830 million, which will help it expand its wireless offering in Canada. Quebecor will also be actively participating in the next auction and urges the government to keep these pro-competitive measures in place.

The oligopoly of the big three still holds 90% of the wireless market, so whether they like it or not, the policy to set aside wireless spectrum for new competitors is paramount if a strong fourth player is to emerge in every region of Canada.

With the right conditions and a swift decision from the CRTC on the terms for mobile virtual network operators, Videotron is the best player to foster real competition throughout Canada and drive innovation.

Thank you, Dr. Fry.

[The Chair, Liberal, Hedy Fry]

Thank you very much, Monsieur Péladeau.

Now we begin with a question and answer round, and we may only be able to do one round because of the time constraints. We have a hard stop at 5 o'clock.

This first round is meant to be six minutes, and I will begin with Kevin Waugh for the Conservatives.

Kevin, you have six minutes.