Canadian Heritage Committee on March 2nd, 2022

[The Chair, Liberal, Hedy Fry]

I call this meeting to order.

Welcome to meeting number nine of the House of Commons Standing Committee on Canadian Heritage. I want to acknowledge that this meeting is taking place on the unceded traditional territory of the Algonquin Anishinabe people. Pursuant to the motion by the committee on Monday, January 31, 2022, the committee is meeting regarding the impact on local news of Rogers Communications Inc.'s takeover of Shaw Communications.

Today’s meeting is taking place in a hybrid format, pursuant to the House of Commons order of November 25, 2021. Members are attending in person in the room and remotely using the Zoom application. The proceedings will be made available via the House of Commons website.

Given the ongoing pandemic situation and in light of the recommendations from health authorities, as well as the directive of the Board of Internal Economy on Tuesday, October 19, 2021, to remain healthy and safe, all persons meeting in the room are to maintain a two-metre physical distance and must wear a non-medical mask when circulating in the room. It is highly recommended that the mask be worn at all times, including when seated and when speaking, and you must use the hand sanitizer in the room. As the chair, I will be enforcing these measures for the duration of the meeting. I want to thank you in advance for your co-operation.

For those participating virtually, I would like to outline a few rules. You may speak in the official language of your choice. You have the language choices, at the bottom of your screen, of floor audio, English or French. If interpretation is lost, please let us know immediately so that we can ensure it is properly restored before resuming the meeting. Before speaking, please wait until I recognize [Technical difficulty—Editor] slowly and clearly. When you are not speaking, your mike should be on mute. As a reminder, all comments by members should be addressed through the chair.

Now we will begin with panel number two, which is for Rogers Communications. We have present Colette Watson, president of sports and media at Rogers, and Pamela Dinsmore, vice-president of regulatory cable. We will begin, for five minutes, with the Rogers Communications panel, and then we will go into questions and answers. You will be able to finish what you cannot finish in five minutes during questions and answers. Thank you very much.

Ms. Watson, please begin. You have five minutes.

[Colette Watson, President, Rogers Sports and Media, Rogers Communications Inc.]

Thank you.

Madam Chair and members of the committee, thank you for inviting us here today to discuss the impact that Rogers Communications' acquisition of Shaw Communications will have on local news.

My name is Colette Watson, and I am the president of Rogers Sports and Media. With me is Pam Dinsmore, vice-president, regulatory, Rogers Communications.

Rogers is one of Canada’s leading and most respected sources of local news. Through our 54 radio stations, seven Citytv stations, five Omni Television services and 30 community TV channels, we offer Canadians from coast to coast news and information programming that includes coverage of local events, sports and other issues. We are deeply committed to ensuring that Canadians can continue to access significant amounts of professionally produced local news that meets high journalistic standards.

Our acquisition of Shaw will not change that commitment. Nor will it have a material impact on the quantity or quality of local news that is being made available to Canadians today. Shaw does not own any local television or radio stations, which means the transaction will neither result in any further consolidation within Canada’s television and radio industries, nor reduce competition. The only thing that will change as a result of the transaction is that Corus’s Global TV stations will no longer be vertically integrated with Shaw. As a result of that change in status, Global will become independent and will no longer be able to access local expression funds from its affiliated cable business.

We have listened to the committee’s earlier discussions and share its concern regarding the health of local news. The long-term viability of local news is indeed in question, but this transaction is not responsible for that reality. In fact, the health of local news would likely be much worse without vertical integration.

Contrary to what you have heard from previous witnesses, community‑owned television outlets are not producing local news that meets high journalistic standards. The need for Canada to have professional sources of news produced to these standards becomes more apparent every day. In fact, false and inaccurate reporting is becoming more pervasive in our media.

What this transaction will do is ensure that the funding Shaw directed to local stations will stay in the system and continue to be used to support the production of local news. Global is a top station group in western Canada, and its news budget currently exceeds Citytv's news budget by close to $100 million a year. In addition, it is required by condition of its broadcast licence to provide locally relevant and reflective news programming in all the markets it serves. Redirecting the funding it receives from Shaw will not have a material impact on Global's news operations and should not impact current levels of service.

In contrast, this funding will have a material impact on Rogers' CityNews operations, which will help strengthen our news presence in markets outside of Toronto and offer western Canadians a strong editorial alternative to Global, CTV and CBC.

As part of our CRTC application, Rogers made several commitments to news that would be incremental to our existing investments. We've provided a list of those commitments to the clerk in both official languages to share with you.

All of the commitments we made are significant and incremental, and they would not be implemented absent the Shaw transaction. These commitments will result in a significant number of new programming hours and new journalism jobs in the television industry, most of which will be based in western Canada. None of these commitments will matter, however, if local news is allowed to disappear.

Canada's news industry remains in crisis. Amending the Broadcasting Act and expanding the existing journalism tax credit regime to broadcasters are two measures that are urgently needed to stop its continued decline.

With respect to the Broadcasting Act, we strongly encourage the committee to amend Bill C-11 to ensure a sustainable model for local news can be adopted by the CRTC. The current regulatory framework does not ensure that local news is sufficiently funded. Unfortunately, the CRTC cannot begin to address this systemic issue until new legislation is in place.

A more short-term measure to support local news would be to expand the labour tax credit system that is currently in place for print news to include local television news. The Minister of Heritage said last week that “news is news”, and we couldn't agree more. We believe that addressing this inequity would have an immediate and measurable impact on broadcasters' ability to produce local news that meets the highest journalistic standards.

Thank you for your time. We look forward to your questions.

[The Clerk of the Committee, Ms. Aimée Belmore]

Dr. Fry, you're on mute.

[The Chair, Liberal, Hedy Fry]

I'll keep myself off mute, because I need to be jumping in quickly.

We are going to go into a six-minute round of questions and answers. The round includes the question and the answer.

I'm going to begin with Kevin Waugh for the Conservatives for six minutes.

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

Thank you, Chair, and thank you to the guests from Rogers for coming.

I noticed from the clerk that you've sent a detailed assessment of Rogers-Shaw, but I don't see the eight so-called middle-tier stations run by Global today in Kingston, Peterborough, out east and out west, like Lethbridge, Kelowna, Regina and Saskatoon. You claim you're putting a lot of money...but you're not in those markets. You've cherry-picked the Vancouvers, the Calgarys and the big cities, and you're not putting a dime into the middle markets that will really feel the effect of this merger of Shaw to Rogers.

Could you comment on that?

[Colette Watson]

Thank you, Mr. Waugh.

Rogers' Citytv stations are not in those markets. Your Global news has regulatory obligations to provide locally reflective and locally relevant news in each of the markets you've just listed. That will not change as part of this transaction. They are obliged by licence to continue to fund those news operations. They will not be impacted in any way.

The $13 million that continues to decline because of cable subscription declines would not be material to them. Their budget, as I mentioned in my remarks, is $120 million a year. At Rogers, ours is $21 million a year. If they can't run those news operations with that amount of money, we should be having a different type of discussion.

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

Susan Wheeler from Rogers indicated in November, that Citytv out west doesn't do a newscast. Let's start there.

Would you be doing a local newscast on Citytv in western Canada? You don't have anything now.

[Colette Watson]

Our Citytv stations are located in Winnipeg, Calgary, Edmonton and Vancouver. Those markets do news today. They will continue to do news post-transaction and those newscasts will be enhanced. As the list of commitments shows you, we will add an indigenous component; we will add 23 more reporters and we will add two reporters to the parliamentary bureau from western Canada in order to bring a western Canadian perspective to national reporting.

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

I get CityNews in Saskatoon. Will you have a reporter in Saskatchewan? If so, talk about that. How many reporters will there be and what will they contribute, if anything, to the network in Saskatchewan that we currently have on Shaw, SaskTel and Access Communications?

[Colette Watson]

We don't have a Citytv news station in Saskatoon. In Saskatchewan, we are quite proud to be the licence-holder of the educational television network. We are quite proud and spend a lot of time and effort on delivering great programming for the children of Saskatchewan.

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

I think, with the CRTC, that this is a major concern. You would have 52% of the Canadian market in media if this sale went ahead. You've just said you don't have anything in my province of Saskatchewan. This is a concern with the sale of Shaw to Rogers.

You're not addressing the local news angle. You've cherry-picked your big centres of Winnipeg, Vancouver, Calgary and so on. The eight or nine global stations that I have talked about, the middle market, because of the money leaving the independent local news fund.... I would refute what you said; $100 million isn't a lot for eight or nine global stations to give local news.

I can see the flag going up on this sale, that your competition of Rogers versus Shaw and taking on what we have seen with Global and Corus.... This is the concern in those little markets.

Would you not agree with me that Lethbridge, Kelowna, Regina, Saskatoon, Kingston, Peterborough and Saint John would all have a disadvantage if this sale goes ahead?

[Colette Watson]

Respectfully, I don't agree with that premise. I agree that local news is challenged across the board.

If I could just make a distinction for you, the 52% is the percentage of carriage. Those communities will still have Global, CTV, City and CBC. The carriage of channels is what this is about. That's the 52%.

The local news is about a licensed television network. The licensed television network for Citytv is in the markets I described. We are the smallest of the three. There are CBC, CTV and Global, with CBC being public. Of the three privates, we are the smallest. CBC, CTV and Global far outweigh the number of stations that Citytv has.

A Global viewer in Saskatchewan will not be impacted by the merging of the two cable companies. There is a distinction there.

[The Chair, Liberal, Hedy Fry]

You have 12 seconds left, Kevin. Did you have one final word?

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

Yes.

How is that so? The $13 million out of the ILNF would be chewed up. That was in the hearing in November from Global. That was their submission.

[Colette Watson]

There is a—

[The Chair, Liberal, Hedy Fry]

I'm sorry, Ms. Watson. You're going to have to try to get that answer in later on with somebody else.

I'm now going to go to Ms. Lisa Hepfner for the Liberals for six minutes.

[Lisa Hepfner, Liberal, Hamilton Mountain, ON]

Thank you very much, Madam Chair.

I'm going to pick up where my Conservative colleague left off, because as someone who was a news broadcaster up until about six months ago, I'm also concerned.

I have witnessed how local news is diminished whenever there's a major consolidation of news networks. When Canwest Global went bankrupt in 2009-10, a bunch of my colleagues were laid off. We were told we were going to go black in a month if we didn't find a buyer. It was lucky that CHCH News wasn't lost during that time and did find a buyer.

Picking up on what my colleague was saying, how can you be sure that local news won't be affected? Typically, what we see is that we're reassured before the transaction that locals news won't be affected and then a couple of months later, a whole bunch of stations get shut down and journalists get laid off.

Can you assuage our fears a bit about that?

[Colette Watson]

I will certainly attempt to do that.

All local stations have CRTC obligations. The licence they hold is really quite strict. You have a certain percentage of locally relevant news you have to do per week. You have a certain amount of locally reflective news you have to do per week.

The CRTC held three hearings between 2014 and 2018 to solve this issue, to make sure that small and medium-sized markets would continue to enjoy local news. That is why they created the vertically integrated funding opportunity to enable companies like Rogers cable and Shaw cable to move money to their licensed entities.

The regulations dictating the amount of news required to be produced per week by each of the stations—I can't speak for Global or CTV—don't change as part of this transaction. They simply do not change.

What we are saying is that on CityNews, where we have a budget of $20 million and Global has a budget of $100 million, that $13 million would go really far for the news that City produces.

[Lisa Hepfner, Liberal, Hamilton Mountain, ON]

If Global News has to find a new source of income to produce its news, which is often a different type of news from what we see on Citytv, it's expected they'll go looking for that through the independent local news fund. If Global News takes a big chunk of that fund to continue its news operations, it's expected that other smaller stations will be affected and that there won't be as much money for them. Smaller markets, again, are going to be affected because the big players are taking the money meant for local journalism.

Can you reflect on that?

[Colette Watson]

I'll make one comment, and then I'll ask my colleague Pam to talk about the ILNF.

We have no way of knowing today, because there were no parameters put around that, that Global took that $13 million and made incremental news. We have no proof of that. What we're saying is that we'll take the $13 million and prove to you how we'll spend it. We don't know where that $13 million is going and what it's doing.

With respect to the news fund, I'll hand it over to Pam.

[Pamela Dinsmore, Vice-President, Regulatory Cable, Rogers Communications Inc.]

This was definitely a subject that was touched on at the CRTC hearing, and of course we acknowledge that once Shaw no longer owns Corus, it will be independent and will be eligible to get funding from the ILNF, which is effectively a $21-million-a-year fund that provides money to the independent broadcasters and comes out of the BDU, the cable and satellite contribution that we make to the broadcasting system.

Some players at the hearing suggested that perhaps the amount of money that comes out of the BDU contribution should be either increased or taken from other recipients of funding, like the CMF or the Canadian independent production funds.

We considered that this issue is bigger than that hearing and that this wasn't really so much a part of the transfer hearing but should be rolled into the CRTC's study of the ILNF, which it is going to do this year. This is something the commission itself will have to figure out—whether it should be restructuring the ILNF to take into account the fact that Corus will now be eligible to access that funding.

That said, when the CRTC asked us to revise our benefits package at the hearing, we proposed that as a one-time stopgap measure we'd be able to direct $8.5 million—effectively two-thirds of the $13 million—to the ILNF at the close of the transaction.

We await the commission's view on that proposal. If it says yes, that will at least help in the interim while the commission reviews the ILNF itself.

[The Chair, Liberal, Hedy Fry]

You have 20 seconds, Lisa.

[Lisa Hepfner, Liberal, Hamilton Mountain, ON]

I know you suggested that the tax credit for journalism should be extended to broadcasters as well as print journalists. Can you just quickly go over any other ideas you may have to incentivize news, so that we have more local news coverage and broadcasters do more to promote local news?

[The Chair, Liberal, Hedy Fry]

Ms. Dinsmore, you actually have no time left to answer that question, but I will ask you to try to put that in when somebody else asks you a question. Thank you very much.

Now I go to Sébastien Lemire, who is substituting today for Martin of the Bloc Québécois.

You have six minutes, please, Sébastien.

[Sébastien Lemire, Bloc, Abitibi—Témiscamingue, QC]

Thank you, Madam Chair.

Joe Natale, the former CEO of your company, who just left the role, appeared before the Standing Committee on Industry, Science and Technology on March 29, 2021. Among other things, he said that the ability to merge two teams—Shaw and Rogers—with two balance sheets and two sets of assets would allow Canada to be at the forefront of the future digital economy.

We're talking about the merger of a company that holds 50% of the market share of cable subscribers and, as a result, controls 50% of programming revenue.

Will the merger resulting from the acquisition of Shaw by Rogers allow Canada to play a leadership role in the digital economy, or will it mean decreased competition?

Will this merger have negative repercussions on the Canadian digital economy?