Thank you, Mr. Chairman.
My name is Luc Perreault. I'm the strategic adviser for Stingray, a Montreal-based company that owns and operates a portfolio of broadcasting and music-based services, including Stingray Music, available on cable and satellite and through various applications. We also own and operate over 100 radio stations across Canada. We're a global company active in 103 countries, with over 1,200 employees worldwide.
I have to switch languages now, so this requires a little bit of gymnastics.
I appear before you on behalf of the Independent Broadcast Group. With me is Joel Fortune, our association's legal counsel.
Our association represents 10 independent Canadian broadcasters operating in the television, radio and digital media sectors. We serve diverse and varied communities in all regions of Canada.
COVID has hit industries that depend on advertising very hard. We estimate that the broadcast advertising market has shrunk by 50% or more since January.
Before COVID-19, the Canadian ad market was already challenged by the growing dominance of large non-Canadian digital platforms, such as Google and Facebook, which are cutting into the broadcast ad market, much like what has happened in the newspaper industry. COVID-19 has made the situation much worse.
You also need to consider the high levels of concentration of ownership and vertical integration in our domestic market. A small number of the same companies control a large portion of broadcast revenues in all business lines via their multi-platform assets.
For example, in 2018, Canada's four largest media network companies—Bell, Rogers, Shaw and Quebecor—accounted for 73.4% of the $86.2 billion generated by media economic activity.
In the cable sector, the five largest broadcast distribution companies accounted for 88% of the sector's revenue. The same companies accounted for 91% of private Canadian conventional television revenue and 83% of total discretionary service revenue.
While independent broadcasters such as Stingray represent a smaller segment of the business overall, we're still fundamentally very important. Independent broadcasters represent fully 40% of direct employment in the Canadian broadcasting sector. We represent 69% of jobs in commercial radio, 39% in discretionary television and 14% of jobs in conventional television.
There's a multiplier effect as well. In a recent study, it was estimated that the independent sector accounts for more than 28,000 full-time positions annually in Canada through our direct operations and through our production and international distribution activities.
This is why we strongly support the extension of the Canada emergency wage subsidy. The CEWS has been critical for many independent broadcasters to maintain employment levels, especially for businesses exposed to the drop in advertising revenue.
We have also proposed additional measures also targeted to our industry.
First, we propose an enhancement of the existing tax deduction for advertising on independent Canadian broadcasters. The deduction would be increased to 130%. This would help level the playing field in an environment that heavily favours Canada's largest broadcasting groups.
Second, we support the extension of the news content tax credit developed for the print industry to the news programming produced by independent broadcasters.
Third, we support the reimbursement of the 600 MHz transition costs for independent broadcasters. These costs are being incurred to free up spectrum for other uses, including mobile use. All of Canada's largest media conglomerates also operate mobile phone businesses, so they will benefit from this transition. Independent broadcasters bear the same costs, but will not see the benefit, and they should be compensated.
We know that other initiatives have been put forward to support our industry, such as removing tax deductions for advertising purchased on foreign digital platforms such as Google and Facebook. We believe they make sense and are worthy of your consideration.
Thank you for hearing us today. We are ready to answer your questions.