Thank you, Madam Chair.
I have a few opening remarks.
Thank you for inviting me to appear before the committee.
Local communities look to the media to keep them informed on the subjects and issues that matter to them. They look to the media to reflect the diversity of the people who live there.
But shifts in technology, the business of the media and consumer behaviour have created some challenges in providing the local news coverage Canadians depend on to stay informed. Your committee has been studying these issues. So have we. I would like to discuss with you today what we have done so far.
This is an important point. My presentation today will be retrospective—that is, it will be focusing on the commission's past actions. I cannot speculate about the future.
As a member of an administrative tribunal, I have a duty of deference.
As you know, after extensive public consultations, the CRTC issued in June a new policy framework on local news and community programming. It sets out new requirements to ensure robust local coverage across the country. And it re-allocates resources within the broadcasting system to support them.
Canadians value their local news and programming. They told us so during our Let's Talk TV conversation, which reached out to people across the country, beginning in 2013. They told us earlier this year during our consultation on local news and community programming. This type of programming promotes the democratic process by which citizens keep informed and keep engaged. Canadians have said they want it.
A survey for Let's Talk TV showed that 81% of Canadians value local news, but the media landscape has been changing. Online news sources and social media are easily available on multiple platforms. Canadians can easily become creators as well as consumers of content. These changes have had a significant affect on traditional media.
Advertising revenues have dropped. Newspapers have shut down or consolidated newsrooms. They have trimmed copy to make room for more photos. An alarming number of TV stations have cut the length of their newscasts. They have reduced staff and centralized news operations, shrinking their local presence.
The CRTC works to ensure that Canadians have access to a world-class communication system. Such a system must have strong coverage of all the smaller local worlds that make up our vast country.
But that coverage does not come cheap. The costs of delivering local news are outstripping the revenues derived from it. This puts pressure on the broadcasters who want to provide high-quality programming.
We do not believe that local television news can be allowed to fall by the wayside simply because it doesn't look good on the corporate balance sheet. The marketplace of products, revenues, and profits is not the only marketplace that counts—far from it. There is also the marketplace of ideas and information. That marketplace trades in another kind of wealth that supports every aspect of our Canadian society.
Local news is important as a public service. It's a privilege to use the public airwaves, and a commercial broadcaster who holds a licence has a public responsibility to provide that locally oriented service.
You may ask about digital platforms and social media. Are they providing an alternative source of local coverage? Yes and no. They're accessible and gaining in popularity, but so far they lack the funding, the experience, and the newsgathering expertise to offer the focused, professional coverage that Canadians have a right to expect.
Digital platforms certainly offer quick and easy communication. But, at least for now, they cannot provide a reliable alternative to the skills of investigation and analysis that established media have developed over the past decades. Established media also have the advantage of having journalists who adhere to professional standards and codes, and who are trained to gather and interpret facts to create valuable, intelligent news analysis. They enable citizens to participate more fully in Canada's democratic life and institutions at the local, regional, provincial, and national levels.
We know that there is money within the broadcasting system that can be reallocated to support a solid stream of local TV news and information to Canadian communities. In five metropolitan markets—namely Toronto, Montreal, Vancouver, Edmonton, and Calgary—English-language private stations are required under their current licences to broadcast at least 14 hours per week of locally relevant programming, especially news. In smaller markets, the minimum is seven hours per week.
French-language stations will continue to be assessed on a case-by-case basis, using a benchmark of five hours of local programming per week. The required programming will be supported by a re-allocation of the resources provided by television service providers, such as cable and satellite companies. The support that these companies currently provide to Canadian programming will be modified to facilitate the funding of the production of locally reflective news.
That means that starting on September 1, 2017, independent television stations will have access to up to $23 million through a new independent local news fund. The stations initially eligible are located in 18 communities across the country, including Prince George, Lloydminster, Thunder Bay, Rouyn-Noranda, and St. John's, Newfoundland.
In addition, we are giving large private broadcasters the flexibility to keep local stations open and to fund the production of local news programming. As such, up to $67 million could become available for the production of local news in 2017-18. These large integrated companies will determine where and how to best use money to ensure the presence of programming that reflects those local communities. To benefit from this flexibility, the companies will be required to keep all of their local TV stations open.
News programming will be considered locally reflective if it meets three criteria: one, the subject matter relates specifically to the local market; two, it portrays an image of the market onscreen by, for example, featuring coverage of its municipal or provincial government; and, three, it is produced by the station's staff or by an independent producer specifically for that station.
Our new policy framework also addresses community television, which is still valued by Canadians, especially in smaller communities. We are encouraging access programming—that is, programming produced by members of the community—and we are encouraging community reflection, which enables viewers to see local realities that are rarely covered by other kinds of media.
Community programming provides a means for thousands of community and amateur sports groups across the country to be seen and heard in their communities. It also provides information on municipal politics and public affairs outside the major centres. That is essential to full participation in the democratic process.
Community television will continue to be financially supported by television service providers, such as cable distributors and similar services. And we are taking measures to ensure that priority is given to programming content rather than facilities and indirect costs.
That is a brief summary of our new policy for local and community television. Establishing this policy was an important first step, but it was only the first step, because policies of the commission are not self-implementing and binding. While I've been able to discuss our policy as it was published last June, I can't comment on how it will be applied in the future, as certain implementation elements are still before us.
To implement these changes, we must establish new conditions of licence for the television broadcaster. In fact, in November we will be holding public hearings to renew the licences held by the large private ownership groups.
On November 22, in Laval, we begin a hearing to review the applications from the French-language ownership groups: Bell, Corus, Québecor and Groupe V Média.
For the English language ownership groups of Bell, Corus, and Rogers, the hearing will begin on November 28 here in the national capital region.
The fact that these hearings are pending, as I mentioned earlier, Madam Chair, means that I may not be able to answer all the questions that you would like to ask me today. The CRTC is unique in that it is not only a policy-maker but also a quasi-judicial tribunal. We have a duty to ensure that our evidence-based proceedings are conducted in an open and transparent manner. All parties have the right to rely on our procedural fairness and our impartiality as a decision-making body.
To protect the integrity of the process, the clear legal advice I have received is that I can't say anything that might give the impression of pre-judging any of the issues that may come before us in our proceedings later in November, nor can I speculate on what decisions we might make.
There are also other matters currently before the CRTC that may be of interest to the committee. I trust that you will understand that in that respect, I won't be able to discuss them for the same reasons, to the extent that we haven't finalized those proceedings.
Thank you, Madam Chair.
I am ready to answer your questions.
Thank you, Mr. Blais, for coming today to participate in our study on media consolidation and its impact on Canadian voices.
In the context of that study and in the context of the review that is doing right now of Canadian content in a digital world, I would like to talk to you about the CRTC's Canadian content decision of August 25, specifically where the decision drops the points of access to certified independent production funds to support Canadian shows and Canadian voices from eight to six.
That is a decision I've been hearing about almost daily since its release. In looking at news media and how it's reported, the decision was described by John Doyle in The Globe and Mail as “truly appalling”. In Toronto–Danforth, my riding, there are many people who work in the creative industry who are very concerned about the impact of this decision. I expect you would find that what they are telling me is what you would hear across this country from people working in the creative industry.
I'm getting emails and calls, I'm hearing it at meetings, and people stop me on the street to ask about this. What they're telling me is that they have chosen to stay in Canada or they have moved back to Canada because they wanted to contribute to what they saw as a flourishing industry for television and film and for Canadian voices. This is where they want to raise their families, here in Canada, and they want to be part of what we can develop here. They're very concerned about the impact of the CanCon points decision on the creative industry, as opposed to just the service industry.
They're not only concerned about their livelihoods, although they are, but they are also particularly concerned about the impact this is going to have on Canadian voices.
I'll give you an example. I received an email from a screenwriter who lives in my riding. He was trying to describe the impact of this points decision. This is what he wrote to me:
|| If Stephen King wrote a new book and it was edited, typeset, formatted, printed, and bound in Canada, would anyone call it a Canadian book? I don't believe so. The public recognizes that the authorship of a book or television or feature film determines its nationality. Apparently the CRTC believes differently.
It's not just screenwriters I've been hearing from, but actors and the whole spectrum of the industry. Just last week I met with seven ACTRA members, and they were talking to me about how the Canadian productions that we have promote diversity and the strength of the diversity of Canadian voices.
I'll focus on that word “strength”, because they also talked about the strength of our industry and how well we're doing right now. That's something I hear across the board. Just recently we celebrated the fact that Tatiana Maslany won an Emmy for a Canadian production, Orphan Black. That was something we all celebrated as showing how we are producing great productions that are getting international renown.
Going back to how our local news is reporting on things, Jessica Wong from CBC News spoke to the co-creator of Orphan Black, Graeme Manson, who called the CanCon decision from CRTC a “vote of non-confidence”. I'll quote him: “The underlying message from the CRTC is we need foreign help to tell Canadian stories. That's frankly insulting to all of us.”
That's the end of his quote, but he goes on to say that under the system from this CanCon points decision, he would have been under pressure to not hire Tatiana Maslany for her role, and I think that's something that we can agree would have been really an unfortunate thing.
I'm focusing on Orphan Black, but that's not our only success story. We have Flashpoint; Degrassi, which is based on a street in my riding; Being Erica; and Murdoch Mysteries. There are lots of great Canadian shows that are doing so well.
Shortly after the CanCon decision, I had a meeting in my office with my constituents—writers, directors, producers, musicians, and actors. We came together to talk about what their concerns were. They were concerned about the impact. Even more, they were confused about the timing of this decision, because is doing a review of Canadian content. They all agreed that this was a troubling decision to come in the middle of that kind of review.
My constituents said, when they came back to me, that the best outcome would be to see a pause in that decision. That's what they wanted to see: they wanted to see a pause of the CRTC CanCon decision pending the review by the minister, so that we could let her do a holistic review. That's what they came to me with. They also wanted to see evidence from the CRTC that this decision would do no harm to the industry.
My question to you is—
A voice: Oh, the question.
Ms. Julie Dabrusin: —how does your decision help Canadian—yes, there is a question, and it's an important one, an important one coming from my constituents.
How does your decision help Canadians, especially local communities, be informed of local and regional experiences? More to the point, knowing of the current success of our television and film industry, and hearing the concerns of people about the negative impact of this CanCon points decision, and being in the midst of a review by the of the Canadian content system as a whole, how do I explain your CanCon points decision to my constituents, people working in the industry, who are afraid of losing their jobs?
The first point I would make is that I think there's an important distinction between local news and information, which is under a completely different point system from the one you're asking a question about, which deals with documentaries, dramas, and comedies and only applies to those. Most local news information is deemed to be local because it's often in-house production made by producers. There's been a lot of misinformation, in my view, about the point system.
Canada has had a point system of one sort.... In fact, the British Empire has had one since the 1926 Imperial Conference, because, unlike that of a book, the authorship of a audiovisual work is a collective matter, and so you have to look at everybody who participates in that production. The standard rule at the commission since 1984 has had three elements. There's a fact sheet that is available, Madam Chairperson, and I think most members of the committee have it.
There has been some loose interpretation of the facts.
The basic rule for live-action drama and comedy is that you need six out of 10 of the key creative personnel to be considered as Canadian. It's the same rule that CAVCO, the Canadian Audio-Visual Certification Office, under the minister's jurisdiction, uses for tax credit, and so do many other funding agencies across the country. Then you have to have two 75% rules that relate to where some of the post-production costs are spent in the country. Overall that means that a lot of the resources are spent in Canada, and therefore create economic employment.
I'll try to explain it again. In the last opportunity the question was very long, so it probably cut out the point of my being able to explain it.
Six out of 10 in the CRTC world has been the standard for what is Canadian since 1984. That has not changed. The Canadian Audio-Visual Certification Office, which has certified content for the tax credit since 1995, has used six out of 10 as the norm to define what is a Canadian production.
There are a few exceptions for matters done under an official co-production treaty, for co-ventures, and for animation, but here we're talking about live action. It has always been six out of 10, plus the two 75% rules, and the requirement that the producer—the directing mind behind the production—also be Canadian.
Outside of what is recognized as Canadian, there are numerous funding mechanisms that say that if you are at a higher level or at that level, we will also provide production financing of one sort or another. There are a bunch of independent production funds that have been created. They represent about 1.6%, of the funding. They have always been described as being the “innovative edge” of what they're doing, because the Canada Media Fund usually requires 10 out of 10, and it's funding most of the productions in this country that you probably see in prime time from Canadian broadcasters.
The independent funds were quite pleased to have this added flexibility, because the documentary makers could not sometimes make it in a 10 out of 10 world. The 10 out of 10 still exists. They'll still be financing the Orphan Blacks of the world, because that's the only way they'll be able to get to the CMF.
It is a complicated ecosystem. Anybody who is telling you that we have reduced to six out of 10 from 10 out of 10 is misleading you, because what is recognized as Canadian was, is, and continues to be six out of 10. The issue here is accessibility to additional funding given by either taxpayers or subscribers.
Right. I'll deal with the second one first.
The question you ask is one of tax policy, and I'm certainly not an expert in tax policy, but I can see their argument that a service like illico, Crave, or even shomi—that's still around until the end of November—are subject to GST payments, whereas other foreign services that still use our banking system through credit card set-offs don't seem to be. Just as an ordinary citizen, I'm a bit surprised by that. I know that it's not the approach taken in other jurisdictions, but I suggest you ask that question of the Department of Finance.
With respect to the quality of journalism, I gave a speech on the 17th of February and, maybe to shorten things up, I elaborated on my thoughts about the emergence of quality journalism on the new platforms. My point, in short, was that the journalism standards we have today took 300 years to develop. Facebook hasn't been around for more than 10 or 12 years, and it's the same with the other social media platforms, so it takes time. In fact, the codes of ethics that everybody quotes today probably only find their origins in the 1920s.
These standards take time to develop, but they are usually developed by the professional industry themselves. I'm particularly aware that Parliament, in the Broadcasting Act, tells us specifically, right up front, that we have to be cognizant of freedom of expression and independence of journalistic ethics. It's difficult for a body like ours to tell journalists, who are the fourth estate, how to do their job.
I am hopeful that the journalism industry will ask itself the question, as we are on these new platforms, what the standards are. Can we just print anything that appears to get more clicks to sell more advertising, or should we be applying a code of ethics, whether we're the CBC or the CTV, to make sure that we are doing it as appropriate members of that fourth estate?
Thank you, Madam Chair.
Mr. Hutton, Ms. Laizner, thank you for being with us.
One thing concerns me greatly as I listen to you, just as it concerned me when I listened to Mr. Blais a little earlier. I get the sense that the digital universe is surrounded by a legal void. We're talking about the Internet, more or less. We aren't accusing Netflix or anyone else, but we are talking about a new environment, a new apparatus. In the past, we listened to music on the radio and we watched programs or movies on television. All of a sudden, there is a new instrument, with a new code.
In light of that, I don't understand that there are so many initiatives. I am waiting for the government to ring the bell to put an end to recess and stop the initiatives that are being launched in every direction.
As Mr. Blais said earlier, everything in this system is interconnected. Everyone is connected to everyone else from one end of the chain to the other. Suddenly, one brick decides to leave the wall, then another. At a certain point, the whole building is going to collapse.
I know Mr. Blais sees me as an old crone who is afraid of the future, but that isn't so. The truth is that at this time the whole milieu is shaken. I would say there are victims on all sides.
Moreover, I do not understand that in Broadcasting Regulatory Policy CRTC 2016-224, on the issue of improving coverage, the decision was made that community television stations were more or less optional. In other words, they are left to find funding wherever they can, and young people have only to take their iPhone and go and make videos at CEGEP and put them on YouTube. That is more or less the message they were given.
The fact remains, however, that paragraph 3(1)(b) of the Broadcasting Act refers to “the Canadian broadcasting system [...] comprising public, private and community elements”. It says that the system “makes use of radio frequencies that are public property”. I understand that things have changed a lot, but you were still rather cavalier in your treatment of the community media. It seems to me you crossed the line.
It's quite catchy, in a sombre way.
We all know that in every element of the Canadian broadcasting system, whether it's television and specialty channels, radio, or satellite distribution, everybody contributes to the creation and the distribution of Canadian programming.
The CRTC, in 1999 and in 2009, exempted from regulation undertakings that provide broadcasting services over the Internet and operate in whole or in part in Canada. In other words, digital media are not subject to that obligation.
Through the course of this study, we have heard from Friends of Canadian Broadcasting, Rogers, the Canadian Wireless Telecommunications Association, and Cogeco. They are all are very unhappy that foreign over-the-top service providers are not required to collect the same taxes as Canadian services are or to contribute to Canadian programming. Obviously, I'm talking about Netflix. That's what everybody talks about: Netflix, Netflix, Netflix.
I was quite interested to hear your boss, the CRTC's chairperson and CEO, Monsieur Blais, say that it concerns him that Netflix does not contribute. It concerns him as a private citizen. I think he said, “as a private individual”, so as a private individual he's deeply immersed in this issue. What are your thoughts on Netflix being exempt, unlike everybody else?
Well, no. I've repeated what every broadcast CEO tells his shareholders: “I didn't lose this quarter. I'm good.” That's what is reflected in the “flat is the new up” phrase.
We hear about a variety of challenges, but really the challenge is that radio relies on advertising, local television relies on advertising, specialty channels rely in part on advertising, and the CBC relies in part on advertising. The advertising business is it.
Yes, eyeballs may have gone to Netflix, but the advertising business is what is certainly having a wider impact on what's happening in our broadcasting industry. A number of different players have entered the advertising business, and what we're trying to do with a lot of our nudges and our small changes to the broadcasting system is to motivate our broadcasters to, in part, move into that new field, that new digital field, so that they can monetize these new platforms and not let other people eat their lunch and take up all the growth.
All the growth in advertising is being taken up by new platforms. Those new platforms aren't all broadcasters. Netflix doesn't go after advertising revenue, so the problem is wider than just one entity. That's one message I want to leave with you on that aspect.
With respect to our own mechanism, the broadcasters that you mentioned came to us also in our hearings and complained and indicated that they were competing with one hand tied behind their back with respect to over-the-top digital products. What we put in place is a level playing field for them under our own rules.
Most of what is being produced out there is being produced by other entities, so we put them on a level playing field with these over-the-top providers. We provided them actually with a bit of a leg up, because they can use the traditional broadcasting system to distribute their products to Canadians through what we call our hybrid VOD—video on demand—exemption order. It's for CraveTV, it's for illico, it's for Tou.tv, so that they can go forward and serve Canadians and be able to compete on an equal footing with respect to our rules.
I think what the chairman was talking about was essentially that there is another area, a matter of fiscal policy—which is outside our purview—that companies are probably still coming to see you about and want to see addressed.
Thank you, Madam Chair.
Ms. Laizner and Mr. Hutton, for your information, the statements I referred to were taken from testimony given at the May 10 meeting.
My colleague Mr. Vandal had put this question to Mr. Jagdish Grewal, from the Canadian Punjabi Post:
“Where is your competition?”
Mr. Grewal replied the following:
“There's the IPTV box. The last two weeks, about five or six daily 24/7 channels have started in the Punjabi language here in greater Toronto and they are going after our business people to promote their stuff on TV.”
Earlier, Mr. Blais provided a good answer to the question put by the chair of the committee about the taxes that are applied to circumvention services. He said that that question would have to be put to the Department of Finance, which we understand.
Next November 22, you will be launching your study on the large conventional television consortiums like Bell, Shaw and Rogers. We hope that they will not try to conclude an agreement based on the fact that since the other services do not pay taxes they should not pay any either, and that, like Netflix, they do not want to provide Canadian content, or would like to have smaller quotas.
Dare we hope that you will not entertain this tax argument in the negotiation of an agreement? I want to say to my good friends in the telecommunications sector that they are quite right and that we are a very mediocre society if we do not make it our business to collect taxes on circumvention services. That said, can we be sure that that will not be used as a bargaining chip in negotiations?