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37th PARLIAMENT, 1st SESSION

Standing Committee on Canadian Heritage

EVIDENCE

CONTENTS

Thursday, June 6, 2002

0905

The Vice-Chair (Mr. Dennis Mills (Toronto—Danforth, Lib.))

Mr. William L. Daly (Executive Vice-President and Chief Legal Officer, National Hockey League)

0910

The Vice-Chair (Mr. Dennis Mills)

Mr. Abbott

Mr. Chuck Strahl (Fraser Valley, Canadian Alliance)

The Vice-Chair (Mr. Dennis Mills)

Mr. Abbott

The Vice-Chair (Mr. Dennis Mills)

Mr. Abbott

Mr. Chuck Strahl

Mr. William Daly

0915

Mr. Abbott

Mr. William Daly

Mr. Abbott

Mr. William Daly

The Vice-Chair (Mr. Dennis Mills)

Mr. Chuck Strahl

0920

Mr. William Daly

Mr. Chuck Strahl

Mr. William Daly

Mr. Chuck Strahl

An hon. member

Mr. Chuck Strahl

The Vice-Chair (Mr. Dennis Mills)

Mr. William Daly

Mr. Chuck Strahl

Mr. William Daly

Mr. Chuck Strahl

Mr. William Daly

The Vice-Chair (Mr. Dennis Mills)

Ms. Christiane Gagnon (Québec, BQ)

0925

Mr. William Daly

The Vice-Chair (Mr. Dennis Mills)

Ms. Christiane Gagnon

The Vice-Chair (Mr. Dennis Mills)

Ms. Christiane Gagnon

Mr. William Daly

0930

Ms. Christiane Gagnon

Mr. William Daly

The Vice-Chair (Mr. Dennis Mills)

Ms. Sarmite Bulte (Parkdale—High Park, Lib.)

Mr. William Daly

Ms. Sarmite Bulte

Mr. William Daly

Ms. Sarmite Bulte

Mr. William Daly

Ms. Sarmite Bulte

The Vice-Chair (Mr. Dennis Mills)

Mr. John Harvard (Charleswood St. James—Assiniboia, Lib.)

The Vice-Chair (Mr. Dennis Mills)

Mr. John Harvard

0935

Mr. Chuck Strahl

Mr. John Harvard

Mr. Chuck Strahl

Mr. John Harvard

Mr. William Daly

The Vice-Chair (Mr. Dennis Mills)

Mr. Peter MacKay (Pictou—Antigonish—Guysborough, PC)

Mr. William Daly

Mr. Peter MacKay

Mr. Douglas Perlman (Senior Vice-President, National Hockey League)

Mr. Jeff Pash (Executive Vice-President and General Counsel, National Football League)

0940

Mr. Peter MacKay

Mr. William Daly

Mr. Peter MacKay

The Vice-Chair (Mr. Dennis Mills)

Mr. Tony Tirabassi (Niagara Centre, Lib.)

Mr. William Daly

Mr. Tony Tirabassi

The Vice-Chair (Mr. Dennis Mills)

Mr. Abbott

Mr. Gregory A. Piasetzki (Legal Counsel, FWS Joint Sports Claimants Inc.)

0945

Mr. Abbott

Mr. Gregory Piasetzki

The Vice-Chair (Mr. Dennis Mills)

Mr. Jeff Pash

Mr. Abbott

Mr. Jeff Pash

Mr. Abbott

0950

Mr. Jeff Pash

The Vice-Chair (Mr. Dennis Mills)

Mr. William Daly

The Vice-Chair (Mr. Dennis Mills)

Ms. Sarmite Bulte

Mr. William Daly

Ms. Sarmite Bulte

The Vice-Chair (Mr. Dennis Mills)

Mr. William Daly

The Vice-Chair (Mr. Dennis Mills)

Mr. Jeff Pash

0955

1000

The Vice-Chair (Mr. Dennis Mills)

The Chair (Mr. Clifford Lincoln (Lac-Saint-Louis, Lib.))

Mr. Chuck Strahl

Mr. William Daly

Mr. Chuck Strahl

Mr. William Daly

1005

Mr. Chuck Strahl

Mr. William Daly

Mr. Chuck Strahl

The Chair

Mr. William Daly

The Chair

Ms. Christiane Gagnon

Mr. William Daly

1010

The Chair

Mr. Dennis Mills

Mr. William Daly

Mr. Dennis Mills

Mr. William Daly

The Chair

Ms. Sarmite Bulte

1015

Mr. Jeff Pash

Ms. Sarmite Bulte

Mr. Jeff Pash

Ms. Sarmite Bulte

Mr. Jeff Pash

Ms. Sarmite Bulte

Mr. Jeff Pash

Ms. Sarmite Bulte

The Chair

Mr. Abbott

1020

Mr. William Daly

Mr. Jim Abbott

The Chair

Ms. Christiane Gagnon

Mr. Jeff Pash

Ms. Christiane Gagnon

Mr. William Daly

1025

Ms. Christiane Gagnon

Mr. William Daly

The Chair

Ms. Christiane Gagnon

The Chair

Mr. Mills (Toronto—Danforth)

An hon. member

Mr. Dennis Mills

The Chair

Mr. Mills (Toronto—Danforth)

The Chair

Mr. Mills (Toronto—Danforth)

An hon. member

Mr. Dennis Mills

Mr. John Harvard

The Chair

Mr. John Harvard

The Chair

1030

Mr. Abbott

The Chair

CANADA

Standing Committee on Canadian Heritage

NUMBER 072

1st SESSION

37th PARLIAMENT

EVIDENCE

Thursday, June 6, 2002

[Recorded by Electronic Apparatus]

¿ (0905)

[English]

The Vice-Chair (Mr. Dennis Mills (Toronto—Danforth, Lib.)): I call to order this meeting of the House of Commons Standing Committee on Canadian Heritage. We are studying the House of Commons Bill C-48 copyright legislation. With us as witnesses today are FWS Joint Sports Claimants Inc....

Actually, I'll turn the floor over to you, Mr. Daly. You can introduce your associates and begin.

Mr. William L. Daly (Executive Vice-President and Chief Legal Officer, National Hockey League): Thank you very much, Mr. Chair, honourable members.

With me are Mr. Doug Perlman, head of the National Hockey League's local television business in both the United States and Canada; Mr. Jeffrey Pash, the executive vice-president in the National Football League and my predecessor in this position with the National Hockey League; and Gregory Piasetzki, our outside counsel who advises the fall-winter-spring sports collective.

Thank you very much for having us here today. We're very pleased and grateful to have the opportunity to share with you our very great concerns with respect to Bill C-48 and the initiative to extend the compulsory licence to Internet retransmission of over-the-air broadcast signals. For the National Hockey League and all of its member clubs, this is a very significant issue and, as I said, a very significant concern.

In particular, I'd like to highlight for the committee that this is a concern for our small-market Canadian franchises, which are already challenged in a number of respects with respect to their ability to remain competitive and remain viable in their current locations. It's something the National Hockey League is very committed to. As Commissioner Gary Bettman has said on a number of occasions, publicly and before Parliament, maintaining the viability of our Canadian franchises and our Canadian roots is probably the foremost priority of the National Hockey League. The heritage of hockey in this country is something we admire and respect very greatly. We take it very seriously, and it's something we're committed to preserving for the long term. In part, that's one of the reasons why we're very concerned with respect to Bill C-48 and the implications it would have for our Canadian franchises.

One of the most valuable assets professional sports leagues and professional sports teams have is their broadcast rights and the ability to sell those broadcast rights to broadcasters, generally on an exclusive basis. If this bill were to pass, our fear is that a compulsory licence that doesn't fairly compensate the league or the teams for their broadcast rights would cause a serious erosion of the value of the broadcast rights that our Canadian teams have and sell locally; and also of the rights the league has and sells on a national basis both within Canada and within the United States, and from which our Canadian franchises benefit.

As I mentioned, what makes the broadcast rights so valuable is the ability to sell them exclusively, the ability to find a broadcaster who wants to broadcast them and can benefit from their exclusivity because people watch them. Advertisers will purchase time in order to be able to communicate to the audience watching the programming. Our concern with Internet retransmission is that this exclusivity, the thing that makes those broadcast rights valuable, would be totally lost. The retransmission would be able to compete—for lack of a better term—with what had been an exclusive broadcast within local broadcast territories, thus making those broadcast rights less valuable. Ultimately, if there are enough options by which to see the game, the broadcast rights have almost no value. We would therefore urge that strong consideration be given to excluding expressly in the legislation the ability to retransmit over the Internet, on a simultaneous basis, broadcasts of sporting events.

¿ (0910)

The Vice-Chair (Mr. Dennis Mills): Why don't we go directly to questions?

Mr. Abbott.

Mr. Jim Abbott (Kootenay—Columbia, Canadian Alliance): Thank you.

I can't avoid the opportunity to take at least one small shot, and then we'll get into this. Although I'm sure your comment that the heritage of hockey in Canada is admired and respected by the NHL was sincere and well intended, I have to tell you that, in one person's humble opinion, that heritage isn't always shown that admiration and respect. The way in which the league seems to relate to the Canadian side of the game is sometimes not quite as apparent as perhaps you would like it to be.

I think Canadians are exceptionally proud of hockey in Canada. We only needed to see the Olympic gold medal game and the way Canadians responded to it. I dare say 15 million people were absolutely glued to their television sets wherever they were, whether they were in airports, in their homes, or wherever. I think there have been times in this person's experience when I have seriously questioned the commitment that the NHL shows to the Canadian side of hockey.

That being said, I don't often get a chance to take a shot at the NHL, so there you go.

Mr. Chuck Strahl (Fraser Valley, Canadian Alliance): Was that a slapshot?

The Vice-Chair (Mr. Dennis Mills): Would you like Mr. Daly to respond?

Mr. Jim Abbott: Sure.

The Vice-Chair (Mr. Dennis Mills): Did you have something specific in mind?

Mr. Jim Abbott: I think it's rather relevant to Bill C-48. I have the specifics in mind. I just wanted to....

Voices: Oh, oh!

Mr. Chuck Strahl: So it was a fake shot.

Mr. William Daly: Mr. Abbott, I would say that the National Hockey League very much shares your concern about the Canadian franchises, their ability to remain competitive, and the very real challenges that they face in trying to remain competitive. The National Hockey League has put together a variety of programs designed to assist the Canadian franchises in remaining competitive, through fairly significant revenue-sharing with our Canadian franchises. The fact of the matter is, though, that our Canadian franchises start at a significant disadvantage with respect to their U.S. counterparts every year because of the currency differential. They have to collect revenues in Canadian dollars and they have to pay expenses in U.S. dollars, and that's not very fair to them. That's something we need to correct, and it's something we're committed to correcting.

Right now, we have a collective bargaining agreement that remains in effect through 2004. It's something we're going to have to live with and deal with through that year, and then it will be up to us to fix it. We're committed to fixing it, and we're committed to fixing it for the benefit of our Canadian franchises. To the extent that it has a significant impact on the value of what our Canadian franchises have to sell, Bill C-48 will only make it more difficult for them to compete and more difficult for them to survive if it's passed.

¿ (0915)

Mr. Jim Abbott: Fair enough.

Specifically on Bill C-48, you speak of a serious erosion of value. You talk about exclusivity and local broadcast territories. If we take a look at the current DTH model, though, we have a time-shift that allows people to pick things up off of direct-to-home satellite transmissions. That undoubtedly creates a problem for you with respect to the local broadcast territories and so on already. How is the Internet different from the challenges you face with DTH?

Mr. William Daly: The direct-to-home satellite market is something we try to benefit from and derive benefits from for our franchises. It's clearly a balance. It's a structured delivery into marketplaces. To the extent that we can, we try to protect the marketplace in terms of over-the-air broadcasts. For instance, if you're in Edmonton or in Vancouver, you cannot receive your local broadcast of the Edmonton Oilers or Vancouver Canucks over satellite. You will get out-of-market games, but we try to protect the local broadcasts in the local broadcast territories.

I would respond by saying that we are trying to maximize revenues through an out-of-market television package. That does have trade-off effects, but we do this in a very structured way, whereby we deliver and try to protect the local broadcast territories.

Mr. Jim Abbott: If I understood the representation made to us by JumpTV correctly, they were prepared to comply with all of the rules and regulations that DTH and cable currently comply with. I realize this is under the CRTC as opposed to being under Copyright Board Canada, but the two of them have an overlay at some particular point.

If we just simply take their representation totally at face value—that they would comply with everything that is presently a regulation for DTH and for cable, and that they are simply an alternative method or means of delivery to the television set in the person's home—what is the problem?

Mr. William Daly: Let me start by saying I can't accept and take everything at face value, but for the purpose of this question I will.

The compulsory licence is not something we're very pleased with even for cable or satellite, but we understand that's not what we're debating right now. Any expansion of a compulsory licences is of serious concern to us.

In addition to that, in terms of an Internet retransmitter, the barriers to entry in that business and the investment in infrastructure don't have to be made. It will be easy to enter that business, and in terms of the availability of broadcast signals, they will become much more available. They are much more available over the Internet—from my understanding of the technology—than they are to cable.

The Vice-Chair (Mr. Dennis Mills): Thank you, Mr. Abbott.

Mr. Strahl, did you have a question before I move to Ms. Gagnon?

Mr. Chuck Strahl: It's just a short one, and it's just to clarify something about JumpTV.

We're playing the devil's advocate here. We're trying to find a position. I don't think this is an official position of any party, but we're trying to find a position.

They say the technology exists to restrict the regional availability of the Internet signal, and that they're willing to pay the same amount for the use of that, through the compulsory licensing, as anyone else would have to do to rebroadcast it on cable. If it costs much per viewer, they would have subscription-only viewers. That option would be available, and they would rebroadcast the full advertising package with it, without extra advertising banners or anything else. If Molson is buying the advertising, it would be rebroadcast as Molson.

They're asking what the problem is. If they can show that they can restrict it regionally and geographically, if they can keep it within Canada or keep it within a region, based on whatever the agreement might be, it's just another way to view it. You would get back revenues the same as you do now under a licensing system that I realize doesn't meet your best-wish scenario, but it's the one we're working under currently. So they just wonder what the difference is if they can do the same thing and rebroadcast it.

¿ (0920)

Mr. William Daly: I don't belive the gating technology is there, but I'll again assume it is for the purposes of your question. I have not heard them offer to respect regional geographic territories. With all of the restrictions built into your question, though, it would clearly do less damage.

Mr. Chuck Strahl: Finally, in your ideal world, you would rather do away with compulsory licensing entirely. You'd just rather sell.

If you could sell your product under a user-pay scheme—I'm not talking about pay-per-view, but selling it to a network or selling it to whoever—would you consider selling it to an Internet provider while saying they could rebroadcast it on their facilities and that you would give them $50,000 to broadcast a game? Would you consider that on a case-by-case basis?

Mr. William Daly: Absolutely.

Mr. Chuck Strahl: So you're not opposed to the Internet.

The Internet's coming, eh? I'm sure you know that. You have to find a way to get in on this.

An hon. member: It's just a fad.

Mr. Chuck Strahl: Good point.

The Vice-Chair (Mr. Dennis Mills): It's come and gone.

Mr. William Daly: We absolutely would. We look for platforms to expose our product. To the extent that the Internet becomes a viable platform to expose our product, we would have no qualms at all about entering into a negotiation and allowing the Internet, if the technology gets there to—

Mr. Chuck Strahl: If you could sell directly, as opposed to doing it through compulsory licensing, what difference would that make in the revenues of Canadian hockey teams. What would it mean if you could do it the way you would rather do it, instead of under the current system?

Mr. William Daly: We would hope it would enhance revenues.

Mr. Chuck Strahl: I know that, but what are your numbers? If that's what you want, you must have an idea that you could perhaps double your revenues or something like that.

Mr. William Daly: It's a difficult thing to predict. The exclusivity factor is something people pay a premium for. To the extent that you're making the game available in a marketplace on a number of different platforms—and this goes a little bit to your earlier question—each of those platforms is devalued to a certain extent, because basically people have choices about where they watch it. That makes it less valuable.

On an assumption that you're selling it and are broadcasting through satellite, over the air, maybe through cable, and on the Internet, all those pieces would be valued separately, so it would be difficult to tell you. But you wouldn't do that unless you could enhance your revenues.

The Vice-Chair (Mr. Dennis Mills): Madame Gagnon, did you have a question?

[Translation]

Ms. Christiane Gagnon (Québec, BQ): Thank you for your intervention. We are examining the Broadcasting Act, and one of its stated principles is accessibility. With the agreements that have been concluded recently with regard to the accessibility of French Hockey Night in Canada for a majority of francophones outside Quebec—we are talking about 20 to 25%—the National Hockey League made a proposal or an offer to Radio-Canada. It does not broadcast sports exclusively, but it is a broadcaster that could broadcast La Soirée du hockey. For a good number of Quebeckers, this is a cultural value. Indeed, as I was saying earlier, my uncle played for the Canadians, and helped them to win the Stanley Cup in 1942, I believe. So it is sad for francophones who want to watch La Soirée du hockey.

You were talking about your interests this morning. It depends what side one is on, but there are also the interests of the population, of consumers. This means that a large number of francophones who live under the poverty line or who have very little money to pay for cable would like to have access to the basic service offered by Radio-Canada.

Representatives of Radio-Canada told us that they were willing to renegotiate or examine with you another type of offer that could address this concern. We understand that you must look after your interests, but we would like you to also think about the interest of the population. This is a cultural value which is slipping out of the grasp of the francophone Canadian population.

What can you tell us this morning about the state of the negotiations?

¿ (0925)

[English]

Mr. William Daly: Thank you. I appreciate those comments.

That was something that was a very difficult decision for us. We were committed to making hockey available on French over-the-air television, and the Montreal Canadiens were also committed to doing that. We negotiated with SRC numerous times and proposed numerous packages to them. The bottom line was that SRC didn't want as many games, didn't want to televise as much inventory, and wasn't prepared to pay as much money as had been historically paid.

As I indicated, the Canadiens are one of the franchises that is very challenged on the revenue side right now in terms of trying to compete and remain viable. It was very important to them to make sure they at least remained even with the revenues they had been generating from their broadcast rights traditionally. Having said that, I think they were probably prepared to take a little bit less than what they'd been making to make sure the games were as accessible as possible. They went back to SRC a number of times, including after they had reached a tentative agreement with RDS. For whatever reason, no accommodation could be made and no agreement could be reached to continue the SRC package in its current form or even in a reduced form. However, that won't stop us from continuing to see what can be done to make French-language broadcasts as accessible as possible on over-the-air television.

The Vice-Chair (Mr. Dennis Mills): I'm going to cut in just for one second.

Mr. Daly, we appreciate it that you answered that question even though our focus today is Bill C-48. I just want to very gently remind members that this is where we're coming from.

[Translation]

Ms. Christiane Gagnon: Thank you, Mr. Chairman. We were talking about interests, and so I extrapolated this to the public interest.

I will come back to Bill C-48.

The Vice-Chair (Mr. Dennis Mills): I am [Editor's Note: Inaudible].

Ms. Christiane Gagnon: We will go back to Bill C-48, but I do not entirely share your perspective on this. Bell Canada, RDS and all of that is a monopoly, but we can discuss that some other time.

The people from JumpTV came to see us and they said that the technology they have put in place... Those who hold the rights are afraid that a program they hold the rights to will be broadcast outside Canada and in the various regions of Canada. They told us that they had developed a dependable technology that could allay that fear you have with regard to the constraints that would be imposed upon them as to broadcasting outside Canada. They told us that they would even be willing to have a third party verify the dependability of their system.

Could this answer which was given to us by the JumpTV Internet provider satisfy you, would it allay your fears with regard to this broadcasting that might go outside of Canada's boundaries?

[English]

Mr. William Daly: We're certainly happy to talk with JumpTV. Maybe they know something we don't know. My understanding of the technology is limited, but everything I have ever heard is that the technology is not available. Again, their revenue model would be interesting if they couldn't sell advertising, because that's how they would support such a platform. I've never heard them offer to offer that programming on a regional basis in respect of our geographic boundaries. But if all of those factors were there, then we'd be happy to talk with them.

¿ (0930)

[Translation]

Ms. Christiane Gagnon: Yesterday, at the very end, I gathered all of the suggestions that were made to us, all of the commitments they were willing to give us concerning rights to be paid, as to the guaranteed dependability of the technology, the control of that technology and the non-acceptance of publicity spots, on the restriction. Yesterday, before the committee, they gave us all of those guarantees. If all those guarantees were really given and monitored, would you be willing to budge in order that they might have the compulsory licence?

[English]

Mr. William Daly: Again with the caveat that compulsory licensing is not something we're in favour of, if all those guarantees were in place and they could be monitored effectively—which I doubt seriously—then I certainly understand the legislation that's in place.

The Vice-Chair (Mr. Dennis Mills): Ms. Bulte.

Ms. Sarmite Bulte (Parkdale—High Park, Lib.): Thank you very much, Mr. Mills.

Mr. Daly, listening to your position, I think the key thing that you're trying to say is that the National Hockey League is in a position that is the same or very similar to that of SOCAN, the Society of Composers, Authors and Music Publishers of Canada; of the Canadian Film and Television Production Association, which takes in the creators; or of CRIA, the Canadian Recording Industry Association.

What is at issue here is the compulsory licence. My understanding is that JumpTV is actually operating now and is retransmitting the BBC, but also that they indeed negotiated their rights directly with the BBC. What we're talking about is one way of allowing individuals who hold intellectual property rights to negotiate directly with the deliverer of the broadcast, as opposed to taking it to the Copyright Board Canada, at which time the board is going to make the determination. Am I correct that this is the key issue here?

Mr. William Daly: Yes.

Ms. Sarmite Bulte: It's not whether or not JumpTV gives its guarantees, that somehow this committee is going to start licensing it, and that the CRTC doesn't play a role. The key issue really is whether or not we should allow creators and rights-holders to directly negotiate with the broadcaster or the retransmitter, as opposed to allowing the copyright board to do so.

Mr. William Daly: That's absolutely the underlying philosophical issue. There's no doubt about that. I understand, however, that compulsory licensing legislation is in place. I'm here to tell you why that legislation should not have to be extended to Internet retransmission and what makes Internet retransmission different, for instance, from cable and satellite.

But yes, absolutely, that philosophical issue remains. It's something we don't necessarily agree with as copyright-holders. We believe in our ability to negotiate, to give up those rights. We view it as our property, and we have the right to negotiate market value for the distribution of our property.

Ms. Sarmite Bulte: So the artists in Canada and the National Hockey League are ad idem on this one.

Mr. William Daly: Yes.

Ms. Sarmite Bulte: Thank you.

The Vice-Chair (Mr. Dennis Mills): Mr. Harvard.

Mr. John Harvard (Charleswood St. James—Assiniboia, Lib.): Thank you, Mr. Chairman.

I must say that I find myself in a strange situation today. While I'm a great hockey fan, I've never been a fan of the operators of the NHL.

The Vice-Chair (Mr. Dennis Mills): You have my sympathy, seeing that we lost the team in Winnipeg.

Mr. John Harvard: Thank you for that sympathy. I wasn't pulling for the Leafs when they lost, though. Darn it, I hope the Carolina Hurricanes win the Stanley Cup.

Anyway, what I'm saying is that I find myself in a strange position because I support the NHL in this particular situation. I think Sam Bulte and I agree, although I would use words somewhat different from those she used. I think we're dealing with private property here. We're dealing with a potential seller and a potential buyer. JumpTV is a potential buyer, and the NHL is not willing to sell at this particular time. It's a rights-holder, it has property, and we're in a private-market situation. I can't see why this committee, this government, or anybody else should be doing anything to force the NHL to sell its property to anyone.

If they want to change someday for whatever reason, that's fine and dandy, but I just see this as private property. Whether it's through compulsory licensing or any other method, forcing the NHL to share its product with somebody under duress or coercing it to do so through law is crazy.

¿ (0935)

Mr. Chuck Strahl: We do that now.

Mr. John Harvard: Do we?

Mr. Chuck Strahl: That's why they don't like compulsory licensing.

Mr. John Harvard: We're talking about the Internet in this particular case.

Anyway, go ahead, Mr. Daly.

Mr. William Daly: I agree with you, obviously. I think there are significant distinctions between the Internet and cable. The rationale for passing the compulsory licence originally had to do with a very unique set of circumstances in which you had a cable industry that was both very well-developed and very highly invested in. It was a mature industry. You made a public policy decision to support that industry. On the Internet, where there are low barriers to entry, no investment, and virtually none of the same restrictions on carriers that you have on cable, it becomes even more unfair to force somebody to give up their private property for less than fair value.

The Vice-Chair (Mr. Dennis Mills): Mr. MacKay.

Mr. Peter MacKay (Pictou—Antigonish—Guysborough, PC): I'd like to thank the entire panel for being here.

Along with boiling this issue down to the one of distribution of private property rights, just from a purely Canadian perspective, Mr. Daly, I was glad to hear you enunciate at the outset the NHL's commitment to the game. I can think of examples in my riding in Nova Scotia, where the National Hockey League Players' Association has engaged in numerous activities. Al MacInnis supports a lot of the minor hockey programs in his hometown of Port Hood. Guysborough had an outdoor rink facility built much in part because of the generosity of the players' association and the NHL, so I know that commitment to the cultural part of the game is there.

The Winnipeg Jets' franchise was mentioned. We also lost the Quebec Nordiques. What I'm hearing is that our Canadian franchises, our Canadian teams, particularly in smaller markets, could be destabilized and lose revenue streams to the point that they might have to relocate. I think that's something fundamental to this decision and to any changes we might anticipate making. Is it fair to say that? Is it a real threat that's posed here. Could lost revenues contribute significantly to the relocation of players? You mentioned the dollar. We know it's another very destabilizing factor for these Canadian franchises, but I suggest that loss of revenue via access and advertising could be the death knell for some of these teams that are very much on the brink right now.

Mr. William Daly: I believe that's a very fair comment. Without coming in here and telling you that the sky is falling, the fact of the matter is that, as I said at the outset, our Canadian franchises operate at significant disadvantage to the U.S. franchises. You have to take into account the fact that broadcasting revenues—these include national broadcast revenues and their share of those, along with local broadcast revenues—represent as high as 22% or 23% of their overall revenues. If you devalue those rights and revenues, they absolutely become even more challenged and the situation certainly worsens.

Mr. Peter MacKay: Perhaps I can direct a question to Mr. Perlman, because it seems the NFL and some of its smaller market franchises might face a similar scenario.

In the American example, Mr. Perlman, can you tell us how the NFL approaches this issue?

Mr. Douglas Perlman (Senior Vice-President, National Hockey League): Actually, I'll defer to Mr. Pash. He's the representative for the NFL.

Mr. Jeff Pash (Executive Vice-President and General Counsel, National Football League): Mr. Chairman and Mr. MacKay, thank you. On behalf of the National Football League, I'm grateful to be able to appear before you today. From my four years in the National Hockey League, in the chair that Mr. Daly now occupies, I know this is a very important issue. I can certainly appreciate the concerns and sensitivities that have been expressed by some of the members.

With respect to your question, Mr. MacKay, the National Football League has a broadcast television model that is somewhat different from those of other leagues. We sell all of our rights for our regular season and post-season games to the broadcast networks in the United States or to Global in Canada. Individual teams do not sell their rights to their games. Instead, all of those rights are sold and the revenues are pooled and then shared equally. For example, Green Bay, Cincinnati, New Orleans, or Buffalo will have the same broadcast revenues as either New York team, Chicago, or San Francisco. That model tends to go a long way toward preserving competitive quality on the playing field and in terms keeping those small-market teams in the game so that a team like Buffalo can go to four consecutive Super Bowls.

¿ (0940)

Mr. Peter MacKay: Just as a final question, so that we're clear and on the record, Mr. Daly, from your submission here, your preference is clearly that this bill does not pass in its current form or is at least suspended in terms of its passage through the House.

Mr. William Daly: That's correct.

Mr. Peter MacKay: Thank you.

The Vice-Chair (Mr. Dennis Mills): Mr. Tirabassi, did you have a question, sir?

Mr. Tony Tirabassi (Niagara Centre, Lib.): Yes, I'm going to ask a question. Thank you, Mr. Chair. I'd also like to welcome the panel that's here today.

On page 3 of the submission, you refer to the uniqueness of the sports industry and sports telecasts. You say they differ from most other television programming in that they are time-sensitive, live, and geographically limited, and that they generally have little replay value. Unless it's the last game of the original 1972 Canada-U.S.S.R. series, with Paul Henderson's infamous goal, you're right, once the game's over, it's over. Who wants to watch something that's stale?

The other unique aspect of professional sports and modern college sports is the underground economy. It's there, I'm not so sure it's all underground. You can look in a newspaper and find all the 1-800 numbers. I don't have the figures in front of me, but what is transacted in that particular economy is incredible. It's out there. As a result, for those who participate in it, there's going to be an unrelenting hunger to receive those signals. That doesn't give anybody any right to pirate the signals to feed that hunger, though.

Would you care to comment on whether or not that indeed does have any impact as far as saleability or attraction to you is concerned? I will concede that it is your business and that these are private-property rights, but how would that play out with certain people who wish to buy and sell the signals for that purpose? Is that something you monitor?

Mr. William Daly: One of our main concerns with Internet retransmission certainly is the ability of Internet retransmitters to accept advertising from the underground economy, as you've pointed out. It all goes with our fundamental belief that we should have a right to package and sell our programming and our product in the way we see fit. One of those considerations is how that programming and product is packaged and sold to the public. It clearly is important to us that the reputation and public's perception of our game and our product is first-rate and up to the standards of society.

Mr. Tony Tirabassi: Thank you, Mr. Chairman.

The Vice-Chair (Mr. Dennis Mills): Mr. Abbott.

Mr. Jim Abbott: Mr. Piasetzki, can you just briefly inform us what FWS Joint Sports Claimants Inc. is?

Mr. Gregory A. Piasetzki (Legal Counsel, FWS Joint Sports Claimants Inc.): Fall–Winter–Spring Joint Sports Claimants Inc. is a collective society under the Copyright Act. It was established for the purpose of receiving royalties under the existing compulsory licence of section 31. It brought these particular leagues together, along with the Canadian Football League and the National Basketball Association, for the purpose of receiving royalties under the existing regime. Of course, they have a common interest, as expressed by Mr. Daly to this point, in seeing that this regime isn't extended further to bring in other property rights, including the Internet, as discussed here today.

Let me just say that the fact the CFL and the NBA are not separately appearing today has nothing to do with any lack of interest on their part. That was a decision on our part simply to expedite the proceedings before the committee. There is a belief in the National Basketball Association and the CFL that their interests are being well represented by the speakers here today. They're completely as one in terms of this issue.

¿ (0945)

Mr. Jim Abbott: I have ended up under the impression that the NHL, NFL, and NBA—the larger players—have indicated that if Canada does not go ahead with some type of Internet protection—an Internet carve-out or some kind of proper protection—they would be seriously reviewing whether or not they would be broadcasting in Canada. In other words, if the law won't protect the signal.... I would suspect that this would be more true of the NFL and the NBA than it is for the NHL, because you cannot cut hockey out of Canada.

I would be interested in getting a response to that from all three groups represented here today. Is there any truth to the threat—I'll call it that—that if there is no legislation to protect your property, such as is envisioned under Bill C-48, you would either go ahead with not broadcasting in Canada or would take some kind of protective measure on your own?

Mr. Gregory Piasetzki: Mr. Chair, honourable member, I would refer that question to Mr. Daly and Mr. Pash.

I should also say that Mr. Pash had come prepared to make a formal statement as well, and that we only began with Mr. Daly.

The Vice-Chair (Mr. Dennis Mills): I'm sorry. Would you like to answer that question first, though? We can then come back to your presentation.

I believe Ms. Bulte also has a short question before we move on.

Mr. Jeff Pash: I'd be happy to answer the question, Mr. Chairman.

Mr. Abbott, I'm not here to make any threats on behalf of the NFL. I think what you're suggesting is not a threat, it's a natural operation of market forces. If you are trying to sell rights under one set of legal protections and those rights have a value, and if the value of those rights is then eroded by an operation of law, as a seller you will naturally look to maximize your value under that new regime. If that new legal regime maximizes the value of your rights by moving them off broadcast television and on to other more secure forms of distribution, I think that's a natural market response to a change in the legal structure under which you're compelled to operate.

Even though we are a U.S.-based operation and all our teams are there, we have a lot of fans in Canada. We value our fans in Canada. Our commissioner was here within the past thirty days or so to meet with major Canadian business leaders to talk about how we can expand our relationship with Canada. We present our games on an extensive over-the-air basis on the Global network. We have arrangements with Rogers Cable. We have very satisfactory broadcast arrangements. If the legal regime in the future were to change such that those rights aren't worth what they are today, though, any seller would have to look at alternatives.

Mr. Jim Abbott: While I realize I used the pejorative word “threat”, I think you've simply restated in a very factual way that this would potentially be—not calling it a “threat”, but throwing that word out completely—the natural consequence of the government not passing Bill C-48 or some form of Bill C-48 in which you would have protection as far as Internet pick-up is concerned.

Mr. Jeff Pash: I do not believe you need to pass Bill C-48 in order to give us that protection. I would advocate what I know a number of other industry groups have advocated. It's what Mr. Daly said in his testimony. The legislation should expressly state that the compulsory licence in section 31 of the Copyright Act does not extend to Internet retransmission. That's the kind of legislation we would look for, as distinct from legislation that would extend that licence under some unknown regulatory regime.

Mr. Jim Abbott: This is really germane. Are you saying this action that the league might feel compelled to take for its own protection—I understand that—might be forthcoming if Bill C-48 is passed the way it is presently, in an unknown form and without the regulations in place? Do I understand your representation correctly?

¿ (0950)

Mr. Jeff Pash: No, I'm saying that if a change in the law opens up compulsory licensing on the Internet, then some of what we've been talking about is a possible consequence. We already have certain contracts in place, though, so we're not going to be doing anything tomorrow or with respect to the upcoming NFL season.

In terms of the kind of legislation that the National Football League would prefer to see, as I just mentioned, it's the kind Mr. Daly spoke about and the kind I know a number of other industry groups have advocated as well. Namely, the Copyright Act should be clarified to exclude Internet retransmission from the compulsory licence. That's the kind of legislation we would support, but we don't urge other legislation.

The Vice-Chair (Mr. Dennis Mills): Did you have a short answer, Mr. Daly?

Mr. William Daly: Mr. Chairman, if I might answer Mr. Abbott's question, I think what Jeff was alluding to and what the question really leads to is what Madam Gagnon was concerned about. To the extent that Internet retransmission of over-the-air broadcasts is available, market forces will dictate that we seek value elsewhere. You seek value through secure distribution that can't be stolen from you, and that secure distribution is cable. You would inevitably see free, over-the-air broadcasts of all sporting events shift to cable and more of a pay platform, and that ultimately would hurt consumers.

The Vice-Chair (Mr. Dennis Mills): Ms. Bulte.

Ms. Sarmite Bulte: I'll be very quick, Mr. Chairman. Thank you.

Mr. Daly, one of the questions I forgot to ask you was with respect to DTH carriage of an NHL game. Let's take Vancouver, for example, and say that the game is happening in Vancouver. How do you prevent the retransmission of that game back into the local Vancouver market? Is it because of a contract between you and the DTH carrier, or is it because of CRTC regulations? If it's because of a contract, then why wouldn't JumpTV enter into that same type of agreement with you?

Mr. William Daly: That's an excellent question, and it is by contract. We don't have satellite retransmission of our games other than by contract here in Canada, and we have certain blackout technology that allows us to black out certain broadcasts off that package so as to protect the local market.

As I alluded to before, we would be more than happy to entertain discussions with JumpTV to talk about how they can basically distribute our product. We'd need the same types of protections, but we would be more than happy to have that discussion.

Ms. Sarmite Bulte: Thank you.

I'm going to save my TRIPS question for Mr. Pash, after he does presentation.

The Vice-Chair (Mr. Dennis Mills): Building on this section, I'd like to ask one short question of Mr. Daly.

Right now, you would have a contract with, for example, the CBC to broadcast so many games. When you negotiate that contract, does a specific component of that contract disallow them from playing it on the CBC website?

Mr. William Daly: Yes. The exclusive platform is in the contract, and it is the over-the-air use of the signal. Certain provisions in the contract also regulate their use of the copyrighted broadcast afterwards. They can rebroadcast in certain situations, within a certain time period, and on a certain basis. That's all done by contract.

The Vice-Chair (Mr. Dennis Mills): Thank you.

Mr. Pash.

Mr. Jeff Pash: Mr. Chairman, again, thank you very much for giving the NFL the opportunity to testify here today. I am grateful for the time, and I don't mean to burden the committee or the record with a formal statement. I endorse what Mr. Daly has said. As you know from the written submission that was submitted by Fall–Winter–Spring Joint Sports Claimants, we are completely in sync with the NHL, the National Basketball Association, and the Canadian Football League.

With the chair's permission, what I might do instead is simply make what seem to me to be a couple of important points. I'd then be happy to respond to any questions or permit the committee to resume its dialogue with other members of the panel.

First, on the technology issue, with respect, it seems to me that what JumpTV and advocates of a compulsory licence are doing is really asking the committee and Parliament to take a great leap of faith. I have reviewed some of the testimony, and my understanding is that no witness has been able to identify a form of technology that will act as an effective gating mechanism. There have been allusions to them, but no technology has been identified. The Canadian Association of Internet Providers indicated that it was not aware of an effective gating technology. JumpTV did not identify what gating technology they were talking about. The expert whom we and other content holders have retained and who was our expert in the iCraveTV litigation that took place a couple of years ago in the United States has flatly said such technology does not exist. It is also unlikely that it will exist in the near future.

The movements and development of the Internet are moving away from this technology. In other words, it is becoming less likely, not more likely, that effective gating technology can be developed. Even if such technology is developed and put in place on day one, it will only be a matter of days before it is hacked and circumvented. This is important from the standpoint of an enforcement mechanism, because that circumvention will be done in a way that will be very difficult, if not impossible, to trace back.

I don't pretend to be an authority on the technology, but we have taken this seriously. We have tried to find out as much as we can. We have an extensive Internet business of our own. It's part of the National Football League. In that context, we have talked to the leading software companies and have discussed this issue with them, and they can't tell us that such technology exists.

In terms of the whole nature of the Internet, what we're talking about in terms of gating technology is the antithesis of the Internet. Someone made a point last night in some discussions that we were having. If you could effectively gate the Internet, totalitarian regimes overseas would do so. But what is doing more to sow freedom and change in countries like China, North Korea, and those regimes? What is doing more than the Internet? The Internet is doing more than all the efforts of Radio Free Europe, Radio Liberty, and their likes combined because people have access to it in the privacy of their homes. It can't be blocked by those governments, and those governments are dedicated to blocking it.

We have a border between our two countries that is many thousands of miles long, but it is not a barrier. It's a border, not a barrier. We have never, ever, in our hundreds of years of sharing that border, been able to keep people, ideas, goods, or sports from crossing that border. Hockey came to America and American football has come to Canada. I think it would be a great leap of faith, Mr. Chairman, to suggest that we will somehow keep electronic bits of data from crossing that border in any meaningful, effective way.

¿ (0955)

The second point that I would make, Mr. Chairman, is that refusing to grant a compulsory licence does not mean refusing to allow Internet retransmission. It simply means that the Internet will operate in the same environment as the broadcasters, many of the cable carriers, and many of the satellite companies do. They will negotiate with content-holders. They will work out arrangements between themselves that are satisfactory and that will allow this potentially extraordinarily powerful means of distribution to be part of the whole distribution framework that we use, that hockey uses, and that motion pictures and television use. It's not the death knell of the Internet by any means. It simply allows them to operate under the same regime, under the same private-market, negotiated arrangements that others do.

I was doing some reading about the history of compulsory licences in the United States. Back in the 1920s, proposals were made to give radio a compulsory licence so that it could use sound recordings. The theory in the U.S. Congress was that no one would accept advertiser-supported radio. That turned out to be wrong, of course. No compulsory licence was granted, yet radio flourished and the advertiser-supported model has worked.

We would urge that the market be allowed to work and that there not be a compulsory licence granted here. The technological uncertainties are too great. In our view, the need for it has simply not been demonstrated.

Mr. Chairman, thank you again for the opportunity. I'd be happy to respond to any questions.

À (1000)

The Vice-Chair (Mr. Dennis Mills): Mr. Chair, Mr. Pash represents the National Football League. He was the concluding witness, I believe, and we're now moving on to questions.

The Chair (Mr. Clifford Lincoln (Lac-Saint-Louis, Lib.)): Thank you very much for your help, Mr. Mills. I appreciate it.

Mr. Strahl.

Mr. Chuck Strahl: Thank you. I just have a couple of things. One is something I'm struggling with a little bit.

I agree with Mr. Harvard's impassioned plea for the free market to run this whole thing. I think that's the way to go. The problem is the inconsistency of the compulsory licensing being good for one broadcast method and not good for another.

I share some of your skepticism. We tried to get the JumpTV folks to tell us exactly how they could guarantee exclusive regional and Canadian content. The other day, goodness, they were sounding like proponents for the CBC. They were willing to do everything. If that's possible, it may be surprising. They seem to be the only group that claims to have the technology to do it.

Again, the problem is the inconsistency. I am more in your vein that the whole compulsory licensing thing is problematic. Be that as it may, let me get to the question that I had.

We have this bill to deal with, Bill C-48. Two ministers have written to us and have said to pass the bill as it is, without regulations, and that the regulations will be done within a year and will address any concerns. So we have the status quo, which is just the way it is now, with the Broadcasting Act, the Copyright Act, and everything else remaining as is. We could pass Bill C-48 and try to work on the regulations later. Finally, we could try to get the regulations in place, clip them to Bill C-48, and pass the whole thing in its entirety.

Which of those is most preferable to you guys?

Mr. William Daly: I would echo what I said before, and what I think Mr. Pash said. We're in favour of an express recognition by Parliament that the compulsory licence does not extend to Internet retransmission.

Mr. Chuck Strahl: In other words, you need the regulations or an express clause in the bill that is different from what's in the bill now. The ministers' argument and the argument of the officials we had before us was that this would essentially give an Internet carve-out until such time as the regulations are in place, but that doesn't really satisfy you.

Mr. William Daly: The concern that we have—and I sometimes get confused with the concept of “carve-out”—is with, I think, what Michael Wernick testified to. To actually pass the bill and to punt on the regulations for a year would actually change the legal landscape. That would change the status quo. It would suggest that Internet retransmission under a compulsory licence is acceptable, subject to some to-be-determined regulations. In our view, that is not what we would prefer and not what we would advocate. We would advocate an express recognition in the legislation that the compulsory licence does not extend to Internet retransmission.

À (1005)

Mr. Chuck Strahl: So you do want changes to the current system, to the current laws as they stand?

Mr. William Daly: We would suggest that section 31, by its terms, does not necessarily cover Internet retransmission, but I think that issue is at least ambiguous. To the extent that legislation could be passed to make it clear and express that the compulsory licence does not extend to Internet retransmission, that's what we're advocating.

Mr. Chuck Strahl: Okay.

Just as an aside, if access to the Internet is the best way to promote freedom in North Korea, maybe we should put NFL teams on there. It could be the best thing for the....

Voices: Oh, oh!

Mr. Chuck Strahl: It's just a thought, Mr. Pash.

The Chair: Before I pass to Madame Gagnon, I want to clarify something.

My understanding of what Mr. Wernick was saying was that if the bill is passed, then until regulations are promulgated—that's about a year—there will be a moratorium for that period. In other words, there would be an effective carve-out, but just for the period until the regulations come into force. Is that your understanding?

Mr. William Daly: Yes, although my understanding is that it would change what we believe to be the status quo, which is that the compulsory licence does not extend to Internet retransmission. By passing the bill on a basis that would see you would determine regulations later, it would be suggesting the contrary: that the compulsory licence is going to be extended to the Internet, but it's going to be extended on a certain set of to-be-determined regulations. I don't think that is what we would advocate.

The Chair: Madame Gagnon, followed by Mr. Mills.

[Translation]

Ms. Christiane Gagnon: Thank you, Mr. Chairman.

If, for instance, compulsory licences were excluded, what would that mean for you? You would also have control over negotiations with the Internet providers. So, this would be to your advantage.

You talk about control, access to the market and market forces, but you don't talk about copyright. Bill C-48 involves copyright and not control. We saw what happened with La soirée du hockey: you had control and you allowed the market forces to play out, and market forces mean that one part of the population may not have the means to pay for cable. So, you have some very economic interests that may not coincide with the interests of the creators and the stakeholders. I understand that you have rights as creators of part of La soirée du hockey, but by the same token, those forces are due to certain business mergers. They are very strong multinational forces.

So I think that you might also have better access, better control over what you have decided to negotiate with Internet providers. In this case, Bill C-48 aims to control what is happening on traditional television, on hertzian waves. So you too would be excluded.

[English]

Mr. William Daly: I don't think we're asking for a variation of the norm. Content-holders and anybody else who has property rights over something in a free marketplace have the ability to control the distribution and access to those property rights.

In relation to your question about access, I would again add that because we do control those rights, the market would dictate that if those rights lost value because of their free access and availability, they would migrate to a platform on which they're not as accessible but on which we would get fair value for our rights. In other words, if the necessary marketplace result makes over-the-air signals less valuable to the property-rights holder, the property-rights holder will look for someplace else to sell those rights in order to maximize their value. Instead of increasing access over the Internet, as you put it, you will therefore really end up restricting access because those rights will not be as available as they currently are.

À (1010)

The Chair: Mr. Mills.

Mr. Dennis Mills: Thank you, Mr. Chair.

Yesterday, we had a witness in front of our committee from the Canadian motion picture industry. Ms. Susan Peacock made a similar case that if we don't amend the bill now, the period until the regulations are formulated is essentially a grey area and there could be all kinds of legal challenges, etc. I will certainly be advocating that we amend this bill so that there's much more clarity.

She also mentioned what I thought was a very pertinent point in yesterday's testimony. The quality of the transmission on a lot of their products was really not up to their standard. As a private organization, they're constantly testing for quality. Would you share that concern? I've never seen a sporting event on the Internet, but is there a deficiency in quality that would ultimately have an adverse effect on people viewing your product?

Mr. William Daly: I think current technology is such that the streaming video is not of as high a definition as what is produced using the ability to transmit either over the air, on cable, or on satellite. As a copyright-holder, one of the things you value is the ability to present your product in the best way possible. To have that product diminished, as it were, by the inability to relate it well to your audience is absolutely a concern and a consideration that you have when you make a decision on whether or not you will distribute over the Internet.

As Jeff indicated, the sports leagues all have their own Internet companies as well. If there were a value in transmitting over the Internet, we'd be doing it. We make a conscious decision not to do it at the current time, and for various reasons. It doesn't maximize the value of the rights, for one. Two, it doesn't present the product in the way we want it presented.

Mr. Dennis Mills: Thank you.

Officials from Industry Canada were here a few days ago, and I asked them directly if they had met with you to exchange views—your ideas, their ideas, etc.—and they confirmed that they had. In your view, why is it that you couldn't seem to convince them that this sort of clarity—what we are hearing should be in the body of the bill—should be delayed through regulation? Could you please give us some of your sense of the exchange?

Mr. William Daly: When we met with Industry, I unfortunately got the impression in our dialogue that they felt this had moved too far down the road to turn back, really, and that there was some kind of compulsion to pass the bill in its current form, without alteration. They certainly didn't discourage us from trying to make changes. They just seemed to express that, given how far down the road they were in their thinking, it maybe was a little late in the game to turn back, from their perspective.

The Chair: Thank you very much.

Ms. Bulte.

Ms. Sarmite Bulte: Mr. Pash, let's talk about when we had some gentlemen here from the United States last week. They were here at the same time as the Internet service providers, and the trade challenge issue was raised at the time. I'm a little bit more concerned this week than I was last week about a potential trade challenge, because again I'm hearing from you that there is no way to limit the retransmission. I liked what you said about how that's not even what works, and that it's opposite to what the Internet is supposed to do.

Let's talk seriously about this potential trade challenge under TRIPS. Is it something you would petition Congress to do?

À (1015)

Mr. Jeff Pash: I believe a challenge under the trade treaties would not be a congressional act, I believe it would be something that would come out of the executive branch in our government, either through the Department of Commerce or the Office of the United States Trade Representative. I don't believe it's something requiring a legislative...as far as any steps in Congress—

Ms. Sarmite Bulte: The reason I ask is that there was a petition to Congress on the runaway productions. Lay out for me how it would happen.

Mr. Jeff Pash: As I understand it, if the administration feels there is a violation—and that feeling could probably start in different parts of the administration, either in commerce, in the trade rep's office, or in the copyright office—then I believe they have a number of steps they can take, many of which are probably somewhat informal and consultative in nature. I suppose that if, in their judgment, the violation is present and is sufficiently egregious, then they can commence proceedings, but that's a government-to-government act. It's not something the National Football League has much say over one way or another.

Ms. Sarmite Bulte: It would certainly have an influence with the Office of the USTR.

Mr. Jeff Pash: We would certainly express the view to the USTR that we don't believe this gating technology exists—and we have done so—and that we believe a compulsory licence on the Internet, whether it's here in Canada or in any other country, has the potential to substantially endanger our broadcast arrangements domestically.

Ms. Sarmite Bulte: Correct me if I'm wrong, but I can't remember if it was our officials or somebody else who told me that, on this regulation, we are actually on the watch list that U.S. embassies have.

Mr. Jeff Pash: I do not know.

Ms. Sarmite Bulte: Thank you very much.

The Chair: Mr. Abbott.

Mr. Jim Abbott: I'd like to make two observations and then ask a question. The first observation is for the chair and the rest of the committee members, and perhaps for our researchers.

It seems to me that we would not be doing our job if we don't receive some technical briefing relative to the technical question of whether or not the gating technology exists. I think we should have one or perhaps two experts, with perhaps differing points of view, coming in to testify to the committee so that we can check the veracity of these observations. I believe Mr. Pash is being absolutely factual in his representation to us, but I think it would do us well to have an independent verification of that.

Secondly, in listening to Mr. Pash, it was interesting to hear him talk about the small markets and the way the NFL handles the issue of the small markets, in that television, which represents such a gigantic portion of revenues—hundreds of millions of dollars to the NHL and the NFL—is distributed to the teams on a proportional basis. It seems to me that the NHL could take some lessons from that. Rather than saying the Canadian small markets can't really support their teams, so Calgary, Edmonton, and Vancouver are therefore in trouble or whatever the case may be, while the New York Rangers rake in all sorts of dough and the rich get richer, it seems to me that the NHL probably has within its own control the ability to mitigate that situation.

The question that I have is the value of the over-the-air signal, because that's really what we're talking about. If we consider that at least 80% of Canadian households are covered by cable or DTH—I'm talking about the people who have actually subscribed, and that number is probably going to be increasing because of the excitement people have particularly about the DTH in more remote areas—then notwithstanding the principle that we should be looking at in this legislation, how important is the over-the-air signal in terms of a revenue stream in practical terms?

À (1020)

Mr. William Daly: Right now, it remains a very significant portion of the revenue stream. We have 433 game a year that are broadcast over the air. Of our 30 clubs, 16 broadcast over the air, so it remains a very significant player in how our games are distributed.

Just because I can't resist going back to your earlier point about how the National Hockey League has it within its own control to address the issues and to package its rights and sell its rights in the way the NFL packages and sells its rights, I would respectfully say it's a little bit apples and oranges because of the product, the number of games, and how they're broadcast. I think the NFL is trying to maximize its telecast revenues in the way they package and sell their rights. We are doing that, as well. The fact of the matter is that if we took our entire inventory of games and tried to sell that inventory on a national basis both in Canada and the U.S., and if we then split all the revenues, the teams would be in a far worse position than they are today.

In terms our national broadcast packages, including our out-of-market packages, I would also add that all the revenues are shared equally. To the extent that the league can package and sell rights to NHL games, we're trying to maximize that value, and that is shared equally with the Canadian teams.

Mr. Jim Abbott: Thank you.

The Chair: Are there any more questions? Madame Gagnon.

[Translation]

Ms. Christiane Gagnon: If Bell Globemedia had to negotiate with an Internet provider, as the owner of CTV, TSN, RDS, Sympatico, would that be a global proposal? We were talking about monopolies earlier. What would this mean in terms of impact? Would there be piecemeal negotiations for certain productions for which it holds the rights? Imagine the strength of the market. You were talking about power relationships or market forces earlier. You have some very big interests at stake in that decision.

[English]

Mr. Jeff Pash: Respectfully, it may not be as one-sided as one might suggest. There are very substantial businesses involved in the Internet business. We're talking about firms like Microsoft, AOL-Time Warner, and Disney. It is not simply a business occupied only by small companies like JumpTV. There are substantial players on all sides.

It's also the case that the impetus to create new products and new forms of distributing a product does flow from control over distribution. That's the essence of what copyright is about. Copyright and the control that goes with the copyright are intended to foster that creativity. It has done so in both of our countries, and it will continue to do so if it's allowed to work.

I would say that if the market is allowed to work and is not interfered with, you will have more creativity, more new products, and more new avenues of distribution. It's in our interest to do that. It's in our interest to reach as many fans as possible in the United States and in Canada, and nothing would change that interest. We don't have an interest in restricting our product and reducing our fan base.

[Translation]

Ms. Christiane Gagnon: I will refer to your last sentence. You say that you want to reach a maximum number of people. With your last transaction, you did exactly the opposite. Because you have a monopoly with Bell, you deprived a part of the market for La Soirée du hockey. So you did the opposite of what you say you want to do.

[English]

Mr. William Daly: As I indicated before, that was not our intention. There are certain trade-offs. If SRC was interested in distributing the product on terms even close to those on which it has historically distributed the product, we would have been and the Canadiens would have been more than happy to distribute it that way.

À (1025)

[Translation]

Ms. Christiane Gagnon: This was not done according to the rules of the existing market. You were offering 124 programs and were offering your production to Radio-Canada. The opposite occurred. You made an offer which Radio-Canada could not accept. Radio-Canada could not accept an offer like that: it could not become a specialty sports channel like RDS and at the same time, it could not accept to spend so many million dollars, as a public television channel, with access to public funds. So, this was a non-offer. This is the perception that the population has. This is the perception given by the follow-up in the press. You had the big stick and rather than offering what Radio-Canada could accept in light of what has always gone on with Radio-Canada, you came up with something quite different. So, with RDS, Bell and so on, you had the advantage. You wanted a monopoly over broadcasting, a monopoly over sponsorship and control.

[English]

Mr. William Daly: To the extent that that is the perception, it's a very unfortunate perception because it's non-factual. The fact of the matter is that SRC was offered a variety of packages, including what they originally wanted but weren't willing to pay for. We went back to them not five, not six, not seven, and not eight times, but probably ten times, with variations of packages that we were offering them. We don't want to be off SRC, but they were not willing to deal even in the same universe as they've dealt historically.

[Translation]

The Chair: Ms. Gagnon, don't get into that debate. We can't continue.

Ms. Christiane Gagnon: [Editor's Note: Inaudible]

The Chair: This involves official languages, but we can't pursue that debate.

[English]

Mr. Mills.

Mr. Dennis Mills: Mr. Chairman, I realize I'm making a statement, but I'm presuming it's the end of the meeting.

Some hon. members: Oh, oh!

An hon. member: Thank God.

Mr. Dennis Mills: I won't make my statement unless it is the end of the meeting.

The Chair: Mr. Mills, are you talking about that in relation to our witnesses?

Mr. Dennis Mills: Are we still going for another period of time?

The Chair: Well, if you make a statement in regard to what the witnesses have to say, that's fine. I think there's an allowance regarding Bill C-48, the proceedings, and so on.

Mr. Dennis Mills: No, it's for before they go. That's my point.

It's no secret to people in this room that I'm a Toronto Maple Leafs fan—

An hon. member: You are? Come on!

Mr. Dennis Mills: —but I have a message that I would like Mr. Daly to take to his colleagues like Mr. Bettman, etc. It's a message that I've been asked to deliver by some of my colleagues in the Hamilton region, including Minister Sheila Copps and Mr. Stan Keyes.

As time evolves, if there's ever an opportunity that the city of Hamilton could be considered for a franchise, we'd very much like you to know that many people in that community would not want you to overlook that possibility.

Thank you.

Mr. John Harvard: On a point of order, Mr. Chairman, I would like to know whether Mr. Mills is old enough to remember the last time the Maple Leafs won the Stanley Cup.

Voices: Oh, oh!

The Chair: I thought you were going to make a plea for Winnipeg, Mr. Harvard.

Mr. John Harvard: I don't deal with lost causes.

The Chair: Anyway, before we close, I would like to say to the NHL, the National Football League, and FWS Joint Sports Claimants that we are extremely appreciative that you took the time and trouble to give us your side of the story. I think it's very important for us to know, so thank you very much for being here today.

Just before the members leave, Mr. Abbott made a very worthwhile suggestion that we invite technical people on Tuesday. I've consulted with the officials. The officials from Industry and Heritage will be asked to come back, along with somebody from the National Research Council and experts from Public Works and Bell. We'll make sure these experts carry two different—

À (1030)

Mr. Jim Abbott: That was my point. In fairness to JumpTV and others of that mindset, I think it's important for us not only to be fair, but to be seen to be fair, in the sense that we do have the two points of view. Maybe we can even have an informal consultation with them as to whether they feel—

The Chair: We'll have them in. We can question them, and they will give us information on the available alternatives, and their pluses and minuses. On Thursday, we will then proceed with the amendments and clause-by-clause.

The meeting is adjourned.