HERI Committee Report
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Canadian Alliance Dissenting Opinion Outside the Box Review of the Canadian Broadcasting Act Jim Abbott, MP 1.0 Introduction: This is a time of great change. New technological developments have created an environment giving Canadians access to more radio and television choices than ever before. More options mean audiences for any one channel are smaller than ten years ago. Broadcasting companies have responded to the challenge of audience fragmentation with a number of strategies. Some are attempting to become media conglomerates. Others are attempting to assemble a broad base of customers through cross media ownership. No one knows how successful either of these initiatives will be. Canadian Alliance — CA — is convinced that the next ten years will offer incredible opportunities. CA was pleased to actively participate in the hearings of the Standing Committee on Canadian Heritage. We highly valued meeting witnesses and visiting various sites across the country. We are fully aware of the long involved history of broadcasting in Canada, which has created very complex rules and regulations governing this industry. The current regulatory regime creates walls constraining and smothering Canadians' creativity and potential. Canadian Alliance was looking forward to this review because we believe we must think 'outside the box.' In specific terms the "box" that constrained the Committee's work consists of three assumptions that may have been true in the past but have been undermined by changes in the broadcasting system. Two key assumptions are that Canada needs a highly detailed regulatory structure governing definitions of Canadian content and that the CBC is now as essential as it once was. A third assumption pretends that regulations can somehow keep Canadians inside a Canadian system and deliver audiences to Canadian programs. These may have been true in the past but they are now constraints on thinking about the future. The Committee decided to include academic advisors who did not fully participate in either the site visits or the numerous hearings held by the Committee. They remained unaware of the actual evidence generated by the study process. These advisors hold well-known views about the CBC and its place in Canada's broadcasting system. As a result, many parts of Our Cultural Sovereignty are simply a more complex extension of aspects of the status quo. What do Canadians want? Due to time and budget concerns the committee did not survey public opinion. The input of persons representing the industry and groups expressing focused views was somewhat helpful, however, the committee worked in an information vacuum about the audience. After carefully reviewing the witness' testimony and the evidence available from consumers, CA concludes Canadians want unrestricted access to a variety of television programs from around the world. At the same time, they want high quality Canadian programming (be it local news, sports, music or drama) in French and English. Canadians should be able to exercise program preference and have access to a full range of alternatives. In this minority report we outline a number of innovative proposals that will help Canada face the coming challenges. Our Cultural Sovereignty hearings uncovered ample information for us to be able to think outside the box and the proposals presented here are based on that evidence. 2.0 Canadian Content The current system designed to promote Canadian content is, in fact, cumbersome and inefficient. The witness testimony about problems with the existing structure for defining and supporting Canadian content are well described in Chapter 5 of Our Cultural Sovereignty.
Obviously, the creation of original Canadian programming is important but the impossible question consistently eluding answer is "who judges what is Canadian?" This has lead to unaccountable bureaucracies enforcing vague definitions of Canadian content. This results in an unproductive dampening of creative innovation.
Current Canadian content definition determines access to various public support programs (such as Telefilm Canada Feature Film Fund, the Canadian Television Fund or tax credits) and measures television broadcasters' conformity with CRTC regulations.
The 2003 Federal budget cut $25 million from the Canadian Television Fund. This represents less than a 4% of the total federal program spending and tax credits available for creators. However, the impact of that cut is disproportionate because the CTF is the trigger for additional public and private funds. Canadian Alliance supports Canadians producing content for film and television. We would create a simpler system. We would remove content definition regulations. Subsidies and tax credits beneficial to the Canadian Entertainment industry would be based on substantial involvement by Canadians. Canadian Alliance has faith in Canada's creative community. Our primary objective is to exhibit Canadians' productions to a larger audience. We believe Canadian content is an issue of cultural development. We intend to enable Canadian creators reach an expanded international audience in broadcasting. 3.0 The National Public Broadcaster (CBC/Radio Canada) Canadian Alliance notes the historic role the CBC played in the lives of Canadians and the continuing investment made by the Canadian taxpayer. Canadian Alliance would maintain a long-term funding commitment to CBC Radio. 3. 1 CBC Television CA draws attention to Figure 4.13 in Our Cultural Sovereignty. CBC English audience share moving from 34.9% (1969) to 7.6% (2001-2002) is a story in itself. Further analysis reveals unprecedented audience fragmentation. There is every reason to believe fragmentation will increase dramatically in the foreseeable future.
The position of Our Cultural Sovereignty which continues to see the CBC as the corner stone of broadcasting in Canada cannot be sustained in light of this fragmentation. A recent Compas poll of Canadians shows that Canadians have as much faith in the CTV or TVA networks and specialty channels as they do in the CBC. Canadian Alliance interprets these results to say that the CBC image as protector of culture and identity on television is no longer unique. The CBC shares this image with other broadcasters including the specialty channels. The English TV audience share is an indicator of some current harsh realities:
In recognition of significant advances in technology, the choices available for viewers, and to get the government out of the business of being in business, we would restructure CBC television.1
The CBC's involvement in professional sports and the Olympics is a case in point. If the CBC is competing in the commercial marketplace why should CBC management be subjected to the kind of political interference it has experienced in recent times? The only way this can happen is because of taxpayer subsidy which simply means the CBC (often though no fault of its executives) can put taxpayers' dollars in competition with private broadcasters. The Canadian Alliance believes Our Cultural Sovereignty has revealed many current and future opportunities for Canadian creators to reach citizens of our country. Local, regional and national programming is either presently available or could be made available through much more cost-effective means. CBC Newsworld, RDI, and Galaxie specialty services are currently self-funding through mandatory cable fees and advertising. Local news and information programming can be generated by local private broadcasters, cable companies, and through creation of an "independent production fund" from DTH subscriptions. Cable network programming in New Brunswick covers local stories, is staffed by about 400 volunteers and permits broadcasting to local residents. It is a unique way for cable companies to capture customers. Bravo, Showcase and Vision TV, three networks with similar content to the CBC, are available in ninety percent of Canadian's homes by cable or satellite (DTH). Given these realities Canadian Alliance is convinced that the time has come to reconsider the importance of CBC television. The Committee's report may claim that the CBC is essential but the facts do not support the claim. Anyone looking at Figure 4.17 can see that the majority of Canadian programming is available on private networks. It is true that CBC attracts a large number of viewers to sports programs but these same programs could be offered on private networks. If sports is removed CBC's audience share would be less than 5%. We would significantly reduce CBC operating subsidy by commercialization of CBC television. Canadian Alliance would consider transferring a portion of the current funding for CBC television to new or existing subsidy or tax credit programs to support Canadians creating content for film and television. 4.0 Access to Services Presently existing laws and related regulations prevent Canadians from receiving satellite signals that are not authorized by the Canadian Radio-television and Telecommunications Commission (CRTC). Ambiguity about the legality of these regulations created a grey market in satellite signals. Details are discussed in Chapter 16 of Our Cultural Sovereignty. Ignoring the reality of the grey market and the ability of consumers to make viewing choices leaves DTH unregulated. Canadian Alliance believes the current situation is a lost opportunity and will only get worse as Canadian and American viewers make their viewing selections in spite of, rather than within, the regulatory framework. This encourages a black market in satellite services. This situation also ignores a common thread that runs through the entire history of broadcasting in Canada. A majority of Canadians have a taste for programming produced by the United States. Canadian Alliance believes a sound DTH satellite policy represents an opportunity to support Canadians ability to develop an international market for their programs. Canadian Alliance would recommend that the regulations be changed and that Canada enter into reciprocity agreements with other countries to allow citizens of each country to legally subscribe to any satellite service thus creating an open market in the licensing of television satellite distribution. This prudent and proactive response will make Canadian programming available in the United States, which will significantly multiply the potential audience for Canadian productions. Foreign programming will be available in Canada giving Canadians an ability to exercise program preference. 5.0 A Practical Response to Technological Change Our Cultural Sovereignty correctly identifies the importance of creating a single Department of Communications responsible for broadcasting and telecommunications. The report also identifies the need to significantly refocus the mandate of the CRTC. "Our Cultural Sovereignty" hearings have explicitly shown the government should immediately undertake an amalgamation of all departments and enact appropriate legislation to combine all functions relating to broadcasting and telecommunications. Many years ago the Government had a Department of Communications that was dismantled and distributed into the Departments of Canadian Heritage and Industry. Rebuilding a Department of Communications would be a positive reaction to both technical and ownership convergence. The Department of Communications would regulate all matters related to communications issues in Canada. Its regulation body would have less autonomy and would be more accountable than the CTRC today. Since 1968, the Commission has functioned as an independent public authority. Too often, the CRTC acts as a law unto itself. Commissioners are appointed without any oversight or public hearings as to their qualifications. CRTC decisions are virtually without appeal. Tinkering with the CRTC is not the answer. It is vital that the regulator be made more accountable to Canadians. This could be accomplished through the following measures:
6.0 Ownership 6.1 Cross Media Ownership The committee denounced any attempt to stifle editorial independence and journalistic freedom by recommending that the CRTC put a mechanism in place for ensuring the editorial independence of broadcasting operations. (11.1 and 11.2) How would this recommendation potentially work? Take for example, the five journalists at the Montreal Gazette who were fired. Would the CRTC force the Gazette to rehire these journalists? Patrick Watson, former CBC President, has recently floated the idea of the government establishing a newspaper so Canadians can get the "straight" facts. Canadian Alliance believes government interference is a cure much worse than the illness. The Canadian Alliance disagrees with the recommendations in Our Cultural Sovereignty that would impede the ability of Canadian companies to carry on their business (i.e., Recommendations 11.1, and 11.2). 6.2 Vertical Integration Chapter 11 of the report speaks to the issue of vertical integration. "In August 2001, the CRTC renewed the licenses of CTV and Global but stipulated that no more than 25% of their Canadian content in prime time could come from production companies they own. This decision placed a limit on the self-dealing practices that are possible in a vertical integrated company." Experience in the United States marketplace has shown the audience will not accept programming exclusively from one studio. They demand variety. Canadian Alliance therefore questions the necessity of this CRTC stipulation. The Canadian Alliance disagrees with these types of stipulations. 6.3 Licencing Issues Recommendation 11.4 Our Cultural Sovereignty puts broadcast license renewals in suspension for up to three years. This will have an adverse effect on existing cross-media owned broadcasters, putting their business into suspension. Yet another instance where the committee has prescribed a cure that is far worse than the perceived illness. The Canadian Alliance disagrees with both parts of Recommendation 11.4 and most especially part b. 6.4 Foreign Ownership Ms. Joie Warnock of the Communications, Energy and Paperworkers Union of Canada said 'On foreign ownership, the very fact the foreign ownership issue is being considered in the context of the Canadian broadcast system is evidence of the extent to which our public agenda is being controlled by the forces of globalization... We must protect our sovereignty in one of the few remaining bastions of Canadian identity. (Paragraph 11.93 OCS). Lise Lareau, president of the Canadian Media Guild/CWA Local 30213 wrote to AEEF members, explaining how CWA's lobbying efforts in the United States inspired the CMG to form a public policy advocacy coalition with other groups called Our Public Airwaves. She said the guild would not have been able to invest in the coalition if CWA's Member Relief Fund were not there to back up CMG bargaining. 'I consider our affiliation with the CWA our backbone' (CWA news release). The spokesperson for the union must have known that the Canadian Media Guild is part of the Communication Workers of America (CWA), one of the CBC unions. They formed "Our Public Airwaves" engaging in public advocacy on broadcasting in Canada. The view that a union may be financed in the US but a corporation may not seems disingenuous. By contrast, the question of a possible linkage between foreign ownership and the exhibition of local content was studied carefully by the Australian Senate Environment, Communications, Information Technology and the Arts legislation Committee in its review of the Bill, June 2002. (Paragraph 3.24): "The Committee believes that in relation to foreign owner influence, it is reasonable to assume that foreign owners will be motivated to maximize profits, rather than influence public opinion. Accordingly, it is to be expected that they would provide content with the aim of maximizing consumer demand and therefore advertising revenues. There is therefore a commercial imperative for broadcasters to include Australian content... The committee therefore considers that concerns about a diminution of locally produced programming should this Bill proceed are unfounded." Canadian Alliance disagrees with Recommendation 11.5. Canadian Alliance supports relaxing foreign ownership rules on Canadian industry, including telecommunications and broadcast distribution. We suggest conducting an immediate review to determine whether to reduce or completely remove these rules. Canadian Alliance has a coherent policy on issues of foreign ownership for the following reasons:
Canadian Alliance recommends that the review include the impact of changes on broadcasters and content creators. We are aware this would be breaking new ground. CRTC letter 04.02.03 The Canadian broadcasting system must be effectively owned and controlled by Canadians. This safeguards, enriches and strengthens the cultural, political, social and economic fabric of Canada. Chapter 11 speaks of Canadian presence on the air coming under attack and wonders, "could Canada's creators be guaranteed the same access to the Canadian market they now enjoy? Furthermore, how would existing subsidy programs work if Canadian-controlled firms were no longer operating national networks in Canada?" In committee Canadian Alliance asked, "Why wouldn't they have access? Why wouldn't Canadians be able to establish whatever regulations we deem necessary?" We never received an answer or even an attempt at an answer. 7.0 The Private Sector Canadian Alliance believes that the private sector is the dominant force in Canadian broadcasting. Recognizing this, it is important to state that they have an opportunity and a responsibility to assist and promote our artists and creators. 7.1 Music, Artist, Production, Lyrics (MAPL) Canadian Alliance is convinced there should be a review of the MAPL rules. This study should include a review of definitions of Canadian content and the ways in which the system can foster the development of new artists. (i.e., Recommendation 8.1 of Our Cultural Sovereignty). Canadian Alliance suggests the review look at the following ideas:
8.0 Copyright The 1997 copyright bill C32 had apparent flaws built in, none more obvious than the right of transfer of medium for broadcasters. To do business, performing daily technical tasks, broadcasters electronically transfer stored audio content between storage/format mediums either 'in-house' or distances by broadband. Clauses 30.8 and 30.9 (of Bill C-32) were drafted to allow for exemption of broadcasters from copyright fees. Sub-clauses (8) and (6) were added at Committee thus negating the exemptions. Canadian Alliance strongly opposed these revisions and we were sceptical of the testimony of the CMPA before committee. "Music publishers recognise that such copying [radio transfers of format] is integral to the operation of radio stations, and also realise that any publisher foolish enough to demand payment for such copying would likely find himself frozen out of the station's playlist in short order" Subsequent initiatives by copyright holders validated our skepticism. The broadcast industry has been assessed fees of more than $20 million retroactively from January 1, 2000. The notice of liability for payment dated March 28, 2003 indicates payment due May 31, 2003. Cost estimates to the end of 2004 are $6.5 to $7 million per year. "The Committee recognises the pressing need for copyright reform in the digital age and intends to address all relevant broadcasting issues during its forthcoming statutory review of the Copyright Act."(Our Cultural Sovereignty Chapter 13) This is an underwhelming response to a serious situation. The Committee doesn't recognize broadcasters present cash flow problems, which have resulted in layoffs of staff in many stations. The Heritage Minister has historically resisted amending the Act saying that it must be considered in its entirety. However, in spite of those statements she has now introduced Bill C-36. Clause 25 of Bill C-36, amends Section 30 of the Copyright Act. Having opened Section 30 of the Copyright Act subsection 5 why wouldn't she introduce amendments to sub clauses 8 and 9 of the Copyright Act at Committee following second reading of the bill? Canadian Alliance is opposed to the practice of imposing retroactive fees. In the case of C-32 there was an egregious abuse of the legislative process and the exceptions that allowed ephemeral rights should never have been approved. The subsequent imposition of fees should be negated. Canadian Alliance does NOT accept retroactive legislation as a constructive legislative tool. However, in this instance, in view of the manner in which these exceptions came about and the negative impact they have created, we propose the following: Canadian Alliance calls for the government to immediately bring forth amendments to the Copyright Act to delete clause (8) of 30.8 and clause (6) of 30.9. Further, that the government consider ways to effect those deletions retroactively. 9.0 Summary The key proposals Canadian Alliance is suggesting are to:
Implementing these changes would increase support for Canadian creators and Canadian programs. They would also allow Canadian programs to reach larger audiences. 10.0 Conclusion These proposals made by Canadian Alliance deal with the opportunities facing the Canadian broadcasting system. Canadian Alliance will give creators and the industry an opportunity to compete for an expanded audience. Canadians would be able to exercise program preference and have access to a full range of alternatives. Since 1867 Canadians have turned challenges into opportunities. We have carved a niche in the international world of technology. We have done so through courage, initiative and foresight. Canadian Alliance believes that the gradual and incremental alterations recommended in Our Cultural Sovereignty are timid and defensive. In this minority report we are saying we believe in Canadians. If we drop a number of outdated assumptions that narrow our choices and restrict our opportunities Canadian Alliance believes Canadians can create, compete and prosper. Endnote:
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