Welcome back, everyone.
This is our study of Bill , now at the committee stage after succeeding through a second reading vote. Here we are with the study.
I'd like to point out one thing. During the question and answer session, please point out to whom you're directing your question. It will make things flow a lot easier.
To our guests, if you want to weigh in on a certain topic that's being asked about, you can use the “raise hand” function, if you wish, or wave your hand. The chair, meaning me, will not interrupt to provide you the opportunity. You will have to get the attention of the person asking the question.
Right now we're going to start with our five-minute opening statements.
We have with us Mr. Richard Stursberg. We have, from Corus Entertainment, Troy Reeb. We also have, from the Society of Composers, Authors and Music Publishers of Canada, Geneviève Côté and Martin Lavallée.
We're going to start with Mr. Stursberg, for up to five minutes.
Go ahead, please.
Good afternoon, everybody. Thank you for inviting me. It's a great pleasure to be here.
My name is Richard Stursberg. I am the author, with Stephen Armstrong, of The Tangled Garden: A Canadian Cultural Manifesto for the Digital Age. We were honoured to have our book shortlisted last year for the Donner Prize, which is given for the best book on public policy written by a Canadian. The book deals with many of the issues that are before you with Bill .
I have worked in the broadcasting business for many years. I was the head of English services at the CBC, chairman of the Canadian Television Fund, executive director of Telefilm Canada, president of Shaw Direct, and CEO of the Canadian Cable Television Association. I am now retired and represent nobody but myself.
In the more distant past, I was the assistant deputy minister for culture and broadcasting. In 1990, I was one of the architects of the current Broadcasting Act, so it is a pleasure to have a chance to talk to you today about the new act.
I start from a simple premise. The reason we have a Broadcasting Act, along with the associate regulations of the CRTC, the tax credits and the Canadian Media Fund, is to support Canadian culture. We spend all this money and energy to ensure that Canadians can see themselves and their stories on television. The objectives of the system are cultural, not industrial or economic.
In approaching Bill today, I believe that the fundamental principles governing future broadcasting policy must be support for Canadian culture and equity of treatment. The latter point requires that the obligations imposed on Canadian broadcasters such as CTV and Global must be borne by foreign broadcasters such as Netflix and Amazon. By the same token, whatever advantages are enjoyed by Canadian broadcasters must be extended to the foreign ones operating in our country.
Today I would like to talk about the four key supports for Canadian television: Canadian ownership, the spending requirement, the system of subsidies and the definition of Canadian content.
First, under the present act, broadcasting companies operating in Canada must be owned and controlled by Canadians. There has been much talk about whether Bill eliminates this requirement. The legal issue is largely academic, since the requirement was ceded a decade ago. Over the last 10 years, foreign broadcasters like Netflix and Amazon have been offering TV programs to Canadians without any need to be Canadian-owned. There is no chance in the future that they will be forced to become Canadian-owned.
In the interest of equity, you may want to consider putting Canadian and foreign broadcasting on the same footing by amending Bill to make sure the Canadian ownership requirements are gone. Not to do so would be to disadvantage Canadian broadcasters in their own market.
Second, Canadian broadcasters have to spend a certain percentage of their gross revenues making and commissioning Canadian TV shows. Bill rightly extends this requirement to the foreign broadcasters and leaves it to the CRTC to determine the appropriate level. If the commission leaves it at 30% for CTV and Global, as it is now, it should be 30% for Netflix. If it is set at 20% for Netflix, it should be the same for Canadian broadcasters. Equity is key. You may want to make sure that the equity principle is clearly incorporated in Bill .
Third, the system of subsidies for the production of Canadian shows is expensive and complicated. It consists of the Canadian Media Fund, federal and provincial tax credits, and Telefilm Canada. Last year, they collectively cost Canadian taxpayers over $1.2 billion. Those subsidies are only available for Canadian shows, defined as those made by Canadian-owned production companies and employing Canadians in key creative positions. If we require foreign broadcasters to spend 20% to 30% of their gross revenues commissioning Canadian shows, they should have access to the subsidy. Again, the principle of equity should prevail.
The subsidy system itself is fiendishly complicated and expensive to administer. The long-standing joke has been that Canadian producers are not experts in making shows but in navigating the system. There has been some talk of collapsing Telefilm Canada and the Canadian Media Fund into one organization to address the problem. That is not the best approach. It would be much better to wind up Telefilm Canada and the Canadian Media Fund and transfer their financial resources to an enhanced tax credit. This would create a system that would be dramatically simpler, more predictable, better attuned to changes in the market and much less expensive to administer. The Tangled Garden estimates that this approach would save $60 million per year in administrative costs.
You might want to consider amending Bill to make this change.
Fourth, and finally, all of these arrangements hinge on the definition of what constitutes “Canadian content”. For decades, Canadian content has been defined on the basis of a 10-point scale, where points are assigned to the creative talent involved in making the show. The problem is that as long as Canadians are employed, the show could be culturally completely foreign. It could be set in another country, featuring foreign characters and involving a foreign story. This has happened very often in the past. Toronto may be made to stand in for Chicago, while American characters struggle with losing their health insurance.
There has always been great pressure on Canadian producers to disguise the Canadian character of their shows so they can be sold in the States, making them more profitable and easier to finance.
Good afternoon to the committee members.
My name is Troy Reeb. I serve as executive vice-president of broadcast networks for Corus Entertainment.
On behalf of our 3,500 employees across the country, I want to thank you for inviting us to discuss Bill , which we are urging Parliament to pass without delay.
Before getting into the bill, I want to provide a brief overview of our company. We're very proud to be Canada's leading pure play media and content company. We have Corus Studios, a leading producer and distributor of Canadian lifestyle programming; Nelvana, a premier animation studio; Kids Can Press, Canada's largest independent children's book publisher.
Lastly, Toon Boom, our Montreal-based division, creates software for international studios.
All told, our Canadian-made content is exported to 160 countries around the world, but our bread and butter remains broadcasting here in Canada. We operate 15 Global TV stations, 39 radio stations and 33 specialty channels, in both English and French, such as YTV, Séries Plus and Food Network Canada. We are the proud home of Global News, one of Canada's largest news organizations, delivering thousands of hours of local, regional and national stories every year.
To emphasize this, Corus is a pure play media business. We have no cable or telecom assets to subsidize us. We are an independent, publicly traded company competing in a trillion-dollar global entertainment sector. We think we've assembled the vision, the team and the expertise to build an international media powerhouse right here in Canada, but even the best people and ideas cannot overcome badly outdated regulation, and that's why your work today is so important.
You've already heard from many stakeholders about Bill , and no doubt each of them has an interest in the Canadian broadcast system, but we have to remember that what the Broadcasting Act is really about is the rules for broadcasters operating in Canada. This act enables a web of regulations, policies, conditions and codes that touch every level of our operations. They dictate how much we have to spend on certain kinds of shows, when those shows can go to air, the types of songs we can play on our radio stations, the number of commercials we can sell to advertisers and from whom we can buy our programs. I could go on and on.
Most of these rules were designed for an industry that doesn't even exist anymore, one where licensed broadcasters enjoyed privileged access to Canadian audiences. That is no longer the case. We're doing everything we can to adapt and compete, but in far too many cases, the old broadcasting rules make it impossible to do so. After more than 10 years of escalating unregulated foreign competition, five years of rolling policy consultations, and one devastating pandemic, we simply cannot wait any longer.
Bill is not perfect, but it gets one big thing right: It will finally bring foreign digital broadcasters into the regulatory fold and start to level the playing field for Canadian media. For us, this is reason enough to support it.
Let me be clear. New players should not have to play by the old rules. The level of regulation currently applied to Canadian broadcasters is simply untenable in a world of open competition. Going forward, all players—foreign and domestic, digital and traditional—must have a more flexible, less onerous set of obligations than Canadian broadcasters have now. All players should be able to contribute to the system in ways that make sense for their audiences and their business.
Here at Corus, news is a prime example. We're very proud of our work at Global News, and we're uniquely able to provide news through local stations across Canada that foreign streamers will not and cannot replicate, but local news is a very challenging and expensive business. While it's still highly popular on all platforms, it is entirely dependent on ad revenues that have been increasingly siphoned away by foreign Internet giants.
For many years now, we have offset our losses in news by providing internal cross-subsidies from more profitable entertainment programming, but now our ability to do that is also fading fast. Foreign digital broadcasters are siphoning away those profitable audiences with no obligations in return to support Canadian content or communities. If this continues, we will soon face some very difficult decisions, as other Canadian broadcasters already have.
Going forward, news should not represent just one of our many obligations but should be recognized as our primary public service contribution. Giving us more flexibility to compete in other parts of our business will provide us a more sustainable way to cross-subsidize news in the future.
Now, as I've said, this bill is not perfect. In our written submission, we will propose amendments to improve it.
We're also strongly urging this committee not to amend the bill to empower the CRTC to regulate private dealings between broadcasters and producers. That kind of amendment would further benefit producers who are now enjoying record profits at the expense of Canadian broadcasters, who are seeing record declines. The CRTC already rejected this “terms of trade” approach six years ago, and there is no compelling policy reason to reverse course now.
In closing, Canadian broadcast policy has always depended on strong private broadcasters. We want to continue creating Canadian jobs and serving Canadian communities, but we simply can't do that when faced with a regulatory environment that allows foreign players to scoop profits out of the country while leaving us as Canadians with all the obligations.
By prioritizing equity between foreign and domestic players and signalling that obligations should be suitable for individual circumstances, we believe Bill can help us begin the difficult work of building a fairer and more sustainable broadcasting system, and we urge you to move it forward.
Good afternoon. We are before you today on behalf of SOCAN. We represent the rights to musical works of our 160,000 members, songwriters, music composers and music publishers. In short, we grant licenses, and collect the rights arising therefrom, notably from traditional broadcasters—radio and television—and digital audio and audio-visual platforms, for the use of music as part of their business.
Because of this, we see the two perspectives of the economic value of music, the value for rights holders and the value for music listeners. It seemed important to us to come and testify before you to make a few points of clarification.
From the outset, like many players in the music ecosystem, we welcome Bill . We believe that subjecting digital platforms to the same legislative and regulatory conditions as those applicable to all Canadian broadcasters will end the distinction that the music industry has been decrying for years.
When we compared distributions made to Canadian music rights holders with what was distributed to foreign writers in regard to uses in media, we came to a devastating conclusion. In digital media, royalties paid to Canadian creators were three times lower than those related to uses in traditional media. The average percentage for traditional was 33.9% over the past six years—
SOCAN deals primarily with copyright issues as well, so we pay particular attention to any modification to the Copyright Act that would affect the rights of our members or play a disruptive role in our negotiations with users. Therefore, the proposed amendments that Bill introduces into the Copyright Act in respect of ephemeral recordings, which would add online undertakings to this exception, are simply unacceptable and go contrary to the intent of this bill.
An ephemeral recording is a copy of a program made by a TV broadcaster, for example, to permit them to broadcast the same program at the same time of day in different time zones. This is called time shifting. The proposed amendment wants to extend this exception to online undertakings, which, in our experience, should not be the case. In the digital realm, you can always choose what you see at the time of your choosing, so doing this broadens the scope of what is generally understood and applicable as of now. Neither online undertakings nor TV broadcasters have, to our knowledge, used this exception or even raised it in a negotiation.
As we saw when a plethora of exceptions were introduced in the act back in 2012, these exceptions triggered what we predicted: legislation by litigation. We've spent a significant amount of money and time to defend any overreaching interpretation of these exceptions. At the same time, technical giants resisted our effort to have them pay fair value, since they were claiming that such and such exception could be interpreted in their favour.
History must not repeat itself today in this very bill that aims at providing a means from which money will flow to creators. The proposed amendment to the Copyright Act is anything but status quo. In order to truly be status quo, the ephemeral exception absolutely needs to remain as is—limited to radio and TV—or clearly specify that those provisions do not include online undertakings.
In closing, there is another element of Bill that seems to us to require clarification, maybe even a correction, and that is the possible exclusion of certain social media activities from the application of the Broadcasting Act. Social media are enabling platforms used for music discovery. In all their iterations, digital media recommend content and generate “programmed” viewing. Platforms manage the user uploaded content and the access to it.
As other organizations have mentioned to this committee, notably the Coalition for the Diversity of Cultural Expressions, we believe the Canadian creative ecosystem would benefit more from Parliament, rather than excluding these services from the scope of the act, giving the power to the CRTC to determine how to better regulate social media under the Broadcasting Act.
In our opinion, the Canadian legislator should not focus on who uploads the content that Canadians turn to, but should rather target those whose line of business it is to recommend that content and monetize access to it, so that in the end, these giants share with content creators, the value they get from the use of their creation, of our Canadian music.
I think the key thing is that the centerpiece of the bill—which will require foreign broadcasters like Netflix, Amazon and Disney+ to contribute in the same way as current Canadian broadcasters—will make a very significant improvement in the watering of the garden.
For example, right now, Netflix makes, just to make the math simple, just over a billion dollars a year in Canada. If it had to spend the same amount of money on Canadian shows that Global does, at 30% of gross revenue, it would have to inject $300 million into program production.
That's just one of them. If you cascade them up, as the has done in terms of his claims of how much more money would be injected into the system, he's quite right. It will be a very substantial amount of money. If we don't do it, however, then the problem is exactly as per what I was saying. The financial circumstances of the major broadcasters in Canada are extremely difficult, and they will be spending inevitably less and less on Canadian programming.
We're going to find a big shift in the system. Canadian production is going to be more and more supported by foreign broadcasters in Canada, and less and less by the traditional Canadian-owned broadcasters.
Well, I don't think it reduces choice; it increases choice. What will happen is that when the streamers are obligated to pay in the same way that Global and Corus are obligated to pay in terms of the development of Canadian content, you'll have more Canadian content and more choice by way of Canadian shows, not less. Frankly, I don't understand the argument. I think precisely what we want to get here is more choice for Canadian shows.
Maybe I'll pick up one small thing that Troy just said. Programming is also treated differently in this collection of subsidies we have for television shows. The most valuable subsidies go to documentaries and to drama, but for news—which, as Troy says, is under enormous pressure, as everybody knows, particularly local news, where stations are closing all over the country—we provide no subsidies.
We find ourselves in the most peculiar system, where we say, yes, we're happy to subsidize comedy, but we're not happy to subsidize news—which, if anything, is absolutely fundamental to our democracy. The irony is that we've said we'll give subsidies to the newspapers, but not to the television news operations. All the local television news operations are under water right now.
Yes. It tells none of our stories and it shows none of our people. This has historically been the case, where Canadians have made shows but they've often disguised Toronto as Chicago or whatever it happens to be.
Even if you take something like Schitt's Creek, which is an enormously successful and brilliantly done comedy, you would never know for one minute that it was Canadian. You wouldn't know it. There's no reference to the people being Canadian, and there's no reference to the settings being Canadian. As more and more of the money that finances Canadian shows comes from, essentially, big foreign broadcasters, the danger of this happening more and more, it seems to me, increases.
What I think we should do is use the U.K. point system. The U.K. point system is not an employment-based system. It's a culturally based system. Very briefly, they have a 35-point system, and they call it the “cultural content test”. You get points if it's set in the U.K., and if it has British characters, British subject matter, British creativity and heritage, etc. Of the 35 points, only eight points are based on the creative team.
It serves to ensure that when you're spending what is in effect public money—whether it's money derived from tax credits or from the Canada Media Fund or the money that a broadcaster is obligated to spend—you're going to get shows that are genuinely about us, in the same way the British system ensures that the shows that are made with British taxpayers' money are genuinely British.
The interesting thing is that the British system has not in any way reduced the attractiveness of British shows. In fact, the British export more cultural product now than they did before the system was put in place, and they export six times as much cultural product per capita as we do in Canada.
One of the things that Netflix has done, which I think is really interesting, is to show that there is a market for shows that are culturally distinct, so that even with the big shows now on Netflix, like Lupin or Dix pour cent, which are French shows that are completely French, you know exactly where you are. You're in Paris. It even has French stars. These shows are successful.
I think it is very important to be careful—because ultimately the goal is cultural—to shift the point system in a way that guarantees that when the foreign broadcasters are the principal financiers of Canadian content, we will get genuinely Canadian shows.
What The Tangled Garden
argues is that news generally, including local news, should be put on the same footing as drama, comedy or kids shows. It should get the same level of financial support that we provide to those kinds of shows. This would be an enormous shot in the arm for local news—and indeed for national news.
All the news organizations in the country are struggling. You know very well what's happening with the newspapers. The newspapers are on the point of collapse. The only reason we continue to have local television news—and actually, more Canadians get their news from television than they do from newspapers, overwhelmingly—is that the big organizations, whether CTV or Global, have been subsidizing the losses they take in local news.
If you were to say, “No, no, no, let's treat news the same way we treat comedy”, in terms of the subsidy structures by way of the Canada Media Fund and the tax credits, that would dramatically improve the situation and make it dramatically easier for people to continue to maintain local news.
Thank you, Mr. Chair, for the warning. I appreciate that.
As a reformed anarchist, I don't know.... When we have the federal government spending 80% of their advertising dollars on foreign social platforms, we have a federal government that doesn't understand where their money should be spent. For example, Stats Canada sent out news releases and wanted media to cover it with news stories, not paying for advertising. I think we have a problem, starting right with the federal government, in the sense of how we support the media.
Then we had the Yale report, and anybody who sat around the table with me knows I'm not a fan of the Yale report. They had a lot of scary adjectives in there. Then when we look at this bill, with the CRTC getting more power and more regulations, I get really concerned.
I think the witness from Corus sort of touched on this but didn't really want to get into the examples of red tape, bureaucracy and regulations. As I said, as a reformed anarchist, I don't like regulations and I don't like rules. I see this legislation getting scary when we're giving more power to the CRTC, and if they're basing it on the Yale report, I have a problem.
Corus, do you want to respond to what I've said?
Certainly, Mr. Shields.
I think you raise a valid concern, that none of us wants to see a giant monster created at the CRTC. There is risk in this bill that this might happen, because it does give greater powers to the CRTC to determine many of these issues.
We think the simple fact that this starts the process of levelling the playing field and reduces this untenable competitive discrepancy between Canadian broadcasters and foreign broadcasters is reason enough to support it. Once it's brought in, there is no need for the CRTC to turn into a giant monster. Yes, it will be given new regulatory powers, but those regulatory powers should be applied with a light touch to the foreign players, while actually reducing the touch that they have on Canadian broadcasters.
As we said before, if you have a situation where you have Canadian broadcasters with this 30% level of required spending and foreign broadcasters at zero, there's no reason they can't somehow meet in the middle without having to increase the overall level of regulation in the system. As an operator, we find that the current level of regulation reduces our competitiveness, not only domestically, but internationally.
Thank you very much, Mr. Chair.
Thank you to all the witnesses for being here. I'll do my best to get to everyone, so I'll keep things quick.
I want to address first Madame Côté from SOCAN.
We all know that the future of music is streaming. It's just too convenient for listeners, and it's too profitable for some to ever think that anything is going back. Real-world earnings on recorded materials have dropped, and you gave us the numbers as to how significantly they have dropped.
Right now, all that's left for a lot of these artists is live performances and licensing of their music to commercials, movies and TV, plus the streaming. We all know that live performances are gone right now. Every stage in the world is dark, so, really, the share of revenue that has been lost is overwhelming for creators in that field.
Most of the discussions are about the platforms. The platforms will continue to change. They're changing, and they'll continue changing, so the legislation we have has to able to support these changes and into whatever is next.
I know that the foreign Internet broadcasters are increasing their revenue through subscriptions and through advertising, but the fraction of the royalties these creators are making is not even trickling down to the artists—we're talking fractions of a cent—and we all know this.
What is in Bill , or what else can we do to strengthen Bill C-10, to support those creators who seem to get less and less of the pie as it's divvied up?
I have the role in this committee every single meeting as being the last person to question our witnesses, so I want to give each witness time for a very brief answer and a bit of a final word, I guess.
To quote some of our witnesses, this bill has been 10 years coming and there has been nothing whatsoever done in the last 10 years. I recognize that the witnesses want to have this bill passed with some urgency, but I think it's really important, considering it's taken so long, that we get it right.
I'd like all of the witnesses, if possible, to give me the very top amendment that they would like to see with this bill.
I would start with Ms. Côté and Mr. Lavallée, please.
Thanks, everyone, for joining us again on our second round. This is our analysis of Bill before we proceed with clause-by-clause.
I'd like to introduce our guests at this time. From the Fédération des télévisions communautaires autonomes du Québec, we have Amélie Hinse, director general, accompanied by Catherine Edwards. From Netflix, we have Stéphane Cardin, director of public policy. From Rogers Communications, we have Pam Dinsmore, vice-president of regulatory cable, and Susan Wheeler, vice-president of regulatory media.
As we've mentioned, you get up to five minutes. I'm going to be a little strict, because I'd like to get a couple of rounds in. Following that, we get into the questions.
Let's start with the federation. You have up to five minutes.
I believe, Ms. Hinse, you're starting.
I'd like to thank you for having us today. We're very pleased to appear before the members of the Standing Committee on Canadian Heritage. This is the first time we've appeared before the committee, and we're delighted to have this opportunity.
I'm going to talk to you about community television in Canada. Community television stations have been established across the country for over 50 years. In Quebec, in particular, there are more than 40 independent community television stations, or ICTs, in 14 of the province's 17 administrative districts. There are 30 more in the rest of Canada, which is very few compared to Quebec. There were more than 300 in the 1990s, but the lack of specificity and guidelines for ICTs has meant that they have gradually disappeared as a result of amendments to the Canadian Radio-television and Telecommunications Commission Act, among others.
Our ICTs produce, on average, six hours of original programming per week, a third of which is news, which is still a lot. There are 200 full-time jobs, 70 part-time contract jobs, and more than 1,500 volunteers who focus on local production. Television stations generally have a budget that varies between $45,000 to $500,000 per year—a very wide range. In Quebec, we are fortunate to be funded by the Quebec Department of Culture and Communications, in addition to receiving a portion of the investments that are made in government advertising. This doesn't exist either at the federal level or in the other provinces.
The community component is essential to the Canadian broadcasting system. The community component is one of the three pillars of the Canadian system, along with the private and public sectors. Today, more than ever, we need a robust community broadcasting system. Newsrooms have been closing for a number of years now, while commercial business models are struggling to adapt to digital competition, among other things. Communities outside the major centres are being abandoned, and they are becoming media deserts quite quickly.
Studies clearly show that the lack of local representation compromises Canadian democracy. Community broadcasters are local non-profit organizations created by and for citizens. We are ensuring that minorities and local populations have access to traditional and digital platforms, which is very important.
The advantage of community media is that they’re part of the community. They’re there for the long term. They collaborate and provide visibility to businesses, community and sport organizations, local artisans and artists, educational institutions, as well as various levels of government, from municipal to federal, and elected officials who do not have a voice in traditional national or regional media.
The community model is effective, efficient and sustainable. It makes it possible to produce productions for much less than what is done in private companies.
We meet a need for local programming in Canadian media. We are very inclusive. We make sure that local communities are represented. Education and training are among the main missions of community television. To achieve this mission, we need more recognition and specificity in our role.
It's with this in mind that we've made the various requests for amendments to the act that we have presented to you.
Mr. Chair, members of the committee, thank you for the opportunity to address you today.
Last September marked Netflix's 10th anniversary in Canada. We're grateful that over the last decade around seven million Canadians have welcomed us into their homes.
We filmed our first series in Canada in 2012, and our activity has grown ever since. In 2017, we signed an agreement with the government to establish Netflix Canada under the Investment Canada Act, which enabled us to hire Canadians directly. In return, Netflix made substantial commitments, including to invest a minimum of $500 million over five years in production activity across the country. Canada is one of our top production countries globally, and since 2017 we have in fact invested more than $2.5 billion here.
This includes our original series and films, as well as collaborations with independent producers and broadcasters in English and French. We also continue to acquire series and films, most recently Le guide de la famille parfaite.
Netflix also contributes to the vitality and competitiveness of Canada's audiovisual industry through long-term leases for stages, collaborations with leading animation and VFX studios, and the hundreds of vendors we work with across the country.
Earlier this month, we shared great news about our plan to open an office and hire a dedicated content executive in Canada. Netflix is excited to expand our connections with the Canadian creative community and to continue strengthening our local work and partnerships.
Our track record over the past decade is clear. Netflix is committed to Canada, and our message to you is equally clear. We will continue to bring Canadian stories to the world.
We understand that policy-makers must consider the nature of contributions from all players in Canada's entertainment ecosystem. To the extent that Bill aims to create a flexible framework that will enable the CRTC to tailor conditions of service applied to online undertakings and to recognize the different ways that online services contribute, we think such an approach makes sense.
However, simply imposing the regulatory obligations of licensed Canadian broadcasters onto online entertainment services would not be an appropriate approach to ensuring contributions from this otherwise vibrant sector. Services like Netflix do not perform the same roles as traditional broadcasters, nor do we have the same content strategies.
We look forward to discussing these issues at public hearings before the CRTC at the appropriate time. For now, we note our concern with an approach that would impose a uniform 30% Canadian programming expenditure requirement to the Canadian revenues of online video entertainment services.
Such an approach would not create a level playing field, nor would it be fair and equitable. Netflix seeks no regulatory benefits. Nor do we offer news or live sports programming—the categories that enable Canadian broadcast groups to meet the majority of their spending obligations.
Canadian consumers have more entertainment options than ever. An overly burdensome regulatory framework could result in reduced choice for Canadians. As new global services are launched, some may decide not to enter the Canadian market at all, while others may avoid regulation by providing their content through a Canadian intermediary instead of setting up here.
The government has stated its ambition to create a world-class communications sector for Canada and highlighted the importance of enabling and promoting Canadian culture, contributing to economic growth, and safeguarding the interests of Canadian consumers.
In order to achieve that ambition and build a well-balanced, forward-looking and resilient model, let's acknowledge the contributions of each participant in the system and enable them to play to their strengths for the benefit of Canadian stories, workers and consumers.
Thank you, Mr. Chair. I'd be happy to take your questions.
Mr. Chair and members of the committee, thanks for inviting us here to discuss Bill . My name is Pam Dinsmore. I am vice-president, regulatory cable, and with me is Susan Wheeler, vice-president, B2B distribution and regulatory, for Rogers Sports and Media.
At Rogers, we are committed to leading our industry in broadcasting innovation, as well as in celebrating and amplifying Canada's culture and identity. We provide platforms for a diversity of voices and deliver rich local content that engages Canadians across the country. Through our 54 radio stations, seven local Citytv stations, five OMNI-branded multicultural and third-language TV stations, and our OMNI Regional service, we entertain and inform citizens from Medicine Hat to Waterloo, Gander to Victoria.
Across our cable footprint in Ontario, New Brunswick and Newfoundland, we have 30 community TV channels that provide Canadians with coverage of local events and community issues in both official languages. Through these local outlets and our Sportsnet-branded channels, our celebration of community and sport brings Canadians together, transcending gender, age and ethnicity.
We welcome Bill 's proposed reforms and urge all parties to work towards a swift passage of the bill, notwithstanding any amendments that might need to be made. We also believe more needs to be done, and quickly, to address the immense disruption happening in Canada's media ecosystem that has put Canada's private broadcasters at a distinct structural disadvantage. This is especially true when it comes to producing national and local news programming, which plays an increasingly important role in democracies as newsrooms shrink and disinformation proliferates across multiple platforms.
Above all, we would like to leave you with an understanding of how profoundly our business model has shifted since the current Broadcasting Act was introduced 30 years ago. The Internet has, over the past decade, turned the economics of broadcasting upside down. Foreign digital competitors operating without oversight or regulation have undercut revenues, splintered audiences and driven up our operating costs. The legislative and regulatory frameworks governing broadcasting in Canada have not kept pace with these changes. In fact, they have disadvantaged Canadian broadcasting companies that compete with foreign streaming services, which have no regulatory obligations.
To address [Technical difficulty—Editor].
We have five recommendations to improve Bill and the government's policy direction to the CRTC that will follow the legislation.
First, include a provision that will ensure regulatory fairness between Canadian companies and foreign streaming services. Bill should direct the CRTC to impose comparable obligations on all media players drawing revenues from the Canadian broadcasting system. It is critical that Canadian domestic broadcasting companies do not have more onerous obligations than U.S.-based tech giants.
Second, dismantle the regulatory silos. Whereas U.S. streaming services are viewed as single entities despite their roles in both content creation and distribution, Rogers' broadcasting and distribution arms are not. Each is subject to a different set of regulatory obligations that prohibit us from evolving our business models and provide no incentive to invest in content creation. Rogers would like the act to give the CRTC the flexibility to regulate our broadcasting and distribution divisions as a single entity. This could take the form of conditions of service, as has been suggested by the CRTC in its “Harnessing Change” report.
Third, make local news and information a priority in the act. The act should allow Canadian broadcasters to prioritize the production of news programming over all other programming.
Fourth, eliminate part II licence fees from the Broadcasting Act. These fees are not directly tied to broadcasting and are not levied on foreign streaming services. The current bill proposes to keep these fees for Canadian broadcasters while letting the U.S. streamers off the hook. We think that is simply unfair.
Fifth, provide stronger protections to combat online content theft. If steps are not taken to address illegal online streaming, the objectives and debate around Bill will be moot, as the Canadian content ecosystem will fail.
Detailed amendments to implement these recommendations will be available in our written submission to the committee.
We thank you for your time and look forward to your questions.
My thanks to all the witnesses for being here today.
My first questions are for Mr. Cardin from Netflix.
Mr. Cardin, I'd like you to tell us more about the government's willingness to impose reinvestments to the tune of 25% to 45%, or 30% on average, in Canadian content. I would also like you to relate that to your position, because I'm sure you've been talking to senior government officials to try to understand the amount of $800 million that would be reinvested in Canadian content.
Where did that calculation come from? Unfortunately, despite multiple requests, we are unable to access that information.
What do you think about it all?
Thank you for your question, Mr. Rayes.
As we said in our presentation, we support the flexible framework proposed in Bill C-10, as introduced last November 3.
However, from the time the bill was introduced, during some of the discussions the department had, the possibility was raised that Canadian spending obligations similar to those currently applicable to Canadian broadcasters—there was talk of 25% to 45%—could be imposed on online entertainment services.
Again, we want to contribute and do more, but in a fair and equitable manner. Given the services we offer, which are essentially series, films, feature documentaries and family programming, and given that we don't offer news and sports, we simply don't think the suggested percentages are appropriate. They are not fair and equitable.
As Ms. Hinse said, and as is in both of our briefs, Quebec and Canada are on the same page. We'd like a definition. There's a big section about the role of the CBC in the previous act and in the current draft act. Other than saying that the community element is one of the three elements in the system, there's no definition at all. We'd like a definition that it's not-for-profit.
Second, we'd like a definition of its role. There used to be a section about alternative media, which was never really used or actionable and almost exactly describes what we do. We serve niche groups and minorities that aren't served by mainstream media.
Third, in all of these different reports that come out, like the creative Canada policy framework and the Yale report.... We're not even mentioned in the 235-page Yale report, other than to take more money away from community TV and give it to private broadcasters. We're in a vacuum.
We've suggested some additional wording to be tacked on to some of the very strong sections in the act just to explain what we do. For example, the inclusivity around the needs for indigenous media has been beefed up in the current act, which we super support, but realistically, the way you're going to get media on most indigenous reserves and programming in the language is through community media. We can produce for a tenth of the cost. We train groups to do their own content.
We've added in our brief particular add-on phrases to clarify where we can address some of these challenges facing the Canadian broadcasting system, mainly around inclusivity and local content.
Ms. McPherson, can we deal with the first motion first?
Given the fact that we're dealing with two motions, may I be so bold as to thank our guests for being here today? It looks like we're going over time.
I want to thank Amélie Hinse from the Fédération des télévisions communautaires autonomes du Québec. I also want to thank Pam Dinsmore and Susan Wheeler from Rogers Communications. Also, from Netflix, I want to thank Stéphane Cardin. Good luck on Sunday on the awards show; apparently you're going to do well, according to rumour, so all the best.
Thank you to our guests for providing their input, amendment suggestions and so on.
Ms. McPherson, can we start with the first one you mentioned, the Governor in Council motion?
Is there any debate on that?
Ms. Dabrusin, go ahead.
I worked on the amended motion with Ms. McPherson. I have distributed it in writing and in both official languages.
Everybody would have their written version by email.
I think the proper amendment is that I would move that the words after “That the Committee” in the first motion be struck and replaced by the words in our revised motion.
The revised motion is:
That the Committee invite Facebook, Inc. for a follow up meeting regarding the subjects raised during its testimony before the Committee on January 29th, 2021 and also to address Facebook's recent actions in Australia related to the Australian Government's consideration and adoption of the News Media Bargaining Code.
That the Committee requests that both Mark Zuckerberg, CEO and Mr. Kevin Chan, Global Director and Head of Public Policy, Canada testify on behalf of Facebook Inc.
That the Chair be asked to find a time in a non-sitting week in March for this meeting, based on Facebook's availability.
There are two differences between the two proposals. First, we are asking the committee to summon Mr. Zuckerberg and Mr. Chan, because the decision in Australia was certainly made at Facebook's headquarters, not in Canada. Second, we want to find a date for this work in March when the committee is not already hearing from witnesses, depending on Facebook's availability.
Those are the two major changes to the motion. I hope that the committee will be able to accept the amendment and the initial proposal.
Thank you, Mr. Chair.
I'm just going to hold on for less than one minute. I want to address the concern that Mr. Shields brought up, if you just give me one second.
Okay, folks. I just want you to bear with me for a moment as I'm going through the Standing Orders in the House of Commons Procedure and Practice, third edition.
I wanted to provide this as clarification on where I'm going. It talks about the motion itself as amended:
An amendment must be relevant to the motion it seeks to amend. It must not stray from the main motion but must aim to refine its meaning and intent. An amendment should take the form of a motion to....
In other words, what they cite here is that:
it is irrelevant to the main motion (i.e., it deals with a matter foreign to the main motion, exceeds its scope, or introduces a new proposition which should properly be the subject of a separate substantive motion with notice)
There is, in my opinion, a substantial amount to deal with in this particular amendment. Therefore, I have to seek unanimous consent to allow this motion to be debated.
Well, let me just deal with your shock and awe for just a moment. Let me consider what you just put forward.
Does anybody else have a comment on this? This is just my initial reaction to what I'm looking at right now. I will take that under advisement, and I will read this once again. As you know, I got this during committee hearings. Unless anybody else has a comment, I'm going to take a few moments to read this again. Thank you.
Mr. Housefather, here's the predicament we're in. The motion that was put forward by Ms. McPherson has been amended per se. If you look at the original motion, after the word “that”, it takes on a completely different form. At first blush, I have to look at this and say that it has been substantially changed, enough that you need to seek unanimous consent.
I understand what you're saying about the language of a person involved and just a date. To me, these don't seem like substantive matters. I know that.
Mr. Rayes, I will let you proceed.