Welcome, everyone, to the Standing Committee on Canadian Heritage. Pursuant to the order of reference of Tuesday, February 16, we are now studying Bill , an act to amend the Broadcasting Act and to make related and consequential amendments to other acts.
I'd like to remind everyone that we are still in a hybrid format. We are all online, by the looks of things, with the exception of me. I would remind all of you that you are not allowed to take pictures or snaps of the screen for distribution. Thank you so much.
Now, this is the part where I normally say welcome to the committee, but today, I have to say welcome back. As you know, we were waylaid in the last meeting we had, so we're holding this over because we missed out the last time.
So here we are and we start again with our first three witnesses as we did last time. From the Alliance des producteurs francophones du Canada, we have Carol Ann Pilon, who is the executive director. From the Canadian Association of Broadcasters, we have Kevin Desjardins, who is the president. From the Independent Broadcasters Group, we have Joel Fortune, who is the legal counsel, and Monsieur Luc Perreault, strategic adviser. Thank you so much again.
As you know, we do the five-minute introductions, as before, except that this time we'll actually get to questions.
We're going to start off with Madame Pilon.
Ms. Pilon, you have the floor for five minutes.
First of all, I want to thank the committee for having me once again.
Since I've previously made a presentation that was entered into the public record, I will simply summarize it briefly and highlight what we feel are its essential points.
In our initial presentation, the Alliance des producteurs francophones du Canada, or APFC, outlined three fundamental principles.
First, it is absolutely necessary to put a stop to the current unfair treatment exempting online businesses from any obligation to support the creation and broadcasting of Canadian content.
Second, it is essential that the act include provisions designed to give the entire Canadian broadcasting system a clear mission to reflect the situation of the official language minority communities, the OLMCs, and to encourage the creation of programs produced by their members.
Third, it is undeniably important that the act include meaningful provisions designed to strengthen the position of original French-language programming within the Canadian broadcasting system.
We have attached to our brief specific proposed amendments to the wording of sections of the act and amendments giving effect to those proposals.
The culture is a strong concept that embodies the aforementioned principles. By that I mean the culture that promotes our development, enhances our identity and gives expression to our language. This same great principle of diversity of cultural expression should constitute the foundation of the Canadian broadcasting system and be the essential feature of its orientations.
Since our first appearance, has tabled a white paper that could eventually lead to a review of the Official Languages Act. Some claim this potential review may be enough to ensure that the objectives of our second principle are achieved.
Although this reform acknowledges that it is important to support the creation and broadcasting of francophone content and to improve access thereto, that objective must be included in the relevant legislation, the Broadcasting Act, so that it is set forth in express terms in the regulations made by the Canadian Radio-television and Telecommunications Commission, the CRTC, and stated in the clearest possible terms so that it applies to the broadcasting system as a whole.
Experience has shown that the Official Languages Act has thus far failed to compel the CRTC to introduce measures that have an actual impact in responding to the needs of the OLMCs. The figures speak for themselves since francophone minority production amounts to 4% of total production, even though we represent 14% of Canada's francophone population.
The Minister of Canadian Heritage suggested during his appearance that, under the present wording of the act, the CRTC was able to provide adequate support for original Canadian French-language content on the broadcasting system.
I must emphasize that this production is mostly from Quebec and that it has not necessarily achieved the same success elsewhere in Canada. This phenomenon is not solely attributable to the CRTC's decisions but also stems largely from Quebec's cultural policy, which, for many years now, has encouraged the creation of French-language cultural products. Minority francophones do not enjoy equivalent support, which is why the act must ensure that original French-language programs can be created, produced, presented and discoverable all across the country.
In your discussions with Canadian broadcasters, many have sought significant relief from their present obligations. If such relief is granted, we fear that millions more dollars from online businesses will in fact be used to substitute for proper funding.
In other words, we are afraid the entire exercise may be only a zero-some game in which licence-holding broadcasters' contributions to the financing of Canadian content are reduced by an amount equivalent to contributions from digital businesses.
The Canadian Heritage minister and representatives clearly stated that this was not the intent of the bill, but nothing in the text of the act so indicates or guarantees. This concerns and troubles us, even more so given the emphasis placed on flexibility in the Directions to the CRTC issued yesterday.
This is why we believe it must be stated in the preamble to the act or in the Directions to the CRTC that the objective is to increase the total resources available to finance the creation and production of high-quality Canadian content and to ensure that it is disseminated and promoted.
In conclusion, I would like to say that we welcome Bill and encourage the government to adopt it as soon as possible. This major bill is inclusive and an exceptional opportunity to give a voice to all Canadians across the country.
Thank you for your attention. I will be pleased to answer your questions.
Good afternoon, Mr. Chair and members of the committee.
Thank you for the opportunity to return today on this important piece of legislation that I am pleased to be able to address.
My name is Kevin Desjardins and I'm the president of the Canadian Association of Broadcasters.
The CAB is the national voice of Canada’s private broadcasters, representing the vast majority of private radio and television operators in communities large and small and in both official languages.
For nearly a hundred years, Canadian private broadcasters have been a part of the cultural and economic fabric of the nation. They have provided a platform for Canadian stories, invested in Canadian talent, employed Canadian workers, reflected Canadian diversity, paid Canadian taxes, entertained Canadian audiences and informed Canadian citizens.
The legislation we are here to study comes at a critical moment for our sector. Over the past decade, the competitive landscape for Canada’s broadcasters has fundamentally changed. Unregulated digital competitors have moved into the Canadian market without hindrance or oversight. They have fragmented audiences, driven down revenues and driven up programming costs. In short, they have turned traditional broadcasting business models on their heads.
The advertising marketplace has changed radically, with online platforms now consuming half of those advertising dollars. In fact, private, conventional TV stations posted a negative margin of 7% in 2018-19, which was the seventh consecutive year of losses. That was before COVID-19.
Similarly, nearly as many Canadian viewers are watching Internet streaming services as are watching television through cable or satellite providers. In addition to decreasing audiences and subscriptions, these new over-the-top entrants have fundamentally changed consumer behaviour.
These structural challenges require structural solutions. Broadcasters are doing their part by investing in new content and technologies and following audiences onto new platforms. However, they remain hindered by unsustainable and inequitable regulatory obligations. This is why we welcome Bill .
The Broadcasting Act is 30 years old and it still presumes a reality for the sector that has long since become a remnant of history. It assumes that there are limited ways for content to reach Canadians, as was the case when Canadians could only watch or listen to programs over the public airwaves. Because licences to operate broadcasting channels over those airwaves were scarce, they were highly valuable. Broadcasters’ regulatory obligations, especially with respect to Canadian content, were proportionally high.
Today, because audiences have a multitude of content platform options, the value of traditional broadcasting licences is much less than it once was. Nevertheless, regulatory obligations have remained as onerous as ever and in some cases have become more burdensome. This has left Canadian broadcasters as some of the most heavily regulated businesses in Canada, attempting to compete in one of the most profoundly disrupted industries in the world.
These trends have created an existential crisis. A study published last year estimated that television and radio broadcasters stood to lose more than $1 billion in revenues between 2020 and 2022.
Canada’s private broadcasters are not interested in turning back the clock. They are optimistic about the future. They want to continue evolving with Canadians, providing cultural and economic value to the nation. However, they cannot continue to shoulder their significant obligations alone.
Bringing digital broadcasters into the regulatory system is a necessary first step, which Bill gets right. It is not enough to simply apply a parallel regime to extract additional dollars from digital giants. We need to rebalance obligations and create a modern, agile and sustainable regulatory framework that will allow Canadian broadcasters to adapt to the new realities.
These changes are particularly vital for sustaining one of the most important public services that our domestic broadcasting industry continues to provide, which is local news.
Canadian private broadcasters remain especially proud to be the primary source of news and information in communities across the country. In an era of misinformation and global pandemics, it is critical that we identify ways to continue to support local news voices that reflect the realities of their communities and reflect a fair and accurate vision of Canada back to Canadians. We know that the digital giants will have little interest in delivering the evening news from Lethbridge, Saskatoon, Peterborough or Quebec City.
Ultimately, Bill needs to support local news and help us find ways to ensure that these critical Canadian stories are funded across the country in markets large and small.
Mr. Chair and members of the committee, thank you for the opportunity to complete our presentation.
I am a strategic advisor with the Stingray Group, which is a member of the Independent Broadcasters Group, the IBG. I am here with Joel Fortune, legal counsel to the IBG.
The group supports Bill but requests that it be amended before it is adopted. The bill gives the CRTC the necessary authority to supervise online programming services, such as Netflix, that offer individual programs to subscribers. The bill confers significant powers on the CRTC but withdraws the power to supervise online distribution services at the very moment the major cable companies in Canada are preparing to offer Internet distribution services in conjunction with their established cable services.
This lack of supervision also affects global platforms such as Netflix, Amazon and Apple TV, which also offer distribution platforms that include applications and services provided by other businesses. Many of those, such as Pluto TV, also offer services including programming guides and linear content.
The CRTC currently has the power to ensure that Canadian services are fairly treated in this online environment. Bill C-10 eliminates that authority. The few changes that we have proposed will solve this problem.
Why is this regulatory authority so important?
As independent broadcasters, we know how essential it is to have fair access to distribution platforms. I will leave it to my colleague Joel Fortune to explain why the future of independent broadcasters and independent distributors depends on those amendments.
IBG recently completed a study that demonstrates some of the problems with Canada's existing broadcasting system. Between 2015 and 2019, some Canadians cut the cord and the base of Canadian subscribers fell by about 6.5%. IBG's study finds that over this same time period, the revenue of non-mandatory, Canadian independent television discretionary services fell faster, by 20%. Meanwhile, the revenue of the large, vertically integrated discretionary services actually rose. The collective per-subscriber wholesale rate for these services increased by more than 20% over this same time period. This is more than twice the rate of inflation.
These differences suggest strongly that the market power of Canada’s large, vertically integrated BDUs is distorting the Canadian market. This kind of discrepancy in revenue is not sustainable. It is undermining diversity in the Canadian system. We believe that the CRTC’s rules in this area need attention, but at least the CRTC has the authority to do what is required. Under , they won’t in an online environment.
In an online environment, it's imperative that the CRTC have clear jurisdiction to ensure the fair treatment of all players, including in the ever-changing use of algorithms and in the fair use of data. We are not alone in our concerns. The Canadian Communication Systems Alliance, CCSA, represents independent cable and IPTV companies. They're on one side of the independent broadcasting coin in Canada and we are on the other.
In its submission to you, the CCSA underlines the importance to this committee’s work of the market power of Canada’s own media giants. We support the CCSA’s comments, which echo our own, and the changes the CCSA is proposing in addition to our own. CCSA suggests an amendment to proposed paragraph 9.1(1)(f) to add a reference to contracts between broadcasting undertakings.
CCSA also proposes that the CRTC’s authority to protect against undue preference and disadvantage in the distribution environment be brought into the bill. Both changes respond to the reality of the consolidated broadcasting industry in Canada.
Lastly, I will follow up on some other points of discussion we have been following in this committee. On the question of Canadian ownership, of course should include Canadian ownership of all types of services as a policy objective. It should be updated, not removed as a policy. On the question of the role of Canadian broadcasters, we've heard words of support for Canadian broadcasters and the important role we play as the bedrock of the system, but the bill omits the most important issue for most broadcasters: fair access to the means of distribution.
Thank you for the chance to appear. We’d be happy to answer your questions.
Maybe I'll take that one.
There's a lot that isn't defined in the bill. “Internet” isn't necessarily defined in the bill. These are terms that are generally understood and can be given meaning when the act is interpreted in its normal course.
With regard to “terms of service”, for example, if you're talking about terms of service between broadcasting undertakings, those are the terms that are negotiated by broadcasting undertakings. If you're about talking terms of service to consumers, generally it's the contractual terms offered to consumers. We can get tied up in all kinds of definitional issues.
There are a few extremely important definitions in the act. Those are the ones that deal with online undertaking, programming undertaking, distribution undertaking, network and many others. It's important to—
Thank you very much, Mr. Chair.
Thank you very much to all of the witnesses for coming back again today and finally getting a chance to do your full presentations.
I'm going to concentrate my questions with Madame Pilon.
As a member of the committee who comes from an official-language minority community and who cares very much about this issue, one of the themes that I believe most needs amendment in this law is the recognition of the place of official-language minority communities in Canada.
In Quebec, as we know from previous testimony, we used to have more than 25% of the original English content in Canada created in Quebec; now it is less than 7%.
In the rest of the country, only 4% of francophone content is created by francophones outside Quebec, and I don't think that's enough. We have to find a way to ensure both that the creation, production and presentation of original French-language programming flourishes across Canada, including in French in Quebec, and that the act recognizes the francophone communities outside Quebec and the anglophone community in Quebec.
Ms. Pilon, then what would be the actual consequences of not expressly naming Canada's official language minority communities in the act? I imagine you heard me when I asked Minister Guilbeault the same question. He told me the CRTC's regulations guaranteed those things. However, I think it's preferable to state it expressly in the act.
Do you agree with that?
We entirely agree on that subject. We propose two principles to guarantee that protection. The first actually concerns the official language minority communities, both anglophone in Quebec and francophone outside Quebec.
We also propose that a provision be added to section 3 precisely to ensure that content is created by and for the official language minority communities and to guarantee access thereto. We use words such as "ensure" and "guarantee," which are clear, precise and firmly imperative.
Linguistic duality has frequently been interpreted very broadly in decisions concerning our communities and in consultations with the CRTC, as I said earlier.
Some might claim that linguistic duality can be secured by providing francophone content in Quebec and anglophone content in the rest of Canada.
The only place where the official language minority communities are named in the present act and in Bill is in CBC/Radio-Canada's mandate.
I'll go even further. When CBC/Radio-Canada's mandate was last renewed, a condition was added, providing that a certain percentage of the broadcaster's spending be earmarked for productions outside Quebec. As a result of the way that condition was interpreted, the corporation, in its reports to the CRTC, included English-language productions dubbed in French in that category in order to meet its obligations.
Failure to be precise and to put accurate names on things can result in all kinds of interpretations. This is what we want to avoid. We want the bill's provisions to state clearly that the official language minority communities have value and that they acknowledge they are a part of the Canadian identity and of the broadcasting system.
I entirely agree with you.
What impressed me about your amendments, which are very specific, is that you've worked with both the members of your organization outside Quebec and Quebec anglophones, such as the…
Quebec English-Language Production Council.
You've also worked with francophone broadcasters from Quebec. Consequently, you've worked with all those groups in an attempt to strike a balance in the wording of your amendments in order to protect French across Canada, including in Quebec. Your objective is also to protect the official language minority communities in Quebec and elsewhere in Canada. I think that's very good.
My next question concerns a matter you haven't addressed.
What are your fears given the absence of any provisions in the bill that would enable the CRTC to oversee contractual relations between independent producers and broadcasters?
The way the law works, generally, is that it has two major parts. There are the policy objectives set out in section 3, and then there are the powers. You have to have both elements. You have to have policy objectives, and you have to have the power. You can have all the noble policy objectives in the world, but if there's no power to back them up, they don't help. Similarly, you can have all the powers in the world, but if there's no object in the act, it can easily be challenged.
In the case of ownership, first on the policy level, it would be incredible to me if we didn't have the support of Canadian ownership in our system as an objective. This is not to say that the ownership language shouldn't be amended; perhaps it should be. However, we've proposed an amendment that I think takes into account global platforms while also preserving the space for Canadian broadcasters.
Why do we want that? We don't want Canadian broadcasters just to be branch plants of foreign platforms. I'd refer this committee to the excellent Lincoln report from 2003, which said exactly that: “...the best interests of Canadian citizens...and fostering...our own talents and imaginations cannot be left to foreign interests.”
Legally, the direction exists under the existing act, which includes a requirement that the broadcasting system be effectively owned and controlled by Canadians. That policy direction speaks directly to that object. If you have no object about Canadian ownership, what's the authority for making that direction? It's certainly open for the direction to be challenged at law that it's no longer valid, given the change in the policy and the act. That's the concern there.
I think it's very important that we move this bill forward. If global platforms are really the way for all Canadians to access content in five years, we'll clearly be facing a serious problem. Those big global platforms pay no taxes in Canada. Canada derives no tax benefit from the revenue they earn.
Furthermore, they're the ones that will have the last word about our cultural sovereignty. That will mean major decisions concerning the content that's offered. The algorithms that direct Canadians to content via various apps are created outside the country for global platforms. Those major platforms are therefore of no particular interest to Canada.
It's important that we begin to supervise this ecosystem to ensure the discoverability of Canadian content. We have to see to it that Canada and Canadians have access to Canadian programmers, not programmers who sign global, worldwide agreements with certain services.
Consider Stingray, for example. It's very hard to access its global platforms because it tends to sign agreements with Spotify, among others. Those decisions are made outside Canada. All Canadian artists, creators and broadcasters will therefore be in trouble if we can't quickly oversee the major global platforms ecosystem.
Welcome to the second round of today's meeting. We are discussing Bill .
We will go ahead with testimony. We are running tight on time. I'm hoping to get two rounds in. I may ask for permission to cut down a little bit on the time in the second round. Please bear with me. We will get to that a bit later.
In the meantime, I want to introduce our guests. From the Coalition for the Diversity of Cultural Expressions, we have Nathalie Guay, executive director, and Bill Skolnik, co-chair. From the Motion Picture Association-Canada, we have Wendy Noss, president. From the International Alliance of Theatrical Stage Employees, we have John Morgan Lewis. Finally, from Quebecor Media, we have Pierre Karl Péladeau, president and chief executive officer, and Peggy Tabet, vice-president of public and regulatory affairs.
We will start with the Coalition for the Diversity of Cultural Expressions.
Mr. Skolnik, you have five minutes, please.
Thank you very much, Chair.
Thank you to the committee for inviting us here this afternoon. My name is Bill Skolnik. I'm co-chair of the Coalition for the Diversity of Cultural Expressions, CDCE. We are a coalition of 43 organizations representing more than 200,000 creators, performers and professionals in trade associations, music and screen production, publishers, unions and collectives.
For more than 20 years, our members have been working together to protect and promote Canada's diverse cultural expressions. My colleague Nathalie Guay and I have been CSO delegates at several UNESCO assemblies on this topic. This crucial protection and promotion requires the exercise of cultural sovereignty. The review of the Broadcasting Act is an essential part of the tool kit that can return some balance to our ecosystem. It is worth noting that the maintenance of cultural diversity was deliberately included in the terms of reference for the Yale commission.
Recently, it was reported that one in four people working in this sector lost their jobs in 2020 due to the pandemic. Meanwhile, companies providing access to cultural expressions online have made substantial profits. Netflix's revenues increased by more than 22% during 2020. It was a great year for Spotify too. They saw their total subscriptions rise by 27%.
The CDCE applauded the tabling of Bill on November 3, 2020, and welcomed the agreement of all parliamentarians to move the bill forward at an accelerated pace. To us, this represented agreement on the urgency to act.
Many of the people who have appeared before you have referred to our proposals to improve the bill. We have gone to the heart of the matter to ensure that the Broadcasting Act truly allows Canada to maintain cultural sovereignty. The changes that we ask you to contemplate are the result of an unprecedented consensus created by our multi-faceted and eclectic membership. We will respond to the draft policy direction with the same objectives. The Broadcasting Act is not just for regulation; it's cultural policy, and it has to remain cultural policy.
I will now turn the floor over to Nathalie, who will present these proposals to you.
Thank you, Mr. Skolnik.
Good afternoon, everyone.
My name is Nathalie Guay and I'm the Executive Director of the Coalition for the Diversity of Cultural Expressions.
You've received our seven main proposals for the improvement of Bill . I'll go over them quickly and I'd be happy to hear any comments or questions you may have.
First of all, distribution services provided by online companies need to be included, as was mentioned earlier today, and social media need to be included unambiguously. We understand that the intent is to include social media, and the role they play, in organizing professional content, but we find that the exclusions in Bill C-10 are causing confusion. Our approach would included them from the outset, so that the Canadian Radio-television and Telecommunications Commission, the CRTC, can fully exercise its new powers to collect information from these companies, and determine whether they should to be required to contribute to our ecosystems and how they should do so.
Second, the system ought to be under Canadian control, for our cultural sovereignty, our identity and our social cohesion. The CRTC direction that has generated so much discussion does not apply to undertakings that don't need a licence. The system can be essentially Canadian, in spite of the presence of a number of foreign undertakings.
Third, the act must continue to promote Canadian talent. The wording of paragraph 3(1)(f) under subclause 2(3) of the bill, could mean that Canadian broadcasting undertakings would no longer have any obligation to use Canadian talent, whereas the current wording already allows for factoring in the nature of the undertaking.
Fourth, we think that opportunities for reference to the Governor in Council should be broadened. Bill C-10 assigns many powers to the CRTC. We need to strike a better balance by allowing civil society organizations to have recourse to review a CRTC decision.
Fifth, more robust provisions are required to ensure that original French-language content is created rather than simply translated content or content subtitled in French. For proper service to the cultural diversity, original French-language programming from francophone minorities is needed, as well as programming in indigenous languages.
Sixth, orders should be applicable for a maximum period of time and be subject to amendment, to allow broadcasters and producers to plan their programming and their productions more effectively, and also to ensure that the conditions are reviewed and that all intervenors can have input concerning a service.
Seventh, a move towards the lowest common denominator should be avoided. The wording in paragraph 5(2)(a.1) under subclause 4(1) of the bill, for example, opens the door to undertakings being able to compare themselves to others more easily with a view to obtaining less restrictive conditions. It may be more logical and beneficial to adapt spending requirements to specific undertakings rather than regulate what might appear to look like a minimum applicable to all. We would also like to have a public hearing process for issuing orders.
Two other modifications might also be made. The CRTC should continue to rule on the percentage of programs in various genres; otherwise, programs of national interest, children's programming, dramatic programming and documentaries are likely to be neglected at the expense of less expensive programs like sports and reality shows.
The CRTC must also be able to oversee contractual practices between independent producers and programming undertakings, including the music sector. That proposal from the Yale report should be included, given the size of some of the players that will be subject to CRTC orders and regulations.
Thank you, Mr. Chair, and members of the committee.
I appreciate the offer to provide you with a shared perspective of the global studios represented by the Motion Picture Association in Canada. These include Walt Disney, ViacomCBS/Paramount Pictures, Sony Pictures Entertainment, Netflix, NBCUniversal/Universal Pictures and Warner Brothers.
All are major investors in Canada's creative economy through the production of television and streaming series, feature films, world-class post-production, visual effects and animation projects, employing over 94,000 Canadians a year and supporting over 23,000 Canadian businesses.
Here with me today, albeit virtually, is John Lewis, who leads the IATSE in Canada. The IATSE is the largest union representing Canadian entertainment workers, costume and set designers, editors, cinematographers, visual effects artists and virtually all of the crew.
We both thought it would be useful to highlight that our major studios, and this major labour organization, are aligned on why modern cultural policy must take into account opportunity for all Canadians who create film, television and streaming entertainment in Canada, and the importance of foreign investment to Canada’s creative sector.
MPA members have for many years been partners and investors in Canada’s creative community, and today they offer Canadian consumers diverse choices online, including the global entertainment on Netflix; the much-loved Disney brands on Disney+; the all-reality show hits of NBCUniversal's Hayu; the ad-supported Pluto TV service from ViacomCBS and their new Paramount+ service; and the most popular Japanese anime streaming service in the francophonie, Sony's Wakanim.
It is with that broad perspective that we recognize a lot of good thinking went into the complex issues at the heart of Bill . We want to commend the government for recognizing that a flexible approach is the logical way to create a modern broadcasting policy, given the rapidly and constantly changing dynamics in the marketplace.
Global streaming services bring opportunities for Canadian creators, contribute to economic growth and offer appealing entertainment for Canadian consumers. Allowing the CRTC to tailor conditions of service flexibly, based on how best each of these services can or should contribute to Canada, is a modern, sensible approach.
To fully modernize broadcasting policy, we recommend three criteria be added to the factors that the CRTC must consider in future decision-making prescribed in section 5 of the act.
Specifically, Parliament should require the CRTC to do the following: first, encourage competition and innovation; second, ensure that the regulation of online undertakings promotes choice and affordability for Canadian consumers; and third, recognize that competition and the growing choice of programming made available online contributes to broadcasting policy objectives.
By adding these criteria, the legislation will move beyond perpetuating decades-old broadcasting policy, and create more choice for consumers and more opportunity for Canadian creators and film workers.
Some argue that Bill should simply impose the same like-for-like obligations on online undertakings as Canadian broadcasters. This argument implies that nothing has changed in decades, from a time when the Broadcasting Act was designed to limit consumer choice. This approach ignores the many policy benefits that broadcasters have long enjoyed. It doesn’t take into account the very different business models of streaming services, their content offerings, and it doesn't recognize the unique benefits that global studios bring to Canada through investment in production.
While some are asking you to amend the bill to reduce flexibility, we believe the right way to serve Canada's creators, workers and consumers is to develop a policy framework that embraces change and helps Canada benefit from it.
Online undertakings create global entertainment, and reflect a wide range of viewpoints and experiences. This content is made in Canada with Canadian creativity. It is part of a global content marketplace that has led to foreign investment in production in Canada of over $4.8 billion annually. Almost 90% of the growth in production investment in Canada over the last five years, and more than half of all production in Canada, comes from global studio investments fuelled by these new undertakings.
Talented Canadians, who want to stay in Canada, develop their skills, work at the top of their craft and help create stories that resonate with audiences around the world, need this policy to be flexible and adaptive. Viewers, who want the best stories from Canada and around the world, need this policy to be forward-looking and consumer-friendly.
A modern approach that promotes investment, competition and innovation over protectionism will make for a bigger creative marketplace in Canada, more talent development opportunities for Canadian creators, more jobs for Canadian workers and benefits for Canadian consumers.
Thank you for allowing us to share this perspective. I'd be pleased to answer any questions.
Thank you, Mr. Chair, and members of Parliament.
My name is Pierre-Karl Péladeau, the President and Chief Executive Officer of Quebecor Media. With me is Peggy Tabet, Vice President, Public and Regulatory Affairs of Quebecor Media.
Bill is a long-awaited overhaul of the Broadcasting Act. Since the act was last updated in1991, 30 years ago, the broadcasting landscape has changed dramatically and irreversibly with the appearance of foreign online streaming services such as Netflix, Disney+ and Amazon, whose market capitalization totals several hundred billion dollars. We're talking about $1.5 trillion for Amazon and $357 billion for Disney+. To put these amounts in perspective, the figure for Quebecor Media is $8 billion.
In 2020, 68% of French-speaking Canadians were subscribed to an online streaming service. One out of two were subscribed to Netflix.Globalized competition from web giants such as Facebook and Google has destabilized our broadcasting system and, more than ever, traditional domestic players such as TVA and Videotron are facing unjustifiable and unsustainable inequities
When Bill C-10 was tabled, the Department of Canadian Heritage’s presentation document promised, and I quote, to “address regulatory asymmetries” and “provide flexibility and predictability”. However, it is clear that the consequences resulting from the bill in its current form go against these objectives.
For traditional broadcasters, those that showcase our Quebec and francophone culture, and the resulting economic benefits, the bill imposes new regulatory restrictions that will not redress the unfair conditions they have been coping with for years and will only pull them even deeper into the financial abyss and a Kafkaesque universe of regulation. From 2010 to 2019, the profits before interest and taxes of Canada’s main private over-the-air television broadcasters plunged by a combined total of $223 million. By 2020, the decrease was even more drastic, totalling $336 million.
The original and legitimate intention of the legislator to regulate television broadcasting had, as a corollary, the granting of a licence and the holding of a privilege. Today, and for many years now, technology has made it possible to broadcast without borders and without a licence. Trying to regulate what cannot be regulated is unrealistic. That's why the bill should provide traditional players with the regulatory flexibility they need and lighten their administrative and financial burden by removing unnecessary requirements. Quebecor believes that to modernize the Broadcasting Act and make it fair for Canadian businesses, regulation should be eased when market forces are operating effectively, and regulated only when necessary.
We cannot leave unmentioned a point that is notably absent from this bill: a refocused mandate for CBC/Radio-Canada. Recently, the CRTC held public hearings on the renewal of CBC/Radio-Canada’s licences. One after the other, more than 70 industry stakeholders said the public broadcaster has gone off the rails. Add to that all the complaints filed with the CRTC on this issue and the Friends of Canadian Broadcasting petition against the new Tandem branded content service, which was signed by more than 16,000 people
CBC/Radio-Canada’s unbridled pursuit of ratings, its commercial ambitions and its insatiable thirst for revenue are undeniably undermining the future and the sustainability of private broadcasters and the diversity of content. Each player in the system must play its role. For this to happen, it is more important than ever that Parliament overhaul the public broadcaster’s mandate.
Today, after a 30-year wait, the government is proposing to regulate foreign players instead of deregulating domestic broadcasters. We have serious reservations about the CRTC’s ability to enforce these new regulations and restrict the behaviour of foreign online services. If this new act is not to be totally ineffectual, Parliament must urgently amend its laws to allow the creation of a flexible ecosystem with fair regulations and taxation in order to keep our businesses viable and our culture strong
Thank you, Mr. Chair.
There are all kinds of regulations that apply not only to broadcasters, but also cable operators. These regulations seriously penalize the Canadian undertakings that create jobs, get Canadians working and contribute heavily to funding Canadian television and culture.
You are probably aware of the fact that Canadian cable operators play a major role in providing funding for television. Some of the people who spoke ahead of me addressed the issue of cord cutting, or unsubscribing from cable. Cable operators are losing customers because they are subject to regulations in various areas, including basic cable service. No foreign companies are subject to this. This has accelerated the cord cutting phenomenon. The end result Is that there is currently no money for the Canada Media Fund, which helps to finance Canadian undertakingsxx.
Basic service is one aspect. As for broadcasting funding, I'll give you an instance of this. One might wonder how such a thing might still exist, but to give you an example, there are people who time the length of audience applause during programs to determine whether or not broadcasters can get a tax credit. This was something that used to be done when awarding a licence, or a privilege, but it no longer exists. Now, distribution is over the Internet.
Luc Perreault, a colleague I know well and have a lot of time for, spoke earlier about an Internet regulation exemption. How could Parliament regulate the Internet and determine what is accessible? It could certainly be done under the provisions of the Criminal Code, but that's different kettle of fish. How could one ever attempt to regulate the Internet, including companies like Netflix and Disney+?
Ms. Noss, who spoke earlier, mentioned the important role now being played by American—most of them are American—companies with respect to streaming. We too made efforts. There was Club illico, but as you probably know, it was subject to the goods and services tax, the GST, and the Quebec sales tax, the TVQ, while the foreign streaming companies were not. This question was shunted aside by discussing a Netflix tax.
I believe that Parliament needs to shoulder its responsibilities. Otherwise, by the end of this year, Canadian industry and culture—and Quebec culture in particular—will be seriously affected.
If you're talking about actual numbers, I don't have them at hand, but I can tell you that if you want to read The Globe and Mail of two days ago, you can see what has happened to great people who have been classified as stars, such as Ashley MacIsaac and Old Man Luedecke. It has been devastating. It has been devastating because of COVID, but it started long before COVID. Who knows when it will come back or if it will come back?
There's an opportunity with this act, with amendments to this act, to recreate production for all of these folks, to say that we are going to take responsibility, that we're going to provide the opportunity for our Canadians—our creators, our performers and our producers—to work within this system and to resurrect, to get rejuvenated. The devastation that we hear of from all of our organizations is incredible. You can read the stats in terms of the entertainment industry and the cultural industry being hit harder than anybody, I think, except perhaps hospitality and tourism. I'm not sure, but it's there.
This is something that.... If we bring them back, it's going to affect a lot of you folks. You represent major festivals even in the small towns: the Festival of the Sound, the old Drummondville folkloric festival, the Victoriaville festival and the Orford one, which is a famous festival—we even have a string quartet named after it. All these things can become rejuvenated.
We need to take responsibility. We should not be embarrassed about saying that we're going to help Canadian performers, creators, producers and publishers with all of this. That's something we can do.
Well, I think the amendments we're offering—I'm not going to go over them—do provide some opportunities to do that. I also think that having American production companies here, as Wendy has pointed out, and the training that we receive and the experience that our people receive just result in even better products from Canadians. These things are not mutually exclusive. You don't have to say one and not the other. You just have to make sure that there's a level playing field, that people are treated the same and all of their experiences are noted when policy is made.
Like I said in my comments, this isn't the case of just massaging regulations. It's a case of saying, and not being embarrassed about saying, “We're here with this act to make sure that Canadian culture is there, front and centre, and it's there all the time—our stories, our folks, our performers, our producers.”
You know, they get it in Quebec. I just hope the rest of the country can pick it up from there, too.
It's my turn to thank all the witnesses for being here with us today.
My first question is for Ms. Guay, of the Coalition for the Diversity of Cultural Expressions.
Ms. Guay, this week, at the ADISQ meetings, the minister began by talking about Bill and the Broadcasting Act as a piece of cultural legislation.
Yesterday, we learned about the direction that the minister intends to send to this CRTC when the bill is adopted. What was your reaction yesterday when you learned about this letter and this direction?
Thank you for your question.
We're afraid that we will end up with more translated content or content subtitled in French unless the act is strengthened. We believe that it's important to strengthen the act with respect to original francophone content.
I'd like to remind you that several of our members appealed to the Governor in Council in 2017 when the CRTC reviewed conditions for the renewal of television service licences for the large French-language private ownership groups.
It's clear that the act needs to be strengthened to prevent this from happening again, all the more so as it will now apply to foreign undertakings.
To begin with, we are proposing something that is central to Canada's broadcasting policy, which is the addition of original French language productions from official language minority communities. Ms. Pilon spoke to us about that earlier.
Secondly, we are arguing that regulation and monitoring should give preference to the presentation of Canadian programs to Canadians that have been created and produced in both official languages and in indigenous languages.
I won't talk about the third amendment, because I think you want to ask another question.
It's true that these requirements may appear tedious. I have a list in front of me, and so I'll run through them.
To begin with, there are the content quotas. For example, TVA must have 50% Canadian content in the evening. After that there are the Canadian programming expenditure requirements, the expenditure requirements for national interest programs, the independent production and local production requirements. We also have to comply with the expenditures and the number of hours for local news. We also have subtitling and described video requirements, and the obligation to contribute to independent funds and the CMF. Added to all that are the regulations for providing the $25 basic service and the requirement to distribute certain programming services, like APTN, CPAC, AMI-télé, TV5 and Unis TV. And then, there are all the reports, including the two audit reports each year, annual financial reports, production reports, women in production reports, ownership reports, programming and recording records, and cultural diversity reports.
As you can see, instead of investing in Quebec and Canadian production, we spend a lot of time on red tape and administration, while our foreign competitors are not obliged to do so.
I was listening with interest to Ms. Guay just a short while ago. The fact is that we don't need regulation to know that we need to invest in Canadian programming. We have always considerably exceeded the established thresholds. And yet we still have this mandatory administrative burden. We know full well that it's important for us to disseminate Canadian content, and that's what we do. We also provide work for the craftspeople and all those involved in the cultural, television and cable sectors, and all for one very simple reason—our audience. God knows that there's talent in Quebec, and the audience expects us to put it on the screen. That's what we've always done. And we were doing it long before Quebecor bought TVA. It's a natural historical development in Quebec. It's not because of regulations that require Canadian and Quebec broadcasters to offer Canadian content that they do so.
Thank you for letting me speak today to ensure that the voice of the majority of film and television workers is heard. That's why I am here today.
The IA is the largest union in the entertainment industry, representing over 150,000 creatives across North America, including 30,000 in Canada. We are the behind-the-scenes creatives such as cinematographers, costume designers, scenic artists, makeup artists and special effects technicians.
We must address changes to the Broadcasting Act from a sense of confidence and optimism. Our industry is booming. We are thriving, not because of content quotas and regulatory restrictions, but because we are good. Our infrastructure is world class, and our creative talent is world class. Even in the face of the global pandemic, our film and television industry has burst back to match historic highs, which would not have been possible without serious deliberation and co-operation to ensure cast and crew are safe when working.
The IA supports the need for a flexible approach to create a modern broadcast policy and allowing the CRTC to use its expertise to fashion appropriate mechanisms to support the entire industry because, at the end of the day, a healthy industry requires a thriving domestic and foreign sector. They complement each other; they don't compete with each other.
We are not opposed to foreign streamers contributing to the domestic industry—we believe they should—but when determining that contribution, we would ask this committee to consider the full scope of their contributions. Foreign streamers make direct investments in producing content in Canada. As recently reported, since 2017 Netflix alone has spent $2.5 billion employing Canadian creative talent. That is tens of thousands of Canadian jobs.
In 2018-19, the foreign service industry was the largest single component of productions employing Canadian creative talent, which my organization represents, and I am disappointed to hear some commentators complain that foreign service productions do not employ Canadian talent. The vast majority of creative positions on foreign service productions are Canadian, and to suggest otherwise is not supported by the facts. Even worse, it suggests the work of the talented Canadians on Star Trek in Toronto, Deadpool in Vancouver or X-Men in Montreal are not as important and should somehow be discounted. I call that cultural elitism, and it should not inform our policy decisions.
We also hear a lot about the importance of supporting Canadian stories. Canadian stories should not be used interchangeably with Canadian content. Just because something qualifies as Canadian content, does not make it a Canadian story. When a Hallmark movie sets up as a small U.S. town, it qualifies as Canadian, but The Handmaid's Tale or Barkskins in Quebec City did not. We have to rethink the definition of what constitutes a Canadian production, and we are pleased that the proposed act contemplates that the CRTC modernize the definition of Canadian content. Our 10-point system is badly outdated and in need of an overhaul. We also support enhancing the discoverability of Canadian productions on streaming services.
If I could leave with one note of concern from the workers in this industry, it would be do no harm. As well, I would like to take this opportunity to thank the Department of Canadian Heritage for its incredible work to support cultural workers during the pandemic. The IA also represents workers in the live-performance industry, and the actions of the federal government have made a difference for thousands of families who have seen their livelihood decimated.
Thank you very much, Ms. McPherson.
Ladies and gentlemen, colleagues, we have about eight or nine minutes left. I would ask you for a favour. We're going to go into the second round. I say that because I like doing that, but also because we've asked these guests to come back after we scheduled them several weeks ago and cancelled at the last minute for reasons of democracy.
Can I ask each of my colleagues to please think of one or two questions and try to throw some of that time back to me? I don't want to do one or two parties, and then cut it off. I'd like to include all four parties. I think that's only fair, as colleagues. Can I ask you to be as concise as possible? I will afford the time that is necessary, of course, but hopefully you can help me out.
Okay, let's go to Mr. Aitchison.
I have, I think, a fairly quick question for Mr. Péladeau.
I'm hearing over and over again people talking about the difficulties that Canadian broadcasters face, in part because of regulation, and then also because of new streaming content, for example, coming on and not being subject to the same regulation. I tend to agree with your point that easing regulation on traditional broadcasters would be a better approach.
Would you describe the approach of Bill , which, for lack of any real, thoughtful analysis of the situation, simply calls streamers “broadcasters”, as a lazy approach to solving the problem?
Chair, thank you for helping me learn a new phrase. I will also shorten my time so everyone gets a chance.
I appreciate everyone's time. This has been extremely helpful.
I know Mr. Skolnik mentioned creators and performers in our culture or industry. You used the word “devastating”, and I could not agree more. Digital content more and more is becoming demonetized. For so many consumers, music has become practically free, writing is becoming free, people obtaining videos and images is practically free. We all know that creating art and creating music, those stories, take years of dedication. That requires a means of support. If things aren't going to change, a lot of our art is going to basically cease to be sustainable.
Because of the pandemic, artists are not able to work and perform in congregate settings. By one of my definitions, art brings people together. Therefore we really do need to support creativity more than ever.
I very much appreciate, Mr. Skolnik, your passion in this. I also appreciate that you mentioned our pre-study was important to move things forward in an expedited manner.
I'll get right to the amendments. I'll only talk about one today, which is the amendment you are concerned might reduce the requirement to use Canadian talent and result in broadcasting undertakings no longer having an obligation to use Canadian talent.
How can we enshrine that idea that we want to maintain Canadian content? I know you used a series as an example.
Anyway, I want to refer back to Wendy and John. I use this phrase: It's not mutually exclusive. Helping one does not take away from the other. We need to take advantage of the fact that we can enhance our own folks with our own talent.
We're worried that the regulations will be lowered to the lowest common denominator, that we need to say they can do this, but if they want to get these benefits, they have to use Canadians and use them all the way through. The market is going to look after a lot of it. You have to sell it whether it's Canadian or not. However, we believe, just as we do with so many regulations in this country, that Canadians must be put forward and Canadians must be part of it. Our amendment should ensure that all aspects consider Canadians, and not just the regular ones. We know that in other jurisdictions, like Latin America, the Disney Channel, for example, is obligated to have local content.
To us, this is not detrimental; it is promotional. We need to continually promote and support it.
It's true. Some of the broadcasters today—and Mr. Péladeau said it many times—are asking for conditions to be reduced so they can compete better. In a sense, they are right that the conditions are unfair to them at present. We propose that online undertakings have to meet the same level of conditions rather than reducing the existing conditions.
If we lower the conditions for everyone, it is our artists, creators and local production companies that will pay the price, losing their jobs and contracts. Along with that, the Canadian public will no longer have access to our great Canadian productions. We'll have access to less diversity.
The economy will also pay the price because broadcasters will pay foreign production or other types of production that will not bring added value to our economy.
Another important aspect is the inability of our producers to hold copyright of their productions and thus market them internationally. If the exhibitors, both conventional and digital, hold all rights, producers will have no back end. This speaks to the ability of the CRTC to bring back the notion of terms of trade, which is another one of our recommendations.
It most certainly is, Ms. McPherson. Thank you very much.
I want to say thank you to my colleagues for helping me out on that second round. I'm glad we got through it for reasons that are quite evident.
I thought our witnesses today were great. I'm glad we rescheduled. As a committee, we took the decision to reschedule after you were cancelled on that day. You were all great. I really enjoyed what you had to say.
Thank you to Ms. Guay and Mr. Skolnik from the Coalition for the Diversity of Cultural Expressions, Ms. Noss from the Motion Picture Association-Canada, Mr. Lewis from the International Alliance of Theatrical Stage Employees, Madam Tabet from Quebecor Media Inc., and last, but by no means least, Mr. Péladeau. I always enjoy your input, sir. Thanks for joining us.
We are going to have to break for a bit and go in camera. Again, I thank our witnesses for joining us.
[Proceedings continue in camera]