Hull, Que.: Two weeks to go in the Canadian Television Policy Review Hearings and the proceedings have already offered up their share of – believe it or not – entertaining moments. The following are excerpts from the presentations of the lobby groups representing the primary sectors of the film and television industry, the Canadian Association of Broadcasters and the Canadian Film and Television Producers Association.

The scene is the crtc chamber in Hull, Que. Representing the cab are president Michael McCabe, Peter Miller, senior vp and general counsel, cab tv chair Jim Macdonald, PricewaterhouseCoopers’ Glenn Suart, and Scott Cuthbertson, a senior broadcasting analyst for TD Securities.

Sitting for the cftpa are Elizabeth McDonald, president and ceo, chair of the board Linda Schuyler, Alliance Atlantis Communications ceo Michael MacMillan and Dr. Matthew Fraser, professor of broadcasting policy and communications at Ryerson Polytechnic University.

Commission representation includes Andree Wylie, vice-chair broadcasting and acting chair of the hearing, and commissioner David McKendry.

The Opening

mr. mccabe: I would first like to welcome the vice-chair Wylie to this first hearing in your new capacity as vice-chair, broadcasting, and congratulate you on your appointment.

As well, I would like to send out our best wishes to Francoise Bertrand. Francoise, I know you would have liked to be with us here today. We hope you get well soon and do indeed rejoin us. Perhaps you can console yourself with the thought that today at home you are the most important person in the whole broadcasting system. You are a television viewer.

the chairperson: Better make this good Canadian content.

mr. mccabe: How can we miss with her?

Fire! Fire!

mr. cuthbertson: Since June, the combined value of the top five broadcasting stocks has declined by $1.8 billion, erasing almost 26% of their value, while the TSE 300 during the same periodÉ

Fire bells go off

the chairperson: Perhaps we can try to ascertain whether that’s the recession at our doors or a false alarm, and we will resume once we have established that.

Break/Everybody returns

the chairperson: Order, please, ladies and gentlemen. Ë l’ordre, s’il vous plaît. Est-ce qu’on peut m’entendre dans la salle?

– Short pause/Courte pause

the chairperson: Order, please. There seems to be a problem with this mike. Can people hear me now? No?

Well, for the moment, as long as we can hear the applicant –

mr. mccabe: Or the supplicant

the chairperson: The supplicant.

– Short pause/Courte pause

the chairperson: Apparently, our economic situation has now improved, so you may proceed.

mr. cuthbertson: Thank-you very much. Before I was gonged, I was basically outlining the fairly grim situation that we appear to be facing and the sensitivity of the broadcast sector to the economy –

– Technical difficulties/Difficultés techniques

the chairperson: Excuse me, I will have to interrupt you again. Apparently, now the stenographer does not have any sound, so we will have to wait and see when that can be restored.

– Short pause/Courte pause

the chairperson: It appears that we are a long way from digital!

Mounties too?

the chairperson: While we are on this 200% credit, it is a bit of a more pointed questionÉ.what it would be, how it would be differentiated from the 150% credit programs, that it would be distinctively Canadian, dealing with Canadian themes, historical events, personalities. What do you mean by ‘Canadian themes’? What would be the distinguishing factor to put it in the 200% credit category?

mr. macdonald: It would have to feature a beaver.

mr. miller: I will pass this to Rob Scarth, who is our expert on this, but I do note that this notion of a super Canadian credit for some of the very tough, truly indigenous Canadian programming, feature films and otherwise, is something that has got support among a number of interveners, and it is I think, an important area for us to explore.

Whose money is it, anyway?

the chairperson: When we look at that sheet on page 18, what strikes one, it would seem, is that the taxpayer is the greatest contributor which, I suppose, is what would support Dr. Fraser’s comment that Canadian taxpayers, or does it, that Canadian taxpayers are not subsidizing Canadian program production as intended, but they are subsidizing the bottom lines of Canadian broadcasters?

mr. macmillan: Well, the contribution of the cable production fund and the tax credits, which have been significant, that increase has coincided with a decrease in licence fees.

mr. fraser: There I was talking about the licence top-up money, not the tax credits.

the chairperson: But would it not be the same? Isn’t that taxpayer money in the last analysis that is in those funds?

ms mcdonald: I think one of our experiences –

the chairperson: It’s not producers’ money.

ms mcdonald: Our experience with tax credits, and we are very experienced with them both federally and –

the chairperson: No, no. I am talking about the fund here. The comment was about the fund, whose money was in the fund. I suspect it’s the taxpayers’ money.

ms mcdonald: It’s only half.

mr. fraser: You could argue whether the fund is taxpayer money or cable money. I mean, it was a CRTC mechanism that started the fund, so was it public money or is it from the cable industry? It’s called the cable fund.

the chairperson: The 5 per cent is passed on to the subscriber, so –

mr. macmillan: Let’s not split hairs. It’s the public’s money. Absolutely. Part comes directly from the taxpayer from the federal treasury. The other part is filtered through the cable operators and viewers pay for it. That’s right. It’s not our money to start with, either way you slice it.

It does subsidize the industry, which is required. It does help make better programs. Absolutely. A key beneficiary in that is not merely the producer, but also the broadcaster. It’s getting better programs made for, paid for in part by taxpayers’ dollars or viewers’ dollars. That’s the truth.

the chairperson: But the point on page 18 is to show that the broadcaster is not contributing enough, which is why you would want that level of contribution increased.

mr. macmillan: We do think, first of all, as producers we always think broadcasters pay us more licence fees. That sort of goes with the territory. But we do think though there has been a decline during this decade and we would like to reverse that decline.

If nobody needs fixing, why are we here?

mr. mccabe: The cftpa and the dgc proposals both have the dubious virtue of eliminating most of the profit in the private conventional broadcast sector and transferring it into the hands of independent producers – some $80 million in the case of the cftpa and some $50 million in the case of the dgc. We understand how these proposals would benefit their members. We don’t understand how they would benefit the system or the Canadian public.

Producers have shareholders just like broadcasters. How would their shareholders react if they were told that all of their profits had to be siphoned away to some other sector? Shareholders would certainly take their investments elsewhere.

The independent production sector is a profitable $2.9-billion business that rivals broadcasting in size. Its larger companies have a market capitalization level higher than many broadcast companies. The levels of production activity within the independent production sector have never been higher. This sounds like a success story to us, not a problem to be fixed.

The numbers

game, part 1649

commissioner mckendry: I have a question about one of the PricewaterhouseCoopers schedules, the one entitled ‘Canadian Drama Not Economic.’ The question I have is: Looking at English drama, what would be the impact on that number of using incremental costs rather than fully allocated costs?

mr. suart: You mean just direct costs in a sense?

commissioner mckendry: What I mean is the costs that would be incremental to producing drama as opposed to fully allocated. I assume ‘fully allocated’ means you have allocated some fixed costs to drama. What I am asking is: What would the number look like if you just used the incremental costs?

mr. suart: The fully allocated costs include the amounts that have been apportioned by the broadcasters in giving us the data for technical and other operational costs. If you just did it on a direct cost basis, the crtc style, the loss would still be about 28%. So, for example, for every dollar of advertising revenue on a direct cost basis, just paying for that English drama they lose 28 cents.

commissioner mckendry: So, that number would be 28 cents rather than $1.15. Is that what you are telling me?

mr. suart: It’s 28 cents for a direct cost, but if you allocate all the other costs in that are relevant to the broadcaster, which should be there probably, then it’s more a fully allocated one and, therefore, $1.15.

commissioner mckendry: But the answer to my question is 28 cents.

mr. suart: I think so.

To be continued. . .