Proceedings of the Standing Senate Committee on
Transport and Communications
Issue 14 - Evidence - October 7, 2003
OTTAWA, Tuesday, October 7, 2003
The Standing Senate Committee on Transport and Communications met this day at 9:38 a.m. to study the Canadian news media.
Hon. Joan Fraser (Chairman) in the Chair.
[Translation]
The Chair: The committee is examining the issue of the role government should play in helping our news media remain vigorous, independent and diversified, in the context of the upheavals that have affected this field in recent years, particularly globalization, technological change, convergence and concentration of ownership.
[English]
Today, we are pleased to welcome representatives of Rogers Communications, Mr. Lind, Mr. Engelhart and Mr. Strati; from Rogers Media, Mr. Viner; and from Maclean Hunter Publishing, Mr. Segal.
I would ask each witness to make an opening statement after which we will go to questions. Mr. Lind, please proceed.
Mr. Philip B. Lind, Vice-Chairman, Rogers Communications Inc.: Rogers Communications Inc. is a Canadian company with three separate operating divisions: Rogers Cable, Rogers Wireless and Rogers Media. Rogers Cable is Canada's largest cable television operator. We provide cable service to 2.3 million Canadians, and Rogers Wireless provides voice and data to 3.5 million subscribers.
The roots of Rogers Communications are in the Canadian media industry. Ted Rogers started the business more than 40 years ago with a single FM radio station in Toronto, CHFI. Today, Rogers Media has grown to become one of Canada's largest media companies, with a diverse portfolio of media assets. Rogers Media consists of three main operating divisions: Rogers Broadcasting, Rogers Sports Net and Rogers Publishing. The Rogers Broadcasting Group consists of radio, TV, digital categories 1 and 2, as well as the Shopping Channel.
The radio division owns and operates 43 radio stations in the provinces of Ontario, Manitoba, Alberta and British Columbia. We are recognized for our radio programming expertise and for our willingness to invest in innovation and diversity. For example, we introduced the all-news station format in Toronto with the launch of 680 News in Toronto.
The television division consists of two ethnic TV stations, OMNI.1 and OMNI.2. These two stations provide multicultural and multilingual programming to 40 different ethnic groups in 33 languages. OMNI TV produces five separate newscasts in five different languages, each with its own editorial perspective.
We operate three digital TV networks: the Biography Channel, TechTV and MSNBC Canada.
Rogers Sports Net was launched in October 1998 and is a regional, all-sports specialty television network. Our service consists of four regional feeds that serve four different regions, focusing on home teams and hometown sports heroes.
Rogers Media publishes over 65 magazines Maclean's and trade publication titles. Our national brands include Maclean's, Canadian Business, Flare, Chatelaine and L'actualité. Approximately 45 per cent of Canadians read one or more of Rogers consumer magazines each month.
Two important programs administered by Canadian Heritage support Canadian publishing: the Publications Assistance Program provides postal subsidies that are vital to the financial health of all Canadian magazine publishers, including our own. The second program, the Canadian Magazine Fund, has allowed us to improve our publications, thereby increasing our readership.
At Rogers, we do not have a common editorial stance for our magazines, radio stations or television stations. Indeed, even within our two television stations there are a huge number of ethnic public affairs shows that are responsible for their own editorial positions. Rogers' responsibility at our television stations is to ensure that the content complies with CRTC policies and guidelines and that it is accurate, balanced and fair. Each of our magazines and radio stations develops their own positions, while we seek only to ensure that they have the highest standards of journalism and integrity. Each magazine editorial is signed by the editor or by the editorial board. In all cases, editorials are written by journalists and not by business executives.
Much has been written the about the failure of converged media companies to generate large synergies. We would agree that many of the convergence benefits from combining print and broadcast have not materialized and that the real synergies are much more modest. Nevertheless, we believe that Rogers Media is an effective media company and that our diverse collection of assets in part accounts for our success. The synergies that we have achieved fall into the following categories: advertising sales, content sharing and career opportunities. That is more important than convergence.
Large media companies like Rogers have the scale necessary to launch new magazines, radio or television stations. Our scale allows us to monitor emerging trends, invest in new technologies and assemble the human resources needed to grow and nurture Canadian media properties. In an era when audience fragmentation is so pervasive, large Canadian media companies are needed to ensure that the Canadian message is heard.
A number of witnesses who appeared before this committee have expressed a concern regarding cross ownership of television and newspapers. Rogers does not own a daily newspaper, although at one time we did own the Toronto Sun. As noted above, we do own radio stations, ethnic television stations, specialty television stations and magazines.
The concerns regarding cross-media ownership rest on the premise that cross-media ownership prevents Canadians from having access to a diverse source of news and information services. We strongly disagree with this premise.
There has never been a greater source of news and information for Canadians. People in Toronto can read The Toronto Star, The Globe and Mail and the National Post, in addition to viewing hundreds of television stations, hundreds of magazines, countless numbers of community newspapers and an almost limitless number of Web sites.
While Toronto has more newspapers than other Canadian cities, the amount of news and information available to Canadians from different sources has never been greater. With satellite television, even Canadians in the most remote parts of the country can receive hundreds of different channels from Canada and abroad.
Internet access is available almost everywhere. Rogers provides high speed Internet access across all its licensed areas and the federal government is now seeking to roll out this high speed Internet to rural and remote areas.
Rogers is not requesting foreign ownership liberalization for Canadian content industries. We do feel strongly, however, that foreign ownership restrictions for carriage industries, telecommunications and cable television, should be removed. Foreign ownership restrictions raise the cost of capital, which makes it expensive for Canadian service providers like Rogers to keep their networks modern and up-to-date.
The content industries, on the other hand, are not capital intensive. Content requires high operating costs, including lots of personnel, but it does not require large expenses in capital. At the same time, the content industries are obviously much more important for Canadian culture than the carriage industries. For these reasons, we believe that the liberalization of the foreign ownership rules for cable and telecommunications should proceed quickly but that liberalization for television, radio and print are not required.
Senator Graham: Welcome to all the witnesses. You are all recognizable by face and by reputation, and the reputation is commendable.
Mr. Lind, we had one witness before the committee who suggested that, if foreign ownership restrictions were lifted in Canada, there would not be a wave of foreign capital flowing to Canada because of the different regulatory and tax environment in Canada versus the U.S. Do you agree with that assessment?
Mr. Lind: If the requirements were lifted for carrier regulations?
Senator Graham: Yes.
Mr. Lind: I think there would be some more foreign investment in Canada, yes.
Senator Graham: There would be?
Mr. Lind: I also agree that there is a different regulatory environment in Canada. People would have to wade in here cautiously, but I think they would and could.
Senator Graham: Are there any other effects, in addition to any changes in the cost of capital, which you would expect if foreign ownership restrictions were reduced, or eliminated?
Mr. Lind: No. It is the cost of the capital that puts us at a disadvantage, even against other bigger Canadian media outlets such as phone companies. They get capital cheaper than we do because they are considerably larger than we are.
Senator Graham: Is there any kind of integration between the newsrooms of your magazines and your radio and television outlets?
Mr. Lind: I will let Mr. Viner answer that question.
Mr. Anthony P. Viner, President, Rogers Media Inc.: All of our media properties have separate editorial and newsrooms. It is a way in which our company has functioned throughout time. There is no common editorial policy. Each of our media products has their own policy.
Senator Graham: Do you think there is a danger of our news becoming Americanized?
Mr. Viner: Perhaps I could ask you to define ``Americanized,'' if you mean by that sensational?
Senator Forrestall: Just look at California today.
Mr. Viner: I think the recall, senator, is not the same.
Mr. Segal, who is not only president of our publishing division but also former publisher of Maclean's, should comment.
We have serious journalists in our radio, television and magazine groups, who are independent and investigate the facts. We reflect our audiences and our audience's tastes. Canadians generally are interested in factual reporting. In order for our businesses to be successful, it is important that we reflect those tastes.
Mr. Brian Segal, President and Chief Executive Officer, Rogers Publishing: The unique selling proposition of our magazines is their ``Canadianness.''
You just have to go to any newsstand and look at all of the other choices that Canadians have. Even in the news magazine genre with Maclean's and L'actualité, Canadians are looking for the Canadian perspective. It does not mean that either of the two magazines would not cover stories that may be American stories or have something to do with the U.S., but it would be done from a Canadian perspective.
Our editorial philosophy is to meet the needs of our audience. If you are doing a good job, then your editorial is meeting the expectations, aspirations, wants and needs of our Canadian audiences, and that is the unique selling proposition. That is why Maclean's attracts 400,000 subscribers in Canada, and the Canadian edition of Time has 225,000; we appeal to what Canadian want to read. It does not mean that Canadians are not interested in U.S. news, but they have many other vehicles where they can get that information.
That would be the same for our women's titles. If you look at Chatelaine or Good Housekeeping, which is an American title, the differences are essentially that the content in Chatelaine is focused heavily on the values, aspirations and needs of Canadian women as compared to U.S. women. The content of our magazines is relevant to our readers, and the response in positive.
The Chairman: Please clarify the use of the words ``editorial'' and ``editorial policy.''
As you know, to most members of the public, editorials mean ``editorials,'' those things that appear on the editorial page. This is the opinion of the newspaper or the magazine or whatever. Within the trade, it means everything that it not advertising. In what sense are you using the word ``editorial''?
Mr. Segal: I am using it in both senses, but let us be clear. On the issues of editorials, each of our magazines sets its own editorials, and we ask our editors to sign the editorials, or, in the case of the new back page of Canadian Business, the editorial board to sign it, so that it is a clear reflection of the editors and not a corporate position.
You will find that one publication might take an editorial position on a subject matter that would be quite different than that of another publication. Canadian Health Care Manager on universal health care might have a different position than Maclean's might, and that is fine, because they are responding to different audiences. We do not approve the editorials.
Senator Graham: I wanted to clarify so that it is on the record, because we have had a number of witnesses who have appeared before the committee and have expressed concern regarding cross-ownership of television and newspapers.
As explained earlier, you do not currently own a daily newspaper, although you did own the Toronto Sun at one time, so you do not see any need whatsoever for a ban on cross-media ownership, nor do you see any danger to the Canadian public as a result of cross ownership.
Mr. Lind: We do not see any need for a ban on cross-media ownership.
Senator Corbin: I am seeking further information on the two federal government programs that subsidize your activities: the Publications Assistance Program, which provides postal subsidies, and the Canada Magazine Fund.
Do you really those subsidies to survive?
Mr. Lind: Yes, sir.
Senator Corbin: How does that fit into the free enterprise system?
Mr. Lind: We desperately need the programs, and Mr. Segal will explain why.
Mr. Segal: The history of the postal assistance program goes back over 100 years. It is probably one of the most efficient of our Canadian cultural policies. It brings Canadian content to Canadians all over the country.
The Canadian consumer magazine industry has been built on the basis of the postal assistance program, which has enabled Canadian magazines to keep their postal costs down.
There are substantial postal costs attached to Canadian magazines. It allows the magazines to be delivered at a lower cost than the normal postal rate. That has, over many years, brought Canadians and their content much closer together. It is important to note that the postal assistance program also provides substantial funding to community newspapers across Canada.
Canadian consumer magazines would find it difficult to survive if they only could live on the newsstand. You need only go to a newsstand to understand the competitive environment of magazine sales.
The subscriber base of Canadian magazines is critical to their survival. That subscriber base, the ability to charge a reasonable fee for delivering the magazine, is made possible by the postal assistance program.
It is a bit like the trucking industry. The government has been subsidizing roads for the last hundred years, and if they stopped subsidizing and charged full freight it would have a negative impact on the industry. It would be the same for consumer magazine rates. The postal assistance program is fundamental to the subscriber nature of those magazines, whether we own them or some one else owns them.
The Canada Magazine Fund was established in response to the change in legislation that permitted U.S. magazines to come in and have split runs, that is, keep the U.S. editorial, take out the U.S. ads and put in Canadian ads. That fund, as you probably know, has been significantly reduced from $50 million to $16 million. The rationale for its reduction is that the threat of U.S. split runs has not materialized, and therefore, the same support is not required.
We agree that the threat had not materialized, but we are starting to see some evidence that it might be beginning. Sports Illustrated and People magazine are now selling advertising in Canada. The Print Measurement Bureau, PMB, measures both magazines. We are likely to see a growing movement of U.S. or foreign-based magazines in Canada.
The most important element of the Canadian Magazine Fund was its editorial support fund. That allowed Canadian publishers to increase their support for quality editorial and, as a result, increase their audiences and, as a further result, increase their competitiveness for advertising dollars. Rogers, as well as other publishers, both small and large, have benefited from the editorial support fund to strengthen their editorial content.
Senator Corbin: It seems to me that L'actualité is more Québécois than Canadian. Is that a deliberate policy on the part of the publisher?
I am from New Brunswick.
[Translation]
French is my mother tongue; my ancestors come from Quebec.
[English]
I find that L'actualité tends to be parochial in terms of its coverage of French Canada.
You may agree or disagree with me. Of course, if an Acadian becomes an international star, L'actualité will do an article or have and interview with that person probably because that person has a tendency to move to Montreal where things happen.
As for the rest of human activity, I do not read much about New Brunswick or francophone Ontario or other islands of Francophonie elsewhere in Canada. If it does happen, it is almost accidental. It is not deliberate.
What is the policy of L'actualité?
Mr. Segal: Your fundamental premise is correct: L'actualité is a magazine whose audience is Québécois. It has historically focussed on Quebec; that is where 99 per cent of its circulation occurs, and it is a Quebec public affairs magazine. Its editorial direction does not drive from any corporate position; it drives from a position of its Quebec editorial staff. The editorial staff decides how best to meet the news, public affairs, entertainment and information needs of the people of Quebec. I do not think it does so with any intent to exclude Francophonie outside of Quebec. However, you are right; its focus is very much Québécois because that is where 99 per cent of its subscribers reside.
The Chairman: I wonder if that could be a vicious circle phenomenon. If you only cover one region, then people in other regions will not read you.
Senator Massicotte: You make the argument that there should be no limitation of cross-ownership or what I call ``hardware,'' in other words, capital-intensive industry. You do not express an opinion, but you do say it should not be limited in that respect. What about the content side? You can all appreciate our concern concerning content. What would your opinion be in that respect?
In your paper, you say that you are not so sure there should be a limitation on cross-ownership. Should there be regulation relative to the ``CanWests'' of this world, where the concern would be that there would be a limited number of opinions?
Mr. Lind: No, our opinion is that there should not be limitations. Canadians have hundreds and hundreds of sources of news and entertainment and information, much of which was not available 10 or 20 or 30 years ago.
Senator Massicotte: I can appreciate there is a diversity of news sources. However, from a Canadian perspective, I suspect most of the Canadian population limits itself to one or two daily sources of information content.
Would there not be, maybe, a lot of cross-ownership? Nevertheless, in your mind there is no purpose to have any regulations or rules to allow that, or do you just let the free market dictate?
Mr. Lind: The CRTC views each and every transaction that we seek to make; they evaluate it in those terms, as well as other terms. We feel that with the hundreds and hundreds of sources of news available that it is probably not a wise thing to do.
The Chairman: Are Maclean's and L'actualité profitable?
Mr. Segal: Yes they are.
The Chairman: They both make a sufficient amount of money by your standards? Do you want them to be more profitable?
Mr. Segal: We would always like our properties to be more profitable, although we are sensitive to certain categories of magazines and the costs that they bear, which are different than other magazines. A weekly news magazine frequency will never give you the same margin as a monthly women's magazine, or as a trade magazine.
We differentiate; we say this is a realistic margin for a weekly news magazine or a bi-weekly public affairs or business magazine.
The Chairman: Would you care to give us rough estimates of the ranges?
Mr. Segal: The news magazine category should have margins in the 5 per cent or 6 per cent, and women's magazines might have margins of 10 per cent or 12 per cent return on revenue.
Depending on the sector, the trade magazines might have margins in the 13 per cent to 17 per cent range. The news magazine or the bi-weekly public affairs magazines have a lower margin, and that is our expectation.
The Chairman: I am interested in your views on foreign ownership, and the differentiation you make between capital-intensive businesses and others.
Are you saying that foreign ownership rules for the carriers should be entirely lifted or just eased a bit?
Mr. Lind: We believe they should be lifted.
The Chairman: Who would you expect to be the suppliers of this capital? What kind of companies would you be expect to invest?
Mr. Ken Engelhart, Vice-President, Regulatory Law, Rogers Communications Inc.: Any time you put a restriction on capital, you raise the cost of that capital. The fact that the foreign ownership restrictions are on equity capital makes it more difficult for us to raise capital, and makes us give a higher return. The result is that Canadian carriers and cable companies trade at lower multiples relative to subscribers or revenue than their American counterparts. Those are, in part, a reflection of the foreign ownership rules that we have today.
Even more interesting, perhaps, is that foreign ownership rules on equity can raise the cost of debt capital. When you go into the debt markets, one of the things bondholders are thinking about is what happens in the catastrophic situation where this company fails and we have to take over those assets. A foreign debt holder cannot take over a Canadian carrier or cable company. Therefore, we pay a cost every time we go to the equity markets with the foreign ownership restrictions.
It is our hope that if those foreign ownership restrictions are lifted, we will have access to more capital and lower- cost capital, even without selling. The Rogers companies have no intention of selling. These are rules that can be lifted and provide an enormous benefit to Canadian carriers or cable companies, even if foreign entities do not assume control.
I think you have asked what foreign companies would be interested? I have seen quite a bit of interest from international satellite companies in acquiring Canadian satellites, for example; and I am sure there are areas where they would be interested in entering, in the fullness of time.
The Chairman: I do not know if this would be legally possible, but setting aside that question, would you favour any kind of limits on who, among foreign investors, could invest?
For example, the range could run from Rupert Murdoch or Larry Flint, all the way around to somebody purely noble and non-profit oriented like the Ford Foundation. Do you see what I mean? A wide range of people might be interested in moving into the Canadian market.
Would you suggest that there should be any kind of policy to control that situation?
Mr. Engelhart: One of our biggest problems in the telecommunications business is a lack of competition. Many telecom companies that started up have gone bankrupt. Others are in one form or another in insolvency. I am not being flippant. We should be grateful if anyone wants to invest in the Canadian telecom sector, because it has proven to be a very challenging sector for new entrants.
The Chairman: What kind of numbers are we talking about when you refer to the comparative difficulties that Canadian companies face in capital markets? How big is the gap in terms of cost?
Mr. Lind: The gap is between 50 and 100 basis points at a minimum, and is sometimes significantly higher. It can be between 0.5 per cent and 1.5 per cent, at a minimum. When you tack that on to a $100 or $300 or $400 million issue that becomes significant. We pay it every time we borrow.
The Chairman: Do you have any estimates of how much money you will have to raise over the next 10 years?
I am sure you have them, but can you give them to us?
Mr. Lind: No, because our CFO would go crazy if I answered that question. Let me put it in the broader sense: The cable industry and the wireless industry will probably have to raise over $10 billion in terms of new facilities that have to be built over the next 10 years or so. That is a lot of money.
The Chairman: Thank you.
Senator Massicotte: You are talking about a lot of savings; in your company alone it would be $20 million or $30 million. I presume those savings will pass on to the consumer. How will those savings be shared?
Mr. Engelhart: Much of what we are doing now is ruling out new products and new services. The benefit to consumers from these investments we are making comes from the new services we are offering. If you look, for example, at high speed Internet, Canada has the second highest penetration in the world, second only to South Korea. This is in large part due to the pioneering efforts of Rogers Cable, which got into the high speed Internet business in 1995. We have about 40 per cent higher penetration than the Americans, and at much lower rates. A typical Canadian rate for high speed Internet would be Can. $45, whereas the Americans are paying U.S. $45 or more.
Canadians do benefit when we invest in new technologies, and the more investing we can do, the more benefit they will see.
Senator Graham: You mentioned that Maclean's has a circulation of 400,000, which is impressive, and the Canadian edition of Time has 225,000. Are those numbers up or down over the last five years?
Mr. Segal: They are both down. Maclean's is down from 450,000 to 400,000 and Time is down from about 375,000 to 225,000.
If you look at their circulation levels over the last five years, you will see that they have come down because of the costs of maintaining very high circulation. Newspaper circulation has come down, and high frequency product circulations have come down.
In part, I think we are back to the point we were making earlier about competitive outlets and media choices. There are so many media choices to be made. Media use habits over the last five years have changed. The circulation of print vehicles tends to reflect some of those changes in media use.
Whether on television or radio, we have all news all the time. As a result the circulation levels have changes and they have also changed their content in some respects. In some instances they are not as responsive or reflective of last week's news but more thoughtful and provide more perspective on where the news is going versus where it has come from, because of the instantaneous vehicles that give you last week's news or last night's news.
Senator Graham: It is difficult to try to keep ahead of the news, which you almost have to do in the magazine business. To what extent would you consider that your magazines are alternatives or even competitors to newspapers?
Mr. Segal: I would think that The Globe and Mail and the National Post are Maclean's two main competitors in terms of frequency and in terms of the advertising market. L'actualité is a little bit less so because it comes out every two weeks, but in terms of advertising dollar, it would certainly see La Presse and Le Journal de Montréal as being within its competitive set.
Obviously, newspapers have taken the weekend to have their magazine sections, if you will. You have to be able to differentiate yourselves, and magazines can do that effectively, especially with photography, because the quality of the paper is different. Sober second thought is something that magazines can do well, because you have more time to think about it and they can give a different perspective.
They are maintaining their competitive position, but in direct answer to your question, for a magazine like Maclean's, it would be the other two national print vehicles of frequency that would be competitive.
Senator Graham: Certainly the people on this side of the table are sympathetic to the need for sober second thought.
You have 43 radio stations. Was Ted Rogers father in the business before Ted started 40 years ago?
Mr. Viner: His father was in the business. CFRB in Toronto stands for Canada's First Rogers Batteryless. Ted's father got into the business and died young, at the age of 39, and lost the radio station. Many suggest that the early death of his father was one of the motivations in Ted's life, to be a successful entrepreneur in the communications business, as he felt his father would have been had he lived.
Senator Graham: Of the 43 stations that you now own, how many were actually built by Rogers and how many have been purchased by Rogers?
Mr. Viner: That is a good question. CHFI was the cornerstone of all of Rogers' communications. I am the only one that will say that because I am the head of the media company. Ted bought that station.
He bought an FM station when fewer than 5 per cent of the homes had FM. The story is he bought it for $100,000 and promptly sold the connected background music service for $80,000. He was a law student at the time, which goes to the extraordinary characteristics of Mr. Rogers.
What have we acquired through public hearings? Most recently, we acquired a television service to serve Southern Ontario ethnic audiences. Although we have been active participants in the regulatory process, the hearing process, we have not won many licences. Most of them have been acquired through purchases of one sort or another, even including CHFI.
Senator Graham: Do you ever have any opposition from competitors or would-be competitors with respect to market share?
Mr. Viner: Absolutely. I am sure many of them will appear before this committee. Corus, CHUM, Standard and NewCap are all substantial radio companies. Both CHUM and Corus, depending on the measure, are certainly larger radio players than are we.
There are also some feisty independents that have market share, especially in Western Canada but also in the Maritimes.
There is a wide variety of ownership, both large and small, in the radio industry.
Senator Graham: Are you dealing constantly with the CRTC?
Mr. Viner: Yes, constantly.
Senator Graham: Do you think that it would be useful if the government gave more specific directions to the CRTC with respect to cross-ownership?
Mr. Viner: We do not believe that there needs be any additional regulations concerning cross-ownership.
Senator Graham: I am looking for purposes of clarity, not to be more restrictive but to give the CRTC, perhaps, a clearer view of what the people of Canada would like.
Mr. Engelhart: As I think Mr. Dalfen explained a few weeks ago when he appeared before the committee, the CRTC will look at cross-media issues when they are in the process of approving a transaction. Generally, they are very sensitive to the issue of media concentration as it is reflected in diversity.
Even in a situation where a broadcasting licensee subsequently acquires a newspaper, they will look at it when the licence renewal comes up. They have put in place restrictions over shared newsrooms.
I do not think we need more detail than that. I think the CRTC does a fair balancing act when they look at concentration and cross-ownership issues and at diversity.
If we had a cabinet directive coming down on this issue it would, by its nature, have to be a fairly simple rule of thumb. I think that the kind of trade-offs that the CRTC does when they examine these questions are appropriate. I would not see much benefit coming from a cabinet direction.
Mr. Lind: The case-by-case approach that the commission uses is still a pretty good one. They have the Competition Bureau looking over them anyway. I think it is fine.
Senator Graham: In what year did you launch the all-news station format with the launch of 680 news in Toronto?
Mr. Viner: We celebrated our tenth anniversary earlier this year.
Senator Graham: Of the 43 radio stations that you own, how many of them are all-news?
Mr. Viner: Only two of our radio stations are all-news. All news is a format that can only be sustained in a very large market. Toronto and Vancouver are the only two that we own. Corus has two all news, one in English and one in French, in Montreal.
I frequently tell the story of going to our board to say that I had a terrific idea for a fairly successful CFTR, which was a music-based station at the time and marginally profitable. I had a great idea where we could lose $7 million over the next couple of years. For whatever reason, the board supported our team in that endeavour. We built 680 news into the station, which now has the largest audience of any radio station in Canada, as measured by the number of different people who tune in each week.
Senator Graham: Does it broadcast 24-hours a day?
Mr. Viner: Yes, and seven days a week.
Mr. Lind: It is an advantage of scale. If we had just that station, we could not have afforded to go to that format. At that time we did not know whether we would blow $7 million or $10 million or more and have nothing come out of it. People see that it is a logical service to have now, but back then it was a real risk. It was a very uncertain market.
Mr. Viner: A majority of the critics told us that it could not be successful in Canada.
Senator Graham: In your all-news stations, do you do much editorializing?
Mr. Viner: Almost none. I use the word ``almost'' only because, occasionally, in Vancouver, we may run the odd editorial. 680 news does not run any editorials. I believe we do not run any on 11:30 news in Vancouver.
The idea of all-news is simply to provide constant surveillance to listeners. When you get in your car, at any time of the day or night, you can turn on your radio and get a quick update.
When we promote the radio station, we say, ``Tune us in three or four times,'' unlike other music-based or other radio stations who say, ``Listen to us exclusively all the time. We say, ``Tune us in. Listen for 20 minutes and then tune us out. We want to be your second favourite radio station.''
I cannot think of an instance when we have ever done an editorial on our radio stations.
Senator Graham: Is it fair to say that your primary goal is to inform rather than to influence public opinion?
Mr. Viner: Absolutely. We try very hard to get the perspective of either an eyewitness or an individual. Through interviews and on-air participation, we try to get individuals to try to describe what their experiences are or the nature of the event that we are covering.
Senator Forrestall: I might just editorialize and say, perhaps, if Rogers would keep a close eye on the sober second group in front of them today, perhaps we would have a better informed Canadian public and a better legislative process.
I want to ask about the implications of application processing concerning purchase, disposal, et cetera and the necessity of the CRTC being the grinder through which everything must move.
It seems to me that a few years ago that there was a very definite desire to get away from the CRTC and let some reincarnation of the Competition Tribunal pick up a lot of this work because of the time involved.
I would like you to address the question of the length of time it takes to process an application. If the process is lengthy and if there are financial implication would the Competition Tribunal be able to process the application more quickly?
Mr. Lind: I think the situation is pretty fair, as it exists right now. There is no question, though, that the CRTC takes too long to render decisions. Aside from that, there is certainly nothing that would indicate to me that the Competition Bureau would be any better. The situation is pretty good, only it is too slow.
Senator Forrestall: The tribunal is a chunk of clay that you can bottle and mould to suit the Canadian need and law, and to speed up the process, I would have thought.
Mr. Viner: When I first started in the business many years ago, we used to appear in front of the commission for every single licence renewal. Now, if there are no outstanding issues with the licence renewal, if there are no outstanding complaints, the commission really renews licences routinely. The commission does, however, differentiate between that and those licence renewals or public policy issues that are of significance to the broadcasting system, and examines those in greater detail. I certainly agree with Mr. Lind that it still takes too long.
Mr. Lind: That is in broadcasting; in telecom, it takes forever.
Senator Forrestall: I was thinking more in terms of telecommunications. Thank you very much.
The problem does not go away, and the implications to the user who has to pay the bill are becoming apparent. It is getting costly to enjoy the benefits of the service and the product that you supply.
Senator Corbin: What is the difference between Mr. Engelhart, Vice-President of Regulatory Law and Mr. Strati, Director of Regulatory Affairs?
Senator Forrestall: There must be a boss in every organization.
Mr. Lind: Mr. Engelhart is regulatory for the whole company — wireless, cable, media, et cetera. Mr. Strati is responsible for the media only.
Senator Corbin: I gather from your responses to both senators Graham and Forrestall that, with the exception of the grievance you expressed with regard to the slowness of the CRTC in some instances, you feel that the Canadian regulatory environment is quite comfortable for you.
Mr. Lind: We think that the Canadian regulatory agencies serve the public well.
Senator Corbin: Do they serve you well?
Mr. Lind: We serve the public. Yes.
Senator Corbin: Beside the reasonable complaint you make about the CRTC, what about the Competition Bureau? I do not know what experience you have had with them, if any. We were told at a previous hearing that they received about 80,000 complaints a year. I do not think I am exaggerating that figure.
The Chairman: That number rings a bell, but it was obviously not all media-related; it was everything.
Senator Corbin: If the public complains about your operations, does the Competition Bureau inform you? Do they give you an opportunity to respond before acting or discarding the complaint?
Mr. Engelhart: If there is a complaint to the Competition Bureau, they will definitely give you an opportunity to respond. Interestingly enough, they will not show you the written complaint. There is a belief at the bureau that when a small industry player complains about a large industry player, that complaint should be protected because they want to encourage whistle blowing. However, they have taken that laudable principle too far, so that you can never see the complainant even if the complainant is bigger than you are.
Senator Corbin: You feel entitled to see the complaint?
Mr. Engelhart: I think it would be a good idea to show the written document to the company to which the complaint was directed.
The bureau will meet with you and discuss the nature of the complaint. They will ask you any questions that they think are relevant. They have a fair process; but I question the rule that says that you cannot see the written document.
Senator Corbin: I appreciate your comments concerning foreign carriers having access to our markets. Would that, at the same time, open up opportunities for Rogers to move to foreign markets. Is Rogers interested in entering the foreign markets?
Mr. Lind: We used to be a major player in cable in the United States in the 1980s. Believe me, we would like very much to still be there. However, Ted Rogers was given an opportunity to bid on the wireless company in Canada and, therefore, he had to choose between cable in the United States or Rogers Cantel wireless, now Rogers AT&T wireless. That is what he chose; he could not do both. It all came down to money.
Yes, sure, we would like to be a bigger factor in the U.S. market because we have been, and we have proven that we can do it, which, for many Canadians, is an unusual thing. Canadian businesses do not do well in the United States, generally speaking. However, our cable company was a great success in the United States. We wish we could still be there.
Senator Corbin: I was not being overly critical about the quality of L'actualité. It is an excellent magazine, and one of the best generalist magazines of that type. In French Canada, we do not have much choice; however, it is excellent and the quality of the language is as it should be.
Mr. Segal: Thank you.
Senator Massicotte: I will follow up on two earlier points, and try to motivate you to be a bit more adventurous in your comments.
We talked about the CRTC earlier and about cross-ownership. It is a market fact that, to the extent that you have limitations or uncertainty, the cost of capital goes up. We are taking one point of view on the CRTC but, as we all acknowledge, the CRTC has a great deal of discretion in reviewing Canada's cross-ownership, content and many other things. That discretion obviously causes uncertainty relative to the capital market.
What would the argument be to remove some of that discretion to create more set policy guidelines?
If there were more certain approvals, I assume your costs to capital would go down and the consumer would presumably benefit down the road. Is that argument strong?
I know that you mentioned that it is serving the public well but there are some economies of cost that would be achieved if it were less discretionary.
What are your comments?
Mr. Engelhart: Certainly in respect of content for radio and for television, the CRTC exercises a great deal of discretion. There is no question that its action in the content business does raise the cost of capital. It is a policy model that we seem to have chosen, whereby the CRTC will exercise control over Canadian content producers because Canadian content is important for our country and the market will not deliver enough of it. We have deliberately chosen, on the content side, a kind of non-market outcome, if you will. It is working well and we have good sources of Canadian content.
For telecommunications and cable, the CRTC has to move towards being as non-interventionist as possible, given the realities of the market. In the local telephone market, where there is virtually a 100 per cent monopoly, the CRTC must continue to regulate to protect the consumers. However, in markets such as long distance or the Internet, which have become increasingly competitive, the CRTC can and does step away from micromanagement. They have the right model. I would argue that in the cable television business, for example, they are still regulating too much, given how competitive that market has become with the implementation of satellite technology. I agree with Mr. Lind that the overall structure works well, even though I have my share of arguments on individual files and cases.
Senator Massicotte: Human nature being what it is, we are all attracted to the 10-second clip of something controversial or labelled ``newsworthy.'' However, the item is frequently frivolous or superficial. In the United Kingdom, there is a big debate in the media industry whether it exaggerated Mr. Blair's problems or the existence of weapons of mass destruction in Iraq.
You are motivated to sell but, at the same time over the longer term, the Canadian population is best served when we concentrate on the content and its quality, yet that does not sell as well as the 10-second clip.
Do you think that in Canadian public policy something should be done to manage those two conflicting interests?
Mr. Viner: First, the CRTC does require us to be fair and balanced, including in the area of news reporting. The CRTC deals seriously with questions of comments that are deemed unfair and unbalanced.
The CRTC deals effectively with what they perceive to be a problem. There is a well-established complaint process and we frequently deal with the CRTC if, for example, we receive viewer/listener complaints.
I received two separate complaints last week that claimed we were clearly biased against one or the other of the potential leadership candidates in the pending Ontario election. The comments came from opposite camps so, clearly, we were probably pretty balanced.
We have a requirement under the Canadian Radio and Telecommunications Commission to be fair and balanced and to have a complaint process. The current system serves us well. There are not a great number of complaints.
The Chairman: How many journalists are in you employ?
Mr. Segal: Do you mean print journalists?
The Chairman: If you do not have the numbers today, could you obtain that figure for the committee?
Mr. Lind: Certainly.
The Chairman: We are also interested in trends in the employment of journalists.
Mr. Lind: Do you mean educational background and such things?
The Chairman: I was actually thinking about numbers but if you have more information, anything you could give us would be helpful.
Mr. Segal: We could also give you, in addition to the full-time journalists who work for us, is information on freelancers. Last year Rogers Publishing spent $14 million on freelancers across the country, in every corner of the country. I say ``every corner'' because they tend to be in every corner of the country. Our numbers will not only provide you with the data on full-time journalists but also the number of freelancers that we use across the country.
Mr. Viner: We could that information for both our radio and for television operations.
Senator Graham: Is that where the three cents a word applies?
Mr. Segal: I am not sure.
The Chairman: It used to be a number of cents per word, which is why there were so many wordy reports.
The Chairman: The editor's job was to slash the number of words.
Similarly, if you could give us any trends in newsgathering budgets not just for staff but also for increasingly complex, and expensive equipment, it would be helpful.
You have explained that you do not have a common editorial policy and that each outlet is free to set its own policies. You also talked about repurposing content. Could one of you describe that a bit further?
For example, someone may do a story for the Medical Post and then the item is repurposed. Is there a requirement from on high that it be repurposed? Is there a requirement that it be sent out? How does repurposing work?
Mr. Viner: Perhaps both Mr. Segal and I could tackle this question. The Medical Post is a good example. It is Canada's leading medical journal. It contains superb editorial content. From a business standpoint, we believe that editorial will be of interest to consumers.
The Chairman: When you say ``editorial,'' do you mean ``information'' and not ``opinion?''
Mr. Viner: I am sorry, ``editorial'' in this sense, is the content.
We have an e-newsletter called ``medical posting,'' which we send to consumers who sign up for it through the various Web sites of our media company. We take the material and prepare a short update of our news and information stations concerning a particular development in medicine. We think it is of interest to our audience and that is the context.
We are looking at childhood obesity. Editors bring forward these ideas and we support them. There is funding across the whole company and it will be treated by journalists at Maclean's and at Today's Parent. Information will be used on the radio station, as well. It is a benefit, and that is how we deal with it.
The Chairman: It should be a benefit to get new and original information to a broader audience. One could also suggest that a story about childhood obesity, when repurposed and sent to your radio stations, crowds out some other news story that the radio station itself might have produced or limits the diversity of coverage of that issue; which is to say, the radio station might not have come up with the same take on it as you have. This is a bit hypothetical, but do you see any difficulties or risks here? Do you have any policies to avoid?
Mr. Viner: I return to our original premise, which is that the editorial decisions are taken by the individual media outlets. We make this material available to them but they are not required to carry it. If, indeed, one of our media outlets has a different take on it, it is welcome to go forward with the article of their choosing.
We entrust the success of our media outlets to the individual publishers, managers, editors and program directors. With them resides both the responsibility and the obligation to provide content that will attract audiences and fulfil both the spirit and letter of regulation. It is entirely up to them to carry what they want to carry.
The Chairman: Senator Graham informs me that he does have a question and that he, unfortunately, must leave us in a few moments.
Senator Graham: We were talking about the CRTC's insistence on balance and fairness. I understand that you are to inform Canadians rather than influence them. Does that apply to phone-in shows or so-called ``talk-back'' shows? We do find in some parts of the country that there is much editorializing and hosts of talk-back type shows and phone-in shows are very adamant in trying to influence public opinion.
Mr. Viner: We do not do phone-in shows. Again, the issue is whether or not the content is clearly identified as editorial or opinion.
The commission will tell you that it frequently receives complaints from talk-show listeners. The individual broadcaster has the opportunity to respond and say whether or not it is its view that it has been fair, and the opportunity to provide other opinions if the determination is made that it has been unbalanced in some way.
We do have some sports talk shows, and one can argue whether they are information or something else.
Mr. Lind: In cable, we do an ask-the-manager show once a week where people can berate the manager for service problems or whatever.
Senator Forrestall: I wish to ask you about the adequacy of schools of journalism in terms of supplying the workforce that you need. Are you happy with them? Are you people-watching from high? Do you contribute to their support?
Mr. Viner: My answer is ``yes,'' to all of those questions. I think Mr. Segal should also respond.
I am on the advisory committee of the Radio and Television Arts Program at Ryerson University. We support the education of journalists in a number of ways. We provide the John W. Graham scholarships and bursaries to students of various ethnic backgrounds in order for them to be able to complete their education at Ryerson. These funds have been available for about 15 years and have gone to many students who have eventually ended up working with our television service.
We conduct seminars at various universities across Canada for the purpose of finding people who are interested in sports broadcasting. We have provided bursaries and scholarships to schools of journalism from UBC and Simon Fraser to Ryerson and other community colleges. Each year, we take interns from the various programs to our various media properties.
Perhaps Mr. Strati has something to add that I may have overlooked.
Mr. Strati: There is also a recent initiative with Rogers Sportsnet. Sportsnet has four regional feeds across Canada serving different interests and communities.
We have programs with BCIT, NAIT in Alberta, Concordia University in Quebec, and Ryerson in Ontario. The programs are a bit more than scholarships. There are also some mentorship programs where students and sports journalists come to various regions and work with and get involved with staff, as well as initiatives with universities to establish seminars. Weekend seminar programs are available not only to the students but to people who are interested in the specific area of sports journalism. Thus, there are initiatives in place.
Senator Forrestall: You overwhelm me, but you overwhelm me with the obvious; everything is west of Montreal.
When I turn on my television set, I have to listen to Ontario news. It is as bad as listening to CNN. There are several ways of resolving this situation. One of them would be to encourage those of you who participate actively in the boards of some these institutions to encourage the hiring of fellows from out in the boondocks.
We have a point of view in Eastern Canada that is rather comfortable and we have enjoyed it for almost 400 years, as a matter of fact. The West does as well. Please do not engulf us. Please let us see something that must be from Newfoundland or northern New Brunswick once in a while.
Mr. Lind: We were on sports. Let me just say that our sports network is the only sports network that splits Canada into four regions and broadcasts different feeds to each one of those areas.
Senator Forrestall: If you are informing me, you are also moulding my opinion and I do not even realize it unless I protect all the quality of the bricks that go into the structure that advises me. Then I have reason to be concerned.
The Chairman: How many bureaus do you have? Do the radio stations just rip and read or do they have journalists on the ground?
You have a long list of your educational initiatives. If you could give us a more specific form, that would be very helpful indeed.
Mr. Viner: We have a significant number of reporters and EFP, electronic feed production people, in all of our media outlets. We think it is a key, perhaps not a differentiator, but it is a unique selling proposition and it is key to our ability to deliver the news.
The Chairman: Back to this business of independent editorial or information content. Do you have a formal policy statement? D your employees get a written guarantee that you expect you to function independently?
A couple of former newspaper publishers who had appeared before us, who have worked for separate, different, large companies have talked about having such statements and suggesting that they found them very helpful and useful.
Have you ever thought about making such a statement?
Mr. Lind: We have not been burdened by being large newspaper owners. When, for example, we owned the Sun, we started to wrestle with those problems but then they went away again.
The Chairman: That brings up the next question, which is, would you be interested in getting back into the newspaper business?
Mr. Lind: We just look at anything but no we do not have specific plans to get back into the newspaper business.
Mr. Viner: On the editorial independence, I guess that we have not provided regulation when there did not appear to be a problem. We have not responded to it and we have not had complaints from either our listener, viewers, or our editorial staff. As you have heard, I think if we tried to influence our editors, you would hear from them.
The Chairman: I can remember when I was a junior journalist, that there was a strong conviction that you were hired to be a good and fearless journalist, except in anything affecting your employer; the bigger and more diverse your employer, of course, the bigger the field of information that; rightly or wrongly, might constrain you.
How do you see the Internet affecting the provision of market for news and information, in the coming years?
Mr. Segal: Earlier on there was there was an awful lot of content on the Internet that was unbranded, particularly in news and information where everyone was publishing their own information and their own ``news'' but it did not have any standards. It was not part of any kind of peer review.
That has changed to a situation where the strongest sources of Internet news and information are attached to branded products that people understand. Whether it is the Maclean's Web site or a Globe and Mail or the Wall Street Journal or the New York Times, the Internet component of it is an extension of the same legitimacy to the extent that the brand brings to the site. People read it in the same context as they would read the newspaper or the magazine.
I think that in the future, we will see more of branded, referenced, peer reviewed standard-based journalism, as compared to free-lance uncontrolled journalism which we saw a lot of during the boom days.
Therefore, if you had questions about the mother brand, then you might have questions about the Internet brand attached to it, but you would look at the two in a similar way.
I think the news services have become ``feeders,'' they feed the print brands, and the Internet brands but differently. So Canadian press, or Reuters, or Thomson, are feeders of data or of their own content, which historically, has always been processed by the major newsrooms, not necessarily as presented but within the context, or spin of the story they wanted developed.
The Chairman: Do you see it as a supplement to the current sources or a replacement?
Mr. Segal: I am biased; I like the touch of paper, print. I think you use it for different reasons. It does not the have the mobility or the feel, or the ability to take it anywhere you want to take it that easily. I do not think that people will give up on printed information. If it is done right, as many of them are, you can get a lot more data than you could get in the print equivalent of it. You can search stories and get more data about a particular subject matter than you can from the printed article.
The Chairman: The 50,000 or so readers that Maclean's has lost, where have they gone?
Mr. Segal: We have to differentiate between readers and subscribers. We are measured on the basis of our readership and the subscribers have gone down but the readers have actually gone up.
That is because of pass along readership and so on. I am sure that the media use habits have changed and the Internet is one component of that change. Broadcast is certainly a very strong component of it as well; you not only have CNN, or CBC Newsworld, or CTV, but also Fox News and other options available to you.
The Chairman: Do you have any studies on changes in media use, either historical, or what is likely to happen?
Mr. Lind: We read all the journals all the time about what is happening and what is projected to happen in the future. These sources are available to you as well.
The Chairman: I thought maybe you would have some wonderful in-house documents you could give us.
Mr. Lind: We are not able to tell where it will be in 10 years. If we could, we would be pretty good.
Senator Corbin: Is correct that you do not own or operate anything in the Atlantic Provinces? You have the sports feed, but other than that, you are not a player at all down there.
Mr. Lind: We are in cable in a big way, in Newfoundland and in New Brunswick. We have applications for radio stations in several Maritime provinces.
Senator Corbin: What is the situation in New Brunswick with respect to cable?
Mr. Lind: We own most of the cable in New Brunswick, and in Newfoundland as well.
Senator Corbin: In terms of publishing —
Mr. Lind: I did not want to say that in front of Senator Forrestall, because we are not in Nova Scotia.
Senator Corbin: He complains a lot about central Canada ignoring the East; but coming from New Brunswick, we tend to get a lot of Halifax news dumped on us.
Mr. Lind: We are also in publications and in wireless across the country.
Senator Corbin: You do not have publication houses in New Brunswick?
Mr. Lind: No, we do not.
Senator Corbin: Are you not interested? You said earlier that you would look at any opportunity.
Mr. Lind: We will look at anything.
Senator Corbin: We could suffer a little diversification of ownership in New Brunswick publications. Thank you.
The Chairman: I am stopping only because we have to proceed to our next meetings. We have only scraped the surface, although you have been very helpful. As we proceed, I wonder whether it would be possible to invite you back or, alternatively, to send you some questions and ask for your responses?
Mr. Lind: We would be delighted to appear or to answer further questions, Senator.
The Chairman: Thank you very much indeed. It has been a most instructive session. We are very grateful to you.
The committee adjourned.