Proceedings of the Standing Senate Committee on
Transport and Communications
Issue 2 - Evidence, February 4, 2014
OTTAWA, Tuesday, February 4, 2014
The Standing Senate Committee on Transport and Communications met this day, at 9:31 a.m., to conduct its examination of the challenges faced by the Canadian Broadcasting Corporation in relation to the changing environment of broadcasting and communications.
Senator Dennis Dawson (Chair) in the chair.
[Translation]
The Chair: Honourable senators, this morning we are continuing our examination of the challenges faced by the Canadian Broadcasting Corporation in relation to the changing environment of broadcasting and communications.
[English]
Today's witness is Ian Morrison, spokesperson for Friends of Canadian Broadcasting. I invite the witness to make his presentation; and we will have questions following that.
[Translation]
Mr. Morrison, you have the floor.
Ian Morrison, Spokesperson, Friends of Canadian Broadcasting: Mr. Chair and members of the committee, thank you for inviting me to appear during the first days of your examination of the challenges faced by the Canadian Broadcasting Corporation in relation to the changing environment of broadcasting and communications.
[English]
I was originally invited here to focus on the broadcasting environment, but last week I was told that I could include some comments on the CBC, so I will touch on both as a stimulus to our conversation today.
The basic challenges facing Canadian policy-makers and broadcasters in 2014 are similar to those described by the Aird Commission in 1929. I'm going to give you five of those: first, providing Canadian content in sufficient quantity and quality to compete for audience attention with the flood of production from elsewhere, principally the United States; second, making that content universally accessible to all Canadians who want it — it was actually five time zones at the time but now six time zones with more geography than population and with two official languages; third, ensuring that both the production and the distribution of Canadian content are economically viable and sustainable in the absence of a profitable business model; fourth, using the system to both celebrate and share the rich diversity of this country's regions and peoples as opposed to some monolithic centric vision; and fifth, maintaining the independence of the system from undue influence or control by special interests of any kind, either political or commercial.
The late Graham Spry framed this challenge well when addressing a parliamentary committee in 1932. I quote:
The choice before the committee is clear. It is a choice between commercial interests and the people's interest. It is a choice between the state and the United States.
Here is a graphic demonstrating the continuity of that challenge in the second decade of the 21st century. I have distributed documents that will have this before you. I got this from a corporate plan of the Canadian Broadcasting Corporation/Société Radio-Canada. It shows for about 18 Western democracies the leading television programs — the top 100 programs — by country of origin. In countries like Japan and the United States, the top 100 shows that people watch are all Japanese or all American. You can see that ratio change, and the countries are lined up not by alphabet but by percentage of foreign content in their top 100 shows.
On the right-hand side, they show Canada in French and English. As you can see, in French-speaking Canada the level of domestic content in the top 100 shows is equivalent to, say, Switzerland. But for English-speaking Canada, we are just an outlier in this statistic of the Western democracies. Of course, sheltered from U.S. competition by language, French-speaking Canadians enjoy a preponderance of Canadian and Quebecois content while English-speaking Canadians view 77 per cent foreign programming, mostly American. As I say, it is an outlier.
Notwithstanding its shortcomings, our television system is admired and respected worldwide. Because of time-shifted and out-of-market viewing options and the wide range of over-the-air and specialty channels, the average Canadian viewer has greater viewing choice than the average American. Nonetheless, our system faces real threats. Much of our success in TV results from the delicate checks and balances that have been put in place by the CRTC to ensure the availability of Canadian programming. A pick-and-pay or unbundled system referenced in last October's Throne Speech could unravel decades of hard work to ensure the availability of a wide variety of programming that is predominantly and distinctly Canadian.
Another challenge is the changing pattern of advertising spending, where online spending has risen tenfold in the past decade, propelled by a new-found capacity to monetize human activity, outpacing newspapers and conventional television. It is soon expected to exceed all TV revenues. In my presentation is a graphic, which I have available only in English, that shows in millions of dollars over the past decade what is happening in this country with online advertising growth.
Unregulated services such as Netflix, YouTube, Hulu and Google TV, among others, are creating unprecedented fragmentation of Canadian tuning. As recently as the autumn of 2012, however, the CRTC insisted that such platforms continue to be complimentary to the regulated broadcasting system. One policy option would be to offer priority carriage for Canadian services on the Web. Similarly, Canadian radio stations are now competing not only with satellite radio but also with streaming channels from all over the world. Thus far, they have held up their share of ad revenues, as you can see; but a recently published commercial radio environmental scan concludes that radio ad revenues can be expected to start to decline over the next five to seven years by as much as 15 per cent.
Another challenge to the sustainability of our broadcasting system is the immense profitability of the large communications companies for both their broadcast and their non-broadcast services. Last year, their profits before interest and taxes, PBIT, exceeded for the first time the revenues of Canada's conventional broadcasters. I repeat: The profits of big distributors and communications companies exceeded for the first time the revenues of Canada's conventional broadcasters. In 2012, for example, the combined operating margin of Cogeco, Rogers, Shaw, Vidéotron and some smaller distributors was 44 per cent. Compare this to the 6 per cent margin for the conventional television industry.
Why is this a problem? Because more than $2 billion in subscribers' money passed through the distributors' hands into those of their shareholders without contributing to the creation and broadcast of Canadian stories. This market domination absent price regulation means that consumers take it in their pocketbooks. We note that the current government, though speaking out in support of the interests of wireless consumers, has remained silent on the interests of cable and satellite consumers.
As a segue to your CBC study, I want to offer a few comments on Rogers' recent acquisition of NHL rights for the years 2014 through 2026. This is very good news for the National Hockey League and its hard-working players. Starting next September, Rogers will pay upwards of $400 million annually for the NHL's multi-platform rights in Canada. In a period of low inflation, $400 million a year constitutes a 500 percent increase in rights payments since the year 2007. Split amongst 30 teams — that's the way they do it — 77 per cent of that money, $300 million a year, will remain in the United States. By September, Canadians will be paying more than Americans for the NHL's audio and visual images.
CBC Television used to make a substantial profit on its Hockey Night in Canada franchise. In 2007, it unwisely — this is an opinion, of course — bid up its NHL rights payments by about 100 per cent, believing, erroneously, as it turned out, that CTV/TSN would also be bidding. Shortly thereafter, a major worldwide recession suppressed TV ad rates, causing CBC to lose money on its investment. Our research indicates that CBC was able to get back into the black on its NHL investment by 2011 and that it offered approximately $200 million per annum in its unsuccessful bid for the 2014 and going forward rights.
Further, we understand that the NHL recommended to Rogers the current arrangement Rogers has made with CBC to essentially rent CBC Television's English network for upwards of 350 hours of prime time for the next four NHL seasons. That's beginning this September and going to June of 2018. Under this deal, Rogers will have the right to sell ads on CBC Television during NHL hockey broadcasts. Media speculation has it that this arrangement will come to an end in 2018.
We are skeptical for two reasons. We believe that Rogers has overpaid for the NHL rights and, going forward, its shareholders will insist that it do its very best to monetize this asset, and CBC Television's Canada-wide reach offers an unsurpassed opportunity to sell ads to national advertisers. Second, CBC Television has acquired a very high level of skill in telling hockey's story to Canadians, including high production values, which hockey fans have come to expect.
CBC Television has avoided a doomsday scenario for the time being. That doomsday would be losing NHL hockey for 350 hours a year in prime time and having to replace that programming, at its expense. FRIENDS believes this four-year period offers CBC Television an excellent opportunity to do what SRC Television did 12 years ago — wean itself from excessive dependence on professional hockey programming. The loss of NHL rights will reduce CBC Television's ad revenues by more than $120 million. That's half of its total ad revenue. As its sales costs will not fall proportionately, the net benefit of the remaining advertising will decline to a level where it could contemplate, for the first time, going non-commercial.
We're greatly concerned by the failure of CBC's CEO and senior management to engage in advance contingency planning for the possible loss of NHL rights. The writing was on the wall. CBC's testimony before the CRTC at last year's licence renewal hearings suggests that its head was in the sand in this matter. It appears to remain there today. I mean by that that it essentially thought that it had had these rights for 60 years and wasn't going to lose them. CBC's leadership has advocated ever more dependence upon self-generated, principally ad revenues. The recent failure of its NHL strategy as well as its recent adventure into advertising on Radio 2 and Espace musique suggests the need to consider the option of a non-commercial future.
Albert Einstein defined insanity as doing the same thing over and over again and expecting a different result. We recommend that the committee explore the possibility that this applies to the CBC. Removing subsidized competition with the private sector can offer a win-win benefit as well. No less an authority than the Prime Minister has advanced this view when he told the Canadian Association of Broadcasters that CBC's:
English language television has tended to become more commercial, more in direct competition with private television and more driven to use American programming to attract advertising dollars — an approach which does not appear to be successful. . . .
We believe that CBC English-language television should become, and will have to become, more distinctive if it is to remain viable and fulfil its role as a unique public broadcaster.
FRIENDS agrees with the Prime Minister.
Finally, I want to flag two issues we believe merit your priority attention during this study. One is to focus on strengthening CBC's local presence in communities across the land. Canadian Media Research Inc. has established that local news is Canadians' top priority for television. The Broadcasting Act charges CBC to "reflect Canada and its regions to national and regional audiences, while serving the special needs of those regions." We believe that greater attention should be devoted to the local and regional dimension of CBC's statutory responsibilities.
The second issue is to address the independence of CBC's governance, in keeping with the necessary arm's-length relationship between a public broadcaster and a government in a democratic country. The sage advice of the 2003 Lincoln report has yet to be enacted:
In the interests of fuller accountability and arm's-length from government, nominations to the CBC Board should be made by a number of sources, and the CBC President should be hired by and be responsible to the Board.
[Translation]
I am looking forward to our conversation this morning, as well as to the opportunity to make comments following the appearance of the Canadian Broadcasting Corporation. Thank you.
The Chair: Thank you, Mr. Morrison. Before we begin, I would ask the senators to note that tonight's meeting is cancelled.
[English]
I rarely ask questions, as chair, but I will today, on one thing. Do you have a francophone equivalent of Les Amis de Radio-Canada, other than the PQ caucus, I mean?
Mr. Morrison: Mr. Chairman, we are much larger than the PQ caucus.
The Chair: Is there a francophone equivalent or Quebec equivalent?
Mr. Morrison: I will give you a brief answer, to speak to all senators whose information on our work may be limited. I stuck that kind of thing in the footnotes for brevity, Mr. Chair. We are primarily an anglophone, independent watchdog group that is concerned with the quality and quantity of Canadian programming in the audio-visual system. Not only is there no similar organization in the French language in Canada, but there is no similar organization in any of those 18 countries. I think it may be because of that big red line that you saw on the chart.
We do offer limited services in the French language to people who are supportive of our cause, but because of the limitations, we have never sought to raise money in the French language. We are financed almost exclusively by something like 170,000 households on the English side, and we have a relationship with about 30,000 households on the French side.
The Chair: Thank you for that. I will ask the clerk to share the Lincoln report with the members of the committee. It is not as up-to-date as what we will be producing, but I think it would be a good opportunity for us to see what was discussed.
Mr. Morrison: Clifford Lincoln used to call it a telephone book.
The Chair: My other comment will be — I don't know if I'm quoting you or quoting some of your supporters — on the governance of CBC, the board governing Radio-Canada, that has the lines clearly indicated in a totally different business than CBC as far as commercialization and penetration of the market.
Mr. Morrison: On the television side? On the radio side, that's not so.
The Chair: I don't know if I'm quoting you or somebody close to you, but the way the board of the CBC is set up, it would be like la Radiodiffusion Télévision Française, RTF, and the BBC being governed out of Brussels in the sense that these are totally different worlds that are being governed as if they were the same from a perspective that doesn't really take into consideration the red and the blue lines that you showed us. I don't know if you said that or somebody else.
Mr. Morrison: Mr. Chair, if I said that I was quoting someone else, and that someone else is the late Pierre Juneau.
The Chair: One of the issues we have to deal with as we go forward, because of those strong distinctions you informed us about, is to look at that.
Senator Mercer: Thank you, Mr. Morrison, for being here and for the work you are doing. I found it very interesting that you talked about the margin of cable companies at 44 per cent, and the conventional television industry is 6 per cent. I thought competition was supposed to help to keep the price down, but it seems that competition is doing just the opposite.
Mr. Morrison: Yes. To make sure we're talking about the same thing, when I used the word "margin" there, I was talking about the total revenue of the company, taking away the total expenses, which gives you the operating income. The operating income divided by the total revenue gives you the margin. It does not talk about things like interest, depreciation, taxes and things of that nature.
It is still a good measure that is used widely. If you look in the footnote to that comment, Senator Mercer, you will see that in the activities regulated by the CRTC and the broadcasting world that margin drops to about 20 per cent. It is highest in the unregulated world, from a broadcasting point of view, which is the Internet and wireless.
How could it be? I guess the issue is, and this is an opinion, that the CRTC made a mistake about 15 years ago when they decided what would constitute, and this is your word, "competition." As you know, the cable industry has geographic monopolies, and at the time, there was very little choice to them. The CRTC decided that when about 5 per cent of customers were choosing some other service it was competition. It hasn't worked. The issue is best illustrated by the cost of basic television.
I wrote an article about this on the theme of the proposal to unbundle the television system. In 2002, Rogers' basic package, the minimum that you could buy if you wanted to subscribe to Rogers, was $22 a month — this is not with taxes — and last year it was $40. Excuse me that was Shaw. Rogers' minimum went from $23 to $43; and Vidéotron's from $19 to $37. Now, that averages something like an 80 per cent increase in the lowest amount you could spend to still get cable television at a time when Canadian inflation was just 15 per cent.
They have not been responsive to a market because a market is often not there. I live in a condo in a city that Senator Eggleton knows well, Toronto. It is against the rules of my condo to put a dish on the wall outside. If I were on the north side of a multi-storey building, in any case, you wouldn't be able to point at a satellite. There are all kinds of things that tend to give an advantage to the territorial monopolies. In the finality of that, $2 billion is flowing through and not going back into the system; and we're concerned about it. We actually recommend that something be done about it, and that would be a return to rate regulation by the CRTC. It always used to do that in the 20th century, but it is no longer happening.
Senator Mercer: I live in a rural part of Nova Scotia where there's no access to anything other than satellite, and the costs are significantly higher. I think it is $100 plus, plus, depending what you add on, which leads to the question about an unbundled system that was mentioned in the Throne Speech. You said it would unravel decades of hard work to ensure the availability of a wide variety of programming that is predominantly Canadian.
Would it work, if the government were to proceed with unbundling, if one of the riders to that said you could unbundle but you must carry certain Canadian channels such as CBC and Radio-Canada?
Mr. Morrison: I'd like to think that the government will proceed in a thoughtful way on this topic. Considerable time after the Throne Speech, the responsible minister asked the CRTC to study the matter, and the CRTC is studying it in the coming months. That means the government will wait until the CRTC gives an opinion about how to handle a pick-and-pay regime before proceeding. The responsible way would be to ensure that certain basic services on which Canadians depend, such as CBC, the weather and a number of others, would be available as a minimum; and then they might take apart other parts of the system.
There is the danger of unraveling what has been done. Mr. Chair, would it be economical in time if I gave the clerk a copy of an article I wrote for the Vancouver Sun on this topic? You could just distribute it and I would shut up.
The Chair: Well, I would appreciate two things: shorter questions and shorter answers. As many documents as you want to send us, please do so through the clerk, and we will be happy to take them into consideration.
Senator Mercer: To be fair to my colleagues, I will pass.
Senator Housakos: Good morning, Mr. Morrison. Thank you for being with us today. I have a comment. You opened your presentation by outlining the raison d'être of CBC/Radio-Canada, how they came about and what their objectives are. It is clear that nobody has any qualms with their objective, which is to promote Canadian content and Canadian culture. This committee is not looking at the objectives that have been outlined through the years. We're just trying to find the best ways to reach those objectives.
You also said in your presentation that when it comes to broadcasting here in Canada and Canadian culture, it comes down to the U.S. versus Canada. In looking at the statistics, especially at the very interesting graphs you presented to the committee, I formulated a bunch of questions.
First, do you think that the Canadian public, especially in English Canada looking at the ratings of the CBC, are really as preoccupied about Canadian content and Canadian culture as we were maybe 30 or 40 years ago? If they are not, based on the statistics, why do you think that is the case?
Second, and we look at it clearly in your chart, why is there such a difference between what is going on in Radio-Canada with regard to their viewership and what is going on with CBC in English Canada? Is it a question of the French arm operating differently and producing better content and marketing their content better? Is it a case of CBC on the English side not producing good Canadian content and not being able to improve their results? Or is it a question and a case, as I suspect, of English Canada being a little bit more emulsified in North American culture and, in the case of Radio-Canada, going after a market that is culturally distinct from North America? That's the second question.
The third question pertains to your point on governance and bringing up the issue. I would like you to elaborate. I get the impression that you feel there's too much interference on the part of government right now in the CBC. Is it that the system in place right now is not as independent and as arm's-length as it should be? A supplemental question to that is about the transparency of CBC/Radio-Canada to its shareholders, the equivalent of the transparency you get right now between private sector broadcasters and their shareholders, and what the differences would be.
My last question is in regard to public spending per capita to support public broadcasting. This is a question I have for the clerk, and maybe we can do this research ourselves. I suspect you wouldn't have these numbers. I would love to know per capita how much Japan, the U.S., Germany and the U.K. spend on public broadcasting compared to the bottom four countries here, which are Canada, New Zealand, Australia and Ireland. I would bet off the top of my head that these four countries at the top range, where there is very little foreign content being watched by their citizens, are spending probably far less per capita on public broadcasting than the countries like France, Ireland, Australia and New Zealand.
There are lot of questions here, Mr. Morrison.
Mr. Morrison: And conflicting instructions — one was to answer briefly, and the other was to speak slowly for the interpreters. I'll try to just rattle this off.
The ratings aren't all that dissimilar as share of the total viewing than they were 30 or 40 years ago, senator. CBC English television's share of viewing depends how you measure it, but let's say a number like 8 per cent or something like that of viewing. That sounds pretty modest if you compare that with Radio-Canada television. It would be much higher as a percentage. Remember that most of what English television is broadcasting is Canadian. I would be happy to do a better job and send you a note, but 8 is a small number out of 100. If you look at that chart, you have to think of the 8, and the denominator is the 23. All the rest is American viewing, so 8 becomes a rather substantial share of viewing of Canadian shows, programs, news and information. Because there are five questions, I will leave it at that.
The second question was about Radio-Canada's distinctiveness versus — you used the verb "emulsify" at one point. Ever since the dawn of the audio-visual age and John Baird, a banker, by the way, in 1929, dealing with border radio stations, the onset of American programming coming into the country — someone once called it "satellite rain" — affects English-speaking people more than it affects French-speaking people, obviously. Those who are unilingual francophone, who are a good majority of francophones in this country, have a linguistic defence from that onslaught. CBC Television in English is competing with Hollywood, essentially. Remember that Hollywood is more important to the U.S. balance of payments than the aerospace industry. This isn't nothing. That's kind of an explanation of the difference. The challenge is immense. How well are they doing? That won't fit within a short answer.
On the governance, the arm's length, compared with other Western democracies, our government exercises too much control. For example, it is effectively the Prime Minister who appoints the president of CBC. The president of the CBC cannot be effectively fired for anything. It's like a Federal Court appointment. What's the phrase? Good behaviour, not at pleasure. The president is not really responsible to the board of directors in any serious way. The board of directors is more like an advisory board. That's not the way it works in Japan or the U.K. That's not the way it works in most of the countries on that list, senator. It is a problem, but that would require a longer answer.
Then you raise the transparency to the shareholders. The cup is half full; the cup is half empty. CBC does a lot of good work in transparency. On the other hand, they're quite opaque. If I were to compare the information — well, you could do this. The information you could get about the governance of the BBC on its website is a lot better than the CBC.
Then you talked about the per capita. The BBC's revenue comes in a different way, but the BBC's revenue is twice per capita that of the CBC. In other words, because Britain is 60 something million, it's about four times the size. You mentioned France. I remember the Lincoln report quite well, Mr. Chair, and I recall that in the English version of it, page 178 has a chart, and that chart shows investment in public broadcasting as a percentage of GDP in the OECD countries. We were fifth from the bottom. Currently, we are about 30 — it was $33. With a 10 per cent cut, it's going to be in the range of $30 per Canadian per annum right now. Switzerland is at the top, but Germany is close to the top. Japan is close to the top. Australia is well above us. I think Portugal, Greece, the United States and New Zealand, perhaps, are beneath us, amongst the OECD countries.
The Chair: As usual, I am a bit more generous at the beginning with questioners from both side, but I will ask everyone to be a bit shorter with their questions.
Senator Demers: It was a nice presentation, Mr. Morrison. The chair said to keep it short, so we'll keep it short. In your opinion, sir, is CBC/Radio-Canada at a disadvantage in this emerging multi-platform world?
Mr. Morrison: No. I think CBC is reacting rather well. As I said to Senator Housakos, the cup is half full, half empty. I would say no, CBC is doing a rather good job of adapting to the digital world, and I do not see constraints, other than resource constraints, that are holding it back. Short answer.
Senator Demers: That is good. Thank you. You mentioned in your presentation the lack, if you want, of vision regarding CBC English for Hockey Night in Canada. I certainly have nothing against them, because I did work for Hockey Night in Canada for many years. This was more a surprise. They weren't prepared for this. In football, there are a billion dollars, but if you look at the money that has been invested for I believe 12 years, and now they invested with the Senators, TSN and RDS, how can you have people running a big enterprise like that? It is four years. Four years comes very quickly. If Hockey Night in Canada loses CBC hockey, it will be a major problem. They're going to have a hard time recovering from that. I would like to have your opinion on that.
Mr. Morrison: If you look in my presentation at the footnote that introduces the graphic, I credited these graphics to the CBC. You will see a reference, and of course it's available in English and French, to the CBC/Radio-Canada corporate plan 2013 up to 2018. That plan has a date on it of August 2013. I have a copy with me here this morning. I have to tell you I read that with great interest because this was produced in August and they lost the rights in November. They did list in here, in just a little way, the kind of threats they are facing going forward. It got about the same level of attention as the fact that it's hard to sell ads on Espace musique.
Also, another footnote in here takes you to the presentation I made on behalf of Friends of Canadian Broadcasting to the CRTC in November 2012. Paragraphs 12 to 37 of that brief are all in answer to your question. We put that in front of the CRTC. The CBC's response I would characterize as, "How would they know because all this is confidential; and besides, we're not going to lose the rights?" That was about it. That is in a transcript. I think you are spot on. I was accusing them of putting their head in the sand on this issue. From the sources I have, I don't think they've yet figured out what they are going to do. They had a lifeline of things handed to them, but it sounds bad. Rogers gets to sell ads on CBC, but CBC is no longer required to pay money to New York. In any case, it was just about a wash going in. When they rent it for nothing and get 350 hours of programming, they have a defence against the downside risk of another big recession or something like that. They didn't do as good a job of planning as they should be doing on something so fundamental.
[Translation]
Senator Verner: Good morning, sir. I will speak to you in French. I wanted some information, starting with your sources of funding. On your website, I saw that you have 100,000 supporters, but you said that you have 160,000.
Do they come mainly from large urban centres? Are you able to give us the percentage of those from regions and those from large urban centres? Are there some from Quebec? Because you responded to the chair of the committee that your organization is essentially English-Canadian.
Mr. Morrison: That is true. But the main problem with this morning's numbers is that they are from the anglophone side, and our organization originated by prioritizing those problems.
[English]
You will appreciate it if I speak my first language instead.
Senator Verner: Yes, sure.
Mr. Morrison: Where does the money come from? Last year we raised about $3 million. By the way, I could table it, and it's on the website, as the audited financial statements are up for the world to see. Where did that money come from? We refuse to accept contributions from governments or from any corporations that have licences from the CRTC. Other corporations do not seem all that interested in supporting us. So the money is coming entirely from Canadians. Some of it is in a modest number of thousands of dollars, but in the last year, the cash came, on average, from about 70,000 or 80,000 gifts averaging in the range of $40 or $50. It's a broad-reach organization.
You asked from what parts of Canada: everywhere. One in every 320 households in British Columbia supports us. One in every 2,000 households in Newfoundland supports us. From every province in between, about 10 per cent of our money would come from Quebec. It's a little hard to know if someone whose name is Dawson is a francophone or an anglophone. We don't have any kind of basic information. I would say that about half of it is coming from people whose first language is English in Quebec, and the other half would be from people whose first language is French. Is that a good enough answer?
[Translation]
Senator Verner: Indeed, the context of this question comes from the fact that we are talking —
Mr. Morrison: I forgot to mention something.
Senator Verner: Yes, go ahead.
[English]
Mr. Morrison: This is obvious, but maybe not to everyone: We are not a charity. We are non-partisan by policy, but we engage in what the courts have interpreted to be political activities in the sense of seeking to influence public policy, public opinion and the decisions of government. We are not a charity, so all of that $3 million is in after-tax dollars. It would be the equivalent of a federal political party raising $12 million in terms of the real investment of the Canadians behind it.
[Translation]
Senator Verner: What I was explaining to you is that the context of my question was part of an overall questioning of CBC/Radio-Canada's capacity. Because I am from Quebec, the focus is mainly on Radio-Canada, where we talk mostly about the Montrealization of its content, rather than its regionalization.
In 2003, you asked the Nanos firm to conduct a survey for you, and this survey indicated that less than 25 per cent of Canadians valued the crown corporation's news coverage. Do you not think that is worrisome, — I presume so — but I want to hear your comments on that. However, as I said, my question for you as a senator from Quebec is whether this survey included data from Quebec.
Mr. Morrison: Yes, certainly.
[English]
Senators, it is all on the Web, but I would be very happy to table something, if you wish. Since the early 1990s, we have used public opinion surveys as a way of finding out the views of Canadians. I am sitting before you saying something. Whom do I speak for? There is a steering committee, like a board of directors, and there are a couple of hundred thousand families. But what do Canadians think? That's where people like Nik Nanos come in. In fact, all of our research is on the website. Some of the best questions though would be the ones that we have asked as tracking questions over the years. For example, suppose there was to be a vote in the House of Commons about funding for the CBC. Would you advise your member of Parliament — and they rotate the choices — to decrease the money, to maintain the money or to increase the money? We have data on that for 20 years. The most recent data show that about 10 per cent of Canadians would reduce the money; about 40 per cent of Canadians would maintain the money; and about 50 per cent of Canadians would increase the money.
We know that CBC is a very popular institution with Canadians. They don't care about it as intensely as they would their local hospital, but public broadcasting has widespread support. Nanos is just one of several firms we have used to demonstrate that. If you thought it useful, we might cooperate with you to do, as part of your exercise, another Nanos poll to know in 2014 what people are thinking. Perhaps I might come back some day with Nik Nanos sitting beside me, and we could talk about public opinion and public broadcasting.
[Translation]
Senator Verner: My question was more on Canadians valuing news coverage, when the percentage is less than 25 per cent. Do you have any comments for us on this aspect of the survey?
[English]
Mr. Morrison: The facts speak for themselves. It's a good poll and it's done professionally. I didn't get to ask the questions, you know. It was done by Nanos Research, and you have the answers.
Senator Plett: Senator Verner already asked one of the leading questions I had, and you answered it, about the demographics and where you get your support from. I won't prolong that one.
Years ago, when I travelled around northern Manitoba and northwestern Ontario, I listened to the one and only radio show that I could get, and that was As It Happens. I'm assuming that maybe most people under the age of 40 don't even know what the CBC show As It Happens was, but I listened to it. It is sad to say that now that I have satellite radio and satellite television, I don't even know whether that show is still airing.
Mr. Morrison: It is, senator.
Senator Plett: It is. Well, that's great. It was a great show.
Obviously, because of satellite radio and satellite television and so on, it is a natural occurrence that people will listen to what they want to listen to. You and I, Mr. Morrison, are never going to change that fact.
Mr. Morrison: Nor should we.
Senator Plett: I want to watch what I want to watch for the least amount of money. Simply, the majority of Canadians would feel way. Maybe not everybody. Maybe not you. People go where they have opportunities. There are even people from "the Friends of CBC" who have moved to Toronto from Winnipeg because they had better opportunities in Toronto, I'm assuming. I think that's just simply the long and the short of it. We go where we have opportunities. We buy where we have opportunities.
I have a couple of questions. We have, and I'm sure we will continue with every witness, talked about the Rogers NHL hockey deal. Many of us who watch hockey are concerned about what that may or may not do. I'm optimistic that I will get to watch my hockey games, whether it will be four years from now on CBC or somewhere else. I will try to keep my preamble here to just another minute or so. Maybe the clerk can check on this figure, and maybe you have the answer, Mr. Morrison, but I heard that the Ottawa Senators had signed a deal with Bell where they outbid Rogers on a deal, and it went up to $7 million a year that Rogers was paying the Ottawa Senators to a 10-year deal worth $400 million. That is almost as ridiculous as what the Rogers-CBC negotiations were, except Rogers was on the short end of this stick.
A few questions: First, what should the NHL, in your opinion, have done? It's simply about money for them, the best deal that they can get. What should they have done?
A few other questions simply on the CBC itself: On your website, I believe you have posted a petition asking the government to increase funding. How much funding should the government give CBC? I'm not sure that I support giving them funding. How much should they give them? You have a few times mentioned about the appointment process and that the president is indeed appointed by the Prime Minister. My question is, who do you think should appoint the president if it should not be an order-in-council appointment? They are being subsidized to the tune of a billion dollars by the Canadian taxpayers.
I will leave it at those three questions. What should the NHL have done, where do you think they should have gone, and how much money should the taxpayers give CBC?
Mr. Morrison: In your preamble, you referred to a group that does not exist. You referred to "Friends of CBC."
Senator Plett: Friends of Canadian Broadcasting, I apologize.
Mr. Morrison: Maybe you should create that group, senator. Just for the record, it has to go to the footnote that I did not real out loud. Friends of Canadian Broadcasting is an independent watchdog, and we are not affiliated with any broadcaster or any political party, just for the record.
Senator Plett: I think you have made that perfectly clear, and I also acknowledge that.
Mr. Morrison: On the question about the other Ottawa Senators, that is, the hockey club, most NHL teams retain the rights to certain of their games that are not going to be broadcast beyond their immediate area. For example, Réseau des sports has a relationship with the Montreal Canadiens right now for maybe 60 games — I don't know how many games. What you're talking about for the Senators is equivalent. For the Senators, certain games are not picked up nationally, and in this case it sounds like TSN has them. Over 10 years, it's $400 million. Whether that's a good deal or not, I don't know.
On the question of what should the NHL do, the NHL should do what the NHL did. I compliment the Commissioner of the NHL for negotiating with all of these Canadians. In my testimony here, there is a footnote where Ivan Fecan, the former president of CTV, wrote a short letter to Maclean's magazine some years ago saying, "The CBC wasn't bidding against us; we didn't bid." Mr. Stursberg, the vice-president who was doing it at the time, was bidding against himself. The NHL is very clever at getting broadcasters to do that. The money goes to the owners and the money goes to the players. That's their job. As I said, I congratulate the NHL. It's a private, multinational, mostly American organization, since 77 per cent of the teams play in the United States.
Then on the question of CBC funding, the petition that you referred to probably references this, but the House of Commons Standing Committee on Canadian Heritage, in about 2007, about six or seven years ago, and I would have to check my facts, passed a motion. They did a study and passed a motion. Gary Schellenberger was the chair at time. They recommended that CBC's annual stipend from Parliament should be raised to at least half the average that is given to public broadcasters in the Western democracies, the OECD countries. As I recall, that would have involved increasing the CBC's budget over a four-year period, because it would be eased in by something like $100 million a year, which would be something like an 8 per cent increase, in order to get it to at least half. At that time, there was a minority government. That was the view of the Bloc and the NDP and the Liberals. The Conservative then-minority on the committee did not agree with that recommendation. We agreed with that recommendation, and the petition was along these lines. It seemed like a reasonable way to address the public broadcasting deficit.
Finally, on the OIC appointments, in Britain, for the director general of the BBC, the appointment is equivalent to an OIC appointment, but it is done on the advice of the board of — I am trying to remember the name — board of governors, I think, of the British Broadcasting Corporation. In other words, it is arm's-length, a bit like what the Governor General does every day, taking the advice of the Prime Minister. It would be an appointment process that would be arm's-length from political patronage and would ensure that the best and the brightest people were on the board as well as the CEO of the organization. That is what the Lincoln committee recommended on page 567, as I quoted in my presentation today. That is the process we would support. I remember that Mr. Lincoln once said it would be something akin to the way people were nominated to the Order of Canada. That is not a political thing. Politicians don't interfere with that. There is a way of finding the best and the brightest to get them on what is the governance of by far the most important cultural organization in the country. We are an outlier. Almost no democratic country has this direct patronage appointment of the leaders of the CBC.
Senator Plett: First of all, just one comment: I believe we have made sure that the best and the brightest have been appointed.
Mr. Morrison: Well, then we have a fundamental disagreement on that one.
Senator Plett: Fair enough. I'm sure, sir, that isn't the only disagreement that we would have.
Mr. Morrison: We're both from Winnipeg, by the way.
Senator Plett: And I still live there.
You made great reference to the fact that you are not friends of CBC. So let me ask you, how many other Canadian broadcasting organizations are the Friends of Canadian Broadcasting petitioning on behalf of for increased funding?
Mr. Morrison: It's important to understand that Canadian taxpayers support a lot of broadcasters. They support the CBC through a parliamentary grant, but they support other television broadcasters by subsidizing their costs of production, by making it very costly for people to advertise on border stations and by simultaneous substitution. There are many ways that Parliament has decided to support broadcasting.
But the fundamental thing to remember — and this is not a Canadian comment, this is a comment from the democratic world — is that private broadcasters use programs as a means to deliver audiences to advertisers. That's the business model.
Throughout the democratic world, the goal of public broadcasters is to deliver programming to citizens. Hence, in answer to Senator Housakos' question, I said 8 per cent doesn't sound like much, but if the denominator is 23 it's getting up into 30 per cent, 40 per cent of all the Canadian programming out there.
It makes sense that something like that — ever since Prime Minister R.B. Bennett created the Canadian Radio Broadcasting Commission in 1932, they took the advice of the late Graham Spry, as I quoted him: It's the state or the United States.
You may say that 23 is not a very good number, but it has been a struggle to keep it as high as 23 per cent in anglophone Canada over the years.
Senator Plett: I'm assuming the answer to my question was zero. Thanks.
Senator Eggleton: Mr. Morrison, thank you very much for bringing your knowledge and your very succinct presentation to us today, and thank you for the work you and the Friends of Canadian Broadcasting do to try to keep Canadian stories alive in a very difficult environment with the big marketing of the American entertainment industry in our country.
I have three question areas. I will take them separately for your answers. First of all, you've said that with the loss of the NHL rights, and I guess the CBC will lose its advertising revenue from that, which you estimated could be about half of their total advertising revenue, you think this now presents an opportunity for them to go non-commercial. I suppose private broadcasters would find that quite suitable because they wouldn't be competing with them on that basis.
Where is the revenue going to come from? We've seen cutbacks to the CBC in recent years, and I don't know that there's much of an appetite — at least until the point of the next election anyway — for reversing that role.
Is there another source of funding? The U.K. does something a little differently. I don't know what the other countries do, but is there some other source of funding that could help keep the support for the CBC to continue to provide the considerable amount of Canadian stories and broadcasting that it does?
Mr. Morrison: Thanks for your comments, senator. We always appreciate praise as well as criticism.
On the loss of the NHL and the opportunity to go non-commercial, where could money come from? Of course the taxpayers could invest more. That was what the House of Commons committee recommended. You say, "What are the alternatives to do that?" It doesn't have to be an alternative. It can be a mix and match of things.
From a Globe and Mail editorial some years ago, who would benefit if CBC English television were to go non-commercial? The private broadcasters. You hinted at that in your question.
Who would not like them to go non-commercial? The advertising industry. The English television network is an unsurpassed way for General Motors to acquaint people with the benefits of their cars, or Molson, et cetera.
There's going to be a tussle going on, and the lobby of the advertisers will be to maintain the status quo. But the very best property on which to advertise on the CBC has now gone to Rogers, and that is hockey. That is the gold standard of advertising.
However, the private broadcasters who would benefit from CBC's not competing could contribute something for that benefit to happen. There could be a grand bargain. Those discussions have happened in the past. I've been informed about them.
I think it's very wise to distribute the Lincoln report to your colleagues, Mr. Chair. There's another report you might go back to. Pierre Juneau was the chair of that report. There was a professor from Simon Fraser University, Catherine Murray, and the famous Peter Herrndorf was on this report in — I'm going to guess — about 1996. It had to do with big Canadian institutions. I think the Film Board was in there, but principally the CBC. They had detailed recommendations.
At that time even, they were concerned about these huge windfall profits of the distributors. Some of that money could be plowed back into the system, not just to help public broadcasting but private broadcasting.
If you think about it for a minute, if you and I are paying money to Vidéotron or to Rogers and the margins are so high, and effectively they are a kind of unregulated monopoly for many users, it would be quite possible to redirect some of those resources back into programming. This would not be just CBC programming but would be the public at large.
Senator Eggleton: That leads me to the second question, because you're talking about the private industry. You talked about Netflix, YouTube, Google, et cetera. What regulation should we put on those? How can they contribute to Canadian content? They're not making any contribution, I assume, at the moment, or they are not obligated to make any contribution to Canadian content.
Mr. Morrison: All of them are big international concerns, so anything that would regulate them would have to be international.
A number of countries share our concerns. I know that Australia, Ireland and France do. There are a number of countries. It could be that on an international basis, some form of regulation could be put in place that would take a modest amount of the resources of a company like Netflix and contribute it to each country's equivalent of the Canadian Television Fund. The Canadian Television Fund is at the wholesale level, the engine that generates fiction programming in Canada.
Right now, 5 per cent of the revenues of what the CRTC calls BDUs, the broadcast distribution undertakings, of the big cable companies have to go to that fund. There are technical rules. So Netflix would be on a level playing field with its Canadian distributor equivalents if it were doing something like that.
There are other ways, and I mentioned one briefly, that Canadian distributors on the Internet could have more favourable treatment, less of the capping of the bandwidth that's available to them from the big companies. There could be discrimination between Canadian content and foreign content in those rules.
I think my answers are just to get it started. You're asking the right questions.
Senator Eggleton: The CBC News Network, the news and information system, if it was focused on that network, and if that network had advertising as opposed to the main network, could the news and information function of the CBC operate on a break-even basis?
Mr. Morrison: That's a complex question, but here is a short answer: Number one, as you know, CBC News Network does have commercial revenues. It also has fees that are mandated through the CRTC that the cable company is required to collect and pass on to them, just as TSN does. It has a complex web. It comes to something in the range of $80 million or $100 million a year. Those facts are available to you in CBC's financial statements.
It shares its newsgathering with the main television network. Indeed, in a digital age, more and more it shares its newsgathering with the radio, and the cbc.ca and rad-can.ca; so there's a big hub of news sources, some of which are being subsidized by taxpayers, some by advertisers and some by cable and satellite subscribers. Would that break even?
That's a good question for the management of the CBC. I'm sure other people can find better things to do for a living, but I read the annual reports of the Canadian Broadcasting Corporation, as I do Rogers and others. I can tell you that over the years they're not consistent. They're opaque. They often mix television and radio together. If you compared it to the BBC, which has much more financial transparency on its website, it would be very interesting to know. My guess would be that the news and information services are close to break even, that the expensive thing that is so difficult to finance in Canada is the entertainment fiction programming, which costs $1 million an hour and is competing with stuff from Hollywood that costs US$10 million an hour.
Senator McInnis: Yesterday I googled Friends of Canadian Broadcasting, and I was expecting to see an attack dog come this morning; given the articles I read, I thought this group is vicious. Then I meet you this morning for the very first time — and I don't mean to be patronizing — but you are a very nice guy.
Mr. Morrison: I like you, too, senator.
Senator McInnis: You really are. You have to do something about this. People will get entirely the wrong impression.
Normally when you have friends of something — for example, my Nova Scotia colleagues will know that when there were problems with the Public Gardens in Halifax, they formed a Friends of the Halifax Public Gardens, and on the eastern shore, the Taylor Head Provincial Park, and all the problems with government not doing things, they formed the friends groups.
You were formed in 1985, I understand — you have been around since then — and so presumably there were problems. I am wondering if the problems are consistent throughout and when you may be able to retire. You can let me know this.
With respect to the appointment of the CBC board, it is always nice to try to get it out as far as you possibly can. I can remember when I was in the Government of Nova Scotia with respect to judicial appointments, and it used to be that recommendations would come in to the Attorney General, on to the executive council and appointments would be made. That wasn't satisfactory to the public, apparently, so they put in a whole host of people, and now people are complaining that they're appointing their friends.
I don't know where the happy medium is with respect to the appointment of the president and CEO. On the national CBC Radio this morning, they were talking about the new appointment to the National Capital Commission, the president, and there were complaints that, oh, well, he's from within; he's one of their own. Of course, then they had a commentator on saying that maybe we should go back to the days of the appointment by the executive council, people like Jean Pigott who were there. I don't know where the happy medium is with respect to that.
The other point I wanted to make very quickly is this: In this country, we have CBC Radio, and if ever things were done properly, that is a prime example.
When I wake up in Nova Scotia, I hear "Information Morning," and "Information Morning" is pretty much throughout the country, and then you go to "Canada AM" right through Canadian content, and everything you can ask for. On Sunday afternoon, it's Rex Murphy and "Cross Country Checkup." As you get older, and you wake up at three o'clock in the morning, you can hear the BBC, Australia, Germany, and so on.
In my mind, they have got it right. When the CRTC had to put in its part of the licence that you must have nine hours of Canadian content per week in English television and I think seven hours in Quebec, when you have to do this, you have to ask the question: Is CBC Television still relevant? It would be a meaningful debate, because as you said earlier they're competing with Hollywood; and they are. I guess it is close to $1 billion that is put in.
Is that a good expenditure of Canadian taxpayers' money? To me, it is becoming more of a no-brainer in terms of that. Could I get your comments on that?
Mr. Morrison: Thanks. You talked about an attack dog. I remember a story once in the Toronto Star early in the existence of this group, and the lead sentence is always quite important in a good story. It began: "For a group that calls themselves the friends, they sure have a lot of enemies."
The problems that we set out to address have to do with the quality and quantity of Canadian programming. From the opinion research that I discussed briefly earlier, we know that Canadians do support Canadian programming. They want it to be there.
One of your colleagues, Senator Gerstein, sent out a letter that I got a copy of. I must have been a supporter of the Conservative Party to get it. One of the questions was that about $1 billion goes to the CBC, and do you think that's a good use of taxpayer money or a bad use of taxpayer money?
We said that's a good question, and we got Mr. Nanos to ask the question. We found out 63 per cent of Canadians thought it was a good use, and 25 per cent thought it was a bad use.
We asked Senator Gerstein if we could find out the results from Conservative Party supporters, but somehow he wasn't forthcoming on that. So there is support for spending money on Canadian content.
Working backwards here, of course there's a lot of support for CBC Radio, but CBC Television has these special problems. You asked whether we should bother to compete with Hollywood. If we didn't, all of a sudden Canadian viewing, in the English-speaking part of Canada, would drop to a much lower level than it is without CBC Television.
On the back of this chart, just for your information, picking the city of Ottawa, and on our website, we have this only for the English-language television system. These are the over-the-air channels, but even from as far away as you are, senator, and with whatever eyesight you have, if you look at what I have here, you will see one channel at the top which during prime time is all red, which means it is broadcasting Canadian programming. That's what the other channels are doing. The two shades, the white and the grey, are where you get simulcasting of American programs.
So at times of the day when most adult Canadians are free to watch, only one of the over-the-air channels is predominantly Canadian. I think that chart speaks for itself. As for the CBC board and how you appoint it, in essence your question is whether there is something wrong with any appointments mechanism. I agree. There is no ideal appointment mechanism.
There is something wrong with the existing Canadian mechanism, which has been well documented. You don't have to believe me. You can read the Lincoln report and see other recommendations that have been made. What I would say is that at this stage of your work, you are probably thinking about what questions you want to ask. What do you want to pay attention to?
I would check out the governance systems of public broadcasters in other democratic countries. Just as Senator Housakos said, let's get the data on investments in public broadcasting in different countries. I would check out those two things. It is probably cheaper to bring people from Germany to this room than for you all to go to Germany, but I would covet your getting to know what is going on in these other countries and not confining your investigation to the United States of America, where public broadcasting is very feeble.
Did I miss something? I don't think so.
Senator McInnis: No.
Senator MacDonald: Mr. Morrison, good morning. I have so many questions, but I'll try to confine it to a couple for now. For half a century, the CBC was tailored around the way platforms and messages and that type of content were delivered through radio or television boxes. Now, there is great change in the delivery of media, I think we all agree. We can watch what we want when we want. With that change in mind, what exactly do you think is fundamentally essential to the CBC? What is the most important aspect of the CBC that you think must be preserved in this time of change?
Mr. Morrison: I suppose there was a time in the past when there was no change, but I don't know when that was. The subheading of the corporate plan that I criticized earlier says that change is the new status quo. There are elements of continuity in our problems. For example, in the 1930s the problem was these big huge American radio stations coming in and Canadians were listening. All of a sudden, the United States was in every household in the country. Now we have something very similar: the Internet. We have gone from a scarcity of spectrum to an almost infinite amount of spectrum.
This would be my advice to you at this stage in your operation: Please don't get preoccupied with technology. Think of technology as pipes, wires and tools. It is the content that matters. The reason that Canadian broadcasters, including the public broadcaster, are so important is that otherwise we would not have any sense of understanding in our own communities, for example people in Saskatchewan understanding what is going on in Newfoundland. All of that sense of belonging creates what Peter C. Newman described in our first ad, which was directed at then Prime Minister Mulroney, as a distinct identity on the northern half of the North American continent. That's the key thing. Where CBC is doing a good job, and that often happens locally rather than on a network, is in telling Canadian stories.
Go into a Safeway or a Metro or a Loblaws and walk down an aisle. The things on the bottom shelf can't really be seen and you don't buy them. The prime real estate in those stores is at eye level. They describe it as "shelf space." The metaphor for the television system is shelf space for Canada in our audio-visual system; and God knows it is a problem.
Senator MacDonald: CBC is a general interest television network, like ABC, CBS, NBC and CTV.
Mr. Morrison: I'm sorry; I should wait until the end but if you will accept the informality, with the possible exception of hockey. Children's programming and hockey are not treated in the same way.
Senator MacDonald: No, they're not. They raise different revenues.
The CBC, like all general interest television stations, is struggling with the ability to raise ad revenue because ad revenues are driven by large audiences and feed into large audiences. CBC News World has been successful at raising revenues through subscriptions. It raised about $10 million this year. If the ad market collapses for the CBC, and I think it will be threatened when they lose hockey content, how would FRIENDS recommend that CBC deal with revenue generation?
Mr. Morrison: By the way, about your $10 million figure, I'm sure there's a basis for it but my recollection is that CBC gets something north of 50 cents per subscriber per month, which is equivalent to more than $6 per subscriber per year. The English service has something in the range of 10 million subscribers, so I think in an order of magnitude, the subscriber revenues are in the $50 million to $70 million range.
The overall question is not unlike Senator Eggleton's question around where resources could come from. In the interests of brevity, I would just remind you of the comment I made to him: If the CBC were to go non-commercial, who would benefit? They might be prepared to pay something for that eventuality.
These answers are anglophone answers. The Réseau de l'information of Radio-Canada is similar. It has fees and would probably have something in the range of $20 million to $25 million. It is a must-carry thing in anglophone markets in order to have French-language news available. If you add the two together, the figure is probably $100 million, senator.
I would just reference the answers I gave Senator Eggleton rather than repeat anything more.
Senator Eggleton: I have a quick question. You held up a chart showing in red just how much Canadian content is on the CBC versus the private sector stations.
Mr. Morrison: That is in prime time.
Senator Eggleton: Yes. In prime time, of course, a lot of the Canadian content on the private services is coming either at the beginning or at the end of that prime time period — news at the beginning and news at the end.
During the core part of prime time, from 8 p.m. to 10 p.m., I understand that the CBC does 94 per cent Canadian content and that others do anything from 18 per cent to 14 per cent to 7 per cent to even 0 per cent. In terms of the 8 p.m. to 10 p.m. prime time period, there's very little Canadian content on the other channels in the private sector as opposed to the CBC at 94 per cent.
Do you think the rules should change? Should the CRTC and the government change the rules with respect to Canadian content in that prime time period? That's where they're putting on all these American shows.
Mr. Morrison: The private broadcasters need the American content in prime time in order to raise enough money to make a profit; so there's a limit. You and I could sit back and say that they must do more, but what if they couldn't make money doing that model? What would they do then? Would they surrender their licence, and we would have fewer over-the-air broadcasters, who are threatened? Be cautious about increasing obligations and more concerned that CRTC used to but no longer demands certain investments in prime real estate programs, like a good drama series that would be broadcast in prime time.
I sure hope that the chair of the CRTC will be sitting in this chair one day so you will be able to ask those questions of the commission. It would appear that CBOT, during the sample period we tested, which was one year ago today through to March 24 — in a non-Olympic year, by the way — was 100 per cent Canadian in the time period from 8 p.m. to 10 p.m. They could have been much better if they hadn't had Coronation Street on. The blue on the graph means it's not only Canadian but also local. Senator, overall the CRTC regulation going back over a period of time has considered peak viewing periods to be 6 p.m. to 12 p.m. That's what they call it.
That's not the definition in the business of prime time. That's not what somebody in Hollywood would understand. Prime time is 7 p.m. to 11 p.m. and 8 p.m. to 10 p.m. is the middle of it. Here is what happens when you make a general rule: Every Canadian television broadcaster has to be 60 per cent Canadian measured over the whole year and from 6 a.m. to 2 a.m. or whatever. Then they have to be 50 per cent Canadian between 6 p.m. and 12 a.m. So they load up the 6 p.m. to 7 p.m. and 11 p.m. to 12 a.m. periods with Canadian content and then during the real money-making period, they're down to 25 per cent Canadian.
That's how it works. There are people who earn big bucks in private broadcasting who make sure that the 60 per cent that is supposed to be a floor is in fact a ceiling. They don't want to pay 60.1. You can always make more money renting an American program whose big production costs have been realized in the American market and wrapping Canadian ads around it than you can by creating Canadian programming, which is why I said at the outset that our system has been built in defiance of economics. There would be no Canadian programming in a neo-conservative, let-the-market-decide world.
Senator Plett: Further to this draft, Mr. Morrison, do you have numbers of how many Canadians are watching? Aside from The National and sports, do you have numbers for how many people are watching CBC versus the three others that you have here during those peak hours?
Mr. Morrison: The numbers are available from a group called the Bureau of Broadcast Measurement, BBM. The broadcasters have them. You could demand it of them. They won't let us belong. We've offered money. I even had a cheque returned to me.
I have a generic answer, which is probably what you are more interested in. I will try to give you a specific example. American Idol was broadcast on CTV between 8 p.m. and 10 p.m. on CJOH in February of last year. You get the Canadian audience for that show. You also get a boost of about 30 per cent because somebody in Toronto watching it on the Buffalo station, because of simultaneous substitution, gets to see the Canadian feed, including the Canadian ads. The American numbers are very big. You get 2 million or 3 million people. That's why the other chart, which talks about the top 100 shows, is so important. The red chart is just what's available. It's not the audience.
The Chair: Next week, we won't have the chair of the CRTC, but the former chair. The Honourable Konrad von Finckenstein will be testifying via the Web on Tuesday morning. Next Wednesday, we have le Centre d'études sur les médias from Laval University, with Florian Savageau and Daniel Giroux, who will be our witnesses.
I will also be asking the committee for a resolution next week to ask the Minister of Transport to respond to our report on airports and airlines because, since there was prorogation, we will not be getting an answer if we don't pass another motion. I think an answer would be appreciated, so I will be asking you to pass a motion. I can ask it as the chair, but I think a request would have more punch if it were passed as a resolution of the committee.
Senator Housakos: I think it's important to underline, as I'm asking the final questions, that I get the sense that there is a debate going back and forth about whether Canadians want or do not want public broadcasting. You quoted earlier from a poll saying that the vast majority of Canadians believe in the CBC or Canadian public broadcasting. I think we are all in favour of finding a way to make Canadian content and Canadian broadcasting work. As parliamentarians, our objective for this study is to try to determine how best to do that while giving Canadian taxpayers, who more and more are demanding transparency and efficiency, the best bang for their dollar.
I have the utmost respect for Nik Nanos. He is a great pollster, and I appreciate the poll numbers you put out there. I can probably pull out a couple of other polls that are not so favourable to public broadcasting and the CBC and Canadian content. Ultimately, for me, as a parliamentarian, I look at ratings and I look at revenue. The bottom line right now when it comes to Canadian broadcasting and the CBC on the English side is that the ratings are atrocious and the revenues aren't there. If they were there, we wouldn't be spending tens of billions of dollars every decade to subsidize this organization.
We will give you the last word, and you deserve to have it today. As parliamentarians, is the real issue in supporting Canadian broadcasting that they don't have enough money and we have to go from $1.2 billion in subsidies to $2.5 billion in order to get Canadian content to be competitive and basically produce better shows that more Canadians will want to see? Is the problem maybe that the CBC isn't doing the right things in terms of getting the best bang for their dollar and promoting Canadian content? I will give you a small example. A few months ago, I was going through the CBC website. They had this system where they're streaming music on the website. I like it. My kids like it. You go on and listen to whatever music you want. I was going through it, and I figured probably, being the CBC and streamlining Canadian culture and content, you would be putting exclusively Canadian artists on there, but that wasn't the case. You could hear all the Hollywood stars' music as well. That is just a small example. Are they doing enough to fulfill their raison d'être and main mandate with the money they have, or is it a question of just not having sufficient funds, in your opinion?
Mr. Morrison: The late Dalton Camp once said about the CBC that it's probably the most criticized institution in this country, but love it or hate it, it's one of the few national institutions that still work. I thought that was an interesting comment. Camp died about 2002, so more than 12 years ago. It was in his last years that I read that in the paper. We have always had to struggle in this country to create a sense of identity and belonging to something in the presence of all of this onslaught and flood of things from foreign areas.
The Prime Minister once said in a small gathering that I attended that R.B. Bennett created the CBC. That's not quite true, but it was true in principle. He created the CBC. The Prime Minister paused and said, "But we've long since forgiven him for that."
I want to remind you of how modestly Canada funds public broadcasting compared with other democracies. In view of that, I think they achieve a great deal.
My last comment would be that it's also very important for CBC/Radio-Canada to respect the two official language groups of Canada. Traditionally, it has devoted about 40 per cent of the taxpayers' money to the French language and 60 per cent to the English language. The group I speak for supports that allocation, and we get upset when we see something like that change. I would refer to your attention an example of that. A CRTC commissioner, in fact the vice-chair, Mr. Tom Pentefountas, made a very articulate dissenting opinion about an aspect of CBC's recent licence renewal by the CRTC. He pointed out in his very careful analysis that the current management of the CBC, in its proposal for ads on the music service, was essentially wanting Radio 2, the English one, to be 98 per cent funded by commercial activity, while continuing to subsidize the French one. It is very important to these sorts of understandings that the CBC is important for holding the country together and it is important that it behave in a way that is fair to the two official language groups, and it just has to do the best it can with the resources available. I know it could do a lot better if it were more professionally managed at the top and if it had more resources akin to the resources that its counterparts in other Western democratic countries have.
The Chair: On that note, Mr. Morrison, thank you for your presence. It was very enlightening. This has been a long meeting, longer than most of our meetings, so it is appreciated that your comments were well taken by senators.
I want to repeat that tomorrow night we are not meeting, but we will be meeting next Tuesday morning with the former chair of the CRTC. Thank you.
(The committee adjourned.)