Proceedings of the Standing Senate Committee on
Transport and Communications
Issue 13 - Evidence, February 4, 2015
OTTAWA, Wednesday, February 4, 2015
The Standing Senate Committee on Transport and Communications met this day at 6:45 p.m. to examine 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.
[English]
The Chair: Honourable senators, I call this meeting of the Standing Senate Committee on Transport and Communications to order.
Today we are continuing our study into the challenges faced by the Canadian Broadcasting Corporation in relation to the changing environment of broadcasting and communications. Our witness is Richard Rapkowski, Counsel for the Canadian Association of Film Distributors and Exporters.
Please begin your presentation and afterwards senators will ask you questions. The floor is yours.
Richard Rapkowski, Counsel, Canadian Association of Film Distributors and Exporters: Members of the committee, good evening. My name is Richard Rapkowski. I'm here today to represent the Canadian Association of Film Distributors and Exporters, otherwise known as CAFDE. Thank you for your time today on this late evening. I will address the panel today in English.
CAFDE is a not-profit trade organization that serves to represent the Canadian film distribution industry and its members on matters of national interest. Current members include: d Films, Elevation Pictures, Entertainment One/ Les Films Séville, IndieCan Entertainment, Kinosmith, Mètropole Films, Mongrel Media, Pacific Northwest Pictures and Search Engine Films.
Members of CAFDE are responsible for the vast majority of the theatrical releases in Canada including both Canadian and foreign films. In fact, CAFDE members are responsible for two and a half times more theatrical releases in Canada than the six major studios combined.
Specifically with regard to the development, production and distribution of Canadian films, CAFDE members play an essential role. As distributors we have a specialized understanding of the film market and consumer tastes. We invest our private funds in films that we believe will have consumer appeal and commercial potential. Telefilm Canada relies on our investment decisions as a signal for which film projects merit the investment of public funds.
As such, CAFDE members have a vested interest in the continued success of the Canadian film industry. We follow all proceedings like this that can and will impact Canadian cinema with great interest.
As you know, Canadian cinema has faced formidable challenges throughout its history, in large part due to our proximity to the United States and the domination of major U.S. studios in our marketplace. Strides have been made by government to ebb this flow, including the introduction of the distribution policy, in 1988, by the then Conservative government, which significantly shifted the landscape in building the Canadian owned and controlled feature film distribution sector. This policy was an unequivocal success, resulting in the strengthening of our sector and the development of a flourishing Canadian film industry.
I understand that the committee is interested in hearing about the general state of the broadcast and communications industry in Canada, the challenges faced by CBC/Radio-Canada in light of changing broadcast environment and the best role for CBC/Radio-Canada moving forward. You've heard many capable submissions outlining the challenges that new and developing technologies have placed on broadcasters of all stripes. The strain on traditional broadcast modes makes it increasingly difficult for broadcasters to compete for the hearts, minds and eyeballs of consumers, who are inundated with more and more content on a multitude of platforms and devices. In such an environment where consumers are overwhelmed with choice, the successful broadcasters will be those that are able to effectively distinguish themselves and their brand.
At CAFDE we believe that having a focused national broadcaster is critical for the continued success of the Canadian film industry. An approach for the CBC that highlights its unique position as a truly Canadian network is where ultimately success will lie.
We believe that one of the keys to meeting the CBC's mission to inform, entertain and enlighten in this highly fragmented, highly competitive market is for the CBC to be seen by Canadians as the true home for Canadian films and to reframe the CBC as the place to encounter both Canadian television and film.
In order to achieve this, we would encourage the CRTC to amend the CBC's current Canadian content requirements, to add a new category of programming for feature films, one that is wholly distinct from dramatic television series and other Canadian content.
Through initiatives like the distribution policy, as well as tax credit incentives and Telefilm funding, the government has underscored its belief that telling Canadian stories, and telling Canadian stories through film specifically, is important and worthwhile. Reframing the CBC as the home for Canadian cinema is the next logical step in executing this initiative. In an era where consumer viewing habits are changing and audiences are viewing content on multiple screens and platforms, having a national broadcaster that features compelling and diverse Canadian film will be integral to the continued success of the Canadian film industry.
We believe there are four key reasons why requiring CBC/Radio-Canada to program Canadian feature film content will be beneficial to the network and the government and to Canadian audiences.
First, this film-specific obligation will help to ensure Canadian stories are accessible to Canadian consumers and will assist the CBC in achieving one of its stated mandates — to entertain the Canadian public. Canadian talent has never been more visible than it is today. 2014 has been one of the strongest years for critical acclaim of the Canadian film industry in recent history. This past year, at the Cannes International Film Festival, a record three Canadian films were in official competition. There we witnessed a standing ovation for Atom Egoyan's film The Captive, acting awards for Julianne Moore in David Cronenberg's Maps to the Stars, and a jury prize for Xavier Dolan's film Mommy.
As the previous examples make clear, there is no question that Canadian talent is recognized and celebrated on the international stage. We believe that this tremendous international success is inherently compelling and entertaining, and that Canadians would benefit from a national broadcaster that showcases and supports these remarkable works. Requiring the CBC to focus on exploiting Canadian film will help to ensure that all Canadians have access to this phenomenal Canadian product that has already been recognized internationally.
It can be challenging and expensive for rural Canadians to access films in theatres. Television is still how a majority of Canadians access their entertainment content, and a renewed focus on Canadian film for CBC will help to ensure that all Canadians are able to see and recognize internationally acclaimed Canadian stories and will directly contribute to the CBC's stated goal of entertaining Canadians.
We believe strongly in the power of feature film and its distinct role in contrast to television productions. It's a medium that facilitates independent voices and gives content creators the freedom to pursue complicated and interesting narratives without the constraints of ongoing week-to-week viewership that television producers may face. Canadian feature film is a nuanced art form that allows creators to express important and sometimes challenging ideas, and we believe it should be publicly available to all Canadians. What better home for such content than our national broadcaster?
Second, we believe that a renewed focus on Canadian films for the CBC will provide an economic benefit to the network itself. As we have seen, it can be challenging if not impossible for the CBC to compete in the open market with private broadcasters for expensive professional sport and American content. Private broadcasters have shown themselves to be better able to service that programming without relying on taxpayer resources to do so. Distinguishing itself as the true home for Canadian cinema will add to the CBC's unique brand, and by enthusiastically differentiating itself from private broadcasters it can better fulfill its mandate by broadcasting diverse stories that speak to Canadians and underserved regional communities, which the private sector, with its purely market-driven focus, may not deliver.
The CBC will be stronger if it embraces its distinctiveness and its role as a public broadcaster that supports Canadian culture for the benefit of its citizens. The CBC should not compete with and measure its success against private broadcasters. It should be confident serving its distinct role as a public broadcaster that helps to shape our national identity and reflect our values.
Another economic advantage for the CBC with feature film is that it does not have to incur significant overhead to develop and produce it. It can leave the riskier tasks of developing, financing and producing content to our talented and experienced Canadian producers, with the help of Telefilm and government tax incentives, and then select the titles it believes will resonate most with its audiences. It is certainly more cost effective than buying expensive professional sports or American programming or developing and producing its own high quality drama.
Third, requiring the CBC to invest its programming dollars in Canadian film content will create efficiencies in government spending. As I mentioned previously, many government initiatives already exist to support Canadian film, including equity contributions to film budgets made by Telefilm Canada and tax credit programs. In essence, the government has already invested taxpayer dollars in the creation of Canadian film because it believes in the importance of telling Canadian stories in the unique manner that film can provide. Requiring the CBC to program those Canadian films as a separate component of its Canadian content obligation will assist Telefilm in its stated mandate to foster and develop the audiovisual industry in Canada and increase the audience for its productions. The revenue from CBC licence fees will also help Telefilm and the government to recoup its investment by using funds earmarked for content in the CBC budget towards the acquisition of those Canadian films in which taxpayers have invested. Instead of spending programming dollars fighting for U.S. content, our proposed approach would have the CBC align its investment in content with already existing government funding initiatives.
Finally, an increased commitment to Canadian film will assist the CBC in achieving the final branch of its mandate — to enlighten the Canadian public. The Canadian film industry is creating strong, internationally recognized films. By becoming the home for Canadian film the CBC can perform the role of curation to assist the Canadian public in promoting and identifying the best our film community has to offer and films that are important to Canadian culture. In this way, the CBC can work to create a positive feedback loop.
Canadians who have seen Mommy, the latest Xavier Dolan film, for example, for free on their televisions are more likely to identify Dolan and seek out his next project in theatres, on line or on the CBC itself. We have seen these successes take place with the Quebec star system. When Canadian consumers are exposed to our quality films and those films are championed as successes, consumers begin to recognize our indigenous talent and to support these important and quintessentially Canadian stories. In this way, the CBC can become a catalyst for further development of an already strong film industry.
We at CAFDE appreciate that this committee and the submissions of most parties appearing before the committee are focused on the Canadian broadcast and television ecosystem. I am appearing before the committee to remind honourable senators and to emphasize that Canadian feature films are an important part of that ecosystem and that decisions that flow from these hearings may have an impact on the production and distribution of Canadian films and the creation of vital feature-length Canadian content.
With all the complexities our industry faces, whether from a broadcast, distribution or export perspective, there is one thing that remains entirely simple: Canadian taxpayers should be able to enjoy the films that they have already paid for on the airwaves of our national broadcaster. This approach will benefit the CBC, benefit the government and ultimately benefit all Canadians.
The members of CAFDE thank the committee for the opportunity to provide these remarks. I'm happy to answer any questions you may have.
Senator Plett: Let me start off by apologizing for being a little late this evening. It is tough walking in the snow out there. I'd like to blame it on that, but probably I started off a little bit too late.
Thank you for the presentation. I think I was in for almost all of it, and I certainly appreciated your comments.
Let me start off with asking the first question this way: I believe I'm an average Canadian. I like to watch television. I like to watch sports. I like to watch a lot of Canadian productions. You mentioned three Canadian productions. I know you won't be able to answer this explicitly, by why have I never heard of these three when they win these awards? Am I, in fact, an average Canadian?
Mr. Rapkowski: It is unfortunate you haven't heard of them, and one of the challenges we have is promoting our own talent. We seem to have no problem doing it internationally. With the feature film industry and the international distribution of it, these are captive film audiences who are on the lookout for quality content. For the average Canadian, I think part of the problem is that we make a lot of content but we don't expose the public to that content enough. That's specifically why I think CBC has a very important role. It's part of this positive feedback loop that I tried to emphasize, which has worked very well in Quebec. Most people in Quebec have heard of Xavier Dolan and are familiar with his films. In English Canada it is more challenging. A lot of them have heard of David Cronenberg because he has been a success for so many years. But are they aware of the new films that they're producing and the critical acclaim they're achieving? It is a challenge.
Telefilm has been putting a lot of government resources into promoting Canadian films internationally. I think we do need to put more emphasis on promoting them in Canada. Certainly, as film distributors, we spend most of our dollars promoting the films — almost as much as we do, and sometimes more than we do, acquiring the content in the first place. But it's a crowded market. There is a lot of content out there. It's no longer just feature films in television. You have Internet content. You have YouTube. The amount of content that younger audiences have available to them is astounding.
So it is difficult to cut through, but that doesn't mean that these aren't important stories. Once Canadians do get a taste for it, I firmly believe they will come back for more.
Senator Plett: I have no doubt, and I think we've heard at the committee many times, that Radio-Canada is certainly drawing a larger percentage of the viewership in Quebec than CBC is in English Canada. We've heard many reasons why that has happened, and I certainly believe that they are.
We had a witness here a week ago who was promoting "The Book of Negroes.'' I have watched four episodes now, I think. I thought I had taped all of them, and I was not going to start watching until I had taped all of them. Then I watched four episodes and I found out there are still one or two left to go. They did a great job of promoting that ahead of time. As you said, you promoted these films maybe in Quebec, but I think it is about the promotion of it.
My next question is related to this: Do Canadians across the country — and let's take Quebec, absolutely, but let's take English Canada as well. My colleague next to me is from Alberta, and 2 per cent of the people in the province of Alberta watch CBC. So is it money well spent just to put more money into CBC? Should we maybe, as Senator Housakos has asked many times, shave off a piece of the money that we give to CBC and give it to Telefilm Canada or organizations and say, "Here, you run with this, as opposed to CBC doing it''? I'm not sure. That, of course, is why we're doing this study.
Do you have any comment on viewership? We ask this time and time again, and it seems the answer we get is that viewership is not that important; we just need more money. We listened to witnesses two days ago: "Let's not talk about viewership. Let's just give CBC more money.'' Nobody seems to be concerned about the viewership.
I had lunch with a CBC journalist today, and I was told by that journalist that we are going nuts inside of CBC concerning ourselves with viewership. But then, when they get out in the public, they say, "Well, you know, it's not that important, 2 per cent, maybe.'' We always hear, "But in Quebec the viewership is higher.'' Yes, it is, but we have a big country.
Mr. Rapkowski: There is a lot there to speak to. We are a geographically large country. We are culturally diverse — lots of different regions with lots of different tastes. But we are one country, and there needs to be something for consumers and citizens to be able to grasp onto that does express a national identity. I think it's important, and I think it's part of the CBC's mandate.
It can be challenging, that's for sure. But I think one way to increase audiences is by not trying to be all things for all people, not trying to compete in the realm of the private broadcasters and deliver content that we know consumers want — American content, sports content, certain types of news content. We know that consumers want that kind of content, and they will find it, and they don't have to find it on the CBC. The CBC can stand for something different. It can stand for being a true Canadian voice.
Again, as we see so much splintering of channels in a multichannel universe, the only way to survive is to be distinct, to be proud of your distinctiveness, and to create a brand that stands for something and that lives up to that — not where it is a stated mandate, but then you try to pretend like you are a private broadcaster and you are chasing advertising dollars.
It does require taxpayer money to execute on that plan. I'm sure that there are lots of Canadians who would like to see the CBC be funded less and who don't really have an appetite for this broad national dialogue, but I think it's an important value. I can't speak for all citizens. I speak for myself. I think it's an important endeavour. I think it has the ability to bring common ground across the country. Without it, where do you get that? You will not get it from private broadcasters, with their American content, who have no vision for Canadian cultural identity. Much like having trains that run nationally and that are worth investing in to connect people, you need to have cultural industry that also connects Canadians.
Senator Plett: Last question, chair, if I could.
Maybe we're trying to be too many things to all people; I'm not sure. I think you have zeroed in that maybe we need to focus a little more. You made the comment that maybe Canadians don't want to see as many of their tax dollars going to CBC. I think, without a doubt, the majority of Canadians do not want to see as many tax dollars going. But the question is: Do they want to see the CBC? Those are two different questions, and you might get two different answers.
Mr. Rapkowski: I think you would.
Senator Plett: I think we all want to see fewer of our tax dollars going to anything. I would like to see less government spending, but am I willing to sacrifice what I have in order to do that? I think that's the question.
You make a good point when you say that "Instead of spending programming dollars fighting for U.S. content, our proposed approach would have the CBC align its investment in content with already existing government funding initiatives.'' I think you make a good point there. But just up from there you say, "It is certainly more cost effective than buying expensive professional sports or American programming or developing and producing its own high quality drama.''
That's what people want to see, though. Sunday afternoon at 5:30 Winnipeg time, 6:30 Ottawa time, there were not many people watching CBC. They were watching CTV because of a sports show on CTV. So should CBC get out of it or get all the way into it? They lost "Hockey Night in Canada.'' Do they go away from it completely? You are suggesting maybe they should.
Mr. Rapkowski: I do think they should. You cannot be, again, all things to all people. There are niches, underserved communities. There are, surprisingly, some Canadians who are not obsessed with hockey and who are looking for alternate content. CBC Radio is a good example. I am a voracious consumer of CBC Radio. There is no advertising, compared to shock jock morning radio, where you have advertising on some of the private radio stations. There are people who want that. Not all Canadians are alike, but there certainly is a community of people who are looking for thoughtful, Canadian-focused content that serves the CBC's mandate of informing, enlightening and entertaining. The entertainment part is easy, and there's a lot of it.
I'm not saying that people need to take a pill for what's good for them, but it has to be available for people that do want to better themselves and that do want to strengthen their identity as a Canadian, particularly in a country with so many new immigrants. There needs to be something to be able to latch on to and if we have people flowing into the country as new immigrants and all they have to watch is American programming then where do they develop their Canadian distinctiveness? It needs to be available.
I don't think that means that the quality has to suffer. I think the more you are exposed to quality content — it's infectious — it will lead to more viewers. Again, the example I raised about people seeing the film Mommy, it's not for everyone. It's a challenging movie. I think there will be a few people who may never have watched a movie like that who will be exposed to it and then the next time they saw a film released by Xavier Dolan, they would see it and would be interested to consume that kind of alternative content. Again, if you are trying to spread it so thin, where you are giving a little bit of everyone to everyone, then no one is going to come to see you because they never know what they're going to get from day-to-day. If you have a focused brand and that brand is Canadian, I think there is an audience out there. It might be more of a niche audience and maybe that means not as much funding is required because you're targeting. But I think it's a worthwhile endeavour.
Senator Demers: I want to follow up on a very interesting thing that Senator Plett just said. Thank you for your presentation, Mr. Rapkowski.
It's not true that they don't care about ratings. This weekend, I did the two games for the Montreal Canadiens and the next day all they care about is ratings. On CBC/Radio-Canada, I did a show the other day — ratings, ratings, ratings. That is so important. As Senator Plett just said, we have had times where people said we don't get money — no ratings. The most important thing is that they live on ratings. That's how they go to the big companies, and I'm not mentioning any names, and say, look at our ratings here for this and this show. I'm not saying you said that, but I'm saying that ratings are key to the success of CBC/Radio-Canada and every other station. That's all they talk about. If they have bad ratings then they're in really big trouble. I just wanted to mention that.
The distribution of film has changed with digital technology. How have these technological changes affected, if at all, your members? How have recent technology changes affected the way your members deal with CBC/Radio-Canada and with Canadian private broadcasters?
Mr. Rapkowski: Technology has changed — it's changing for broadcasters and distributors. It has thrown everything on its head, in a sense. There used to be two ways to see a film. You went to the theatre or waited for it to come out on television. They came out with video and they said that was going to be the end of the film industry, because everyone would watch them at home. People still go to theatres because people want to get out of their homes. People said the same thing with digital and piracy. They said this would be the end of feature film, but it's not. Content is what people want. What we've realized as distributors is that the important thing is getting good content produced. How people see it is not as much of a concern to us. We want to make good content. There will be platforms and ways for consumers to see that content. We want to make it available on all platforms.
The truth is that there are some platforms that are less lucrative for distributors than others. We make a lot more money from someone buying a ticket in the movie theatre where they're paying $17 than when we are getting a licence fee from Netflix where people are getting 1,000 films for $7.99 a month. So it has changed the economics and it's difficult. It is a time of change and reflection in the industry, but that will not stop films from being made or consumed. It changes the economics for us as a distributor. But as consumers, I don't think you're seeing fewer films out there.
It is creating a dichotomy with huge superhero films dominating the theatres, but I think people are becoming much more comfortable watching long-form content at home. People are willing to watch 15 hours of a show — a whole season — in one sitting. It's not that people are watching less content or have less of an appetite for content. It's just the way they are getting it has changed. We're adapting to it. It's slow. It's tough to stay ahead the curve. With technology, you're usually one step behind but that's the business we're in and we're working hard to get back.
The CBC has strong digital initiatives, and again, as long as they have the content and make it available. I don't think how they make that available is as much of a concern. Going back to CBC Radio, I rarely listen to it on the radio; I listen to most of it as podcasts through my phone. There is no advertising on it. It's great content. It informs me. I'm entertained and I'm enlightened. It doesn't matter to me that I don't have to be at home to watch it on my TV or be in my car to listen to it on the radio. I am quite happy that I can listen to it while I'm on my bike. So these are just conduits and means of delivery. It's the content that matters.
Senator Eggleton: I think ratings are overrated when it comes to the public broadcaster. I think too much attention is paid to it. Actually their ratings aren't all that bad, either. Their overall ratings are second only to CTV. They're ahead of Global which is another private sector entity. As I think you pointed out, Mr. Rapkowski, they're in a different direction. One is seeking profit — the maximum amount of advertising to be able to gain that profit. The public broadcaster is there to, as the mandate says, inform, enlighten, entertain and be able to tell Canadian stories to Canadians. It does not always get you the top ratings, but they reach as high as 89 per cent, which is pretty good.
You have come here to tell us about films. I think you gave a very good presentation, with some good backup material in terms of the value of having Canadian films. You ask for a change in the current content requirements, to add a new category of programming for feature films.
Don't you have the ability the get these films on the CBC now? Why do you need that? The films you mentioned here, why can't the CBC pick them up now?
Mr. Rapkowski: They can and they do, but not as many as they used to and not as many as we would like. Canadian films will be produced and distributed with or without support of the CBC. It's happening now without tremendous support from the CBC. But I do think there are some films where we could use more. There are more stories that aren't told and films that aren't produced because they might be on the margins and might not completely justify themselves from a purely commercial point of view. With a bit of support from the public, these are important stories for the benefit of Canadians that would get produced that might not otherwise. So yes, two is great; four would be better. A double feature every Saturday night and a film on Wednesday nights would be even better. It comes down to the objective of the CBC. If the objective is to tell Canadian stories to Canadians then these are the stories.
It's much easier for the CBC to go out and invest in lower budget, perhaps, easier to produce and cheaper content. They can proliferate and sell advertising dollars for things that are going to maybe garner a larger audience share. They can chase those dollars as much as they want, but that's not going to tell certain regional stories that might be really important, like a story about First Nations communities that Canadians might not see otherwise. These are the kind of films that might be on the margins. If there are only two that they are going to buy in any one year, and that's all that their budget allows for or that's their condition of licence, the minimum that's required, then they might just do the minimum.
Senator Eggleton: You see it as mainly a financial matter? They say they don't have enough money to buy any more or put any more films on the air? It's not like it would be a big expense item as the film is already done.
Mr. Rapkowski: It's this chasing of the ratings, if you are focused on advertising dollars. Some of these films might not achieve the kind of ratings that other type of content would. If you are focused solely on ratings and chasing advertising dollars then you will not want to program those films. But then if not through our national broadcaster, then where do these stories get told?
Senator Eggleton: Are these stories all typically Canadian? Do they really relate to a Canadian story as opposed to the actors or the directors or where the film is made? It can be made in Canada. It can have some Canadian performers and a Canadian director. There used to be a lot of films done in Toronto, but they said it was New York or someplace else. So are these really Canadian stories?
Mr. Rapkowski: There is a range. There are some films that are purely commercial. It's a romantic comedy, and the fact that it's set in Toronto wouldn't be different than if it was set in New York. It happens to be set in Toronto and feature Canadian actors. There are films on that end of the scale. There are films on the other end of the scale, like Atanarjuat, which was the First Nations film that came out a bunch of years ago. That was in a native language and was an important story. You have both sides, but by having a healthy appetite for Canadian films and people, there being a place where people can see all different kinds of these films, you get recognizable actors and people start to understand who they are, and then they're in the next film which maybe is tackling a more important national topic, and it will help drive people to that content. Underlying all this is the fact that the Canadian film and television industry is a huge industry that brings a lot of tax revenue into the government. There are studies that say for every dollar spent, it brings back four or five.
Senator Eggleton: Economic advantage.
Mr. Rapkowski: But to say that every Canadian film that achieves Canadian content status is a quintessential Canadian story that deals with Canadian values, you know, it's obviously not true.
Senator Eggleton: You made the statement that the CBC will be stronger if it embraces its distinctiveness and its role as a public broadcaster that supports Canadian culture for the benefit of its citizens. The CBC should not compete with and measure its success against private broadcasters. It should be confident serving its distinct role as a public broadcaster that serves to shape our national identity and reflect our values. I just want to say amen.
Senator Demers: With all due respect, I worked for the CBC. This is not bragging. I did it, and I know what's going on a little bit. They lost about $400 million losing the hockey. That's a lot of money. You indicated, if I heard you correctly, that that wasn't that important, but $400 million is a lot of money. If you get $400 million for "Hockey Night in Canada,'' you're charging less to the consumers.
Senator Eggleton: You won't like my comment on that.
Senator Demers: You can say anything you want. I respect you.
Senator Eggleton: I don't think the CBC should compete with a private broadcaster for advertising. I'd take them off of it, just like CBC Radio.
Senator Plett: And give them more money from the government.
Senator Eggleton: Absolutely. I'd have a special tax or a licence fee like they do in Britain.
The Chair: We'll talk about that probably when we get back.
Senator Unger: Thank you, Mr. Rapkowski. I'm looking at a speech that you made to the CRTC. In that speech, you say, "I'm appearing here today before the commission to remind and emphasize that Canadian feature films are an important part of an ecosystem,'' which you talked about previously, "and the decisions which flow from these consultations may have a profound impact on the production and distribution of Canadian films and the creation of the vital feature-length Canadian content.''
Then, in another place in the same speech, you say, "In 2011, a mere 3 per cent or $37 million of the total box office revenues at Canadian theatres was Canadian content, and in 2012 it actually decreased to 2 per cent.''
I don't know how any business can survive. You describe over and over how this is vital to Canadians, and yet their viewership is dropping.
Mr. Rapkowski: I apologize for recycling some remarks that I made to the CRTC. We are talking about the theatrical viewership, and it's true that it is a struggle to get Canadian consumers to go out and see Canadian films. It's not just Canadian films. It's all films, even American films that are not large, blockbuster films.
Heritage Canada did a study recently that showed that 90 per cent of all viewership for Canadian films is on television. Again, that emphasizes that it will be difficult to get large audiences in the theatres when you have a new Star Wars coming out at Christmastime. It's difficult.
Our challenge as Canadian distributors is to promote our films and to try to put dollars into films that have broader commercial appeal and focus on those for theatrical release, but there are other models of distribution. We're finding now we have some films that don't play in theatres. There are some requirements from Canadian funding agencies that do require the films to play in the theatres for a minimum amount, but they are mostly focused on in-home viewing, on demand, and selling them to broadcasters so that Canadians can see them that way.
We would love to have more people go see them in theatres, and we are working hard to do that, but the theatrical industry is suffering not only for Canadian films but all around, and it is the large tempo films that are winning. That doesn't mean that people aren't consuming the content by other means, and CBC would play a very important role in supporting that.
It's a lot more difficult to cut through when you're getting people to go out to the theatres than if people knew that every week they can rely on the fact that there will be a quality film for free at home, produced by Canadians with Canadian tax dollars. I think there are a lot of people who would tune in and who don't want to spend $6.99 to get it on VOD that week. They know it's quality programming curated by good programmers.
Senator Unger: Thank you for that answer. You said earlier the CBC can't be all things to all people, and Canada is a large and diversified country. In Alberta, I know that what we get presented on the radio, probably in particular, and on television can't compete with what people in Quebec have access to. I believe that to be true, and I stand to be corrected by my colleagues.
I wonder if you don't think that the CBC should reach out as much to all parts of Canada, because they cannot be all things to all people. Why should all Canadian taxpayers have to pay for it? Why can't it be a system where you subscribe, like perhaps PBS? The BBC has a licensing fee, and again I stand —
Senator Plett: That's on the television. On the TV itself.
Senator Unger: So why not something like that? The people who feel so passionate and adamant about CBC can pay for it. I certainly don't want to, and I know, as my colleague posted out, most Albertans don't and just don't see any value for money there.
Mr. Rapkowski: You raise PBS as an example. The consumers aren't paying for PBS. There are people who are supporters of PBS. The U.S. government is not a huge supporter of PBS. Look at the model of the BBC in the U.K., and I understand all of you will be travelling there to look at their model, also not paid for by consumers.
As soon as you put up a pay wall, you are going to drive away a large number of consumers. You do have to take the leap, and not everyone does, that it is an important endeavour to have a national identity and not just separate regional identities. That's not to say that national identity is all centred on central Canada and Quebec at the expense of Western provinces or the Maritime provinces.
Maybe the CBC needs to do a better job of promoting Canada, a vision that all Canadians have. I think that's a worthwhile endeavour. But just because it's not happening does not mean it is not something that we should continue to pursue. Maybe it would be worthwhile to have a better-staffed regional department in Alberta that is able to understand the needs of Canadians out there and reflect that on the service. Maybe it is too focused on Ontario and Quebec, and that can change. But the mandate, objective and vision of having a service that is available for free to Canadians — and again, we have a huge immigrant population in Canada, and if you don't have anything for people to be able to grasp onto as an identifier of Canadian culture, then these regional differences will continue to expand. I think what we need, as a federation, is something to bind us all together.
I should say that some of these remarks are personal remarks of mine and don't necessarily represent the views of all CAFDE members — I did not canvass my views on these subjects — and admittedly I'm speaking from a personal perspective and as a consumer of CBC since I was very young. I'll have to answer to some of my CAFDE members following the meeting.
Senator Unger: You still didn't answer my question about why all Canadians should have to pay. In fact, the one thing that Albertans were watching was the news. Whenever anything would happen, people would gravitate to the CBC, and the weather, of course. Now CBC has been cutting back on the number of weather forecasts and news broadcasts, and I'm assuming on TV, too — I don't watch it — but they are cutting back the number that they have been doing in Alberta, specifically.
Mr. Rapkowski: In terms of why pay, admittedly it is somewhat of a philosophical argument. We all pay for health care; not everyone uses the doctor as much. It's still something we want to have available for Canadians. We all pay for public transit. There are people who would never step on a bus in their lives. There are aspects, as a social democracy and not purely individual interest, which require some social institutions that are beyond individual and that speak to the collective Canadian consciousness. It's a philosophical view, admittedly.
The Chair: Since you admitted to recycling your CRTC speech, I'll recycle one of mine. We have distinct markets between Quebec, francophones outside Quebec, and the rest of the country. I've always said that CBC is like having BBC and RTF, Radiodiffusion Télévision Française, being run out of Belgium. It is such a contrary market that to try to have a common management approach and a common marketing approach — there's a question coming. Sacrificing the advertising in English Canada is not a drama, but in Quebec, the hundreds and millions of dollars that Radio-Canada is collecting from their strong market share would make it a CBC solution but not a Radio-Canada solution.
I went through your website. You have membership in Quebec. I think you lived in Montreal. You have membership in both of those markets, in both of those communities. How do they approach it? You talked about Xavier Dolan. Dolan can obviously survive on the Quebec market. He is doing very well. But he is still now more and more attracted to the North American market. How do your members face that challenge of trying to get your fair market share of Quebec and trying to aim for the anglophone market share, both in Canada and obviously in North America?
Mr. Rapkowski: It's difficult. As we know, they are distinct markets. There is such a huge support for Quebec films and Quebec talent in Quebec that we really are talking about two different models. Quebec has the ability to support itself on its own merits with advertising dollars, like you said.
I work at Entertainment One, which is a company that has an office in both Toronto and Montreal. We have Le Film Seville in Quebec, which is distributing — internationally and within Canada — mostly Quebec films. The business models and film choices we make are different. There are some films that we do distribute, which are Quebec films, which only get distribution in Quebec because there is no market for them in English Canada, and that's fine. Not all content is for everyone. You have to understand your audience and where they are and create content for them. There's lots of content produced out of English Canada that in Quebec does not get a release either. It does go both ways.
Again, you can look at Alberta as similar to Quebec. We do have regional differences in the country, and it is difficult to have one set of content that will work for everyone.
The Chair: We had Entertainment One here a few weeks ago. I don't know about your other members, but I think your messages are about the same as your boss, so on that side I think you're okay.
Senator MacDonald: Senator Eggleton went into a couple of the areas I wanted to go into, so I suppose I'm going to ask some supplementary questions to what he went with.
I enjoyed what you presented here. It certainly raised some questions that I wasn't aware of. One of them was that there is absolutely no Canadian requirement for feature films on CBC, according to the CRTC requirements. Has this been proposed for the CRTC in the past? If so, why would they have turned it down? Why would they not have encouraged the CBC to be used as a vehicle for Canadian feature films?
Mr. Rapkowski: I cannot speak to the CRTC's decision. We have certainly been making this case at the Let's Talk TV hearings. We certainly made that case. Part of the challenge is that the private broadcasters, who do hold a lot of influence, are trying to have the Canadian content requirements to be as flexible and broad as possible. There used to be a separate category for feature film, and that did require broadcasters — certain conditions of licence — to have a certain amount of feature film content. Because of lobbying from private broadcasters, they were able to make that more flexible. I understand their arguments of why they want to be able to program what works. If they see that they're getting better ratings with a very popular Canadian television series, why should they have to program feature film?
I have less of a concern with that. I work in the feature film business. I would love to see an exclusive feature film category for all broadcasters, but there are private companies that are entitled to — they are using national airwaves and they are a protected industry, so they do have some responsibility to Canadians. But I do see the CBC playing a different role in that. Feature film is not television, and I tried to emphasize that in my remarks. I think it is a distinct art form that comes from a more independent view. It's not financed by broadcasters. Often these are individuals with scripts, who are artists, who come up with unique and diverse visions.
I think feature films serve a different cultural purpose than television productions do. The line is blurring now that people are doing 15-hour TV series that are becoming more like very long feature films, so it is changing slightly. But still, television productions are founded on being able to create an audience for eyeballs and advertisers; feature film is not. These are cultural products that are artistic visions oftentimes — not all of them; there are plenty of films that are purely commercial. But I do think it is distinct from television, and I think it's worth some recognition.
Senator MacDonald: You mention here in these suggestions that you think it would be beneficial to the CBC for a variety of reasons, that they would embrace this.
When these proposals were made to the CRTC, what was the CBC's position? Were they supportive or were they neutral or combative about it?
Mr. Rapkowski: It wasn't a dialogue. We make our presentations, they make their presentation and everyone is speaking their own —
Senator MacDonald: You must know what they think.
Mr. Rapkowski: To be honest, I don't think CBC addressed feature films as a separate category because they are faced with enough on their plate. They are trying to get through with budget cuts and the loss of "Hockey Night in Canada.'' Feature film is not at the top of their minds in terms of how much should be devoted to Canadian television as opposed to Canadian feature film.
I would love to hear from them about it, but I don't think it was specifically addressed. Again, all broadcasters who have to operate under conditions of licence want them to be as flexible as possible. It's natural not to want to impose restrictions on what your management and programmers can do. That is not to say that they won't use those conditions and still program Canadian films. They are free to do that. There is no restriction against Canadian feature films. I understand that they want as much flexibility as possible. Yes, I am suggesting that they have somewhat less flexibility, not to constrain them too much, but we do want to emphasize that Canadian films are an endeavour that is supported at a number of different government levels with Telefilm Canada and with tax credit programs. You need to close the loop and have a place for audiences to see the films, and I think CBC as our national broadcaster is really the ideal place for that.
[Translation]
Senator Verner: I am a senator from Quebec. Unless you have been living on another planet over the last year, I can't imagine a Quebecker who hasn't heard of Xavier Dolan's film Mommy. Despite the cultural environment in Quebec, which is very different, with less competition and a more restricted market, it is true that this is a great success story. You were right to mention it.
My colleagues have asked several of my questions. However, I will ask you about the comments you made on September 19, 2014, during the CRTC hearings "Let's Talk TV: A Conversation with Canadians''.
One of the things you said is that you wished it were easier to diversify the programming in order to appeal to niche, underserved audiences, as well as large audiences.
When you say "niche, underserved audiences,'' what do you have in mind?
Mr. Rapkowski: Let me answer in English.
[English]
As audiences fragment, they are becoming more niche oriented. In a three-channel universe where everyone was watching the same things — those days are gone. There are people who are focused on very specific types of content. On top of that there are communities in Canada that are also looking for specific type of content. There are rural Canadians who are under-represented, probably, in Canadian media. It would be great to bind them to the rest of the country by having their stories. I mentioned First Nations before. You can get them on the Aboriginal Peoples Television Network, but there are not that many city dwellers who are consuming that content. If you make it a national story, something that's on the CBC, I think you will find more people who are used to going to the CBC to look for Canadian stories will be exposed to broader stories from broader communities. At the same time, those communities who don't usually see their stories represented on the national broadcaster will have more of it, will better identify and feel closer to the rest of Canada.
[Translation]
Senator Verner: Do you think government subsidies will always be required to serve those audiences? Or are there other ways to reach them? No? I would assume government subsidies must be the way to go for those markets, correct?
[English]
Mr. Rapkowski: It's difficult to say that for every problem we have to throw tax dollars at it. I'm sensitive to that. You want money to be well spent and having content on channels that no one ever watches doesn't serve anyone, especially when it is tax dollars. So I understand that.
But in this environment where there is so much out there, the only way to create any sort of differentiation is to be secure in your niche and to breathe it and live it. It doesn't require that many tax dollars if you start getting a huge audience. You can get a lot of bang for your buck, as they say, by focusing.
If you get rid of advertising, for example, as many who have come before the commission have suggested, then that does require tax dollars to support it. Again, it comes to a philosophical view as to whether that is a worthwhile endeavour. I can offer personal views on that. I'm not here to offer my personal views, but it is a challenge. Playing the same game and chasing to try to compete with private broadcasters has not worked up to now and I don't see it working. Private broadcasters can much more quickly reduce their workforces, and realign resources. A public broadcaster can't do that in the same nimble way and they don't have the resources to invest where they need to invest. You have to focus on what you can do, and do those things well. I don't know if that's answering your question entirely.
[Translation]
Senator Verner: I think this will always be quite a broad debate.
However, I would like to go back to what the chair of the committee and a colleague from Quebec were saying about the fact that Radio-Canada's performance is radically different from the CBC's. Advertising revenue is crucial for Radio-Canada. Clearly, the competition is different, but that is what we are hearing. Various groups and individuals have been repeatedly saying this since the beginning of the study before our committee.
Thank you.
[English]
Senator Housakos: Indeed, sometimes I get the impression that CBC is run out of Belgium, but that's a whole other story.
Quite frankly, I'm a little bit perplexed by your commentary. On the one hand you make an argument that the CBC should not be competing with private broadcasters and that their mandate is totally different.
Yet, I read between the lines when you come before us and you say the CBC is an important institution, we have to continue funding it, it's the best institution to showcase Canadian film and culture and so forth. First and foremost, you should be jumping up and down and asking CBC management to stop competing with the private sector. I agree with you. We have no business competing with private broadcasters in this country. The mandates are radically different. What we've asked CBC to do for years is to promote Canadian culture and content and to enlighten Canadians, right?
Mr. Rapkowski: Absolutely.
Senator Housakos: Your industry is fundamental in that. It's supposed to be the centre of what the CBC should be profiling: Canadian artists, Canadian culture, Canadian movie makers and Canadian documentaries. As a government, I think we should be spending a lot more on Canadian culture. I think we have to be very vigilant since we have next door a very powerful cultural machine in the United States. English Canada, like my colleagues from Quebec said, is in a very different context than Quebec. Quebec has the benefit of having less competition in their cultural milieu than English Canada. Obviously everything we consume in Quebec, Quebecers will buy into because their options are very limited. In English Canada, your industry has to be twice, three times as good because you are competing against the best of the best.
The first question is: How would you feel, in addition to the $100 million a year that National Film Board gets, in addition to the $370 million that the Canadian Media Fund puts out, in which three quarters of that goes to the CBC, if there was another four or five millions dollars available to Canadian producers of Canadian film and Canadian content? Would that have an impact in your industry?
Mr. Rapkowski: More money always has an impact, but a lot of the money that comes from government now goes toward producing and doesn't go toward supporting an audience and for making the films available. Yes, you could put more money in. Budgets will go up, and you might get better quality because maybe certain great writers and great story tellers who maybe don't make as much here as they can south of the border might stay because it would be more lucrative for them. Budgets might be higher and it might be able to support larger productions and things that might appeal to younger audiences that require special effects. So yes, you could put more money into the production industry, but again, it's important to have a place to grow audiences. Like I said, there is this positive feedback loop. You want people to start recognizing Canadian stars. You want them to start appreciating Canadian talent and stories. They'll come back for more when they realize it's there, but it has to be available.
Senator Housakos: You are at the crux of the issue, which is you are saying we have a lot of material but no place to showcase it. Is that what you're telling us?
Mr. Rapkowski: It is very difficult to cut through all the American content that comes across the border.
Senator Housakos: Based on your argument, then, you're certainly not going to cut through that by having the CBC get more money because the CBC right now has tons of Canadian content that nobody is watching because obviously they are in head-to-head competition with American productions that are being showcased by private broadcasters. Don't you think the solution would be for the CRTC to regulate those private broadcasters more, forcing upon them the necessity of broadcasting more Canadian content? Would that not be a better or a more natural solution, if I'm hearing your argument?
Mr. Rapkowski: Well, I don't know if increasing regulation on private broadcasters is necessarily the way to go. Again, I might not be speaking for all members of CAFDE, so I need to be careful about what I say. They are facing competition from companies like Netflix south of the border and new forms of over-the-top broadcasters that have no Canadian content requirement. They are already behind the ball trying to compete with those types of services. Just increasing their requirement to broadcast more content that is not as popular as American content will hurt them, I would think.
What you want to do is create a niche where people understand that there is a place to find good quality Canadian content and that there is a place to do that. I don't think Canadian consumers right now see the CBC as a home for great Canadian film. I don't see it. I think they see it as formerly a home for "Hockey Night in Canada'' and national news, and perhaps some regional news broadcasts. It's not a place for great Canadian content.
Senator Housakos: If I may interject, that's exactly where I'm headed in my thought process. Where I'm headed and where I come up with the $400 million is right now we give CBC close to $1 billion a year. Based on what we've gotten from them so far as information, anywhere from 35 to 40 per cent of that budget is used for the production of news, local, national, et cetera. The argument I made for the longest time, and others have on this committee, is that broadcasting news on CBC/Radio-Canada and competing with the other networks on news is not necessarily responding to the mandate of providing and promoting Canadian culture and Canadian content.
I go back to my argument that CBC and Radio-Canada have to restructure themselves totally. When somebody wants to see Canadiana, the Canadian cultural mosaic, they know they will go there and they are not watching CBC local news like they would on three or four other channels, or Radio-Canada when you can watch it on one or two other channels. They are watching documentaries and Canadian film and Canadian production.
The question I have in a nutshell is, with the $1 billion currently going to the CBC and the high percentage being used now on news, do you think that's an appropriate use of money to promote Canadian culture, or should there be a reengineering of CBC/Radio-Canada? I'm not saying to shut the place down. I'm not saying not to give them more money. I have a colleague who thinks the solution is to write a cheque, now that he's in opposition. My view is to write the cheque but convince me that the model is strengthened, reorganized and restructured and to be able to fulfill the mandate in a proper way. Then you can ask for a couple hundred million more.
Mr. Rapkowski: My area of expertise is not news. I have made it clear that my view is that they should not be competing where the private broadcasters are already doing a good job and serving Canadians quite well. Are private broadcasters doing important kinds of journalism, investigative journalism, difficult international stories, stories that are able to speak about Canada on the international stage and Canada's role in the world? I don't know if they do that as well, and maybe there is a place for more investment in Canadian news from that perspective for the CBC.
Again, I'm in the film business, so asking me about news is a bit off topic for me. I emphasized again, and I've raised it a few times, don't just try to be in the mix with CTV and Global and trying to be everything, all things to all people. Part of the CBC's mandate is to inform, and I do think there is a role for the CBC in not just entertaining and enlightening and just being about films and artists and music and just a cultural program. I do think it has a role to inform Canadians but, again, you have to do that in a niche way, in a way that is being underserved, in a way that the private broadcasters are not willing to do. Maybe because of the influence of shareholders and large media companies, there are areas they don't want to move into to inform the Canadian public. Maybe a national broadcaster has a role in a way to serve Canadians from a public view as opposed to a private view.
Senator Eggleton: I have to say Senator Housakos made a lot of sense. I was with him all the way until he started talking about the news service, but that's another story for another day. Everything up to that. Spending more on culture. Imagine that.
Should we be competitive? Yes, that's one of the reasons why I talk about removing the advertising. By the way, I'm just talking about the English network. Radio-Canada is a different service. It's quite a successful service, and I would hope we wouldn't tinker with it. It does not have as much competition. There are only about three channels, whereas you have hundreds of channels in the English network, a lot of which are American. I don't know how much the CRTC could control the ones near the border areas, because that's where most Canadians live. They can get the channels coming across. When the CBC lost the advertising from "Hockey Night in Canada,'' it's brought the advertising down substantially, and yet they still have a lot of costs, so I think it's debatable just how valuable that is. That's on the English side, not on the French side. I would not tinker with that. That may be aspirational in the short term in any event.
I want to ask you about the over-the-top broadcasting. You referred briefly to the Netflixes of the world, et cetera. The CRTC has washed its hands of trying to regulate the Internet, trying to regulate a platform that it couldn't seem to get a handle on. Yet, it is an important part of the cultural broadcasting/cultural entertainment delivery systems to Canadians. Should there be regulation of the Internet of over-the-top broadcasting by the CRTC in terms of the cultural content?
Mr. Rapkowski: It's a difficult question, and I don't know the answer for it. There are lots of different views on it, and it's a tough one. There are many reasons not to regulate the Internet for lots of different reasons, but when it becomes a commercial endeavour that is competing with a regulated industry, it becomes very difficult when you can't create a level playing field. You are constraining private broadcasters in that way and leaving them open to having their lunch eaten by someone who is not regulated, but regulating the Internet is a slippery slope. I wish there was an easy answer to that one. There are compelling arguments on both sides. I wake up one day and I think one thing, and the next day I think the other. I don't have a good answer for you on that one.
Senator Eggleton: I don't have an answer, either.
Mr. Rapkowski: It's a tough one.
Senator Eggleton: I agree.
The Chair: Colleagues, as you know, next week some of the members of the committee will be travelling to the United Kingdom to review the operations of the BBC and the environment in which the BBC works. Upon our return, the committee will be hearing from CBC senior management.
[Translation]
Mr. Rapkowski, thank you very much for your presentation. We are all more informed than we were at the beginning. Thank you.
(The committee adjourned.)