Proceedings of the Standing Senate Committee on
Transport and Communications

Issue 17 - Evidence - November 6, 2003


OTTAWA, Thursday, November 6, 2003

The Standing Senate Committee on transport and communications met this day at 10:50 to study the current state of Canadia media industries; emerging trends and developments in these industries; the media's role, rights, and responsibilities in Canadian society; and current and appropriate future policies relating thereto.

Senator Joan Fraser (Chairman) in the chair.

[Translation]

The Chairman: It is a great pleasure to welcome you to this meeting of the Standing Senate Committee on Transport and Communications. The Committee is continuing its examination of the appropriate role of public policy in helping to ensure that the Canadian news media remain healthy, independent, and diverse, in light of the tremendous changes that have occurred in recent years notably, globalization, technological change, convergence, and increased concentration of ownership.

[English]

Today our witnesses are from CHUM Limited. We are joined by Mr. Jay Switzer, President and CEO; Ms. Sarah Crawford, Vice-President of Public Affairs; and Mr. Peter Miller, Vice-President of Planning and Regulatory Affairs.

Welcome. Thank you very much for being with us. I think you understand the way we operate. We will ask you to make an opening statement of 10 or 15 minutes and then we will go to a question period.

Mr. Jay Switzer, President and Chief Executive Officer, CHUM Ltd.: Thank you very much. Good morning, madam chair, honourable members of the committee. Thank you for this opportunity to appear as part of your study on the state of Canadian media. Any vibrant democracy requires institutional scrutiny, which is why it is important — from time to time — to turn the lens on those who normally ask questions.

We take your work seriously as we believe Canadian sovereignty requires a strong and distinct domestic media. To that end, we hope you recommend that the government resist pressures to increase levels of foreign ownership in broadcast media.

We also hope that you and your fellow colleagues in the Senate will give resounding support and swift passage to Bill C-52, an act to amend the Radiocommunications Act designed to curtail black market satellite activity.

These are but two immediate pressures that we feel if left unchecked could cause long-term harm to our collective ability to sustain our Canadian media. In our brief time this morning, we hope to give you a better understanding of CHUM and how we fit into the big picture.

We also want to explore how we believe media has changed and how to better equip young Canadians for a truly multimedia world. Finally, perhaps slightly beyond the original mandate of your study, we wish to speak of the importance of finding space for telling Canadian stories.

While CHUM may not be the biggest, we pride ourselves of being on the cutting edge and being part of a long tradition of firsts. We were the first to engage young Canadians, almost 50 years ago, with Canada's first top-40 radio, and launched the first FM radio licence in Canada. We were early pioneers in the area of Canadian speciality services, including household names like MuchMusic and Bravo! We have revolutionized local television. While other conventional networks move towards national newscast, with CityTV in Toronto we saw an important niche in supporting local news and telling local stories, independently run by local news directors with a diversity that truly reflects our viewers. We have subsequently brought this intensely local approach to communities such as Windsor, London, Barrie, Ottawa, Vancouver and Victoria.

Our innovation continues today as we recently were granted the first over-the-air digital television licence in Canada. Quite simply, we like to go where more traditional media fear to tread. That is why promotion of Canadian artists, musicians and filmmakers are at the foundation of our services. That is why we focused on young Canadians, not just as consumers of advertising but as literate consumers of media. This is why we have championed cultural diversity to ensure that our stations truly reflect the changing face of the communities we serve.

As a ``pure play'' broadcaster with no affiliation to print, or distribution companies such as cable or telecom, we hope to offer a fresh point of view.

What are the issues and benefits that arise from consolidation? On a practical level, I cannot deny that we have faced difficulty in getting print coverage, especially in markets like Vancouver and Victoria. Frankly, we face far greater challenges from vertically integrated companies that include cable, satellite and telecommunication undertakings. We would argue that this area of cross-ownership has greater public policy implications — especially as the debate over foreign ownership moves forward.

The clear evidence is that there are more owners and sources of information — both domestically and internationally — than ever before. Let us take a city like Ottawa as an example. If you lived here 20 years ago, you would have had access to seven commercial radio stations, four CBC radio stations, a CBC television station in English and one in French, a CTV station, one French language TV affiliate, one daily newspaper, and one national newspaper. Today you now have 10 commercial radio stations, four CBC radio stations, a local CBC TV English and French, a local CTV station, a local CHUM station, a TVA and TQS affiliate, two local daily English newspapers and two national newspapers.

While there has been recent consolidation, particularly on the radio side, it is interesting to note that there are actually more media ownership groups playing in a mid-sized market like Ottawa than there were 20 years ago. This does not even begin to reflect the explosion of other media sources. On basic cable and satellite, you have access to two Canadian 24-hour a day news services, Newsworld and NewsNet, plus a wide range of U.S., services.

Then, of course, there is the Internet with tens of thousands of streamed radio stations and thousands of online pages of information and news services from around the world.

Numbers compiled as recently as last July show that almost 110,000 Canadian were habitual or daily readers of the New York Times online — nearly half the number of subscribers to the National Post.

We do believe that consolidation has brought benefits to the Canadian system. It allows us to compete in an increasingly fragmented market while providing the necessary economic model to create more local coverage, and help Canadian stories travel across the country and around the world.

Perhaps I can provide a few concrete examples of how we at CHUM are making this work. Here in Ottawa we operate four radio stations, including CFRA, an all-news radio station and the Team 1200, an all-sports news station as well as the NewRO, an intensely local television station. While the stations have separate editorial direction and separate newsrooms, they do collaborate in several ways, primarily, during our morning show on the NewRO where we get regular news updates from CFRA and sports update from the Team. Why is that a benefit? We also have the capacity to provide more in-depth coverage for special events such as elections.

For the record, we would like to note that our CHUM stations in Ontario all had independent coverage of the last provincial election that focused on each of their communities — unlike the networks who for the most part ran Toronto-centred shows with ten minute updates each hour from the local station.

While the main networks, including the CBC, rush to centralize newscasts in Toronto, Montreal and Vancouver, we are filling the vacuum with intensely locally focused news and current affairs in the communities we have been privileged to serve.

We have also forged important promotional and cross-programming synergies across our various channels to bring important stories to more Canadians. I could list several examples, but the one that springs to mind is a show on Aboriginal culture that is called The New Canoe, which was originally produced and still runs as a regional show out of our Victoria station — The New VI. The show is also seen nationally on Bravo!, providing a window on West Coast Aboriginal culture to Canadians from coast to coast.

I should like to offer a word of caution: In any attempt to deal with perceived editorial problems, let us not create barriers that would curtail our ability to collaborate cross-program and cross-promote across our services. One of the most important public policies — at least in broadcasting — and certainly our most important issue is the power to licence.

Mr. Charles Dalfen, the chair of the CRTC, gave testimony to this committee that over the last 10 years, the diversity of ownership and choice has risen. In fact, we at CHUM have been the beneficiaries of the CRTC's more liberalized approach to fostering more players in the system. This has allowed us find more niches in the world of speciality channels and it has helped CHUM be an intensely local voice in formerly network-dominated markets such as Ottawa, London, Windsor, Vancouver and Victoria.

We hope to make a similar contribution to local reflection in Alberta by the fall of next year, if the CRTC grants our applications for new CityTV-style local television stations in Calgary and Edmonton.

Again, this is an area in which we have bucked the establishment. There are those who scoffed when we, the makers of MuchMusic, proposed a new style art channel called Bravo! They asked what do the Barenaked Ladies and Aïda have in common? They both need a platform that will make their work accessible to a broad spectrum of Canadians — especially young Canadians.

The quest of engaging young Canadians is not easy. At one time advertisers shunned young Canadians in search of shows that would reach older and upper income earners. While many broadcasters now respond to advertisers' relatively newfound interest in our next generation, we at CHUM have always been passionate about connecting with young Canadians over the air, on screen and on-line.

MuchMusic.com is the number one web destination for young Canadians. The site averages over 7 million page views a month — approximately 600,000 unique visits per month. This is perhaps not surprising as these browsers largely represent a broad demographic of 12 to 34 year olds, and a core group between 15 and 24 years of age.

What is fascinating, however, is that many of these same young Canadians are also visiting our all-news site, Cable Pulse 24, CP24, with over 4 million page views per month, equalling 470,000 unique visits. They even visit Bravo!.com, which receives over 200,000 page views per month.

From our early roots of radio to today's on-line world, we have given many young Canadians a media home. You can imagine how shocked the traditional networks were in 1993 when MuchMusic won the prestigious Gemini award for best federal election coverage.

In that vein, we would like to spend a couple of minutes trying to paint a picture of the media landscape through the eyes of our next generation of decision-makers. A recent study by media research company ComQuest revealed some interesting numbers. Amongst adults aged 18 to 34, only 7 per cent consider newspapers the most influential media. That number falls to only 3 per cent — barely a margin of error — for teens aged 15 to 17. Also of interest, adults aged 18 to 34 spend on average 24 minutes a day reading newspapers, teens from 15 to 17 only spend 10 minutes a day.

Imagine the difference between a high school student 20 years ago and a high school student today. The student 20 years ago may have got most of his or her information from radio and television, and newspapers might be a second or third source of information. A student today is looking at multiple sources of information, many of which are not traditional media. In a small twist on an old philosophical question, if a publisher puts forward a national editorial perspective and increasingly no one is there to read it, does the perspective exist?

In reality, young Canadians today are facing almost unlimited media resources — fewer and fewer of which, on a relative basis, are Canadian. To us this means two things: First, the need to ensure that our youngest citizens are armed with critical thinking skills and become smart and sophisticated consumers of media; second, the increasing need to find a place for Canadian stories.

Ms. Sarah Crawford, Vice-President, Public Affairs, CHUM Ltd.: Raising the media literacy of young Canadians has always been a core believe at CHUM. We have supported media literacy or media education in communities across the country as a public service initiative for almost 20 years. We think it is important to encourage our young people to become active and not passive media consumers, and to have a heightened awareness of nature and role of the media.

We want to assist educators who teach students to think critically and analytically about the media: to assess and study what they see on the screen and not only what they read on the page.

We encourage media literacy in many ways. Notably through creating original programming made available commercial-free and free of charge to educators. Recently the Canadian Teachers Federation requested our MuchTalks: The Bully Factor program to use at their national conference on how to cope with bullying.

We also provide financial support to further academic research, teaching grants and sponsorship of conferences. Last year CHUM television, together with the London Public Library, were honoured with Industry Canada's ``LibraryNet Best Practices Award'' for innovative Canadian community partnerships promoting life-long learning. The award recognized the CHUM Media Literacy Centre — the first media community resource within a major public library in North America.

We must also mention that we are the first corporate sponsor to commit to a multi-year gold level sponsorship of Canada's world-renowned Media Awareness Network. You simply would not hand your kids the keys to the car without teaching them how to drive. We cannot send our kids in this multimedia world without giving them the tools to be discerning consumers of media.

Mr. Switzer: The real test of our media policy may not be seen for years to come. Will a high school student 20 years from now be able to discern a truly Canadian perspective on the world? Arguably, this goes to our very relevance as a nation.

Perhaps our greatest challenge going forward is our quest to ensure a place for our Canadian voice and identity, especially in English Canada, to develop, create and promote Canadian drama.

I speak of this not simply as the president of CHUM, but as someone who grew up in this business as a programmer. While some may propagate the notion that private broadcasters only see Canadian content as an obligation, I submit to you that any responsible programmer knows in his or her heart that the only way we will distinguish ourselves in a 500-channel universe is with a strong Canadian context strategy.

That is why we have asked our local station managers to intensify local coverage while the networks withdraw from local programming. That is why CHUM has been an aggressive investor, promoter, and exhibitor of Canadian feature film, providing significant investment in Canadian features such as the Red Violin and the critically acclaimed Bollywood Hollywood.

In my role as a member of the Executive Committee of Canadian Association Broadcasters, I was invited to give an address at the Fourth International Broadcasters Luncheon at the Banff Television Festival this past June. I will not reiterate that address as we have appended a copy for your reference today. In essence, we challenged both public policy-makers and the industry to find a new programming strategy that would engage Canadian audiences specifically in the area of drama.

Yes, we need to urge the government to reverse its decision and make the Canadian Television Fund, CTF, whole again.

However, there are several structural issues that we also must address. We need an improved system that allows programmers and creators to get on with the job of telling stories and breaks down silos that prohibit real collaboration between broadcasters and producers.

We need a system that provides all the incentives available to us to maximize private and public investment towards the goals of creating stories that Canadians will want to watch.

We need to construct a strategy that is not just for the CBC or the big networks but one that would allow all players in the system to maximize investment opportunities and create television drama and feature film that will attract widespread audiences.

The current CRTC drama review will go a long way to starting that process of a constructive dialogue and collaboration. However, the CRTC would be the first to admit it does not hold all the cards. If Canadian drama is a true public policy priority, this must be reflected in public funding decisions, both in terms of the amount of public money made available and the choice of instrument — the Canadian Television Fund, the CBC, or perhaps new tax credits, incentives for super Canadian production all must be considered.

Even if we quadrupled public funds available to Canadian drama, we still could not guarantee success — at least not in the same terms and manner as our neighbour to the south. To guarantee a Canadian drama hit, along the lines of a Canadian West Wing or Law and Order, we would have to spend on the order of well over a billion dollars a year — vastly more than all the profits of all the private broadcasters in Canada.

While we do our best to encourage hits, we must also unleash all our creative and business resources to build a sustainable improvement in viewing to Canadian drama. Today in English Canada, Canadian drama represents 10 per cent or 11 per cent of overall drama viewing, up from the 4 per cent to 6 per cent of a decade ago, but stagnant over the last half decade. Let us set the goal of achieving 15 per cent viewing to Canadian drama on English TV in five years, and implement the incentives and measures to make that happen. If we define our goal that way — viewing, not just volume; sustainability, not just the occasional success — we at CHUM can certainly play our part.

The more success we create with these shows, the less reliant we become on second-grade U.S. programming. The less reliant we become on U.S. programming, the more control we have over our own destiny. As I said in Banff, ``We cannot build a future where we surrender our living rooms and bedrooms to decisions made in the boardrooms of Madison Avenue and Hollywood.''

In closing, madam chair, honourable members of the committee, we believe that players like CHUM provide evidence of diversity in the Canadian media system. We sincerely hope that concerns over media concentration do not result in public policy interventions that could have negative, unintended consequences on other players that contribute to an otherwise and rich media culture in Canada.

Thank you again for your time, madam chair and honourable members. Of course, we would be pleased to take your questions.

Senator Graham: I remember very well when CHUM hit the scene. Some of you around here are not old enough to remember that 50 years ago. Indeed, I recall the new sound and the impact that it had. I became acquainted with some of the people involved.

In your annual report for 2002, you talked about focusing on multi-platform synergies. What are those synergies within CHUM and do you have any plans for getting into the print media?

Mr. Switzer: We have absolutely no plans whatsoever to get involved in the print business in any way. I can say that very clearly. That has been a consistent decision of this company and remains the position of our larger shareholder and of management.

We have chosen to specialize in areas where we believe we can make a contribution, where we can maintain a meaningful and relevant relationship with our listeners and viewers. We continue to operate primarily in three areas: in radio, in conventional television, and in speciality television. We have an increasing involvement and success in reaching clients over the Internet. We have no interest whatsoever in terms of newspapers.

As to multi-platform, we have historically run our company as two separate and occasionally competitive divisions — a radio and a television division. The references in our annual report last year were to acknowledge the changes that are going on in our company. These changes are constructive and timely. We were looking to some structural changes, primarily in the back offices, as well on the advertising and marketing side to better connect with and — frankly, not compete directly where radio sales reps, television and sales reps were occasionally going to the same client competing with each other.

We have great relationships with listeners and viewers across the country. Our goal is to figure out better ways as a company to monetize that.

Senator Graham: Does cross-media ownership by your competitors affect you at all?

Mr. Switzer: Yes, it does. We touched briefly this morning on small, important issues where in some markets our competitor in television also owns the only local daily newspaper. That is certainly a challenge, when it is hard to get coverage, get attention and get listings. In fact, sometimes have them accept our advertising. We do not raise it today as a major threat to our sustainability or our business. However, it is what we would consider a business irritant with which we have learned to deal.

Senator Graham: Ms. Crawford touched in her part of her presentation on literacy. Do you feel that broadcasting has a responsibility with respect to education in general and most particularly, since you do have a focus on young people, with respect to educating our young people? If so, apart from literacy, which is very important, do you have any other programs or initiatives in terms of educating our young Canadians?

Ms. Crawford: That is a great question and it is a big question. Media literacy — that is to raise the literacy of young people as concerns electronic media — ought to be a concern of all Canadians. Love it or hate it, whatever one's position is about the electronic media — I am talking about the electronic media on the screen — it is a highly ubiquitous part of our media world and especially the worlds of our young people.

When we talk about screen-based media, we are not only talking about television, we are talking about the computer and what is on the film screen. We believe that all of us should want to give our young people media literacy skills because these media are such a part of our world. It is part of how our young people will be engaged as citizens, how they will get their entertainment and information.

We encourage people in our schools to think critically and analytically about what is on the page. We must give them the same tools to think about what is on the screen.

Providing people with the skills to be more media literate will create better content creators within our system — we see it as part of an investment in talent development. We see it as just a basic literacy skill. We do a number of things in this regard. It has been a major public service at CHUM for almost 20 years.

I will mention a couple of specific initiatives and ways that we support media literacy just to give you an idea and of course we would be pleased to provide details if anybody would like it.

One of the main ways we support media literacy is by providing financial support. There are two media literacy organizations doing fantastic work in Canada. One is the Media Awareness Network. If you are not familiar with them, I urge you to visit their website. It is a model for media literacy and dissemination of information. It is a clearing house of all media literacy information in Canada. It is a sophisticated bilingual website and serves as a model for other countries around the world to emulate. CHUM is a sponsor at the highest level. We provided seed money when the Media Awareness Network was created by the NFB many years ago. It is a major organization that we continue to support.

Another one that we touched on earlier is the Media Literacy Centre through each of our local stations. In addition to the national support we provide as a company, we do community outreach initiatives in media education. We will fund the work of a local media education teacher, who is not paid to go into the community. I should mention that medial literacy is a mandated part of every level of the curriculum from K to 12 across Canada. However, teachers do not receive any training in media education at teachers college. They are not being taught how to use the screen or how to teach what is on the screen, so we are trying to step in as a private company and provide support in this area.

We provide teacher training in various communities. We provide consumer and community-based training for parents and students. The London Public Library is just one of the most recent ways that we have tried to expand this community outreach by providing a physical venue in this newly redesigned community centre for people to come.

Senator Graham: Would that be through CFPL?

Ms. Crawford: Yes, CFPL is our local station in London. They are very active in working with local educators to make sure the centre is vibrant. We have got some summer institutes that are in discussion now and we are planning on providing to the community.

It goes deep. It is a long-standing commitment. Corporately, we really believe in it. We do it above and beyond anything that is expected of us or required by us by a regulator. This is a big public service that we think is important and we are very committed to it.

Senator Graham: I suppose my question could be categorized under the general heading of editorial freedom. I do not know if you give that totally to your individual stations, your newscasters and, most particularly, I suppose your open-line radio hosts who have powerful instruments at their disposal in terms of the public airwaves to influence public opinion.

It is a question of balance. Do you insist on balance, or are local line hosts free to carry on and to express their opinions and to slant or sway public opinion one way or the other? Do you have any kind of system of checks and balances? Do you do any kind of monitoring that you do? What is the general policy in that respect?

Mr. Switzer: Senator, that is an excellent question. Balance of course is an absolutely, critically important principle by which we live. There is no national editorial policy; there is no national news director; and there is no national individual that guides. Every local manager led by the general manager and led by the program manager must ensure — in both our radio and our television station but we are talking about radio here — that there is balance, particularly in stations that rely heavily on talk. It is a watchword that we live by.

The checks and balances are of course responsibility to the viewers first. We pay attention to feedback, concerns and complaints. We have various internal mechanisms and structures that are in place to ensure those checks and balances work. There is also the Canadian Broadcast Standards Council, the CRTC and others.

However, it starts and is solely responsible and taken seriously at the station level by each manager and, yes, balance is part of the responsibility of operating radio. When you rely on talk, there will be controversy and that can sometimes create for very exciting radio; however, that does not take away from the responsibility of the station, the management, this company and the senior executives to ensure that balance exists.

Senator Graham: You do not exercise any central control in terms of checks or balances or a monitoring system? It is merely up to the local manager.

Mr. Switzer: We insist on reports on a timely basis of any concerns expressed by any listener in the community. We get these reports on a monthly basis informally and on a quarterly basis formally. Every single concern that might be raised by any listener across the country is taken extremely seriously. That ensures that we are not only doing what we think is right thing but that we are listening to our viewers and listeners in a timely way.

Senator Gustafson: You mentioned the fact that you were very concerned about unlicensed dishes. Coming from a rural area one of the problems one faces is to get media coverage equal to that in larger centres and so on.

I would like to hear your comments on that. Is this a major challenge for you or major threat?

Mr. Switzer: We think it is a very important issue for the strength of the overall Canadian broadcasting system. As you very well know the economics in media-market television — certainly small-market television as in some small market radio — is getting increasingly difficult. As satellite penetration grows, particularly in rural areas, north of 30 per cent, north of 40 per cent, I think in some communities in Canada, smaller communities in Canada it is north of 50 per cent, viewers begin to exercise their right to more choice that is available to them in the system.

No one is concerned with choice, competition or more voices. We are concerned when there is leakage to the system and viewers elect to steal signals and illegally chose foreign signals. We think that results — if you go down that path — in a weakening the Canadian system in terms of ensuring that there are strong Canadian voices that medium-size markets still are able to produce.

Senator Gustafson: Can I use the example of the football game between the Rough Riders and Regina, and you may not have heard they won. The only towns able to get the game were the larger towns where they had piped in TV. The small centres did not get any coverage at all. That was a real concern.

I believe Fox decided to go with the baseball finals in New York as opposed to carrying the broadcast. This raised the whole question of how we handle media in rural areas, especially in the north. I imagine it would be much more critical in the North than it is in Saskatchewan or Manitoba.

Mr. Switzer: It ties back to our point of the importance of a sovereign, independent strong Canadian system. We do not operate generally in the area of sports on television. We have three sports radio stations that are very successful. There are other issues that it is difficult and we see around the world the whole question of sports rights migrating from conventional television to various forms of pay television. That is another issue.

I certainly do not want to let my bias of being raised in Estevan alter my answer here or which sports team I want to be in favour of having temporarily been in Toronto for 20 some odd years.

If we do not have a strong, successful and profitable Canadian system, those decision as to which games play on which channel in which window will be made in the private sector to the benefit of viewers because it is not only the right thing to do locally, it is also good business. When we as an industry start making our decisions based on what the Americans are doing, or end up relying on the profits that we might earn from second-rate American shows because we need those monies to help pay for things that are not paying their way in the Canadian system, that is not in the best interests of the Canadian system. I think what you are seeing in terms of programming and regional abnormalities are a result of too much power in the hands of the Americans.

Senator Merchant: I want to talk about the radio portion of your business. That is where you began and where you have some good corporate history. Please appreciate that as members of this committee we are seeking your views rather than necessarily expressing ours. I am interested in your view as one of the boldest and traditionally more successful operators in Canada. CHUM in Toronto was the voice of rock. You were boss for decades.

How does the fact that you were a very successful top 40 radio station in Toronto make CHUM an appropriate choice for a talk format in Ottawa? Why would a successful operator in Saskatchewan — similar to yours in that they play rock music — be an appropriate choice to have a licence for a country and western station in Toronto?

I am concerned about the criteria that the CRTC use when they grant a broadcaster a licence. It seems to me that there is no connection to community or to the product and that the CRTC appears to give the licence based on whether you have a successful operation, rather than whether you have a connection to that particular community.

A licence is a very important thing for a broadcaster to get. It is a licence to make money. In this kind of a system where you need a licence to open a station, how does that benefit anybody but the broadcaster?

Mr. Switzer: Those are very important and very complicated questions. We will try to be as forthcoming as possible. However, I hope you appreciate that our answers have to be muted because we are and have just sat before the CRTC, in fact, asking for the privilege in radio of serving Edmonton with a new urban radio station in partnership with our friends at Mile Stone in Alberta where we operate and have operated television for almost 10 years with Access, the educational station in the Province of Alberta.

I will ask Mr. Miller to address the issues that we think are important and whether we are comfortable — if I understand your question — with the way the commission is it choosing licence winners.

I must respond, with respect, to your comment that a broadcasting license is a licence to print money. It is a privilege to serve Canadians in markets where we are fortunate enough to win licences. As a company in radio and television, we have been very fortunate in the past 20 years. We have certainly not won all or nearly everything we have wanted to do but it is a business, yes, but it also comes with great responsibility.

I believe that the best broadcasters in Canada wake up in the morning knowing that they must do both. They cannot serve listeners unless they have a business. However, they must also remember — even in the private sector — that a broadcasting is leasing public airwaves and with that right and that business opportunity comes a responsibility. I do not just say that as words. That is how we operate. That is why we put the connections and encourage the passion and operate our system in a decentralized way.

In Toronto, we are not in the best position to decide what is best for listeners in Ottawa or Winnipeg or in Kitchener or Windsor. The local men and women that run those stations are. We have been privileged in the past to win many new licences — not as much in radio — and we still have great faith in the integrity of the system, in the structure and choices that we must make.

Where we see an opportunity — as we did in Edmonton — where there is clearly an unmet need, particularly in urban music, and an expertise and partnership that we thought fit the bill, we always respond in ways where we think we can make the best contribution to listeners. I am not sure it would be appropriate or courteous of us to comment about some of our competitors in other markets and whether they are worthy or not, and whether we think they should have won that privilege or not.

Mr. Miller, do you want to add something here?

Mr. Peter Miller, Vice-President, Planning and Regulatory Affairs, CHUM Ltd.: I would add that the CRTC has, in its many decades of history, developed a very comprehensive, open, public competitive process to decide who should receive the privilege. As you point out, it is a privilege to win a broadcast licence.

They examine everything from diversity — that is, ownership diversity — diversity of community in question — factors such the track record of the broadcasters and their financial viability. There is generally a panel of five commissioners, who generally represent the region and the rest of the country so that there is as balanced a decision- making process as possible.

On the whole, — I think Mr. Dalfen said when this when he appeared you — the system works because of the five or six interested parties in a proceeding, perhaps only the winner is only partially happy, because even the winners may find themselves under conditions with which they are note entirely happy. It is not a perfect system but it is the best one under the circumstances.

I would also mention that after a licence is issued and there are changes in ownership, there are different criteria. Those are not a competing process by nature of the business reality that one acquires a piece of property, even if it is a broadcast licence, it is hard to do that in a competitive manner. In that process, the commission looks to ensure that there are significant benefits to a transaction and they will look at various other factors.

On the whole, we have developed a system that works quite well in Canada. The system balances the public interest with the necessity and needs of a competitive market to try and arrive at good public service. As we alluded to in our speech, some would say that the runners of MuchMusic would have been inappropriate operator of an arts channel. I would like to think that we proved those critics wrong and in operating our talk stations and talk shows have also demonstrated that we can reflect the needs of our audiences and have successful businesses at the same time.

Senator Merchant: This is a very unique situation with broadcasting. You talk about competition. The CRTC makes it known to the broadcaster that they want to open a country and western station in Toronto. Somebody from Regina or Vancouver makes an application to operate a station there.

In any other business — let us for instance say that Birks who have a certain kind of upper end of the jewellery business wanted to come to Moose Jaw where we have a very small operation of people that make costume jewellery. Imagine if a licence were to be granted to somebody to make costume jewellery and Birks swooped in and, because of their record as a reputable merchant, set up a business in Moose Jaw. How is that good for that small community to get a big giant coming in and setting up business there because you need a licence. It is different if they want to just open up and compete.

Mr. Switzer: I think I understand your question a little more. We believe that the passion, the integrity and the true decision-making at the local level, not to mention the skills and the science and the art of reaching listeners at the local level are far more important criteria than the size of the company or the location of the head office.

We have seen many situations east to west, west to east; east in the east and west in the west where there have been not very successful situations where local owners have not done a very good job serving locally. There are great examples where officially distant owners have empowered local managers in a real way with great passion, art, and love to do a great job locally.

The quality, integrity, and artfulness of the service locally is much more important than whether the company is from Regina or Vancouver or Montreal. That will be the determining factor as to whether that station will be successful or not. In an increasingly competitive world, the listeners will actually decide because these days, a licence does not guarantee success.

Senator Day: I have just quickly reviewed the material that was appended to your brief — this is the copy of your remarks at the Banff Television Festival in June. I will look at it in more detail.

However, it seems to be focused on tax incentives and a number of your recommendations, which will take us a little bit of time to focus on, but it was nice you were able to provide that to us.

I would like clarification on one item that flows from a question that was asked by Senator Graham. When you were talking about concentration, you indicated that you had some difficulty getting attention in the print media, but that you could live with that. You indicated that today there are more channels, television, radio than there were 20 years ago. The implication is that the concentration of ownership in one area of the media is not that serious a problem. In fact, the choices are even greater for the public now than they were in the past.

You indicate in your remarks here that we face a far greater challenge with vertically integrated companies that include cable, satellite, and telecommunications undertakings. Would you elaborate a little bit on that and explain why you consider that could be a far greater challenge? Is it a commercial or public policy challenge that you think we should be involved with?

Mr. Switzer: I am sure you will understand we will try to choose our words carefully because our business is to a great extent on the television side reliant upon our relationships with the largest distributors in Canada, broadcast distribution undertakings, BDUs, satellite operators and so on. Although we tend to think of our relationship with viewers as direct, actually a very small percentage of tuning comes from over the airwaves. Far in excess of 90 per cent of our tuning — certainly in the larger markets — comes via cable or satellite. Our relationships with these distributors are important and they are very generally very positive.

However, we are aware of their own very evident and visible conflicts and they have generally been careful to respect the conditions of licence and some of the structures that the CRTC has put in place to protect unaffiliated channel producers such as ourselves so we are not disadvantaged. For the most part, it is working and we are pleased.

There is a constant reality that when you have a large company like Shaw, which is perhaps structurally separate from their programming company, Corus, but still has the same common owner, it is frustrating to realize that they will and have — for their own business reasons — favour their own channels more than others in terms of marketing materials and channel placements and the way the customers service reps refer to the channels, channel position and so on.

These are not issues of breaking any conditions that the commission has set but these carefully constructed fences and rules are very important to our system, and we are always cautious and, frankly, vulnerable to those self-interests. We must be vigilant. I think it is not only for our own selfish business reasons but for the strength of the system and diversity of choices and the ability for channels to reach viewers in a way that are not just their own channels.

Senator Day: Would the Canadian public, in your view, be better served if there were some public policy decisions and, therefore, some regulations that prevented this vertical type of integration?

Before you answer, I want you to reflect on your next to your last paragraph, your multipoint paragraph as we sometimes call it. You say:

We sincerely hope that concerns over media concentration do not result in public policy interventions that could have negative unintended consequences on other players...

There is a public concern — and we are trying to determine whether it is well founded — as to whether vertical integration or cross-media ownership is a bad thing or a good thing from the point of view of the public's right to have a variety of choices.

Mr. Switzer: I have two comments. One has to do with our concern that in the news gathering area, any changes that might be made because of concerns elsewhere in the system with other players might prohibit us from the mechanical side of news gathering — of having some our stations occasionally work together. As you know, probably more than any other player we have the most decentralized, local separate empowered newsrooms across the country.

We would have concerns if there were large, broad changes in this area that might affect the economics of the news gathering part of it. Certainly, we have no concerns and will always maintain separate editorial and news voices.

Senator Day: That is from a policy point of view.

Mr. Switzer: That is from a policy point of view, and not knowing what direction this committee and others may go. That would be one concern.

As to vertical integration, our concern is more about American dominance. Should the foreign ownership rules change and if they change — and we are not necessarily in favour of them changing — we would certainly not want to see those rules apply to the programming side of the business — that is, the broadcasting side of the business should be treated in a separate and distinct and special way.

While we acknowledge the important of creating larger business units for economic strength, expertise, and critical mass, if a much larger American giant, which might be 10 or 50 times larger were to be able to have interests in or control Canadian broadcast concerns, that would be a serious threat. We think that would not be in the best interests of the Canadian broadcasting system.

We have been able to work and live with and have good relationships with the Bell Globe Media and ExpressVu and the Rogers family and, to some extent, the Shaw family of companies and work within that environment. The checks and balances are working. If a large American giant were allowed to own Corus or its equivalent — I say that metaphorically — the potential and economic power would be crushing to us and to the systems.

Senator Day: My final question relates to your statement here that Canadian Television Fund is necessary in order to produce Canadian content and that Canadian content is important. Will there never be a time when the free commercial market will achieve these objectives? We share your objectives that it is important to help Canadians know themselves and to have Canadian content. We recognize that.

In your submission, you have suggested in the short term that it is never going to be a viable, commercial undertaking.

Mr. Switzer: Well, we live for that day. We share that desire and that dream. Our thoughts in this area echo some of those expressed by Trina McQueen in her report a few months ago. She said that it has to make better sense. If private broadcasters are able to harness the potential power and improve in this area, we as an industry together with producers have to break down our history of differences and come together to find new ways of making better shows that reach more viewers that are also better business. Therefore, in the long term there can be less reliance on an CTF or its equivalent.

In the short term — five years — it is too important a part of the mix to get us as an industry — the entire Canadian broadcasting industry: producers and private and public sector — stronger with Canadian stories, with our viewers, so that as the choices around the world and the international walls eventually come down, Canadian stories will have a chance. We believe in the next five years, a strong CTF is important to continue to prime the pump and get things going in a better way.

Senator Day: A strong CTF being a strong Canadian Television Fund which is public money made available to producers to produce Canadian-content programs, is that correct?

Mr. Switzer: We are suggesting that we have to fix what goes on behind the scenes in terms of the relationship between broadcasters, producers and the CBC. However, we believe that the CTF will be very important in the next few years.

Mr. Miller: As a result of our proximity to the U.S. and the fact that all Canadians believe they have a benign right to view all U.S. programming along with Canadian programming, not to mention the popularity of prime time U.S. dramas and the economics of those dramas and how much money the U.S. market place can put to them, we have a real dilemma in Canada. To compete head-on with the U.S. producers in terms of budgets and types of programming will require phenomenal resources. We believe we have to wage as much as we can in this battle, but it is a battle that is very difficult to win.

This is why players like CHUM can make a difference. Ultimately, if we are going to succeed in getting more Canadian viewers to watch more Canadian drama, we are going to have to do things differently. We are going to have to have dramas that are different and compelling, but it is going to have to be a different model. The nature of the programming and production business is such that there are no guaranteed hits. You have to bring all your creative and financial resources to bear to try and do things differently.

We believe that with some new incentives and collaboration within the system and with sufficient resources, we can start making a difference. That is a goal that we at CHUM are very happy to step up to. We have had historic strong success in feature film. We want to bring that same track record and success to serious drama. We are all in the industry cautiously optimistic.

Senator Corbin: I am impressed with your careers and qualifications. What are CHUM shares trading at these days?

Mr. Switzer: Senator Corbin, it is not something we actually look at every day, but I understand they are at about $52 or $53.

Senator Corbin: I have an information sheet here that was provided by research services. Under the heading ``television,'' there is an item that says, ``15 digital services not yet launched (ownership detail not yet published).'' Could you tell us more about that?

Mr. Switzer: Several years ago we, as did many other Canadian broadcasters, ago applied for many digital channels not knowing which way the landscape would change.

Senator Corbin: You were just positioning yourself?

Mr. Switzer: One was an application in an area that was important to us that was a natural extension of businesses we do. For example, in Toronto, we operate a cable news channel called CP 24. That is not a diginet; that is an existing channel today. In the application process for diginets we applied for other local news cable channels in Vancouver, Ottawa and other areas in which we operate so that in the future, should the economics and relationship with the BDU provide an opportunity to launch a local cable news network in one of these regions, we would have the licence to do so. It is the same in the area of music. Obviously, the music genre is very important to us; we operate in English and French, MuchMusic, MuchMoreMusic, MusiMax, MusiquePlus.

We knew we wanted to expand our range in the music area and we applied for many sub-genres in music and we have launched several of them. Of the many channels for which we applied — each of them in areas that were important to us and have natural extension of one of our areas of expertise — we have launched to date eight of our diginets: five from our Toronto facility and three from our Edmonton facility. Another dozen or so have not been launched but we will be happy to provide you with those details.

Senator Corbin: I would like to go to Ms. Crawford. I see that in your biographical information, there is a note that you are a board member of the Jesuit Communication Project.

Would you please tell me what that is all about? What are you doing with that gang?

Ms. Crawford: I would be delighted to. The Jesuit Communication Project is about to celebrate its 20th year of operation in Canada. It is run by a world-renowned media education scholar, Father John Pungente, who is a Jesuit priest. He was asked by the Vatican years ago to study the media all over the world to find out whether or not the Catholic church needed to be concerned about what was happening in the media; to look at issues of ethics of the media; and to examine how the media is affecting our young people and so on.

Father John made it his business to start a media education resource and scholarly pursuit based in Toronto called the Jesuit Communication Project. It is a non-profit organization with a mission to promote the importance of media education, to get into the field as a teacher and spread the word about how a teacher should be teaching media education and use any means necessary — including the media itself.

Seven years ago, he approached us with an interesting proposal to partner with a movie company that was also concerned about media education. We did a show that was aired on Bravo!, our national arts channel, that was the first of its kind to take a look at contemporary film and ask kids to think critically and analytically about a film. A film such as like The Matrix is launched and he creates a half-hour program, using footage from the company to dig deeper and look through a specific lens. In some episodes it is through the lens of ethics, in some it examines how music can reinforce and tell a story and affect the image that you see on the screen and change a person's understanding of what is being said.

There are teacher lesson plans created by a media education expert who is working at the Toronto School Board. Those are available free of charge to any educator across Canadian who wants to use them. The program airs in two telecasts. One is a commercial telecast on Bravo! that has a commercial break in it in prime time the second Friday of every month. The other telecast, which is well publicized in the educational community, airs in the early morning and is commercial free. This is what we could with all of our media education shows and some of our social issue shows as well on a variety of networks. Teachers are able to tape the show to use it in their classrooms commercial free. Father John does a lot of important work and CHUM is proud to be a sponsor. We give him a grant to continue and further his work and I am proud to sit on his board.

Senator Corbin: I congratulate you for your dedication. I now have a tough question. Why are you engaged in SexTV?

Mr. Switzer: It is a show we are very proud of, senator. It began as a weekly half-hour magazine show produced by some of the smartest and brightest producers, storytellers and intellectuals in that field. It is a half-hour program that has expanded to an entire channel.

The mission of the show is to explore human nature, relationships, and sexuality in an engaging, thoughtful, intelligent and occasionally provocative way. It is a show produced along the lines of MediaTelevision, which explores, in the same analytical way the word of persuasion and advertising, along the same way we produce a fashion or music program. It has been and is extremely popular; it generates lots of viewer attention. As a channel every night at ten o'clock eastern, that program, along with other world-class magazine documentary programs about human sexuality and relationships from Australia, England and everywhere else, play on that channel. It is one of our calling cards and a show we are very proud of.

Senator Corbin: What safeguards or philosophy have you put in place to prevent that kind of thing of just becoming voyeurism? Could you respond to that?

Mr. Switzer: We produce the show in-house. It is a Canadian show with a Canadian perspective that travels the world. I am speaking of the television show, which is the foundation for the channel.

The same protections and checks and balances and systems that are in place for all of our shows apply to that show. There has been no unusual situation. In supervising the show, we demonstrate discipline in demonstrating that this show's content, balance and relevance meets all of the applicable codes — both our internal codes and external codes — that would be applicable to any newscast or any music program we produce.

Senator Corbin: I am quoting from a National Post article of December 2, 2002 printed in the Financial Post news section. Under the by-line of Matthew Fraser, there is reference in there to possibly CHUM being taken over by CanWest Global, Rogers Communication, and Torstar. The last sentence reads, ``We will now see whether Jay Switzer, working with the second generation of Waters on this board, will take CHUM in a new direction.'' The previous sentence reads, ``Allan Waters, stubbornly impervious to blandishments, has rebuffed all offers.''

The Chairman: The suggestion is the Canadian media giants covet CHUM's assets.

Senator Corbin: I will re-read that sentence:

It is no secret, meanwhile, that Canadian media giants CanWest Global, Rogers Communications Inc. and Torstar Corp. covet CHUM's assets, but Allan Waters, stubbornly impervious to blandishments, has rebuffed all offers.

This committee is looking after all that media concentration and I would like to elicit some kind of response to your position, please.

Mr. Switzer: As humble managers it would not be right for us to speak on behalf of our larger shareholders, the Waters family. Certainly, I can recap what has happened in the position of the company and management. Of course Matthew Fraser is a long- time watcher of the media, speculator of CHUM. He is now running the National Post and that is part of the CanWest Empire, so with deference to Mr. Fraser one always have to take everything he says with a little grain of salt.

We have been broadcasters in Canada for almost 50 years. We have been a publicly traded company since 1967. Approximately one year ago, that same month of December 2002, Allan Waters chose to step down. The family made a conscious and visible decision to hand the reins of running the company effectively from the family to professional managers.

We are here representing management. The family and the board of directors made a long-term commitment to us and for us to build this great company. We have done an awful lot in the first nine months. I can only speculate personally if there was any desire by the family to sell anything, we would have scene that 5 or 10 or 15 years ago. This is a family passionate about broadcasting. There are two sons very involved. Jim Waters, the chair of CHUM Limited and Ron Waters, the vice-chair are both young men who are very active in the business. They care passionately about television and radio and have been very supportive and nearby management as we have in the past year done amazing things.

We have grown in radio and in television. We continue to improve our business. It is the most exciting time this company has seen. I believe that we are now large enough, if I may speak in commercial terms — and this is a personal belief — that we have a critical mass that provides us with a sustainable base to grow further and continue to do the great service we do to our listeners and viewers across Canada.

Senator Corbin: Is the mass critical enough to allow you to become predators?

Mr. Switzer: We are here to serve our listeners and viewers every day.

Senator Johnson: I am thrilled that you are a programmer at heart because it is the stories that make everything last in this industry. I do a small film festival in Gimli, Manitoba so I am always looking for film. I know you have received an award from Women in Film and Television and I congratulate you on that. I know a lot of women in the industry and you are very well regarded.

Can you tell me if you have any plans at this time to expand into the film, other than supporting some of the ones such as Red Violin and Bollywood Hollywood?

Mr. Switzer: Support of Canadian feature film has been a long-standing part, a very important platform of CHUM for perhaps 20 years. Although the films you just mentioned are getting a lot of attention, we have consistently and consciously supported Canadian film in terms of development, financing, pre-licensing, and promotion for more than 20 years. We have been an important part of the financing of more than a 150 Canadian feature films in the past 10 years and they have literally been from coast to coast.

Other broadcasters for their own reasons have followed the traditional tenets of commercial television that would suggest that the business is built on successful series. We believe our role, as a mid-size player — growing to be a larger player — is to continue to fill the void in Canadian feature film. The CBC does it, a small part, a few others do.

It has been a priority for us and we proudly think of ourselves as market leader in terms of risk taking, development, work with first-time directors, working with particular directors, writers, and producers from various specific communities and from coast to coast it has been a priority for us.

It involves millions of dollars in development — Tens of millions of dollars of pre-licensing, from very small digital hand-held films up to very large feature films. It is the glue that binds many of our television channels and it is certainly not without its risks. As we have been privileged to grow, one of the advantages to both the system and to our viewers is that we have been able to quick start and finance more films into the system.

Senator Johnson: You are cutting-edge. You have always been very trendy. MuchMusic is one of my favourite shows. I know about New Canoe.

I am curious how is Craig Media affecting your channel in Toronto with their Toronto 1? Has it any effect on CHUM's CityTV? It was a decision that was rather controversial and now I see they are getting together with Torstar, am I right?

Mr. Switzer: They apparently have a small marketing and promotional relationship with the Toronto Star. We understand it is not more than that. We continue to maintain a very good relationship with the Toronto Sun, with Quebecor Sun Media and with the Toronto Star — Mr. Pritchard and his gang in the Toronto market.

Drew Craig is a friend of ours. Our relationship, while there have been some battles in the past couple of years has remained friendly and constructive, although at times very competitive. They are very clearly having a difficult time in Toronto. If I were to fully answer your question, I would say they have affected us on the cost side a little bit with the additional choices in the market — not just them but the Rogers Omni people. Prices have gone up a little bit for talent, programs and so on but we expected it and we can live with it.

On the revenue side, no, they have not made, in their first year, any material impact on us. There are many players in the Toronto market and the Craig's are one of several smaller players in Toronto generating about a one share.

It is an issue and we are watching it very carefully. We know that it will grow in years to come, but they are clearly having a difficult first year. Our Toronto business for our Toronto flagship CityTV is stronger than ever. We are having our best year ever.

Senator Johnson: I was curious to know about that. I am from Manitoba. I have known the Craig's for 20-odd years and watched their work and what they have been doing.

Was that any incentive for to you approach the CRTC regarding Edmonton and expanding into the west? Did that have any influence on your decision?

Mr. Switzer: No.

Senator Johnson: I know you are in the west now.

Mr. Switzer: We have been operators of a very innovative family of services out of Edmonton. Over the past 7 years, our team in Edmonton worked to build Access and that led to the national Canadian Learning Channel, which we chose to operate out of our education unit in Edmonton. That, in turn, lead to Daniel Richler's Book Television, an extraordinary channel that we chose to base in Edmonton because of the commonality in terms of programming.

We have been operating in Alberta for a long time. I think our work on our Alberta applications began four years ago perhaps — long before we had any wind of Craig's in Ontario. It is clearly a very robust, dynamic, and buoyant market. There are exciting things happening.

Frankly, we do not think local television in Edmonton and Calgary today reflects the diversity that exists in those cities. We think we have something to offer. That analysis and homework began many years ago.

Senator Johnson: You can come to Winnipeg. I would love to talk all day, an incredibly interesting field. You have done an amazing job. I think your network has been outstanding in terms of its leadership in so many areas, especially very hip and trendy.

I will just one conclude with one question to you. Are you poised to build a fourth national TV network? It has been written that you are and could be in the future.

Mr. Switzer: Senator, we are anxious to grow.

Senator Johnson: Maybe you are already. I am talking about the major three are, Rogers, Torstar and CanWest. Where do you see yourself in the future in terms of this league?

Mr. Switzer: We operate in three areas, and our competitive group and our peers in radio are different than they are in speciality and different than they are in conventional television. In conventional television, we are often compared as a mid-size or small player with regional, intensely local television stations to the much larger CanWest and CTV who are operating national services.

We believe that there is a void, a challenge, and a growing shortage of service at the local level in many markets in Canada. For their own business reasons, CanWest and CTV, and CBC have had to pull out of local service across the country. We see that as a creative and programming opportunity as well as a business opportunity. We would like to be able to create and build and launch more local stations that would have some connection but clearly be intensely local.

Senator Johnson: That is where there is a need. Thank you for your answers.

The Chairman: As a former journalist, I was very interested by your stress on providing local news and information. All politics is local; all news is local in a sense. One combines that of course with your extraordinary expertise in youth markets.

I wonder if you could provide for us some indication of the amount of air time you devote to news — both in radio and in TV. You received a Gemini for MuchMusic's the election coverage. That must have been one of the sweetest moments of your lives but it is not what one thinks of as the prime mission of MuchMusic.

Could you give us some indication where news comes in terms of air time and all that?

Mr. Switzer: I will be as specific as I can. Clearly on radio, it is different with the stations that are music based versus the stations that are talk based. In Ottawa, for example, CFRA would be very heavy on news; effectively it is talk all the time. Our BOB music station here would have very little news. That kind of parallel would cover across the country.

In television, we operate in both conventional and in speciality. The forte, the mandate, the strength — the very heart and soul — the engine of every local station is its news operation. Primarily we are there to serve local viewers with local stories first. If they want to see international stories and national stories, they have lots of other choices. That does not mean we would not cover it, but generally as a matter of policy put local stories first and then national stories and then international stories.

We have what we consider flagship newscasts in almost every market we serve seven days a week, early in the evening, late in the evening. n most markets, there is also a noon newscast and in most markets, there is also a strong local morning show that is generally built off of very strong news. That can amount to 15 to 20 hours of news in medium-size markets; it could be 25 hours or more, in larger markets as little as 10 or 12 hours in smaller markets.

In our world of speciality television, we only have one local news channel which is clearly 100 per cent news. That is our local cable news channel in Southern Ontario. That does not mean we are not paying attention to the information needs of viewers with our speciality channels but that may differ. We have an arts news program on Bravo! We have a science fiction news program on our space channel and in MuchMusic, we provide news. Each of these programs is appropriate to the needs of those particular viewers and each in the context that best services it.

We do not have a national news director; we do not have a national information policy. Every single news department, news director, news producer is serving their own viewers or listeners in whatever is appropriate to that genre and that channel.

The Chairman: Could you please send us some program grids? Would you also let us know how many journalists you have and where they are located?

Mr. Switzer: We would be happy to provide that information. It is clearly in the many hundreds and we will give you what detail we can.

The Chairman: That would be terrific. We are the ones who have to cope with the avalanche of information but it is always better to have too much than too little.

In respect of the young, clearly there cannot be many people in the country thinking about and working with young people more than you would in this field. How does your fabulous dedication to local news affect the youth market? Do young people pay attention to that local news or is it your older viewers and listeners who tune in for the news? How does it work?

I really liked your line about high school student 20 years from now getting a Canadian view of the world. From where you sit how is it working and what is going to happen?

Mr. Switzer: I am speaking now of conventional television, which is perhaps a framework with which we can begin. Generally in every market we operate, we tend to serve and build a special relationship with the younger viewers. Now, this is a question of degree because news viewers are generally much older than the average — well, whatever index you use to work towards.

The Chairman: Usually not 15.

Mr. Switzer: No. We are always trying to balance having a broad enough audience base to have a meaningful connection. Our conventional television stations are not niche broadcasters; we still have an obligation and a desire to serve a broad base. In many markets, those viewers have other choices. Therefore, we are not trying to emulate what a traditional CTV or CBC newscast is. It is probably older than many people think.

If 15 to 25-year-olds are watching news on television, they are mostly watching us. However, unfortunately not enough of them are watching news on television. We want to be their station of choice and clearly, we are winning with 25 to 35-year-olds.

I must add for us, it is not just a demographic breakdown. We have talked a lot today about demographics. We tend to plan our newscasts and run our businesses framing our success and failure around psycho-graphic breakdowns. We must deal with demographics to defend our business with advertisers. That is the metric that they use. Whether you are 65 or 16, if you live your life like a 30-year-old, that is the viewer that we are trying to get and we have great success with that.

I could give you a few examples. I think in Toronto our average or median news viewer is 7 years younger than that of CanWest and 12 years younger than that oaf CBC. I do not remember the exact number but the last study or reference I looked at was perhaps two years ago. However, it is still older than you might think.

There is a propensity and desire to keep it younger and be their connection of choice. However, but we are not talking about teenagers here in terms of most of our viewers.

The Chairman: You are talking proportionately more 22 year olds than some other people in various media have been able to attract.

What works? How do you get younger audiences to pay attention to news?

Mr. Switzer: There are a hundred things. I would argue that it has to do with the integrity of your relationship with them. Today's young viewer is extremely sophisticated. They have a nose that can smell any kind of artificiality a hundred metres away. Your relationship with them has to be basically in their own language, with respect to them, produced by young people for young people in a way that has honesty and connection and is not designed or shaped by outside advisers and consultants.

If our model of television — which is more democratic, storefront, accessible, interactive, community-based, and reflective of the diversity of those communities — is doing its job right, it will connect with viewers and mostly the viewers that feel disenfranchised are those younger viewers who, for whatever reason, are not satisfied by the traditional network choice. They self-select into our environment. If we are doing a true reflection of that community, we will reach them. If we try to over research, over produce it, make it artificial, or try to guess what they want to hear, that is not with a way to legitimately reach younger viewers.

By following those rules of practice in terms of our integrity and connection with viewers in an honest way, the mirror that we put up to the community in Victoria is working in the same way that the mirror that we put up to the community in Ottawa is working.

The Chairman: As the viewers age, do they then tend to consume more news and information? Alternatively, do you have to get them at 20 or not get them at all, do they just tune out of the news world?

Mr. Switzer: I do not have the precise answer to that. In general, they tend to watch more. They do watch more as their life changes. I am not suggesting causality. I am implying correlation. It could be perhaps of marriage, children and jobs and different lifestyle, they tend to watch more news and listen to more radio.

There is a similar challenge in radio with young listeners today — it is not with just CHUM, it is an industry-wide problem. We are convinced their usage will rise and that is a good thing as they get into their older-younger years. It is a case of building a relationship that is built on respect and innovation and excellence and never abusing it. We can never sell out or take advantage of that relationship. If we stick to this, they will stay through with us for many decades.

Yes, perhaps when they want a little more Celine Dion and a little less ACDC, they will move from MuchMusic to MuchMoreMusic. We hope to provide channels that they will watch all their lives.

Ms. Crawford: The issue is one of relevancy. It is interesting to ponder how we can keep youth engaged in news but the big issue for all broadcasters is really how to keep youth engaged at all. It comes down to relevancy.

A quick anecdote about the MuchMusic Gemini; we did not win it because our election coverage competed successfully on the level of the people that we beat out — the CTVs and CBCs. That is why at first glance it seemed absurd.

We won it because our approach was specifically relevant to youth and nobody else was doing it. We did not try to have the most professional journalists in the field. We did not try to cover the topics in the way other networks did or compete head-to-head. We took a completely different approach and tried to engage younger viewers by covering only issues that they cared about in a style that would engage them with music that would also engage them. It was the way we did it that speaks to your question I think.

Senator Graham: Do you have any problem with the CBC being publicly funded or having a publicly funded broadcaster in the country?

Mr. Switzer: No. We are big supporters and big believers of a strong, vibrant CBC. We think it is important they find their path to a more relevant, meaningful relationship with Canadians.

In the commercial world, we are challenged by competing against them occasionally with public monies, particularly in the area of feature films but we will get through that. That is a smaller issue.

Senator Graham: How is your comparatively new venture into the team sports — the all-sports radio. How is that going?

Mr. Switzer: We have today three team sport stations.

Senator Graham: Here? In Toronto?

Mr. Switzer: They are in Ottawa, Montreal and Vancouver. We have learned that really successful sports radio works best when done locally, passionately reflecting the desires of local listeners. We consider all three stations quite successful and we are no longer doing anything on a national basis.

Senator Graham: My last questions deals with the CRTC and the Competition Bureau. The CRTC denied approval of an attempt to purchase some French radio stations in Quebec. They expressed concerns about concentration and cross-media ownership. Some have suggested that is really a turf war between the CRTC and the Competition Bureau with respect to which entity should have jurisdiction over mergers and acquisitions in broadcasting.

Do you have any views of that, or do you feel either the CRTC or the Competition Bureau should have sole jurisdiction?

Mr. Switzer: I am sure that Mr. Miller will have much more carefully chosen words, but as a manager operating, trying to do service to viewers and listeners, it is certainly frustrating trying to meet the qualifications and needs of two occasionally competing regulators. It is not necessarily efficient or constructive to the process.

Yes, there is a huge level of frustration. It has not affected us yet to date. It may in the future. As a manager, I know there are larger Canadian issues here.

Mr. Miller: From an industry perspective, certainly we would prefer having only one body. That would be the CRTC. That being said, we understand and respect there are public policy reasons why it may make sense to have two institutions. I would note that, given her history with and knowledge of the CRTC, the recent appointment of Sheridan Scott to the Competition Bureau will probably ensure that relationship becomes a little less conflicted than it has in the last four years.

Senator Graham: You see this as a positive step?

Mr. Miller: Yes.

Senator Day: In respect of your operations on the Internet, are you there because you need to be there, or because you do not know where it is going, or are you there because this is a good business venture for you?

Mr. Switzer: We have been there since the very beginning. We were the first Canadian broadcaster to reach viewers that way dating back to November of 1994. We are one of the few broadcasters to have had a profitable Internet division, consistently for the last five years. I think it has to do with the way we treat it.

We are in the entertainment, information and storytelling business. We try not to be prejudiced against how our viewers connect with us. Some may connect with us watching a linear story of Fashion Television over the airwaves; some may watch via twisted copper on a phone system somewhere; some may watch on a DVD; some may watch a non-linear version of that Fashion Television story with producer's notes on their computer screen very far away.

If we are interested in telling those Canadian stories and connecting with Canadians, we want to reach them in every way possible. We have treated our storytelling in that way and not treated the Internet as simply some kind promotional thing to support some other medium that is more important. I think that has been some of our success.

Senator Day: Are you moving toward a subscription base on the Internet or still look for advertising revenue through banners?

Mr. Switzer: In Canada, our Internet business has been advertising supported and it has been quite successful because we are producing so much Canadian content. Frankly, there is a shortage of really strong content in movies and music and fashion and so on around the world, so we are building a business that is syndicating that content to other digital gatekeepers who are looking for content. That is a small but growing part of our business.

On the linear storytelling side, we are participating in transactional revenue on a pay-per-view or video-on-demand basis. If you return from a holiday and you have missed your favourite episode of Fashion Television and you were a Roger's digital client in Toronto, you could purchase that program for 99 cents or $1.99 and watch it on demand at your convenience. That is a very small part of our business today but we think going to be a growing part of our business in the future.

Senator Day: Is your policy on editorial independence of the various entities across the country the result of a policy decision you have made that is important from the point of view of the public? Is this the result of your decision to emphasize local broadcasting it would not be natural to have a cross-Canada policy?

Mr. Switzer: There has been no change. This is a natural reflection of the way we have practiced our broadcasting in radio and TV for the past 40 years. Anything else would be unnatural.

Senator Day: You do know there are some companies that own several entities in the media where they have gone to a national editorial policy and that is, we are told, for efficiency reasons.

Mr. Switzer: It is perhaps not appropriate for me to speak to what they are doing. We are certainly interested in the mechanics of the back office and saving a little bit of money where we can. However, from an editorial policy point of view, we are as likely to take opposing stands on an issue in Victoria, London, Ottawa, and Toronto as we are — and I will find out about it after the fact.

Senator Day: This is a self-imposed policy as opposed to regulated policy.

Mr. Switzer: Correct. It has been consistent and unchanged for our entire company's life.

The Chairman: We talked earlier about ownership of the company and about the fact that some shares are publicly traded but basically it is a closely held company under family control. What difference does that make? I am not asking if it is a good thing or a bad thing. I am trying to understand the nature of how things work.

What difference does it make when a company like yours is closely held? What are the advantages, disadvantages, benefits or whatever?

Mr. Switzer: Our larger shareholder does control a considerable amount of shares but in terms of our total equity that number would be in the mid-30 per cent range. Yes, they have, as with many broadcasting companies, control of many of the voting shares. However, in terms of total equity, approximately two-thirds of the equity of our company is widely held by other private Canadians and institutions.

In July of this year, we raised some money and issued more shares to expand the shareholder base and raised approximately $100 million. It was very successful. We are a publicly traded company. That gives us great privileges but we also have great obligations. I would certainly say our shares are not very liquid compared to the liquidity of some of our competitors. There are hundred, thousands of shareholders of CHUM across the country. As I say, the largest shareholder owns in the mid-30s. I do not think that adds or takes away from what we do.

I think the quality of that shareholder, the involvement of that shareholder, the history and experience of the Waters family I am speaking of and their ability to as chair and vice-chair and with Allan nearby, support management, this is not a company that has been created, or flipped or bought or sold. These are people who care deeply about broadcasting in Canada and have a very long commitment.

For that reason I think it is more about the quality, integrity and history of who that that 30-odd per cent shareholder is.

The Chairman: That would give you a sort of stability.

Mr. Switzer: When we are dealing with other stakeholders it is not as though we are a big nameless company or held by institutions or banks or new players, or people who have bought or sold or in or out. They have been owners and broadcasters in Canada for more than 40 years.

The Chairman: Does it affect the cost of raising capital for you?

Mr. Switzer: Frankly it does. Our cost of capital is probably slightly higher than if we had no controlling or large shareholder, but I think that small price is worth it. There is a cost to the business. Our shares trade at a slight discount because there is a large family involvement. Our cost of capital is a little bit higher but certainly not causing any difficulty on the company.

Senator Merchant: We talk about all the choices that the listener or viewer has these days. I think the most difficult challenge in meeting the needs of the public is that other than people who live in the three largest cities in Canada, people are not really connected to the programming. They constantly tell us that they do not feel a connection, that the broadcasters are not serving the needs of the viewer or listener.

You said earlier that that people have choices in radio and that you are a successful radio operator because the listening audience tunes in to your stations. In a small market like Regina or Saskatoon, the CRTC will now allow people to own up to four radio stations and manage additional stations.

From the point of view of the person in Regina let us say, do you feel that this is a good direction for CRTC to have gone and, if so, why? How does that serve us better?

Mr. Switzer: I will do my best to be respectful to the commission and answer your question.

These are challenging times for many small market radio stations. I am sure I do not have to tell you that I do not know what the exact number is, perhaps two-thirds or three-quarters of all AM stations in Canada are losing money.

We understand the policy changes the commission made in the last few years. We salute them for that. There were tradeoffs and balances in return for the privilege of owning more stations and enjoying the economic advantages had by saving technology costs. In many stations, the difference between the extra staff of five or ten people was the difference between losing or making money.

In return for that, broadcasters are obliged to provide more Canadian content. Canadian content obligations on radio went up. There were risks associated with that trade-off. It has been extremely positive for the industry. Margins that were unacceptable are getting better. Stations that were losing money are now at least breaking even. A good number of AM stations risked going dark — in fact, in the Prairies, one or two stations have gone dark. Yes, there were many FM stations in medium-sized markets that are very profitable, however, it is not a good time for many small market radio operators, particularly in AM.

I am perhaps guessing here but the commission, in their change of radio policy in the past few years, rebalanced the need for economic savings through larger operations and save technology costs against contributions in the culture area. Although clearly controversial at the time, it has been a resounding success.

Senator Merchant: Every corporation has its own philosophy. Therefore, when one entity operates all the radio stations and manages some of the others, I am wondering how that is good for business.

Mr. Switzer: We do not operate radio in Saskatchewan. Maybe I will speak to the issue of diversity of formats and choices. Taken to the extreme, let us say that there are four separate operators in an area and operating similar stations. Each of them would chase the same demographic. They would have the same format and music and compete head-to-head because they want the most profitable demographic. However, if all these stations were owned by one entity, arguably the consumer would have more choice because the stations would not be competing with one another. There would be, for example, a rock choice, a country choice, a talk choice and an oldies choice. However, if left to four separate owners, they would all head to the middle.

I am not suggesting that is the only or most important reason but I think clearly there is more diversity of formats and musical choices now that there are fewer owners. Obviously, the point is to provide better service and more service. The challenge is to figure out a way past the very tough economic situation that exists in small markets.

The Chairman: Thank you all very much. It has been a most interesting session.

The committee adjourned.