Proceedings of the Standing Senate Committee on
Transport and Communications
Issue 10 - Evidence - March 21, 2007
OTTAWA, Wednesday, March 21, 2007
The Standing Senate Committee on Transport and Communications met this day at 6:27 p.m. to examine and report on the objectives, operation and governance of the Canadian Television Fund.
Senator Lise Bacon (Chairman) in the chair.
[English]
The Chairman: Honourable senators, today we will be dealing with our order of reference to examine and report on the objectives, operation and governance of the Canadian Television Fund.
[Translation]
We welcome our witness, Mr. Pierre Lampron, Vice-President of Institutional Relations, of Quebecor Media Inc.
Pierre Lampron, Vice-President, Institutional Relations, Quebecor Media Inc.: Madam Chairman, as I am not familiar with this kind of procedure, I hope that I will abide by the customary protocols. Thank you for inviting me to contribute to your deliberations on the important issue of funding for Canadian audiovisual content. The organization I have the honour of representing has full confidence in the value of Canadian content and its outreach potential.
Quebecor Media is committed to quality Canadian content, quite apart from any regulatory requirements. All of its subsidiaries without exception, whether regulated or not, make a significant contribution to the production, promotion or dissemination of Canadian content, including music, songs, books and audiovisual productions.
Quebecor Media is a leader in all of these fields. It is the private operator that devotes the most space to Canadian content.
We believe in the vitality of Canadian content and we want to ensure its presence on all exhibition windows and all markets in Quebec, Canada and the world.
Pierre Karl Péladeau, Quebecor's boss, is a builder who embodies this vision. He cannot accept that the Canadian Television Fund, an institution created to promote goals rooted in confidence in Canadian content, should have become an obstacle to the achievement of its ambitious goals, which are entirely in keeping with the Broadcasting Act.
For at least two years, Quebecor Media has been trying by all the means at its disposal to draw the attention of all concerned parties, including political leaders, government officials, regulatory authorities and industry stakeholders, to the consequences of the radical changes sweeping across Canada's media landscape.
In the current debate, some have chosen to defend the Canadian Television Fund as it exists rather than the pursuit of the objectives enshrined in the Broadcasting Act. They refused to consider the merits of the initiatives we propose. That stance has led to a sort of witch hunt and all sorts of threats that would jeopardize thousands of jobs. We trust you will agree that our proposal deserves more attention and consideration than that.
On February 20, Mr. Konrad von Finckenstein, the Chairman of the CRTC, announced the creation of a taskforce on the future of the Canadian Television Fund. Recognizing the urgent need for action, the chairman promised results by a specified date. We welcome this initiative by the commission and we plan to participate fully.
I am filing, for the consideration of this committee, recent documents we have produced that summarize our concerns and the extent of our undertakings.
We are guided by a firm conviction that the technological changes now underway are revolutionizing consumer habits, that these changes are having an impact in all quarters and are destructing the traditional relationships amongst stakeholders, creative talent, broadcasters, producers and advertisers, and also between the various conventional and new media outlets. This is not a difficult case to argue: The facts speak for themselves. But it is precisely the refusal to acknowledge these changes that has sparked the current crisis.
Like myself, you probably have more grandchildren than children old enough to be included among the ``new media consumers.'' I need not describe the current changes in their habits as consumers of different media. It is enough to watch what happens day by day.
Quebecor Media no longer has confidence in the Canadian Television Fund. It does not believe the CTF has the ability to respond effectively to Quebecor's commitment to give Canadian content top priority and disseminate it as widely as possible through all exhibition windows.
I do not want to repeat myself, but I will do so nevertheless. Quebecor Media no longer has any confidence in the Canadian Television Fund. It does not believe the CTF has the ability to respond effectively to Quebecor's commitment to give Canadian content top priority and disseminate it as widely as possible through all exhibition windows.
The CTF may meet the needs of other stakeholders, distributors and broadcasters in Canada. That is for them to say. One thing is certain: The CTF is not able to respond effectively to the needs of TVA, a private over-the-air television network that devotes 90 per cent of its programming budget to Canadian content, the most popular network in Quebec by far but also the network that is being hardest hit by the fragmentation of audiences and advertising revenues. The CTF is unable to respond to the desire of video-on-demand operators to program Canadian content of sufficient quality and quantity to induce consumers of video-on-demand services, who can watch what they want, when they want, to choose Canadian content. The CTF is unable to respond to the needs of Canoë, Quebec's top Internet destination. It is unable to respond to future needs in mobile telephony, which will be pressing. Quebecor wants to play a leading role in exporting Canadian products to foreign markets. The Canadian Television Fund has neither the desire nor the means to support this ambition. We hope you will consider our proposal on its merits and not on the basis of the all-to-frequent tendency to support the status quo just to safeguard established privileges.
The merits of our case lie in our firm commitment to invest $109 million in Canadian content over the next three years. Quebecor will spend $30 million in the first year, or about $11 million more than Vidéotron's current contribution to the Canadian Television Fund and the Quebecor Fund. This will enable us to do more, to do it better, to create more content, more jobs, more visibility, to make better, more effective use of the content, to make it more available at home and abroad.
Would this be a fatal blow to the system? Nothing could be further from the truth. By withdrawing from the Fund, Quebecor would be foregoing $100 million in funding from the Canadian government. All Quebecor subsidiaries, including TVA, would relinquish all contributions from the CTF. The fact is that if we compare what TVA is getting from the Canadian Television Fund with what Vidéotron is contributing to it, we find that the CTF will end up with an extra $3 million to distribute to the organizations that choose to remain part of its collective redistribution system. What we are proposing is a familiar type of opting out system, with one difference: Our proposal includes strict conditions for opting out which would be highly advantageous for the dissemination of Canadian content.
Yesterday, convergence was part of a vision. Today, it is a universal fact of life. In this world of convergent businesses, Quebecor is proposing an ambitious solution focused on Canadian content and its dissemination. This should be an attractive proposal for anyone who believes in the ability of our creative talent to express Canadian reality in a compelling way.
The Chairman: One of the basic premises of your argument is that the Canadian Television Fund is not taking new broadcasting technology into account. Currently, private producers keep the exploitation rights of their production. Let us take, for example, the serial Nos étés, which is produced with help from the fund and broadcast by TVA. For Quebecor, the ideal procedure would be as follows: The program would not be produced by Cirrus, but by your internal outfit, JPL Production; you would have created a Quebecor Fund for producing programs; and this private fund would contribute to the production of Canadian content, but only for your subsidiaries. Thus, the serial Nos étés would, at first, be available on Illico's video on demand for a fee. Afterward, or at the same time, the Canoë Internet portal could offer downloads of the serial for a fee, and this might be followed by broadcasting over one of Quebecor's digital networks. After this, it would be broadcast on TVA, and ultimately, a DVD version of the series would be put on the market.
So, for your company, it is a matter of getting many fruits from one tree. Is that the ideal scenario for you?
Mr. Lampron: That is the scenario put forward by the Producers Association. I will tell you the same thing. After all, the ultimate objective is exactly as described: it is in our collective interest for the series Nos étés to be shown on TVA itself, on videos on demand, on the Internet, soon in DVD and, why not as well, if there is enough money and the series is good, in other markets.
Now how does the real negotiation take place? First of all, it is true that independent producers have been told that they will need to agree during negotiations with the broadcasters to change the current model. The model we have today — and I can speak to this because I put a lot of effort into it — was based on the principle that we absolutely had to be able to protect the capacity of independent producers, what was called the ``independent producer structure,'' so that they could fund programs for a particular use, for example, by a broadcaster.
In the francophone market, this led to a whole series of measures called tax credits, which was a good decision by the then Government of Quebec, which set up various types of support that were all centered around a basic principle, once again, of giving independent producers the financial means to be able to thrive within a system that included a broadcasting window called TVA.
Today, independent producers are being told that when they come to TVA to finance their productions, with all the available public and private support mechanisms, the financial challenges involved remain exactly the same. For the Nos étés series, we need to be able to set up what might be called a fair and reasonable broadcast licence of perhaps 30 to 35 per cent of the overall budget.
This is based on the historical ability to pay. Independent producers are being told to look at what is happening in the world today. TVA can no longer afford to pay the same amount of money to have the same kinds of products simply because advertising revenues are no longer the same. That is crystal clear. TVA and other non-specialty broadcasting can no longer pay the same amount for products that have only one exhibition window because of audience fragmentation. We are telling producers that they have to take financial risks. That is not the situation right now. We are telling producers that we need to review the model, that they need to agree to give up more rights so that TVA can take that product and use it in different exhibition windows. People ask us why we use Illico on demand, which belongs to Quebecor, and why we use Canoë, which belongs to Quebecor. Why are we using these exhibition windows? The truth is that they are the only ones that exist. Only Quebecor believes in this and offers this type of window.
Quebecor Media, TVA, would be very interested in offering other programs on demand that might be available. If you take a good look at the system in Quebec and Canada, the fact is that Quebecor Media has developed the concept of believing in Canadian content as part of its business plan. If it did not put Nos étés on Illico on demand, it would do like the others and put Desperate Housewives, Lost or 24 on demand; those three series are currently on the public system.
The Chairman: It seems to me that you are also reluctant regarding the funding, especially regarding the 37 per cent that goes to independent producers licensed to Radio-Canada/CBC, and it seems that you would like to have a Quebecor Media Fund that could contribute to Canadian productions through your subsidiaries.
But the cultural sector is not solely market driven or corporate driven, and to find out whether something will be successful on television people sometimes you have to take risks or try something innovative.
For example, when Radio-Canada piloted an original program that was a bit out of the ordinary called La petite vie, it took a big risk that the other networks may not have taken. That show was a big hit with audiences and with the critics as well. When a network pilots a reality show that has already been successful somewhere else or a classic situation comedy, everyone knows that this is basically a calculated risk. How can you reconcile the logic of business or governance of a private sector corporation that has to keep its shareholders in mind with the requirements of the creative sector such as television, where risk and uncertainty often play a major role?
Mr. Lampron: Well, on that issue, we did not intend to launch a debate on the role of public television. That said, what we have said about having public and private broadcaster share in the Canadian Television Fund is that there are two fundamental ambiguities with that. The first is that the magic of the Holy Spirit has decreed that Radio-Canada/ CBC should get 37 per cent of the funding from the CTF. None of the senators here on this committee, no members of Parliament or senior officials, even the Chair of the CRTC cannot say today whether CBC/Radio-Canada has enough funds to be able to carry out its mandate. Is this almost $1 billion it receives adequate? Should it get $1.1 billion? There is no way to really know, since the pubic broadcaster has absolutely no way of being accountable. So we objected to that situation.
Second, you are right, Madam Chairman, in saying that, beyond this issue of the 37 per cent, we are uncomfortable with this public-private participation. In particular in the francophone market, we are discussing rules, practices and decisions in connection with programming, but the private sector does not have the same interest and resources as the public sector.
Since we are proposing an opting out system, I do not want to dwell on this matter any further. Since the funding sources are not controlled by anyone, the supposed risks taken by the public broadcasters in a competitive market like Quebec are not accurately measured.
You mentioned La petite vie and rightly so. We very much support a strong Radio-Canada. Even more than that, we would rather have a healthy competitor that stays within its own niche than one that tries to take over ours.
They took a risk with La petite vie, but they also took risks with other series that were total disasters. The only difference between them and us is that we took a risk with a show like Nos étés. And I hope that you are all fans of that show. This is a serious risk, since it is an extremely ambitious series, which is very strong culturally and of high quality. If we get anything under a million viewers for this series, we will loose our shirts, but Radio-Canada will go on to do another series.
The Chairman: You talked earlier about the taskforce set up by the CRTC. How do you see your contribution to the consultation and investigation framework? Can you tell us, for example, what recommendations you would make regarding the board of directors of the CTF? We know that the board is quite large, with 20 members. Is it important to change the structure by reducing the size of the board? How do you see things?
Mr. Lampron: We welcomed the CRTC chairman's decision to proceed quickly in striking a committee. What made us happiest about the CRTC chairman's decision was the acknowledgement that there was no time to re-invent the wheel on this issue. We needed a decision here and now because the market is changing as we speak.
We offered our assistance and made a proposal to the CRTC which, in all respects, is exactly what I just referred to. We did not want to get involved in the management of the Canadian Television Fund because our proposal is in fact to get out of it.
As far as the design of the Canadian Television Fund is concerned, we do not believe any change to it would be sufficient to meet the needs I described earlier, and we believe that the fund, given all the privileges it provides to the various people sitting on its board in a conflict of interest situation, will never be in a position to offer TVA, or for that matter any other members of the group, the additional financial resources it so urgently requires.
This has all been said in the past, and I reiterate it now, and I can say this more forcefully than most because I had two years experience on the Canadian Television Fund's board of directors: There is a serious problem with representation, governance and decision making in this organization. Whether you have been on the board or not, this governance problem is the root cause of the continuation of what I call the status quo. Whatever angle you are coming from, you realize that the current representation is such that it is virtually impossible to move past the status quo of privileges that the individuals concerned will surely fiercely defend. Now, since the principle of achieving a consensus necessarily trumps all else, after all these people are there to agree — God forbid that you should indulge in the practice of being in disagreement — consensus reigns supreme at the Canadian Television Fund, and any consensus is bound to result in the preservation of the privileges enjoyed by the individuals concerned.
Senator Dawson: We had the opportunity, Mr. Lampron, of meeting with representatives from the Canadian Television Fund, and we asked them a number of questions concerning governance and that indeed became clear to us.
I would like to take a step back and think about the reason we are holding this committee meeting. I am referring to the slightly dramatic steps taken by both Shaw and yourselves, and it is perhaps a little unfortunate that this had to happen to cause it. In some ways we are similar, the rationale behind striking such a committee was based on the belief that somebody needed to take action, and even though the CRTC decided to move ahead with studying this issue, we still wanted to give you the opportunity, that is to both you and the other stakeholders, to make your point of view known.
We heard, among other things, that the APFTQU was aggressive in its approach to you. This begs the question, how are you going to work together after such a major spat.
The other place, as it is commonly called, has a mandate to study Radio-Canada and, in all likelihood, we will also be taking a close look at what is going on, because the questions you are asking about funding and about Radio- Canada's role are the same questions we are asking ourselves here. We believe that the substantive debate must also focus on Radio-Canada.
Our main concern is that the money be invested; this is the very reason why a former communications minister got the Canadian government to make a joint contribution with the license holders. So, just from listening to you, you still seem willing to make a contribution. We would like a slightly more objective committee involved so that you are not deciding alone where the money goes, regardless of your dissatisfaction with the fund in its current form. I can see that you still think that the best formula is the Quebecor Fund but do you think you will ever be open, in your discussions with the CRTC, to the development of a fund allocation decision-making process, which would include government input, and would you be prepared to reconsider the reinstatement of a funding program?
Mr. Lampron: In response to your first question, you have indeed raised an important point about how difficult it seems to be to have discussions based on facts about the fund with the association representing the producers. Now, I cannot say whether or not they are capable of this, but it is a problem for us and makes it impossible for me, personally, to stay calm and collected because this type of attitude is indeed very troubling.
Furthermore, I sent a letter to my friend, the president of the association, basically saying that we know that we should and must get along, as individuals, with the producers and that there needs to be at least some good faith when it comes to the association. Now, a modicum of good faith would involve saying, for example: ``yes, we acknowledge that Quebecor wants more money ploughed back into the system and that there would be more production,'' et cetera, rather than coming to you and saying: ``Quebecor's proposal will result in thousands of people losing their jobs.'' This is indeed a problem that we do hope to resolve, and we are attempting to resolve it through an open dialogue.
The second point you made which is both more important and more troubling to me was your question about potential compromises. I get the sense based on your question that you are slightly uncomfortable with the idea that it would be left up to Quebecor to decide how to use its money. I would just like to come back to one point; under our proposal, if you interpret it correctly, money will not be taken away from anybody. We are simply saying that we do not want any contributions channelled into the same system that currently exists. We want the money to be used more effectively and only on independent productions with any partners who want to come on board.
There is nothing unreasonable about saying that by virtue of Quebecor's overall profitability, we want to reinvest in programs which will help us get the very best out of our sector.
If we were to tackle the inner workings of the fund, we would find a whole slew of conditions which may not be acceptable in the eyes of, as I said before, all the stakeholders involved. As far as the types of programs are concerned, we understand that there is a public policy to meet the needs of certain specialized channels, certain public television stations, for example, to produce children's programs TVA, because of the type of competition which has developed in the system, will not systematically finance children's' programs, for reasons I am sure you will understand. They are going to want to focus their investment on the types of programs which have made Quebec television as successful as it is. They are going to put money into dramas, TV series; they have said this, they are going to invest in films, and in whatever has the greatest potential to succeed.
I said it before: You need to understand that our game plan is going to logically help the entire system. But I will say it again; taking us out of the fund will mean the fund will have additional leverage totalling $4 million.
Senator Dawson: I cannot see why you would not want to benefit from the $100 million which is in the envelope the government is proposing. Given that you have both a vertical and horizontal structure, you are entitled to go it alone. Unfortunately, not all licence holders are able to do so. And if we as legislators were to let everybody go their separate ways, at the end of the day, there would only be a small pool of money left and no one would want to invest in children's' programs.
Now that the fund has been set up and is being supported, nobody is satisfied with the way it is working, and I am not asking you to be satisfied. But if the big players like you opt out and the fund gets too small, I would be fearful that Canadians would no longer have access to television productions which have shown in the past they deserve encouragement, in other words, that the government had every reason in the world to invest in them.
Mr. Lampron: You are correct. You know, we asked ourselves that same question too. In fact, if that scenario were true, then legitimately, any and every public stakeholder would be responsible for this. It is because we were concerned that we thought about the conditions that might be acceptable to everyone in the system in order to be able to opt out.
So, after reviewing the conditions, we informed the CRTC that we did not want opting out to be the easy answer for any stakeholder. Would any other distributor in Canada agree to pay 50 per cent more than the amount set out in the current rules? How would this benefit him? Would any distributors other than TVA be willing to contribute additional funding given all its obligations? Let us be realistic. The system is set up to ensure that the public support related to the Canadian Television Fund helps all the parties meet their obligations. No more, no less.
When you look at how the system works, TQS, which you are very familiar with — to use examples within the Quebec market only — is meeting its obligations, more or less. TQS has not anticipated having to pay additional amounts in excess of the amount currently set out under the current rules.
The Astral channels, which are very successful, are not relying on Canadian content as such to ensure their success. They are fulfilling their obligations and the Canadian Television Fund is sufficiently well endowed to ensure satisfaction in this area.
If, for example, Bell ExpressVu accepts to imitate Quebecor, we should realize what this would mean for the system since many more millions would necessarily go towards a much broader broadcasting capacity, since the integration capacity is not the same, as well as what this would mean for everything else.
We are seeing stakeholders opt out. The latest decision made was to forego $100 million. This is public money. Why forego $100 million? Listen, it is impossible to simultaneously talk out of both sides of your mouth, we should consider the funding we should be putting into the system as an investment in our future and the $100 million comes with a number of general collective conditions, which make us forgo it even if, for the TVA and the group, it costs us an additional 11 or 12 million per year in order to be able to fulfil, in particular, TVA's obligations.
[English]
Senator Munson: We all know the backdrop to this situation of withdrawing payments. You were then nudged back in to resume the monthly payments to the Canadian Television Fund after the chair of the CRTC and the minister spoke. Tonight you are telling us that Quebecor Media Inc. no longer has confidence in the Canadian Television Fund. What is your plan? Do you plan to stop paying again?
Mr. Lampron: That is not our plan. The fact is that we have made this very positive proposal to the CRTC, and we will await the reaction of the CRTC and the task force that has been put in place.
We will see what happens. We do not know yet what the proposals are, but our commitment for Canadian content is, as I said, more than the normal expectations made by the group. We are looking for a positive response to our very positive proposal.
Senator Munson: I know this is hypothetical, but if you do not have that response, there is still the regulatory body.
Mr. Lampron: It is not for me to say to a politician that it is very difficult to answer a hypothetical question.
Senator Munson: Is this just a hypothesis, then, from the Association des Producteurs de Films et de Télévision du Québec when they told us that there would be a 60 per cent loss of jobs in the industry? They told us that the withdrawal of payments by giants like yourselves would mean a loss of 8,500 jobs in Canada and 2,500 jobs in Quebec. Is that not true?
Mr. Lampron: I do not know if there is a punishment for someone to say —
[Translation]
— any old thing before such an important committee as this? I do not know whether this exists, but you can appreciate what I am saying. It makes no sense! How could we lose jobs by putting $107 million on the table? Come on! We can disagree, we can have a completely different vision of the organization, among other things, but I fail to understand this.
This is an important association but with all due respect, I fail to understand how it can dare come before you, without losing any credibility, and say that Quebecor's proposal will cause job losses.
[English]
Senator Munson: This is the same pool, then, of producers, screenwriters, directors and artists. You want to draw from that same pool into your fund, right? Would these be the same 2,500 independent producers and directors they are talking about in Quebec, and you would draw from that pool to go into your $109-million fund?
Mr. Lampron: No, there are two things. First, we have said again, yes, we need to continue to work along with the independent producers. The only reason we want to continue to work very closely with the producers and the independent producers in general is because they can bring us the best ideas that we need in order to broadcast the best shows in the world. As long as those producers are able to continue to offer us the kind of product we really need, then we will continue to negotiate with them for the best conditions possible.
There is a lot of competition out there for quality programming. When a producer comes to TVA with a good idea, with the proper actors that we want to have in the show and a good director, this producer has the choice to say, ``Look, if you are not interested, Radio-Canada and others may be interested in the same kind of show.'' We do not want to lose them, and that is why there is fair negotiation in the end.
We do not want to be in the situation of not being able to negotiate with the producer the rights and the capacity for us and for them in order to achieve the objective that I spoke about.
We have another problem with the artists, et cetera, not only within the fund but with the way it is organized in our beautiful country. The fact is that we have different interests when we speak about the way we deal with rights with the artists in general. As broadcasters, we say that we are the ones who are able to fulfil the best jobs in the market. We can afford the capacity to produce some very important shows with an independent producer, but we want to have the right to put those productions into other platforms.
However, the producer, who is the only one qualified to negotiate with the artist, will say, ``Look, my interest is in paying you less at the production level.'' With respect to what they would want that is right for the other platforms, it is not in our interest to negotiate too hard.
[Translation]
The Union des artistes wants to be on friendly terms with the producers with whom it is negotiating. It is a negotiation, but we intervened I do not know how many times with the Producers Association to tell it, when you negotiate with our artists, perhaps you need to negotiate fees in relation to demand, however, we need to be able to negotiate reasonably with artists based on the market's ability to pay the additional royalties related to operations. It is not true that we can pay one-third of an artist's original fee to put a production or a series on a specialized channel that will be watched by 900 people. This is separate from the ability to pay.
Senator Munson: Your position is very simple.
[English]
It is about control. You want to control the money that you spend.
[Translation]
Mr. Lampron: If the word ``control'' had something to do with our ability to develop the business plan I outlined to you, then yes, it is true. Our real motivation is not so much control but rather to ensure that TVA can continue to invest 90 per cent of its programming to purchase Canadian products and be able, with those productions, to develop those on all platforms — not to control anyone. Otherwise, tomorrow morning, TVA will have to produce fewer television series, fewer Canadian productions and its famous success story we are talking about, which is TVA, would be even more at risk. We do it with reluctance. We were able to fund Nos étés this year, but will we be able to fund them next year if we are unable to properly operate it?
Senator Meighen: I am in no way questioning your good faith nor that of Quebecor. You are saying that your proposal has merit given that Quebecor is making a firm commitment to invest $109 million over the next three years. I am looking at my colleagues around the table, and we have been in politics for quite some time, we have heard many promises, not only by television producers such as Quebecor, but also by other industries where, in return for government subsidies, we are told they will do this or that. This is not always the case. How can we ensure that the investment you are referring to here does indeed happen as promised?
Mr. Lampron: In fact, our word is not good enough. This needs to be controlled. We have proposed putting this money into a fund and, at least two representatives appointed by the CRTC or the government would be responsible for overseeing the use of this fund based on the criteria I outlined. These representatives would ensure that the amounts spent each year are justified in a public report that would be tabled to the CRTC at the end of each year. These reports would outline expenditures made, somewhat like we do, for example, for the considerable benefits relating to our obligations. When we acquired TVA, Quebecor committed some $40 million. Each year, we have to table a report. The good news is that instead of meeting those considerable benefits over a seven-year period, we will probably be able to do so within six years. Unlike in politics, our company benefits from advice of a board of directors that has the ability to ask that every dime be accounted for. In making such a major commitment, the board of directors already knows that a cheque for $109 million has to be issued. This is already part of the package.
Senator Fox: I am very pleased to have you here with us this evening. You have an impressive resume in support of Canadian and Quebec content both at Telefilm Canada as well as at the Société québécoise de développement des industries culturelles. You may have worked for my wife at one point and benefited from the policies that she implemented.
You talked about the board's commitment to sending a $109-million cheque. Senator Meighen asked whether, out of that $109 million, there was a condition of licence for the CRTC.
Senator Meighen: This is in keeping with the sanction.
Senator Fox: Is there another body other than the board of directors that might be tempted to improve its net result in a not-so-good year, that is something I would not wish on you? What obligation do you have to ensure that the $109 million is paid in both good years and bad?
Mr. Lampron: We would be prepared to agree to the same kinds of terms that the CRTC may issue under such circumstances. Once again, we anticipated this by saying that this independent fund would be administered by a specific board of directors administration and that within this board of directors administration there would be a duty to oversee the fund's use. I do not have a specific answer other than to tell you that we would be prepared to accept the usual terms and conditions from the CRTC to ensure this. It would be difficult to ensure this through a condition of licence because Quebecor is not under the CRTC's jurisdiction. In my opinion, we will have to come up with a formula. This includes money provided by Quebecor. I think that, with the CRTC, if this is the only problem to resolve, that we will be able to do so easily.
Senator Fox: Mr. Bureau put the following question to Mr. Dussault, who appeared before him when he was president of the CRTC, when he had made a promise or commitment: Are you prepared to make this a condition of licence? Obviously, the answer was ``yes'' and everyone immediately noted that this would be a condition of licence, and it became a condition of licence. I would like you to think more about how to further develop this. As you said, there is a problem. Quebecor Media is not the licence holder, so, in this respect, there is a problem with the formula.
You impressed me when you talked about opting out, because you are the first person who has testified before a federal committee and who has talked about opting out without compensation, by offering to meet all national standards at the same time. I find this extremely interesting.
When I look at the first page of your presentation, I see the extent to which you subscribe to the major principles of Canadian content and I really like this. I agree with you when you say that the current mechanisms should not be a permanent solution and that we should be prepared to review these mechanisms and see whether we can find better ones. If there are better ones, we should implement them, otherwise we should maintain the old ones.
Initially, you did not talk about this a great deal, but I get the impression there has been a very vigorous exchange between the people at Quebecor and those at Radio-Canada. It was our impression that Quebecor was fixating mostly on Radio-Canada and that it did not like the fact that Radio-Canada was getting funding from Quebecor, and then competing with Quebecor in Quebecor's own market. I notice today that you are not talking about that part. Are you setting aside that position?
Mr. Lampron: We wanted to distinguish between the two issues. One of the issues is related to how the Canadian Television Fund is funded. We referred to Radio-Canada for the sole reason that I mentioned earlier, which was in fact this unease at having to share, with a public institution, funds that were automatically set aside for no other reason than that there is a need and to ensure competitive programming.
To this end, we have always said — and what was true yesterday will be even truer tomorrow — that Radio- Canada's ability to pay for programs funded by the Canadian Television Fund is based, not on the rules that we have to comply with, meaning profitability, but rather on the ability to invest more since the funding comes from different sources.
Ultimately, this has nothing to do with our diatribe on the Canadian Television Fund. Now we are addressing our position with regard to Radio-Canada head on. Pierre Karl Péladeau was careful in his appearance before the parliamentary committee to reaffirm his belief in a public broadcasting system because it ensures that the system is balanced and I think he spoke eloquently on this point.
We have always spoken up, sometimes more strongly than others, which has led to certain debates. This was because we have condemned — historically, and every time we had the opportunity to do so — what we would call Radio- Canada's failures to fulfil its mandate. We have documented this, we have spoken in various forums, stating, for example, that in our opinion, the Crown corporation did not have the mandate to run American series at peak viewing periods. Not on the Quebec market. We believe that is not right.
We spoke out to say that it was not part of Radio-Canada's mandate, that it had other responsibilities than to show American films. We said that Radio-Canada had no business competing with TVA during the day and to pay hosts two, three or four times the salary paid by the competition.
Senator Fox: You have given many examples, but I think that your examples speak more to the nature of the services provided by Radio-Canada and that they do not really have anything to do with how the fund is used. I hope they will not try to use money from the fund to produce American series!
Mr. Lampron: One of the major difficulties we had with how the fund is managed had to do with this kind of problem. It is true that it is somewhat unrelated and yet, we want Radio-Canada to stay within its mandate. We believe that this is the area in which it excels and that instead of trying to imitate TVA at the expense of what it does well, it should focus on its strengths, and then perhaps Radio-Canada would see better results. We spoke out about this.
You need to understand, however, that given the amount of money the corporation decides to allocate to productions funded by the Canadian Television Fund, since there are no controls, which allows the corporation to do so, not only in competition with us — and we can live with competition from Radio-Canada — but with all broadcasters, and we say that the system, which fails to ensure accountability, allows it to use funds however it wants, which distorts the relationship.
Senator Fox: I think this has much more to do with the controversy between Radio-Canada's role and its programming, its policy of seeking advertising revenues from the market and private television in Quebec. I think that another parliamentary committee is reviewing Radio-Canada's role. It is an interesting discussion.
One example cited by previous witnesses is that, regarding the fund, TVA or Quebecor Media have absolutely nothing to complain about since, in good times and bad, good year, bad year, you pay X number of millions into the Canadian Television Fund and you get X and Y from it — and I am not saying that this justifies it but I would like to have your reaction. I do not want to play with words but some people do not want to admit that they have access to the fund, when ultimately, they do have access to it through private producers. People are using semantics to say that they do not have access to it. In fact, you are not penalized because Radio-Canada has access to the fund.
Mr. Lampron: Now I understand your question. You are right when you say that TVA would get more funding than Vidéotron contributed, and that is why I said that in opting out, we are leaving three or four million on the table. It is also true that, specific and exclusive reference to money, to what Radio-Canada got, is not the biggest issue. Perhaps I am repeating myself, but the problem is the arbitrary decision that Radio-Canada would get 38 per cent of the fund. Why 38 per cent? Why not 37 or 35? It is just that this is how it has always been done and it is now over a five-year period rather than a three-year period in order to ensure that Radio-Canada and CBC can get this 38 per cent. We have spoken publicly about this often.
Should it be more or less? If it was less, we would not have gotten more, and if it was more, we would have gotten less. But it was done on that basis. And on top of that, in all the criteria, when we were sitting at the same table, the criteria would apply to public television in a different way than to from private television. It was in that sense.
Let me reiterate our basic complaints regarding the Canadian Television Fund have little to do with the controversy we find ourselves in with Radio-Canada and a lot to do with governance and what I was describing to you earlier.
Senator Fox: In reading your brief and listening to your answers, I believe that even if the people from Radio- Canada were here in the room beside you, everyone would subscribe to the principle by which we want an audiovisual sector in Canada that allows for the development of quality Canadian content.
I think everyone agrees with that proposition. Second, I think everyone would agree with the idea of a strong public radio that is fully involved in the work of public television in Canada.
One way to achieve this over the years, and you have been part of it, our chair as well, is to try and develop an independent production sector in Canada. Do you still subscribe to this principle and how is this principle to be complied with within the Canadian Television Fund if all of your productions are done internally by JPL Productions?
Mr. Lampron: First of all, concerning the fiction that we could do all our production, as such, internally at TVA, the result would be that we would pay too much for such an idea. It is not our intention to do so. That is not what we said.
Senator Fox: Was that not the case historically?
Mr. Lampron: Yes, except that it is not possible to go back in time. In TVA's current situation, there is only one drama series that is being produced and it is drawing to an end, and that is Poupées Russes. We are under obligation to the CRTC to turn to independent production, and we will meet those commitments. Once again, this so-called threat to the survival of independent production is not a reflection of our intentions.
I will step back from my role at Quebecor; you are right to say that I spent a good part of my life in defending the creation of an independent production system. I believe I am part of the team that devised the tax credit point formula which, today, is used across the country, et cetera.
I continue to believe that, indeed, as is the case almost everywhere in the world where there there is a healthy situation, independent production still remains a major force. As someone who has contributed so much to the development of this system — we worked on a lot of shows together — I am prepared today to question a certain number of achievements because of market development. I think that producers today are perfectly able to negotiate conditions that will allow them to be successful. Today, we have producers who have developed the know-how, who have the ability and who are there. We should re-establish a real ability to negotiate with these producers.
Today, we can say to producers: ``We have a choice; either you stabilize all production for reasons that may be obvious and you will be paid properly pay for the work that you do, or you believe as we do that this production has an opportunity to go beyond the usual broadcast network, you invest either your ideas, or your cash, and in exchange for that we will share the rights.'' In Canada today, I think that one of the solutions is to go back to the position that, in any case, internal independent production capacity no longer exists anywhere. We must re-establish a more effective partnership concept between the groups, the broadcasters and the production houses.
I think that the sacrosanct divide that used to exist between the broadcaster and the independent producer should no longer exist in the same way. Broadcasters can be investors with producers and for producers, as is done in France, the United States and everywhere in the competitive world in which we live, particularly with multiple platforms. That is one way in which English Canada can be much more successful.
I also believe, Mr. Fox, that in spite of all of the dreams that we cherished and nourished, the fact remains that today, the existing compartmentalized system has resulted in a situation where the fact that there are no more major production houses in either Canada or Quebec for which the system was built, ensuring that they had the financial capacity that would allow them to reinvest money in the development of their business. We are dealing, once again, with an organization wherein certain production houses are extremely mature, and they remain medium-sized businesses with the ability to negotiate.
I believe, in any case, that if we want to continue pursuing this objective, we will have to find a way to decompartmentalize this relationship, that was correctly set up at the time, between producers, broadcasters and distributors, because the system has changed.
When we were working on it, there were general broadcasters who had the means to buy things and this multitude of new broadcasting windows did not exist, nor did the international market which is ready to explode once again.
[English]
Senator Gustafson: I would like to ask a question that has bothered me for a long time. Being a producer and broadcaster, perhaps you have the answer.
In Saskatchewan we get CBC and CTV. We probably get more American content on those two stations than we do Canadian content. If George Bush stubs his toe, it is on the TV.
Senator Munson: You will not get that in Quebec.
Senator Gustafson: Maybe not, but I do not know.
If a movie star passes away, they will play that footage for weeks. I would almost say that George Bush gets more coverage on those two stations than both the Prime Minister or the Leader of the Official Opposition. What is happening? Is it the global economy?
I want to know what is happening in the world. For example, at six o'clock the CBC broadcasts the BBC news for an hour or an hour and a half, and it, of course, focuses on European news. Maybe this is part of the global economy and we just have to accept it.
Mr. Lampron: What you see is what you get. I cannot argue the point. The fact is that 90 per cent of the revenue from private conventional broadcasters in Canada is derived from American content. It is a matter of fact.
With regard to TVA in Quebec, the opposite is true due to many factors. It is not because we are smarter than others; it is simply that for historical reasons we have decided to offer mainly Canadian productions to our customers. Ninety per cent of our program costs relate to Canadian programs. I would say that of the 29 or 30 programs in Quebec that are original Canadian content, something like 25 or 26 will come from TVA.
Senator Zimmer: Many of my colleagues' questions have focused on the areas of programming, governance, performance, allocation of funding and Canadian content. I would like to look at the technological side of marketing. One of the issues Vidéotron identified was the absence of funding for video-on-demand productions. In your opinion, how has the Canadian Television Fund adapted to deal with the technological advances and how has this affected Vidéotron's ability to compete in the marketplace and offer new options to customers?
Mr. Lampron: The Canadian Television Fund is not involved, per se, in marketing and going out into the market to value the productions. It is a matter of the broadcasters in general and the distributors being willing to do so. In our situation, we are seeing that the fund, at the production stage, is not organized to recognize the importance of those new platforms. It is because the fund has a certain amount of money to share with the people around the table, each of whom represents their interests and is in a situation to defend the status quo because they do not want to leave a part of the pie on the table. It is simply a matter of interest.
When we are looking at the marketing side and speaking about our proposal to put in this $109 million, it is only for production purposes. Perhaps you are not aware, but for the group in terms of promotion, marketing and all of those tools that we use to build our audience and to sell our productions, I would say that the main part of our efforts are made in support of Canadian content. Our video platform in Quebec is promoted along with the Canadian content that has been offered. Our competitors will use other strategies but it is our strategy to do that. When you look at Archambault, our music store, for example, it is exactly the same thing. We are trying to promote Archambault by promoting Canadian musical content in general. That is our strategy.
Senator Zimmer: On February 20 of this year the CRTC announced that it had created a task force to examine the Canadian Television Fund. When this task force reports back, what types of recommendations would you like to see in it?
Mr. Lampron: We would expect the CRTC to recognize the relevance of our proposal and that they would allow us to choose this option that we have proposed. We would then be willing to discuss with the CRTC all the conditions that will be necessary to assure all of the community that this money will be spent, et cetera.
Senator Zimmer: On a point of interest, Quebecor raised with the Department of Canadian Heritage its problems with respect to the Canadian Television Fund before stopping its monthly payments to the CTF.
Mr. Lampron: We did not intervene saying we were going to stop our payments, but we did make a lot of interventions expressing our dissatisfaction to the Minister of Canadian Heritage, to the deputy minister and all of the representatives. It is well known that we were very uncomfortable with the way the CRTC dealt with our concerns.
[Translation]
The Chairman: In his letter to the Canadian Television Fund dated December 20, 2006, the CEO of Shaw Communication wrote the following:
We believed that the fund, after the initial five-year period, would be independent and self-financing thanks to the performance of investments in successful productions.
Had Quebecor Media also understood the same thing? Are there any documents on this subject?
Mr. Lampron: We did not refer to this issue in our letter. I believe this comes from an understanding of events and commitments. At the very beginning, we had what was called a cable production fund and there was a friendly agreement discussed between the CRTC and the cable operators. Was that what the understanding was at the time? I cannot say, but I think that what underlies Mr. Shaw's comments is a reference to the understanding that he had discussed at the time.
The Chairman: Is there no grandfather clause?
Mr. Lampron: Perhaps there is, I do not know.
The Chairman: If there are no further questions, I would like to thank Mr. Lampron for all his answers which have greatly contributed to our work. They brought us some necessary enlightenment.
Mr. Lampron: Thank you very much, Madam Chairman, for your invitation and for hearing me.
The committee continued in camera.