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DRAFT IBG Oral Remarks CRTC Proceeding into Shaw-Rogers Transaction

Introductions

I would like to begin by acknowledging that we are in Ottawa, on the traditional unceded territory of the Anishnaabeg Peoples. I thank them for their hospitality.

(Abenaki language) Kwaï! N'wig8damobna ali nd'aï iotali pamkizgak nspiwi kiow8. Nd’aliwizi Monika Ille. Alnaba sqwa nia odzi Odanak m8wkaw8gan. Hello! We are happy to be with you here today. My name is Monika Ille, an Abenakis woman from the community of Odanak. I am also the CEO of APTN. The first national Indigenous broadcaster in the world launched 22 years ago. With the Commission support we are fortunate to be granted mandatory distribution on the basic service. I have been in the television industry for more than 30 years but also worked at the Assembly of First Nations and at Quebec Native Women. Mon nom est Luc Perreault, j'ai commencé ma carrière dans l'industrie de la radiodiffusion en 1985 chez Vidéotron. J'ai par la suite fait partie de l'équipe qui a lancé MétéoMédia/The Weather Network en 1988 et fait partie de l'équipe de Direction pendant 32 ans. Récemment retraité, j'occupe le rôle de Conseiller Stratégique chez Stingray My name is David Kines and I am the President and a Co-founder of Hollywood Suite. We are an independent, privately owned, Canadian company that operates four tv channels that launched exactly – to this

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very hour – 10 years ago. Prior to setting up Hollywood Suite, l worked at MuchMusic for almost 25 years, working my way through the ranks to Senior Vice-President of all of CHUM’s music video channels. I am Brad Danks, CEO of OUTtv and OMG Media Group. OUTtv was the first television channel in the world to be focused on the LGBTQ2+ community. This bold experiment, launched with the full support of this Commission, is now celebrating its 20th year of business. I am Chris Fuoco - the Vice President of Marketing and Sales at Channel Zero. We operate CHCH-TV Hamilton and Silver Screen Classics and Rewind. We employ close to 150 full and part time employees in both and are very proud of the news, information and entertainment programming that we bring to our viewers daily. In 1997, I was on the team that launched ExpressVu satellite TV. In 2003 I transitioned to Alliance Atlantis, and in 2009 joined Channel Zero. My name is Peter Miller. I have the privilege of acting as counsel and quarterback for IBG in this hearing. As you know, Joel Fortune, IBG’s counsel of record, appeared with CPAC this morning. I have spent almost my entire career in the communications space, first as a telecommunications network engineer, then at CAB and CHUM, and for the last sixteen years, as an independent communications lawyer. I advise broadcasters big and small, producers, unions and guilds, and government agencies and bodies. Attached at Annex A to this oral statement is a list/logos of IBG’s current members. You will be hearing from three of them separately at this hearing (ECG/TLN and Channel Zero). You will also be hearing from Independents who are not members but who we work with and with have similar concerns – one them, Wildbrain. Presentation

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[Chris] Yesterday, Mr Chair, you laid out the standard that Rogers must meet for approval of the broadcast aspect of its transformative $26 Billion Shaw acquisition. That it is the responsibility of the Applicant to demonstrate that its Application meets the public interest, consistent with the objectives of the Broadcasting Act – in other words, as the Commission has pointed out in reviewing the many consolidating transactions it has approved over the last two decades: “significant and unequivocal benefits for the Canadian broadcasting system.”1 What was plainly evident, however, is that Rogers commitments come nowhere near meeting the Commission’s test. That said, to give credit where credit is due, there were some tangible commitments made to independents. We will get into them later. For now, however, let us say, unequivocally, that we appreciate those commitments very much. We know that serious thought and attention went into them. Yesterday, Rogers also alluded to discussions and agreements with independents. What they did not say is that they were in serious advanced without prejudice negotiations with us, with IBG. In fact, while we’ve agreed not to talk about our respective positions, we can tell you that those discussions continued well into yesterday evening, when negotiations were called off by Rogers. I can also say that, as yesterday evening concluded, we all had an ominous feeling of foreshadowing.

1 See, for example, Shaw-Corus - Broadcasting Decision CRTC 2016-110, para 17.

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[David] How did we get here? It is now more than 6 years since the Let’s Talk TV decision created the current landscape. At the time the Commission was focused on consumer choice and flexibility, and wanted a “a healthy wholesale market” where “risk and reward” were shared between BDUs and programming services. The Commission’s goals at the time were to create a healthy and diverse marketplace. To achieve this, the Commission eliminated access rights for non 9(1)(h) services and introduced the Wholesale Code. The reality is that over the past 6 years one group of broadcasters – the Vertically Integrated companies – have been kept healthy and seen their profits increase even in a declining market. The other group of broadcasters – Independent Services – have seen their incomes decline. The Boon Dog Report we filed for this hearing establishes the factual basis of this situation. As summarized in our intervention at paragraphs 59 and 76:

• Over the last five years, licensed independent discretionary TV services had a relatively larger decline in revenues over those of VI discretionary television services.

o [From 2016-2020 licensed private independent discretionary TV services had a 10.1% decline in total revenue, while VI discretionary television services experienced a 5.4% decrease - beating the 7.9% decline in the BDU subscriber universe over the same period

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o Excluding 9(1)(h) services, licensed private independent discretionary TV services suffered a 13.8% decline in total revenue from 2016-2020; and

o Meanwhile, the effective revenue per subscriber for VI discretionary television services excluding 9(1)(h) Services actually increased by 21.5% from 2016-2020.]

It seems highly unlikely that revenues lost by independent services found their way to consumers as a reduction in their cable bill. Rather, monies saved by VI BDUs in negotiations with independents appears to have been given back to VI discretionary services.

These facts demonstrate that, far from sharing risks, Independents have been absorbing them at a much greater rate than the Vertically Integrated channels. VIs have been able to use and abuse their market power to ensure better distribution for their own services. This was clearly not the Commission’s intent in the LTTV decision but has been the result. [Luc] We noted with interest Rogers comments about providing set top box data during yesterday’s hearing. Contrary to what was said by Rogers, set top box data has been repeatedly requested for many many years. And it has on occasion been provided, but almost only when the information fits a narrative for contract negotiations. No attempt has been made to supply regular, consistent data that would help programmers improve their product and bring greater value to Rogers customers. While we appreciate Rogers undertaking to provide data in the absence of a Numeris industry-wide solution, an “annual report card” is woefully inadequate.

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Let me give another digital example. Apps and the Ignite platform. Attached to our opening statement are articles and platform descriptions that give you a hint of the access issues we face, and the next steps in the Comcast playook, that Rogers has been following. In choosing to write off its own $500 million investment in an app platform [closer to 1 billion if you count Shomi and the Purdy portal], Rogers has started down a path that, while not predetermined, has serious consequences for the availability and promotion of Canadian content and services, and the unfettered entry of foreign content. Hier, lors de leur présentation, les représentants Rogers ont fait plusieurs énoncés sur la plateforme Xfinity. Une plateforme d'envergure mondiale, unique, très avancée technologiquement, utilisée aux États-Unis, au Canada Et au Royaume-Uni. Il vaut la peine que nous nous attardions à son impact potentiel sur le Système Canadien de Radiodiffusion. Comme l'ont décrit les représentants de Rogers hier cette plate-forme hybride donne accès au service de télévision conventionnel et à du contenu applicatif via le même terminal. Une offre attrayante pour les abonnés qui cependant brouille la ligne de démarcation entre les contenus offerts par les services canadiens réglementés et les services de contournement. Si on examine de plus près cette technologie, on se rend contre rapidement qu'il s'agit d'un éco système fermé qui est contrôlé par Comcast et ses franchisés canadiens. La deuxième partie de cet écosystème et celle du contenu offert via des applications. Pour être clair on parle de la transition au système non réglementé vers un univers ou les règles sont entièrement dans les

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mains de Comcast et de ses franchisés. Metrological, une société basée aux Pays-Bas, qui est propriété de Comcast est responsable de la création d'applications ou de la validation d'applications produites par des tierces parties. Lorsque les applications sont prêtes à être déployées, une conversation s'amorce sur le partage des revenus publicitaires qui seront générés par la plateforme FreeWheel, aussi propriété de Comcast. Quand tous ces détails sont réglés, l'application pourrait être offerte sur la plateforme Ignite ou sur la plateforme SmartStream. Récemment, le distributeur Sky au Royaume-Uni a annoncé le lancement de Sky Glass, Un téléviseur intelligent muni de toutes les caractéristiques de la plateforme Xfinity (voir annexe). Lorsque branché sur une connexion internet haute vitesse, il donne accès App Store de Comcast. Les abonnés internet haute vitesse pourront financer l'achat de ce téléviseur intelligent à même leur abonnement tout comme un consommateur finance son téléphone intelligent à même son abonnement au service de communications mobiles. L’équivalent de Sky Glass sera bientôt offert e Amérique du Nord. Comme le Conseil peut le constater, la plateforme Xfinity n’est pas un système ouvert ou le consommateur peut télécharger des applications comme il pourrait le faire sur son ordinateur, sa tablette ou son téléphone intelligent. L'accès à l’App Store est contrôlé de bout en bout par Comcast et ses franchisés canadiens. Ce nouvel écosystème ressemble beaucoup à un distributeur virtuel de programmation vidéo (VMPVD). Hier, Mme. Dinsmore faisait référence au Digital Media Exemption Order (DMEO) comme mesure de protection contre toute pratique visa à restreindre l'accès (gatekeeping). IBG est convaincu qu'il est opportun pour le CRTC qu’il est temps d’exercer son autorité.

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[Brad] The Commission anticipated the advancement of streaming in the lead up to its 2018 “Harnessing Change” report. However, the Commission underestimated how quickly streaming, or what was called “online television” in the report, would be adopted. The shift has accelerated dramatically since the launch of Disney+ and AppleTV+ in 2019, and has been was quickly followed by other streaming platforms such as HBO Max, Peacock, Discovery+ and Paramount+, not to even mention a large number of other direct to consumer services. The problem now in the broadcasting system is that we are not “Harnessing Change” as the 2018 Report suggests but instead are seeing a “harvesting” of change as our major media companies focus on short term profits over long term sustainability. To be bluntly clear, this was not the expectation of the Commission. In fact, it was to the contrary. (There’s a choice paragraph (#12) in LTTV on the assumed benefits of vertical integration that I won’t read, but that I encourage you to:

“Looking into the future of particular services and companies, the Commission expects that vertically integrated companies (companies that own or control programming services as well as distribution services), for their part, will continue to have the opportunity to leverage their resources and audience reach to acquire popular and lucrative programming as well as be well positioned to produce high-quality programming made by Canadians. Their critical mass provides these companies with the

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financial capital required to succeed both domestically and internationally. However, given their formidable position in the Canadian market, certain safeguards are necessary to ensure these companies do not exert their market power in ways that would detract from the ability of other content distributors and providers to offer services to Canadians or to limit the choices available to individual Canadians.”)

For almost two decades, the major media companies’ financial health has been secured by policies in support of vertical integration and greater reliance on market forces, as larger players were seen as our best and perhaps only hope in this emerging marketplace. The fact that these “National Champions” have not done, or been required to do, more to transition the system to the streaming world – with Rogers and Shaw, in fact, launching then shutting down Shomi – is a major problem. The CRTC believed that the VIs would make the investments necessary to make our system competitive globally. Instead, these companies have focused on maximizing short-term profits. This transaction is all about the changes coming to the industry. While the merger makes sense for Rogers and Shaw for their future, it has the unintended consequence of potentially all but destroying the independent broadcasting sector. Simply put, at 50% of the English-language Canadian market, Rogers-Shaw will define that market. They will make or break every non-9(1)(h) independent English and Ethnic service in Canada. Yesterday, Roger’s VP of Regulatory spoke about some agreements with independents. We don’t know the nature of those agreements; we do know what we were in the process of negotiating on behalf of IBG, and that we were unable to conclude on terms. I can also tell you

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that BDUs are very good at ‘divide and conquer’, and that is what you are witnessing. The Commission needs to understand this. The main reason that Independents are so easy to coerce is because over the past decade the Commission has not really been there to support us. We accept that the world is changing. All of us are looking at a streaming future, and many of us are already making significant investments in that future. All broadcasters – independent and VI – want to protect legacy revenues for as long as possible, to enable this digital transition. The problem is independents have been shouldering more than our fair share. If it was simply a matter that independent revenue would fall as quickly as that of the system, we could accept that – but that is not what has happened. Yesterday in their submission Rogers said that their cable revenue had gone up last quarter. There is no doubt those increases will not flow to Independents or consumers. I compare operating an Independent service today to rowing a boat to the future but having to stop every third stroke to bail out the water coming in. That incoming water is loss of revenue from an unexpected new packaging arrangement or new negotiation that always ends with you being much worse off. Without clear enforceable safeguards, this transaction will make things much worse – if it can be – for Independents. A combined Rogers/Shaw entity will set the market and, based on their current approach to Independent services, it is going to be a choppy ride. The situation for many, if not most of us, is dire. Most of us historically had

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relatively good relationships with Rogers (quite frankly, Shaw was the harder BDU to deal with). However, in the last decade, that has dynamic actually reversed. I hope to have the opportunity to tell you more about that, particularly as it affects Outtv, in Q&A. [Monika] Why is it in the public interest to create clear and enforceable safeguards? This one is so self-evident to us that it is hard to imagine a different perspective. Independents provide essential diversity and choice in the broadcasting system. We are dreamers, entrepreneurs and risktakers. We demonstrably provide services that differ from the mainstream, and would likely not be there but for us. We are the manifestation of the call for “alternative programming services” at Section 3(1) of the Act, providing high-quality service to non-mainstream, typically underserved audiences, including OLMCs, Indigenous, ethnic, and LGBTQ2+ communities. Safeguarding a future for independent television services would be an unequivocal benefit, while allowing us to potentially be negotiated out of existence would clearly not. Moreover, such a benefit is achievable at a modest overall “cost” to Rogers, well within the range of reasonable and foreseeable regulatory outcomes. IBG raises many other important issues in its intervention – from treating Corus as an affiliated entity, to access to Apps, set top box data

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and adtech platforms, and support for local news. We would be pleased to speak to those issues in questioning. [Peter] IBG notes and appreciates the commitments towards independents made by Rogers on issues Monday. The problem is they unfortunately don’t sufficiently address independent’s concerns or meet the onus on Rogers to prove that this transaction will significantly and unequivocally benefit the broadcasting system.

Let’s dissect their three commitments to “help independent programmers with their digital transition”.

First, Rogers committed to “distribute a minimum of 40 independent discretionary programming services on each of our BDUs for a three-year period for three years.”

Your questioning of Rogers revealed that this is effectively a 4.5:1 commitment to carry unaffiliated services, excluding the Corus services.

Time period aside, there is no doubt that this is a significant commitment, and we applaud Rogers for making it. But we also learned that today, Rogers and Shaw Direct already exceed this commitment. Rogers said it carries 46 independent services, Shaw Direct 47; Shaw does not – it carries 38. Again, without counting Corus.

So unfortunately, what the commitment actually means is that Rogers wants to reserve the right to drop up to 6 independent services on its systems, up to 7 on Shaw direct, while on Shaw systems, Rogers would need to pick up at least two independent services.. What independents need, first and foremost, is economic stability.

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Coming up with singular language that covers all of the different situations independents are in, and is reasonable, is not easy. But the concept we came up with, of “no less favorable in aggregate after the transaction then before”, is the closest we came. Why that language? Because at absolute minimum, this transaction should not make things worse than they were before. What would that actually mean in practice? First, it means all the terms, all the factors that relate to carriage and distribution: rate, packaging and anything else. It is not simply a mathematical calculation of existing aggregate rates, it is an overall assessment. Second, before versus after is not time specific. For some, the rates in effect with Rogers just prior to the transaction closes will be the right metric. For others, a longer-term view and reflecting what other BDUs have done, as the current Wholesale Code suggests, would be more reasonable. And while strictly speaking, it may not be enough for everyone, it will help. However, while Rogers’ new 40 independent discretionary service (excluding Corus) commitment is “significant”, it is not sufficiently “unequivocal”.

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But at 50 independent services (excluding Corus), that commitment along with “no less favorable in aggregate” would be. And this would stop, at least for the period of time it is in effect, the weaponizing of the Wholesale Code. No more, starting negotiations with “we are going to drop your channel.” So, it’s not perfect. It will not make up for the lost ground of the last 6 years since LTTV. But a majority of IBG members believe the metric is a reasonable compromise to achieve a level of economic stability. Why should it be 5-7 years, as introduced by Commissioner Lafontaine, yesterday? First because it’s already been 7 yrs since LTTV. [We need seven years to regain at least some of that lost ground.] Second because 5-7 years is a typical licensing period these days. As it turns out, most Rogers BDU licenses are up for renewal in August 2025; and in 2018, Shaw has short term renewals to 2023. So here’s a thought. Make the commitment tied to the Rogers’ next renewals – which would mean a bare minimum of four years or five with an admin renewal

Luc has already spoken about Rogers second commitment.

Rogers third commitment is to help independent programmers with access to set-top box data in two ways. We already talked about the first part - provision of STB data.

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The second part was “Rogers will help independent programmers by providing set-top box data, free of charge, for use on the CYNCH platform.”

This is important. Adtech platforms like CYNCH, currently used by Rogers and Corus are the future of ad buying. At a certain point very soon, if independents are not in these platforms, we will not get advertisers. We look forward to Bell making similar commitments viz their SAM platform.

With clear and enforceable language, commitments like these will, as Rogers intends, help provide independent programmers with a viable path to migrating their services to a digital future

We look forward to your questions.

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Annex A – Current IBG Membership

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Exhibit A IBG members as of October 29, 2021

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Annex B - Select Articles/Platform Information Comcast Has Been Removing TV Channels But Not Lowering Its Price https://www.cordcuttersnews.com/comcast-has-been-removing-tv-channels-but-lowering-its-price/

Xfinity cable customers have been taking to Twitter to share complaints about Comcast Xfinity dropping channels.

Channels including WE TV, Investigation Discovery, and WGN have been disappearing from lineups in markets around the country. Customers are saying they haven’t been getting any warning or any explanation from the company about why this content is suddenly unavailable. Comcast has also removed TCM from its main packages moving it to the Sports and Entertainment add-on that costs $10 more.

One Twitter user said that when he reached out to customer support, he was told that these channels are only available on grandfathered plans with current plans no longer offering them.

Complaints about losing channels have ramped up lately as Twitter accounts for Starz shows and actors from the shows have been reminding Xfinity customers that they’ll be missing out on season premieres soon if the company doesn’t work on making a deal.

Even 50 Cent has been getting involved in the discussion, going to Capitol Hill this week to talk about representation in TV and movies. The executive producer of the Starz series Power met with Nancy Pelosi and others on the Hill while sharing the message that representation matters and advocating for Starz to stay on Comcast Xfinity.

Clan, if you’re a Comcast/Xfinity customer, don’t let @XFINITY drop #Outlander from all packages and bundles before Season 5 premieres! Visit https://t.co/Rd0yEPPWeo and call 888-90-STARZ (888-907-8279) to TAKE ACTION. #KeepSTARZ pic.twitter.com/GjuTH1szrG

— Outlander (@Outlander_STARZ) October 19, 2019

When Comcast started planning to replace Starz channels with Epix, the cable provider cited customer viewership and programming costs as two factors taken into consideration when making changes to their channel lineup. The two companies are still in negotiations and Comcast is pushing back on Starz taking its content direct to consumers with a streaming app.

For many Comcast customers, it seems like dropping the premium channel is the last straw after losing so many other channels in the last few months. Some are threatening

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to move to another cable provider while many, according to their social media posts, are looking into streaming services.

For those who are losing channels from their cable subscriptions, be sure to check out our comparison guide where you’ll find that live streaming services including Hulu, YouTube TV, and Sling offer many of Comcast’s missing channels, along with Starz as an add-on for just $9/month.

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