Comments Provided in Response to Digital Economy Consultation

Summary

There is an inherent and ultimately dangerous assumption in the Consultation Paper that the business opportunities of today are separate and distinct from the business opportunities of tomorrow. Such an assumption overlooks the connections and relationships between the current and future business models, and the near–total dependence of the latter upon the former — namely that existing audio–visual business models, while challenged on so many fronts, nevertheless fund the vast majority of new (digital) media activities.

The rise of digital–based "anywhere, anytime" consumer expectations has spurred any number of new activities within Canwest operations — and in the operations of our competitors. Naturally, the emergence of multiple digital platforms has necessitated changes to internal workflows and production processes, and required new approaches to content acquisition negotiations (and the deals themselves). At Canwest Broadcasting, it essentially forced the creation and subsequent expansion of a large, dedicated Digital Broadcast Team, and a dedicated Marketing Ventures Team within the Sales Department to offer multi–media and multi–platform exposure to our advertising clients.

Yet despite the obvious recognition within the company that new (digital) media platforms must be developed and nurtured to meet advertiser and audience expectations and needs, it is still the traditional broadcasting model that generates 99% of the revenues and all of the profitability — and this is by no means a Canwest phenomenon. All of these activities are leveraged upon, indeed, rely upon, the airtime and subscription revenues generated by our traditional, linear offerings. And double–digit revenue growth of new (digital) media initiatives, while expected, will not fundamentally change this equation in the near, medium, or frankly foreseeable future, despite the vast attention paid to this pursuit.

As such, if the Government of Canada truly wishes to support a domestic "digital content advantage," it must first and foremost have a framework in place to support the established approaches funding the digital initiatives. With very few exceptions, stand–alone digital initiatives that rely solely on new media platforms will fail to generate enough revenues (or profits) to support themselves. We submit that the Government of Canada should acknowledge this reality in any subsequent legislative, policy, and/or content–related funding decisions.

With respect to digitizing archival news footage, we note that this concern is not restricted to National Institutions. While Canwest has made very significant capital expenditures in recent years to fully digitize its news operations, our television stations nevertheless have a rich trove of archival news footage sitting and disintegrating on shelves and in boxes. Given the acknowledged and much–discussed troubled financial state of conventional television, conversion of the historical footage to digital and associated organization of the material is not fiscally possible; and we support any efforts by the Government to fund such important work, which would make the footage available to future generations, and of course to libraries and educational and research institutions.

Submission

1. Canwest Television Limited Partnership (Canwest) is pleased to participate in this process and provide its views on specific issues raised in the Consultation Paper on a Digital Economy Strategy for Canada entitled "Improving Canada's Digital Advantage: Strategies for Sustainable Prosperity" (the Consultation Paper) — and particularly the section "Digital Media: Creating Canada's Digital Content Advantage."

2. As a multi–media company with national broadcast distribution and a suite of digital offerings across multiple platforms, Canwest operates as both a producer/creator and acquirer of audio–visual and textual content (often as the copyright holder), and as an aggregator and organizer of that content. In many parts of the country, we have a direct relationship with the audience via over–the–air analog and digital transmitters, but also rely on the distribution of our signals and content by third–party organizations (e.g., cable, satellite, IPTV distributors; Internet Service Providers).

3. In this submission, we have focussed on the singular question:

How can stake holders encourage investment, particularly early stage investment, in the development of innovative digital media and content?

The critical role of the "legacy" broadcaster in the business models going–forward

4. Page 25 of the Consultation Paper includes the following text:

As well, a major transformation is under way in the structure of the digital media sector. The environment is volatile and change is happening at breakneck speed. The challenges are particularly volatile for legacy players that are accustomed to an orderly marketplace. They have the dual task of meeting consumer demand for their established products while at the same time creating the business opportunities of tomorrow.

5. In this context, Canwest Broadcasting would assume the role of "legacy player" accustomed to a (relatively) orderly marketplace. But there is an inherent and ultimately dangerous assumption in that text that the business opportunities of today are separate and distinct from the business opportunities of tomorrow — that the fundamental driving force of digital transition is a "structural transformation" from an existing business model to a model defined by a less orderly marketplace.

6. Such an assumption overlooks the connections and relationships between the current and future business models, and the near–total dependence of the latter upon the former — namely that existing audio–visual business models, while challenged on so many fronts, nevertheless fund the vast majority of new (digital) media activities.

7. The rise of digital–based "anywhere, anytime" consumer expectations has spurred any number of new activities within Canwest operations — and in the operations of our competitors. A comprehensive listing of such activities by a legacy player is perhaps not necessary in this process, but a sampling is instructive. Over the past few years, Canwest has:

• fully digitized its news operations to maximize efficiencies and facilitate content sharing between and among our various media assets;
• established and promoted proprietary websites to "broadcast" much of the audio–visual content we control through the Internet and mobile devices: Canwest operates any number of websites, including:
  
  
  • Global TV: offers full episodes of dozens of new and classic television shows;
  • Global News: a recently redesigned news portal offering Canadians from coast–to–coast a host of news and information — from breaking news in their town or city to deep engaging content that puts complex world issues in perspective. The local sites provide up–to–the–minute community–based news, weather, and information, while the umbrella national site features stories, analysis and deep, engaging content about issues in Canada and abroad. We deliver those stories to Canadians wherever and whenever they want: through the web, mobile devices, email alerts, RSS feeds, and social media;
  • individual websites for a number of our specialty television services (e.g., Food Network Canada; Showcase; History Television; Slice; HGTV); and
  • a rich micro–site, branded Kick–Off Africa, dedicated to in–depth and comprehensive coverage of the FIFA World Cup, including on–the–scene stories filed by Global National correspondents.

8. We have actively pursued social media initiatives — establishing corporate footholds in such networking sites as Facebook and Twitter. And, of course, we have worked closely with our partners in the broadcasting distribution undertaking (BDU) sector to extend much of our programming to third–party Internet portals and video–on–demand (VOD) offerings — including an established relationship with the Rogers On Demand Online (RODO) initiative.

9. Naturally, the emergence of multiple digital platforms has necessitated changes to internal workflows and production processes within Canwest Broadcasting (including new production equipment and associated facilities), and required new approaches to content acquisition negotiations (and the deals themselves), It essentially forced the creation and subsequent expansion of a large, dedicated Digital Broadcast Team within Canwest Broadcasting, and a dedicated Marketing Ventures Team within the Sales Department to offer multi–media and multi–platform exposure to our advertising clients.

10. Yet despite all of these activities, despite the obvious recognition within the company that new (digital) media platforms must be developed and nurtured to meet advertiser and audience expectations and needs, it is still the traditional broadcasting model that generates 99% of the revenues and all of the profitability — and this is by no means a Canwest phenomenon. All of the activities listed above (and so many more that have not been mentioned in this submission) are leveraged upon, indeed, rely upon, the airtime and subscription revenues generated by our traditional, linear offerings. And double–digit revenue growth of new (digital) media initiatives, while expected, will not fundamentally change this equation in the near, medium, or frankly foreseeable future, despite the vast attention paid to this pursuit.

11. Tn recent years, a number of industry analysts have referred to this phenomenon as "analogue dollars to digital pennies." There is simply no comprehensive, stand–alone business model for digital media at present. Canadians are largely seeking traditional broadcast content on digital platforms (that is usually why they visit our websites); and in an export context, Canadian program producers typically make money selling the traditional content in territories outside of Canada, not the digital "add–ons."

Consider the case of "Rookie Blue"

12. For background, we refer the Government to a recent Press Release (14 June 2010) we issued regarding the launch of a new, commissioned, Canadian television series named "Rookie Blue." (see Appendix). As the Release notes, Canwest has just embarked on a national, multi–media marketing campaign — using traditional and new media platforms, including associated (commissioned) online games and social media elements — that will represent the most extensive promotion ever for a Canadian television series.

13. But note that a vast majority of the expected revenues associated with this Canadian series for both the broadcaster and independent productioii company are generated by traditional means (e.g., advertising revenue for the broadcaster; and for the producer, licence fees from Canwest and ABC Television Network and any funding from established third–party funds and/or tax credits).

14. The new (digital) media elements will no doubt help market the series to potential viewers, and some of the audience will be exposed to the program via non–traditional platforms — including a dedicated website Global TV Rookie Blue (with associated Twitter site Twitter Global TV) — but the success of the series will ultimately rely on long–established business and audience models.

15. As such, if the Government of Canada truly wishes to support a domestic "digital content advantage," it must first and foremost have a framework in place to support the established approaches funding the digital initiatives. With very few exceptions, stand–alone digital initiatives that rely solely on new media platforms will fail to generate enough revenues (or profits) to support themselves.

16. So while there is unquestionably a transformation in advertiser/consumer expectations and needs — recognized and acted upon by all established broadcasters — a prerequisite for commercial success for the foreseeable future will be continued reliance upon a supporting framework that recognizes and nurtures the established model. We submit that the Government of Canada should acknowledge this reality in any subsequent legislative, policy, and/or content–related funding decisions.

Digitizing archival news footage should be a Government priority regardless of source.

17. Under the heading "National Institutions," page 27 of the Consultation Paper includes the following text:

Federal cultural institutions, such as CBC/Radio–Canada, the National Film Board of Canada, Telefilm Canada, the Canada Council for the Arts, and Library and Archives Canada, continue to be redefined by changes in technology. Those who produce content will need to continue to make digitization of their collections part of their ongoing activities to serve Canadians. While priority collections in Canada's cultural institutions have been digitized over the past decade, some have suggested that the pace of digitization should increase.

18. This particular concern is not just restricted to National Institutions, While Canwest has made very significant capital expenditures in recent years to fully digitize its news operations (we were a pioneer in this area — see above), our television stations nevertheless have a rich trove of archival news footage sitting and disintegrating on shelves and in boxes. Given the acknowledged and much–discussed troubled financial state of conventional television, conversion of the historical footage to digital, and associated organization of the material, is not fiscally possible.

19. It is for this reason that Canwest asked the Canadian Radio–television and Telecommunications Conimission (CRTC) in 2007 for permission to include the digitization of archival news footage within the benefits package associated with our purchase of the Alliance Atlantis broadcasting assets. As we wrote at the time:

This benefits initiative will allow Canwest to begin the long process of digitizing the rich archive of analog news footage and other programming material currently stored on film and tape at our stations coast–to–coast — an invaluable and "at–risk" source of unique content documenting important events in Canada's history. Much of this material will survive only one pass through conventional technology for storage in a digital archive.

20. Unfortunately, that request was ultimately denied by the CRTC; but we support any efforts by the Government to fund such important work, which would make the footage available to future generations, and of course to libraries and educational and research institutions.

As always, if the Government of Canada should require additional information concerning this submission, we would be pleased to provide it.

Sincerely,

Jon Medline
Vice–President, Regulatory Affairs
Canwest Television Limited Partnership
Attachment: 1

Attachment

GLOBAL LAUNCHES MASSIVE MARKETING CAMPAIGN FOR ROOKIE BLUE

National, Multi–Media Effort is Network's Biggest Campaign this Season and Most Extensive Promotion Ever for a Canadian Series

New Original Drama Premieres — Thursday, June 24 — 9pm ET/PT on Global and ABC

For photography and additional press materials please visit: Shaw Media

For Immediate Release

TORONTO, June 14, 2010 — Global Television today unveiled the details about its arresting multi–tiered marketing campaign for the new original series, Rookie Blue.

Premiering Thursday, June 24 — 9pm ET/PT on Global and ABC, Rookie Blue is packing some serious heat with the networks far–reaching and extensive campaign — from prominent outdoor billboards to cinema trailers to innovative online games, Canadians will know they have great entertainment in store for them this summer.

"We're excited to rofl out this aggressive campaign for a homegrown Global show," said Jamie Schouela, VP, Marketing Strategy, Global. "We are confident that Rookie Blue will be a huge hit with viewers and our campaign clearly reflects our commitment and belief in this Canadian series.

Beginning earlier this spring, a series of uniquely branded on–air teasers and character spots made their debut during Global's highly–rated season finales including top 10 favourites Survivor: Heroes Vs. Villains, House and 24. These promos continue to run extensively on the network and Canwest's specialty channels. Plus, in a promotional assault on the day of the premiere, Rookie Blue promos will run in each hour of every program across the entire Canwest family of 18 channels.

To further fuel this momentum, an aggressive billboard campaign is blanketing Canada's three biggest markets: Toronto, Calgary and Vancouver. In Toronto, massive ads in Yonge/Dundas Square and the landmark corner of Yonge/Bloor are amongst the notable marquee locations.

And just in time for the summer blockbusters, Rookie Blue promotional trailers will run in theatres throughout the month of June. This tactic alone will score nearly two million impressions as moviegoers get a sneak peek of the summer's hottest new series before the most buzz–worthy movies including The A–Team, Knight and Day as well as The Twilight Saga: Eclipse.

Beyond the television and cinematic elements, a barrage of radio spots are scheduled to run in all the major markets in the weeks leading up to the premiere, in addition to an array of print ads in all the national dailies and display advertising on targeted websites such as TMZ, Perez Hilton, Yahoo! and AOL.

Plus, Global TV launched specially commissioned games branded to the series at Global TV Rookie Blue Visitors can test their own rookie skills with Training Beat, a group of seven original, police–themed games including crime scene examination, target practice, traffic control, speeding car pull–overs and suspect identification. Rookie Blues already robust online presence will also include a collection of specially–created web vignettes featuring fictional character "Officer Stryker,' who will take viewers behind the scenes of the rookie world as an extension of the series. As well, visitors can access character profiles and exclusive videos on Global TV Rookie Blue — the official Canadian Rookie Blue website.

Fans can also receive ongoing updates and interact with the show via all major social networking sites including Twitter (Twitter Global TV) and Facebook.

Complementing the vast off–air, on–air and digital media elements of the campaign are promotional rookie cards — a collectable item featuring glossy photos and key facts about the series' rookies. These cards will be distributed in a targeted fashion to consumers, advertisers and press in the weeks ahead.

In tandem with the marketing efforts, Global's comprehensive publicity campaign involved an original press kit in the unique form of a police academy notebook distributed to print, online, radio and broadcast outlets across the county. Additionally, the network is actively leveraging the homegrown cast with a number of targeted publicity tactics including an integrated press junket to build awareness of the series and the up–and–coming stars.

All creative and media plans were developed in–house through the Canwest Creative Agency and Media Strategy teams.

Commissioned by Canwest and picked up by ABC Television Network during development, Rookie Blue (previously titled Copper) was developed by Thump Inc. and produced in partnership with leading indie studio and distributor, El Entertainment.

This highly–anticipated original series is a one–hour, 13–part drama that follows the lives of five inexperienced rookies thrown into the world of big city policing — where even the smallest mistake can have life–or–death consequences. Shot entirely on location in Toronto, Rookie Blue features a diverse lineup of Canadian actors including Missy Peregrym (Reaper, Heroes) as eager Andy McNally; Gregory Smith (Everwood) as thrill–seeker Dov Epstein; Charlotte Sullivan (M.V.P.) as ambitious Gail Peck; Enuka Okuma (24) as feisty Traci Nash; and Travis Milne (My Green House) as police poster–boy Chris Diaz. The series examines the trials and triumphs, competition and camaraderie of this rookie family who are about to learn that no amount of training can prepare them for this job — or for life.

Global Television is a Canwest Broadcasting network.

About Canwest Broadcasting

Canwest Broadcasting operates Global Television and 18 of the country's most popular specialty channels, including HGTV, Mystery TV, National Geographic Channel, Showcase, History Television, Food Network and TVtropolis. Canwest Broadcasting is a division of Canwest Media Inc.

About Canwest Originals

Canwest is the proud home of the most diverse slate of Canadian Original programs across the Dramatic, Lifestyle and Entertainment genres. As a steadfast supporter of the Canadian production community, Canwest is dedicated to bringing the best of the country to audiences nationwide — including shows such as: Rookie Blue, Family Restaurant, Holmes Inspection, Ice Pilots: NWT, 16:9, Re–Vamped and Canada's most trusted entertainment news show, Entertainment Tonight Canada.

About Canwest Media Inc.

Canwest Media Inc. is a subsidiary of Canwest Global Communications Corp. (Shaw Media), Canadas largest media company. In addition to owning the Global Television Network, operating 18 industry–leading specialty channels and having ownership in 5 specialty channels, Canwest is Canada's largest publisher of English language paid daily newspapers and owns and operates more than 80 online properties.

For media inquiries, please contact:

Sánia Brum, Publicist
Global Television
(416) 934–7071
Sánia Brum

Grace Park, Publicity Manager
Global Television
(416) 967–2484
Grace Park