Canadian Heritage committee  Yes.

Canadian Heritage committee  Will I try that? Do you mean the gulf in terms of who provides the money?

Canadian Heritage committee  For us, the regulatory system provides the cable direct-to-home and satellite revenue, since a percentage of the company's revenue goes to Canadian content. Of that, it's 5%, and of that 5%, 20% can go to the private funds and 80% comes to the Canada Media Fund. On the policy question, if it is the case that people are cutting the wire, as they say, or unhooking from their cable service and viewing their content in other ways, and certainly trends are starting to demonstrate that, then the requirement for that vertically integrated company, to us, is only on the cable direct-to-home and satellite side.

Canadian Heritage committee  That's correct.

Canadian Heritage committee  It can. As we pointed out, we normally relish the revenue coming from the BDU side, because we budget very conservatively. As their fortunes gain, so do ours. That additional revenue has been from 7% to 10%. It dropped to 6% last year--

Canadian Heritage committee  --and to 2% this year. So there's a clear trend line.

Canadian Heritage committee  Our envelope system used to be called “broadcaster envelope system”. We dropped the word “broadcaster”, because we really feel that if there are other content distributors, such as the telcos or the ISPs, that actually want to provide support to content, they should be able to earn an envelope with us, along with the broadcasters.

Canadian Heritage committee  We've just finished the first round, which was highly oversubscribed, and the second round just closed. We're just at the analysis stage to put that whole.... You're referring to the experimental stream.

Canadian Heritage committee  We're just at the analysis stage. We're putting all of that information together in terms of demand and success rate, as well as in terms of the types of projects that have come up. I think Stéphane.... We had a few of the numbers in there. It's about triple what we can support in terms of available resources.

Canadian Heritage committee  Because the criteria for innovation were at the highest in that program, one of the things that we implemented this year was to bring together a jury of Canadian and international experts to assist us in evaluating the innovation criteria, because it was such an important piece.

Canadian Heritage committee  If I could just add, certainly we think as this convergence moves there will come a time when the requirement for a broadcast licence cannot be the only trigger. I'll use the documentary genre as an example. There are about three places where documentary filmmakers can get a licence now, and yet much of this content, particularly coming out of the north, will have European broadcasters, digital distribution, or other sources of distribution in it.

Canadian Heritage committee  The first thing is that Shaw and Quebecor have continued their contributions to the fund. Some changes, which are working well, were made last year around allowances for a broadcaster affiliated in-house. Neither the alarm that was expressed at the time from the independent production community nor the need that was expressed from the broadcast sector seem have been borne out.

Canadian Heritage committee  The first thing I'd like to say on that is that the fund is about 50% oversubscribed. Historically, prior to the envelope system, it was first come, first served. There was no requirement for a broadcast licence, and production companies lined up outside of the door of the old CTF and around the block.

Canadian Heritage committee  Clearly, the rapid change in the distribution, broadcasting, and production environment and the resource pressure downward on the fund will continue to create new challenges for the whole system, but also some new opportunities. In spite of all of this, we still are of the view, having been through the fist year of the implementation of the fund, that from a policy perspective it was the right thing to do.

Canadian Heritage committee  Thank you for the invitation to talk to you today. With us today are Stéphane Cardin, vice-president of industry and public affairs, and Sandra Collins, vice-president of finance and administration. I'm going to give you just a bit of an overview. Then Stéphane will talk about the convergent stream, and Sandra will speak to some of the issues surrounding broadcaster corporate groups and our revenue streams at the fund.