STANDING COMMITTEE ON
COMITÉ PERMANENT DU
[Recorded by Electronic Apparatus]
Thursday, November 19, 1998
The Chairman (Mr. Clifford Lincoln (Lac-Saint-Louis,
I declare open this meeting of the Standing
Canadian Heritage pursuant to the
order of reference of the House of November
3, 1998, a study of Bill C-55,
An Act respecting advertising services supplied by foreign
Appearing before us is the Canadian Business Press.
I would like to welcome the witnesses, and ask Mr. Terry
Malden, the chairperson and
vice-president of Maclean Hunter Publishing, to
introduce his colleagues.
Mr. Terry Malden (Executive Vice-President,
Maclean Hunter Publishing; Chairperson, Canadian
Business Press): Thank you.
I am executive
vice-president of Maclean Hunter and chair of Canadian
Business Press, which represents about 140 business
publications in Canada.
I'd ask my colleagues to introduce themselves,
Mr. Michael Atkins (Chair, Legislative Affairs,
Canadian Business Press): I have a small publishing
company in Canada, in both
business area and consumer publishing. I am the
chair of legislative affairs for the Canadian Business
The Chairman: Where is your operation based?
Mr. Michael Atkins: Actually, I started in the
hotbed of Canadian publishing, Sudbury, Ontario, but
we now have branch offices in Toronto.
Ms. Lilia Lozinski (Senior Vice-President,
Multi-Vision Publishing Inc.): I'm publisher
of Elm Street magazine, and a partner in a
small publishing company called Multi-Vision
Publishing. We also publish OWL Canadian
Family, Images and Healthwatch
We are located in Toronto, with branch
offices in Montreal and in Vancouver.
Mr. John L. Thomson (President, Beautiful British
Columbia): I'm president of
Beautiful British Columbia magazine, based in
Victoria, B.C. We publish Beautiful British
Columbia magazine and Beautiful British Columbia
The Chairman: Thank you.
I should mention, Mr. Malden, to you and your
colleagues, that if
you see a small attendance of members, it's because a
lot of committees of the House are sitting now. There's
a lot of legislation going through. Members will be
drifting in from time to time. In the interests of
time, however, I thought we would get started.
Mr. Malden, would you like to proceed?
Mr. Terry Malden: Yes, I would, thank you.
We're here, of course, to discuss Bill C-55.
Let me just mention that I
think you have there, or it's coming to you, a document that
covers the ground we will be covering in our
presentation this morning, and some additional material
we can refer to if questions come up that make it
To assess Bill C-55, in our view, it's necessary to
understand three things: what is the issue it
addresses; what's the source of the issue and the
solution required to address that issue; and third,
we're here because of an international trade dispute
what's the relationship between Bill C-55 and Canada's
international trade obligations.
Let's begin by
talking about the issue.
I think it's valuable to talk about the issue by first
mentioning some of the things that are not at issue in
this bill. One of the things that is not an issue is
free trade. There are no restrictions whatsoever on
the imports of foreign magazines into Canada. Foreign
publishers sell hundreds of thousands of magazines in a
totally open Canadian market.
Imported magazines in
fact account for 50%, according to Statistics Canada, of
magazines purchased in Canada, and for over 80% of magazines
sold on Canadian newsstands.
The issue is not
one of protecting Canadian publishers in the magazine
marketplace. As we've just said, Canadian publishers
have to compete every day with hundreds of thousands of
imported magazines. We have never asked for, and never
have been given, protection against import competition for
readers. The fact that we're able to succeed in such a
competitive market is due to the fact that we deliver
editorial content that Canadians want to read.
The issue is not restriction of what Canadians can
read, obviously. Canadians can and do buy magazines
from everywhere in the world. They demonstrate a
strong demand for information and stories about our own
Canadian society, but they also demonstrate strong demands
for stories from other countries, particularly the
What Canadians really want and what
they have and will continue to have under Bill C-55 is
The issue is not a breach by Canada of its
trade commitments to its trading partners. Bill C-55,
as we will discuss later on, is entirely consistent
with our trade agreements. In fact, I think the right
way to look at this issue is that Bill C-55 is needed
because of an American attempt to circumvent Canada's
rights under trade agreements to which it is a party.
The issue is not a ruling by the World Trade
Organization against Canada's policy in the magazine
sector. The WTO said, “We would like to stress that
the ability of any Member to take measures to protect
its cultural identity was not at issue in the present
What they were saying was that there was nothing wrong
with Canada's policy in this area. Only the previous
measures were found to be technically in violation of
So what is the issue? The issue is whether
Canadians will continue to have channels of
communication through which to share the values,
interests and stories that make Canada the best country
in the world. The issue is whether American publishers
should be allowed to threaten these channels of
communication by competing unfairly in the Canadian
advertising services market. The issue is whether
Canada will stand up for its interests and rights,
including our rights under international trade
Now let's talk about why this is an issue. Government
policy now and for the last 30 years has aimed to
ensure an environment in which our Canadian identity
can be maintained in the face of a huge amount of
foreign—particularly United States—cultural
product coming into this country.
Fundamental to this
policy has been the belief that Canadians must
continue to have the opportunity to read about their
own interests, stories, and values.
The government measures that have been in place and
that underlie Bill C-55 have been based on two important
premises: one, in a free and democratic society, media
should operate primarily in the private sector; and
two, Canadians should have the chance to tell
their own stories.
Now, those two premises mean that
Canadian publishers must be able to operate in a
viable, competitive environment.
Talking about where publishers compete, we have to
recognize that publishers compete for two groups of
customers—readers and advertisers. As we've seen,
Canadian publishers can and do successfully compete
with foreign publishers for readers in a totally open
market. But to survive, Canadian publishers also need
to be able to compete successfully for advertisers. We
should note that advertising revenues are essential to
any publisher's viability. They can account for anywhere
from 60% to 100% of a publisher's revenue.
clear that Canadian publishers need to be able to
compete successfully for advertising revenues if they
are to survive, given the importance of advertising
revenues to a publisher's commercial success.
The fact is, even the most efficient Canadian
publishers with the most loyal and interested audiences
could not compete with American publishers in the
advertising services market. So despite the demand by
readers for Canadian stories, Canadian publishers would
not survive in the face of unfair competition for
advertising revenues by American publishers.
understand why they're such a threat in the
advertising services market, we have to look at the
answers to four questions.
One, do U.S. publishers have an unfair and
insurmountable competitive advantage? Two, would U.S.
publishers exploit this advantage in the Canadian
advertising services market if they could? Three,
would Canadian publishers be displaced, and would they
lose market share to U.S. publishers in the
advertising services market? And four, would Canadian
publishers go out of business as a result if they were
to lose market share?
Let's go through these questions one by one. Do U.S.
publishers in fact have an unfair and insurmountable
advantage in the advertising services market? To
understand the answer to that question, we have to
understand how U.S. publishers could come into this
marketplace to sell advertising services if they were
allowed to. The way they could come into the market,
because they already have magazines with significant
circulation and audiences in Canada, is through the
publication of split run advertising editions, which
would bear very little incremental cost. They could
generate revenues without incurring very much cost at
In a split run advertising edition, Canadian
advertising would be inserted into the U.S.
edition, which is already sold in Canada, without any cost of
editorial or corporate overheads and with minimal
production costs. Really, it's just the cost of stopping the
printing press when the copies for Canada are being
printed, changing the printing plates to put the
Canadian ads in, and starting it up again.
this cost advantage, U.S. publishers could earn high
profit margins on the sale of advertising revenues.
Using our own publishing costs as the basis for making
this estimate—and Canadian publishers by any
comparison are as efficient on a scale-by-scale basis
as American publishers, so we can use our costs as a
representative way of estimating the profit margins
a split run could make, using our costs of
MacLean Hunter magazines in particular—we have
estimated that with the absence of those costs that
would not be incurred by split run editions, profit
margins could be estimated at anywhere from 50% to 80%
of the incremental advertising revenue. Even if U.S.
publishers believed they had to discount their
rates to take into account that their advertising
services would not be a tax-deductible expense under
section 19, margins could still be 30% to 70%.
These high profit margins obviously give U.S.
publishers a huge amount of room within which to
compete for advertising with Canadian magazines in
terms of discounting their rates to make themselves
more attractive. In the goods market, this would be
dumping. The practice in this marketplace is akin to
Unfortunately, there are no remedies to
address the dumping of services in current trade rules.
When you contrast the situation that American
publishers would be in with that of Canadian
publishers, the advantage is clear. Canadian
publishers cannot duplicate the cost advantage of
advertising split run editions—all publishing costs
are incurred in this market, in Canada.
Our advertising rates, therefore, must cover
all normal publishing costs.
So the answer to the question of whether U.S. publishers
have an unfair and insurmountable advantage is clearly
Would U.S. publishers exploit this
advantage in the Canadian advertising services market
if they could? There have been a number of studies
done for and by the government over the last 30
years when they've been called on to address this
issue, and all of them have
concluded that American publishers
would, in fact, be attracted to the profit
opportunities that split run advertising editions would
Just looking at Time Canada as the only major
example of a split run edition currently operating,
it's clear there is a huge cost advantage and that
the profit opportunity would be easily significant
enough to attract other split run advertising editions
of other magazines.
Canadian editorial content of
Time magazine and Canadian editorial costs are
minimal. If you take last week's issue, it had one
page of Canadian editorial content. I've not counted
pages, but I might note that if Time Canada has
five pages, on average, per issue, of Canadian content
over the course of the year, I'd be surprised. It
might cost, if it
did have that much, as much as $1 million to produce,
at the high side. Maclean's
magazine, which is its direct competitor as a news
weekly, has a budget of editorial costs for next
year of $9 million—an $8 million difference.
Time has around 25
employees. That's the number listed on the masthead,
it's a number that was confirmed to me by a colleague
of mine who recently left Time. Yesterday they
said 54. Whether it's 54 or 25, in comparison to
Maclean's 125 employees, there is a
huge cost advantage represented by that.
Time's advertising rates are, in fact,
30% to 40% below those of Maclean's, depending on the
target category that the advertiser is aiming at.
Time yesterday mentioned that Time's
rates were above Maclean's, but they
were talking about advertising rates on a
cost-per-thousand circulation basis.
bought on the basis of circulation, advertising is
bought on the basis of audience.
Maclean's, and most significant consumer magazines in
Canada are members of an organization called Print
Measurement Bureau, which measures the audiences of
magazines, regardless of the circulation. It is those
audiences that are the basis on which advertising is
bought. Time's rates are 30% to 40% below
those of Maclean's.
I think the final piece of evidence as to whether U.S.
publishers would exploit the advantage they have
in the Canadian advertising services market is that they
are aggressively pursuing it. They and their government
are aggressively pursuing access
to this market. Businesses generally actively pursue
something because they see a profit opportunity.
answer to the question of whether they would exploit this
advantage is clearly “yes”.
Would Canadian publishers be
displaced by U.S. publishers in the advertising
services market if they entered it? Well, a study
mentioned in yesterday's discussion, by Harrison Young
Pesonen and Newell, concluded that large portions of
advertising budgets would go to U.S. publishers.
Harrison Young also concluded that the
amount of spending in magazines would increase.
Their point was that magazines would gain a bigger
share of the total advertising expenditure in Canada
because there would be more titles to choose from,
particularly titles in narrow, special-interest
categories in which there aren't currently Canadian
magazines. But they concluded that only 24% of that would
go into categories of magazines where Canadian
publishers do have titles, and that in fact, even with
that 24% increase in revenues in categories in which we
have magazines, Canadian magazines would lose.
concluded that depending on the target audience
the particular advertiser was aiming at, anywhere from
30% to 90% of the advertiser's budget would find its
way to split run editions, which would be a huge loss
of market share to Canadian magazine publishers.
The last piece of evidence as to whether market share
would actually shift in any significant way to
split run editions is the fact that, as I think you
will hear next week, Canadian advertisers are clearly
and quite understandably attracted to the opportunity
for discounted advertising rates that would be offered
to them by split run publishers.
If we lose market share, will we go out of
business? We've already seen that advertising revenues
are crucial to the financial viability of publishers,
accounting for 60% to 100% of our revenues.
On page 6 of the document you have, there is a
financial analysis that indicates the effect on the
profitability of a magazine with a small loss of
The numbers on this page are based
on the actual financial results of one of our larger
and more successful Maclean Hunter magazines. I've
used a consumer magazine in this case, because I wanted
specifically to use a magazine that had significant
circulation revenue as well as advertising revenue.
I've taken the actual revenue for that
magazine, pretended it was $1,000, and then
indexed all the other revenues and costs to that
What you see is that in the current
situation, that magazine generates a profit that
is about 13% of
advertising revenue and something less than 10% of
The second column, or the “after” column, is what would
happen to our numbers if we lost 10% of our advertising
volume and if our rates went down by 10% because of
price competition from split run editions. You can see
that in this scenario, which is a pretty optimistic scenario
in terms of the amount of damage that could be done,
this magazine that is currently profitable and healthy
would no longer be that way.
So despite the success of Canadian publishers in
meeting the demand by Canadians for stories about
themselves—and that is clearly demonstrated—the loss
of advertising revenue to unfair competition in the
advertising services market would drive us out of
I'll go back through those questions one more time.
Do U.S. publishers have an unfair and insurmountable
Would they exploit that advantage if
they were allowed to? Yes.
Would we lose market share
in the advertising services market to split run
Would that loss of advertising revenue
force us out of business? Absolutely.
So what happens if this takes place, if this scenario
happens? Well, two things. Canadians are the
losers. They would lose an important channel through
which they currently share their stories, their values,
their interests—those things that serve to make
Canada the best country in the world.
publishers would, by the way, have no reason to incur
the incremental costs of adding Canadian content to
their split run editions. The reason they are
able to do split run editions and do it so economically
is that Canadians are interested in the non-Canadian content
those magazines deliver, and they would continue to
be interested in those magazines. Therefore, the
American publishers could continue to deliver the
audiences that advertisers would be attracted to
without going to the extra cost of adding Canadian
So there would be no offset to the Canadian
content and the channels of communication that Canadians
would lose with the disappearance of Canadian
So Canadians would be the losers, American publishers
would be the winners. They would have the opportunity
to make more money in Canada. Their
government also would be the winners. They would have
received a trade concession—namely, access to a
marketplace, the advertising services market, to which
they've never had access and never been given
access. They would have achieved access to
that market without
giving anything to Canada in return by way of any trade
concession on their side.
If Canadians are to have the opportunity to read
about their own interests, values and stories, Canadian
publishers cannot be subject to unfair competition from
U.S. publishers in the advertising services market. It
comes down to a choice between ensuring that Canadians
can continue to read about themselves or allowing
American publishers to make more money in Canada.
Let's talk briefly about Bill C-55 and its
relationship to Canada's trade obligations. Bill C-55
has become necessary because the U.S. overturned
Canada's previous measures through a narrow, technical
interpretation of GATT, the WTO agreement on the trade
in goods. That was because the previous measures
did, in fact, relate to magazines as goods. But I
remind you that in its ruling, the WTO said, “We would
like to stress that the ability of any Member to take
measures to protect its cultural identity was not at
issue in the present case”. Canada's policy was not in
question. Only the measures for implementing the policy
were found to be offside.
The new measure enacted by Bill C-55 does not
affect magazines as goods. It deals directly with the
advertising services market, and therefore falls under
GATS, the WTO agreement on trade in services. Under
GATS, the U.S. has no rights of access to Canada's advertising
services market, and Canada has no obligation to provide
Canada has specifically declined to offer
advertising services market access in negotiating
GATS, and the U.S. neither obtained nor paid for
that access. The U.S. in fact is now trying
to gain access to
Canada's advertising services market for free. To
allow them to do so, I submit, would not only be bad
cultural policy but also bad trade policy.
In conclusion, enactment of Bill C-55 is essential to
the maintenance of Canada's policy of fostering an
environment in which we can maintain our own Canadian
identity. It prevents unfair foreign competition in a
market to which Canada has never negotiated access by
It seems to me it would be doubly galling
to grant access to a market to foreigners in return for
no trade concessions, and then to allow them to operate
in that market in an unfairly competitive way.
serves the needs and wants of Canadians with a measure
that is entirely consistent with our obligations to our
trading partners. I might add that it's the only
measure that, after a couple of years of very hard work
by people inside the government and outside the
government, has been identified as both effective
in achieving the policy objective and consistent
with our trade obligations.
You may hear next week—and I think it's often said—that
people who oppose this
particular measure and previous measures support the
policy objective but are just objecting to the measure
itself. I think the question that has to be asked
is, what's the alternative that is both effective and
meets our trade obligations?
Failure to enact Bill C-55 would make Canadians the
losers and Americans the winners. In the interests of
Canada, Bill C-55 deserves your support.
The Chairman: Thank you very much, Mr. Malden. I
think you've made your point of view very clear to us.
I would like to open the meeting for questions, unless
your colleagues have something to add.
Mr. Eric Lowther (Calgary Centre, Ref.): Mr.
Chairman, I came in a little late. I apologize for
that. Perhaps I could get a question on the
second round. I'll forgo my first position at this
The Chairman: All right. Thank you.
Mr. Benoît Sauvageau (Repentigny, BQ): First of all, I'd like
to thank you, ladies and gentlemen, for appearing before our
committee. I don't usually sit on the Heritage committee; today I'm
replacing Ms. Suzanne Tremblay, our Heritage critic, who apologizes
for her absence. I am a regular member of the Foreign Affairs
Committee, where I sit as the international trade critic for my
party, so if I may, I will ask questions on that particular aspect
of the bill.
I don't want to be unpleasant, but I believe that this is a
somewhat touchy subject—I know this may sound political, but I'll
do my best not to make it so. Are we not treading on sensitive
ground when we say that we are the best country in the world when
we negotiate, for example, with the Americans or the French? How do
we rank those countries? Do they rank tenth, seventh, or ninth? If
I were to take part in international negotiations, and if I were to
make that type of statement about my country, I think that, as a
Canadian negotiator, I would feel somewhat uncomfortable. But
that's my personal opinion.
My question is twofold. Firstly, at point 5 of the document
that you submitted this morning, we read the following question:
"Aren't we subjecting ourselves to the possibility of retaliation?"
Secondly, you state that:
Canada is entitled to adopt new measures that respect its trade
agreements. Bill C-55 does just that.
However, in point 4, you don't seem as certain. You say:
If Bill C-55 is not agreed to by the WTO, the validity of the GATS
and the structure of the WTO agreements could be challenged.
I find that statement rather hard to swallow. Knowing that
Bill C-55 could be challenged by the WTO—that's why we are
discussing it this morning and why we have already discussed it at
length—do you really think that if that were the case, the entire
structure of the WTO would be revisited, rather than simply the
legislation that would have been passed here?
Mr. Terry Malden: I'm not sure I'm qualified
to answer that question. My understanding, from all the
advice we publishers, who are not trade experts,
have been given by our trade experts and lawyers,
is that Bill C-55 is clearly consistent with GATS and
should clearly be adjudicated by GATS.
you referred to under point four is simply
saying that if a measure that's constructed
as clearly, as a
services measure, as this is not found to be
adjudicable under GATS, and somehow is found to be
adjudicable under GATT, then you have to wonder what the
two different agreements mean, and whether GATS has any
meaning in a general sense at all.
I can't comment on
what the implications would be for the more general
trade questions you've asked.
Mr. Benoît Sauvageau: Agreed. I will attempt to ask another
The Chairman: Mr. Malden, if any of your colleagues
comment or jump in to amplify the answer,
they should, by all means.
Mr. Benoît Sauvageau: If we paint ourselves into a corner, so
to speak, with respect to advertising in split-run editions of
magazines, do we not risk depriving ourselves of other tools when
we negotiate other agreements with the United States or other
countries? For example, we are at this time negotiating a
free-trade zone with the Americas, and we are constantly
negotiating with the Americans or with other partners. Do you think
it could be harmful if we were to maintain Bill C-55? I don't have
an answer to that question; and it isn't a trick question. I fear
that this bill could be harmful to us when we undertake other
Mr. Terry Malden: My view on that would be
that Bill C-55
has been drafted in good faith by the Canadian
government to be consistent with our trade
obligations, and that Canada was very careful
to not include access to the
advertising services market in the GATS agreement.
Therefore, it is not doing anything that should be seen
to be contrary to our trade obligations, or should have
any impact on the impression that Canada is totally
committed to rules-based trade.
What we are saying is
that there are rules, and we just want to live by those
rules. This measure does that.
Mr. John Thomson: Perhaps I could add to that.
trade-offs are made in international trade
negotiations, with different things given back and forth
countries, I think we can theoretically talk about that
with respect to this issue, but quite frankly, I don't
think any of us believes for a minute that Canadian
culture is negotiable. The bottom line is that we are
entitled to a culture in this country. It's unique. It's
distinctive. It's different from anywhere else in the
world. It's what makes us love living here.
We're proud to be different from the
At some level, that's just never
negotiable. It's not on the table. What we're
concerned about is making sure it stays that way.
Mr. Benoît Sauvageau: I see, thank you. The Multilateral Trade
Agreement gave us an example of non-negotiation on culture. I have
no problem with that.
Finally, I would like to comment on something that I read in
today's press clippings. I was absent when it was discussed, but
I've learned that my Reform colleague Mr. Solberg had stated that
Bill C-55 was in fact a lobby by two large Canadian publishers in
order to make money and protect themselves against the Americans.
I don't share that opinion, and I would like to know what you think
about this statement that was made recently before this committee
and that you have no doubt heard about.
Mr. Michael Atkins: I have not ever, in my life,
worked for Telemedia or Maclean Hunter. I own my own
business. In fact, I compete reasonably effectively
with my colleagues here.
That's just nonsense, and
should be treated as such. It's a political
statement to make that kind of remark.
Perhaps I could draw your attention to these two
magazines we've passed out. You'll see hundreds
and hundreds of Canadian magazines, many of which
can not and will not exist if this predatory kind of
policy is allowed to exist.
throw in some silly remark that there are certain
companies that are central to this is just not
fair, and certainly doesn't represent the truth.
Ms. Lilia Lozinski: I would like to respond to
that as well, being a small publisher.
Probably just under 300 magazines belong to an
organization called CMPA, the acronym for
the Canadian Magazine Publishers Association. This
organization and MacLean Hunter and Telemedia are all
part of this, and we're all in this together. This
isn't a big company against a small company. I'm here
to represent the little guy along with the big guy
Mr. John Thomson: I would also speak to that point.
Our magazines, too, belong to CMPA. We also belong to
the British Columbia Association of Magazine
Publishers, which has about 20 members. At their
annual general meeting in September, they passed a
motion of that association in support of this measure.
That was passed
without opposition from any member. I can tell you
that the B.C. Association of Magazine Publishers
includes members from all points in the political
spectrum. It includes arts and literary journals of
tiny size as well as some significant, substantial
The reason the B.C. association is unanimously in
favour of this, as is CMPA, is that they're
concerned about retaining a Canadian cultural space in
this country. You know, there's a gigantic
American entertainment industry that
has the wealth and power and political access in
Washington to bully their way into our market and beat
up on people offering advertising services in Canada.
Mr. Benoît Sauvageau: I would like to close by saying that I
am happy to hear that all points in the Canadian political spectrum
are respected in British Columbia. Thank you.
Mr. Mark Muise (West Nova, PC): Probably all of them.
The Chairman: Go ahead, Ms. Lill.
Ms. Wendy Lill (Dartmouth, NDP): Thank you.
Thank you for coming. I also apologize for
arriving here late.
I'd like to pick up
on your comment; it sounds like we had some people
beating up on our
committee last night around this issue.
I'd like to ask for some comments on a sheet I have
here, put out by the Embassy of the United
States of America, “The Facts on Bill C-55 and
Canada's Magazine Policy”.
I'd like your comments
on this statement, because I'd like to know how to
respond to this:
Advocates of C-55 often refer to the proportion of
Canadian newsstand space occupied by U.S.-based
magazines. First of all, the percentages given in
these statements are no better than conjecture, since
there's no formal or scientific measurement for
newsstand space. More importantly, much of the Canadian
magazine market is supplied through the mail by
subscription, and estimates are that Canadian magazines
have at least four-fifths of the subscription market.
What do you make of that statement? I think we all
have trouble trying to understand the difference
between the 80% and 50%, and whose magazines are
actually getting into Canadian homes.
Mr. Michael Atkins: I think Terry may be able to
speak more to the specific numbers, but the reality
is, I mean, I invite anyone in this room
to wander down to a local
newsstand. Go to the Ottawa airport and take a
look at what's there. Take a look at the little kiosks
that are bought by the American publishers to display
go anywhere, to any significant newsstand anywhere in
this country, and not have a foreign country's magazines
dominate it. I don't care if it's 70% or 90%; it's a
reality. It takes no genius to be able to see that
at the Ottawa airport on your way home.
I recommend that this be the solution to the conjecture
that is referred to.
Mr. Terry Malden: I guess the other response
I would make
to this is that, first, the numbers we use come
from Statistics Canada, so however they measure them,
we've just used them.
Secondly, though, as we've pointed out, the issue
isn't whether Canadian publishers do compete
successfully for readers, because we do, and we do
because Canadians want to read what we have to
deliver along with what they want to read
in foreign magazines,
We've never denied that we
do okay in competing for readers. We're saying that
despite our ability to compete there, we can't survive
if we have to compete for advertisers.
So I don't think the issue of
how healthy you are with respect to readers is a
Ms. Wendy Lill: Okay.
I'm interested in understanding
more clearly where postal subsidies now sit in this
equation. Have postal subsidies for Canadian magazines
disappeared? What's the status? Are American
magazines, the ones that are grandfathered, now
going to be receiving them?
Maybe we could have some
clarification, in your estimation. I know postal
were the backbone of Canadian magazines' survival for
Mr. Terry Malden: Well, they're an important part of the
economics of a magazine's commercial performance.
Several years ago, controlled-circulation
magazines—and that's what most of the business
are, non-paid circulation, delivered for
free to specialized audiences—lost subsidies
altogether. So they will now be paying the same postal
rates as foreign magazines coming into this country.
Consumer magazines, paid-circulation consumer
magazines, will continue to receive the postal subsidy.
The WTO had an issue with the way in
which that subsidy was paid, but not with the fact of
subsidization. The proposal is that the method
of distributing the subsidy be brought into compliance
with WTO requirements, which will leave a difference
in postal rates for Canadian magazines versus foreign
I don't know what the
percentage is, but much more than 50% of the
circulation of the normal U.S. magazines circulated in
Canada is done through newsstands, so they're
not hugely affected by postal rates.
Ms. Wendy Lill: Okay.
The Chairman: Thank you. Mr. Muise.
Mr. Mark Muise: Thank you, Mr. Chairman.
I'd first like to start by thanking our guests today.
Like most members of this committee, I have a real
concern about the influx of split run magazines in
Canada. I think it's clear we understand that if
produced in the States, and effectively they just change
the plates, as you mentioned, they can sell
ads for much reduced prices. That really concerns me.
But from our point of view, we have to assure
ourselves that we're doing the best thing possible to
assure that this does not continue in such a way
that we don't negatively affect our position
I'm wondering, are there other ways
that you could see we could accomplish more or less the
same thing by using either tax incentives or
disincentives, or something like that, other than this
type of legislation?
Mr. Terry Malden: Michael and I worked on an
industry task force with our own independent experts as
advisers, and then we had some contact with Heritage,
as it looked at alternatives. I can tell you that none
of us were able to come up with a measure that was
effective, that would achieve the objective and be
consistent with trade obligations.
We looked at
subsidies as one solution, but whether or not that
would be consistent with trade obligations, there are
kinds of reasons why it wouldn't achieve the policy
objective. There are also all sorts of questions
about why the Canadian taxpayer should have to pay for
the incremental profits of American publishers. So
aside from whether it works, was it a good solution for
And tax breaks and so on, no, we could not...and there
were independent financial economic experts who looked
at those kinds of things and drew that conclusion.
Mr. Mark Muise: Okay.
Another issue that some
witnesses pointed out to us—and I know this won't
affect you directly, but I'd like to hear your
opinions on it—concerns clause 21, or the
have mentioned to us that the way clause 21 is written
at this present time, it leaves too much to
interpretation, and it doesn't give them the protection
they would like to see there. They have
suggested that the grandfathering should basically just
list those who are already there, and have been there
for a long time, so they just can continue with the way
I'd just like to get your opinion on that, although
understand it doesn't affect you directly.
Mr. Terry Malden: Right.
Both Canadian publishing
associations, business and consumer magazine,
desire to see Time magazine, for example, capped in
terms of the amount of revenue it's allowed to
generate, but whether or not the suggested changes to the
grandfathering clause is a good way to do it from an
international trade perspective, and from a legal
perspective, I don't feel capable of commenting on.
other words, presumably the wording is there for a
reason, but perhaps not. Perhaps the recommended
solution is acceptable.
In other words, we don't object
to Time magazine being able to grow
Time magazine's business in Canada. It's an
established business, and it should be grandfathered.
Mr. Mark Muise: Would any other members from the
group like to speak to
Mr. Michael Atkins: Once you've
crossed the bridge of grandfathers, then I think
you should stay with it, so we don't have an issue
with capping. I don't understand that this was the
intent at all of the legislation, so as to the mechanics
of how you would address that kind of a specific
concern, I think we'd have to defer to others.
Mr. Mark Muise: So what you're saying is that the
publishing industry doesn't have a problem with, for
example, Time being there and
continuing to do its thing, as it had in the past.
Mr. Michael Atkins: Right.
Mr. Mark Muise: My last question is, could you
tell me approximately what percentage of gross revenues
of the publications—for example, that you represent—are
used to hire Canadian writers and editors in relation
to the purchase of articles and features from Canadian
Mr. Michael Atkins: That's a tough question to
answer, for a couple of reasons. The variability of
whether you have a very high press run or low press run
changes the percentages. In other words, I have a small
business publication in northern Ontario, and a high
percentage of my investment is with editorial folks.
It would run 20% to 25%. But the national golf magazine
I have would have a low
percentage, because it has 125,000 circulation.
it's not a very reliable fact, because it could
run anywhere from 10% to 20%, depending on the size of
your press run, not the size of your staff.
Mr. Terry Malden: I guess one of the
realities of the situation we face is that
many of the costs of publishing a magazine are the
same regardless of the scale of the magazine. If
Chatelaine spends $2,500 a page, on average, to
create an editorial page with, in our case, 800,000
circulation, Better Homes and Gardens in the
States, with 5 million circulation, probably
doesn't spend much
more than $2,500 or $3,000 a page.
advantage that big publishers have over small
publishers within any given market, and also between
Canada and the U.S.
Ms. Lilia Lozinski: But in any given issue,
ultimately, for a publication like Elm Street,
we have a
full-time staff that works on the magazine, but we hire
approximately, depending on the issue size, anywhere from
35 to 45 freelancers per issue. These are writers,
photographers and illustrators to provide that content,
and that Canadian culture we're talking about.
We're doing this on a per-issue basis. Over the course
of a year, that may be 360—whatever the math works out
to—freelancers, writers, illustrators,
photographers, and stylists that we are hiring
to provide this
content for the Canadian reader.
Mr. John Thomson: I would echo the previous
comments. We have two magazines. One is about a
quarter of a million circulation, and the other is just
about 120,000. For the smaller one, editorial costs are
more than 20%. For the bigger one, they're in the
12% to 14% range. Yet we spend more per page on the big
magazine than we do on the small.
As with Elm
Street, there is a whole community of freelancers
throughout British Columbia who contribute to our
magazines. Our existence is a big part of their lives,
for them to tell their stories from all the nooks
and crannies of B.C.
Mr. Mark Muise: Thank you.
The Chairman: Thank you, Mr. Muise.
Mr. Lowther, you had agreed to skip your
turn because you came in late. Would you like
to have a turn now?
Mr. Eric Lowther: Yes, thank you, Mr. Chairman. I'll
be quick. I appreciate that very much.
I certainly agree with a lot of what the witnesses are
saying here about the importance of Canadian culture
and wanting to protect it. You know, we're all there. We
wouldn't be here if we didn't care about our country,
and maintaining it and strengthening it wherever we
I just wonder about this particular vehicle of this
particular bill. I want to speak to a couple of
One, we talked about newsstand space as an
indication of how that Canadian cultural space is being
invaded. As I understand it, newsstand space is
purchased more than anything else, and I don't know how
the purchasing patterns would really change with this
In addition, as I understand it, this bill says that if
100% of the product of a magazine you produced was
Canadian arts, let's say, and 100% of the shareholders
were Canadian, if the chairman happened to be
American, that would not qualify under this particular
bill—all within the context of providing Canadian
product to Canadians. I mean, it doesn't seem to me
My primary concern is this. I have a Canadian business,
let's say, and that wants to advertise to a Canadian
audience, but there isn't a Canadian magazine that goes
to that audience, or at least not a good fit—a sports
periodical, let's say. That Canadian business is now
forced to advertise to the North American market to
target his Canadian market.
Do you have any comments on his dilemma?
Mr. Michael Atkins: I think you'd find that it
would be a pretty rare occasion that you'd find such an
issue. It's possible, no doubt, that there are niches
out there, particularly on the business press side,
that are small enough that they don't attract the
attention of a regular magazine.
Mr. Eric Lowther: How about Bauer skates in
Mr. Michael Atkins: There are any number of
places to advertise.
Ms. Lilia Lozinski: There isn't a shortage of
media or vehicles in which the advertisers can
advertise in this country. We have magazines
on the table right now that list Canadian magazines.
I mean, let's
face it, beyond just the televisions and the radios and
all of that, there's rink board advertising,
little league hockey, the minor leagues,
the triple A teams.
Mr. Paul Bonwick (Simcoe—Grey, Lib.): There's
Ms. Lilia Lozinski: Yes, there's Hockey News.
There's also washroom advertising, grocery carts,
floor advertising. GE is making a light bulb
that's going to talk to us soon.
It's the Pepsi challenge, right? As soon
as you turn on the light.
So there isn't a shortage of vehicles in this
country, realistically, or there isn't a shortage
media, if you really wanted to get that message across.
Mr. Michael Atkins: I think something else that is
a growing reality is the emphasis and the power of all
the advertising decisions made in the
United States and such. I don't think you will find
that there are very many niches a Canadian
advertiser cannot address. There may be one or two,
but certainly skates wouldn't be one of them.
There are all sorts of smaller publications
that get to their
target markets right across the country.
Mr. Eric Lowther: Okay.
I'll pass, Mr. Chairman.
The Chairman: Mr. Godfrey, and then we'll get on
to the second round.
Mr. John Godfrey (Don Valley West, Lib.): Thank
you, Mr. Chairman.
Thank you for coming, folks.
I have some questions that were prompted by
Time's evidence yesterday. I would gather from
some remarks that Mr. Malden made that he's aware of
what was said, so I thought I would allow perhaps
an expanded response to some of those comments.
Toward the end of the testimony—and I have to
admit, I was not here at the beginning, so I'm going both
by the written brief and what I heard myself—I think
there was a direct question asked of Time
economics of split runs.
I think the question came
down to, well, is it likely that if we didn't do what we're
going to do, there would be more split runs
that the economics of split runs would encourage
further incursions into the Canadian market? I
believe I heard the representative of Time say
“no”. I wanted you to be able to respond to that.
In your appendix, for example, you seem to make the
alternative case, but I thought you might want to
possibly take a swing at that one.
Mr. Terry Malden: I think the appendix is
the best way I know to
address that question. Probably the second-last
page of the hand-out is the place I would refer
What this is meant to do is to show what the
profit opportunity for a split run advertising edition
would be. I've used actual numbers in
this case—which I hesitate to do, with my competitor
sitting beside me—for one of
our publications that happens to be of a circulation
size that is comparable to several U.S. magazines
operating in Canada.
Mr. John Godfrey: Have your associates guessed?
Mr. Terry Malden: They will quickly guess, yes.
Voices: Oh, oh.
Ms. Lilia Lozinski: I want a $9 million editorial
budget, let me tell you.
Mr. Terry Malden: I've shown
the actual results we achieve on one of our
consumer magazines. The second page of numbers is on
one of our business publications.
So these are real
numbers. What they show is that we make a margin on
our business of about 11.2% of revenues.
The numbers a split run would be looking at if it
did it...and we're talking here just incremental.
always have to remember that U.S. publishers will make
their decisions as to whether to come based on
incremental revenues and incremental costs, because
they're already here with their circulation revenues,
and their production costs and so on, and they must be
making money through those numbers or they wouldn't be
here. So all they're faced with is, “Do we, given that
we're here, and are incurring all those fixed revenues
and costs, go after advertising revenues?”
So the second column is what the numbers would look like
to a split run edition, if all it had was incremental
advertising revenues to consider, and incremental
printing and distribution costs and advertising sales.
The cost numbers I will explain as printing and
distribution, $300,000, is just the cost—quoted
by our printer—of taking all the
existing ads out of our magazine and replacing them
with other ads when the copies are printed. It's
trivial, as you can see.
Then I'm assuming that the split runs would bear the
same cost of selling advertising in Canada as we do.
That's all they would have. They don't have any
editorial costs they would have to incur. Their
circulation costs are part of what they're
already doing. Management and administration; they
would not set up operations in Canada to just sell
advertising. So what they end up with is an 80%
The number below that shows that
if they set out to generate a
profit that was identical to—I almost mentioned the
magazine—the “Maclean Hunter magazine”, they
could cut their rates by 64% and end up with that same
million-dollar bottom line.
Now, they wouldn't do that. They wouldn't have
to do that to win market share from
our magazine. But they clearly have huge room to
Mr. John Godfrey: Thanks.
I have two supplemental questions prompted by
Time's presentation yesterday. The first really
tags onto what Mr. Lowther was asking, but focuses
specifically on the magazine medium.
I'm just going
to read you two sections from their presentation,
on pages 8 and 9. There's a
reference to the underdeveloped nature of
the magazine medium in
Canada, which is caused primarily by, “lack of
advertiser available titles and little or no Canadian
title coverage for many editorial
segments—specifically Men's, Sports, Fashion and
Then it says:
You might question representatives of the CMPA
when they are here next week why their
members have not moved more
aggressively on price, unique editorial content or
Now, I realize you're the business publications, but
you might want to take a swing at that one.
Finally, I just want to understand the response
you made to Mr. Muise. I'm still a little
confused about what the “freeze” means.
Is it your
understanding—and perhaps I should be asking this
of somebody else—that the freeze applies...?
case of Time, they interpret it as applying to
their existing Time magazine business. Is that
the way you interpret it, or do you interpret it to new
Those are the two
questions—first, Time's observations
on the nature of the
Canadian magazine market, specifically, in terms of what
it offers advertisers, and then this issue of the
Ms. Lilia Lozinski: I'm sorry, but could you just
repeat the categories you quoted?
Mr. John Godfrey: The categories that Time
quoted were men's, sports, fashion, and youth.
Then they sort of go on about targeted audiences
and unique editorial content.
That gives you
something rather specific to respond to.
Mr. Michael Atkins: I'm involved in two areas of
sports. We do a variety of publishing with the
National Hockey League and such, but we also have a golf
To go directly to the question of what is the
percentage of advertising that is attracted to the
category of magazines—and I won't mention the
companies, because maybe one day we'll get them—the reality
is that when we put on our packsacks and go down to New
York to ask them why they're not advertising in our
wonderful golf magazine, they say, well, it is a wonderful
golf magazine; it's not all that interesting to
me, because it's about Canadian golfers and Canadian
courses and all the rest of it. And the reality is,
the spill-over we get from United States we believe
to be sufficient—which is to say perhaps Sports
Illustrated; it comes into this country, because
there's nothing to stop it; we're happy to get it,
and some people buy it—and a variety of other American
publications that fill that newsstand that we made
reference to. A number of advertisers feel that they
have covered at least part of the marketplace by that
So the market is naturally, in Canada, smaller
all over the place, whether it's our media or
We could give you any number of examples of major
advertisers that love our product but just don't think
they want to—
Mr. John Godfrey: I guess the focus would be on
Canadian advertisers who feel that this might be the
best vehicle, sort of along the lines of what Mr.
Lowther was saying.
So it's Canadian advertisers feeling that there isn't a
Canadian magazine that would do the job as efficiently
as some American product.
Mr. Michael Atkins: I think this should carry
on to someone else, but my remark would be that we are
in a smaller market, so there are some niches that
we may not be covering. Others could speak more
directly to that than I could.
Mr. Terry Malden: I'd like to address that, if
The argument that there aren't magazines in these
kinds of segments in Canada, that it's
because of protection in the advertising services
market, doesn't make sense to me.
The fact of the matter is, we all spend
significant parts of our working life looking for
opportunities to grow our business, and we often
think, “What about this magazine idea, or what about that
The areas they've mentioned
are special interest areas. What that means is
that in the States or in Canada, a special interest
magazine attracts a circulation and audience size,
because of its specialization, that's smaller than the
big, broad type of magazines, like a newsmagazine or a
woman's service magazine.
We talked earlier about the economies of scale
that publishing involves, where it costs no more to
produce a page of editorial on sailing in the U.S. than
it does in Canada, but in the U.S., if they generate
600,000 circulation for that type of magazine, we in
Canada might expect to generate 60,000 circulation.
So the ad rates we can charge are maybe a tenth of
what they charge, even though many of our costs, not
only editorial but other fixed costs, are the same.
Maclean Hunter used to publish boating magazines
and skiing magazines and tennis and
other racket sport magazines, and year after year we
lost money. The fixed costs are the
same but the audience size isn't big enough to generate
high enough advertising rates to cover our costs.
As well, Canadians in some of those categories find
U.S. magazines to be better for them, I'd have to say,
than we could afford to produce, because they're bigger
and they're thicker—and a boat is a boat. You can read
an American magazine about yachting and find it every
bit as useful to you as a reader as a Canadian boat
magazine. So when you go to the newsstand and you see
magazine that's 100 pages and your choice is an
American magazine that's 250 pages, we often lose out.
So we're not not in those marketplaces because
we don't want
to be; we're not in them because the economics are not
When Harrison Young
talks about the growth in money going into magazine
advertising that would result from split runs, what
they're talking about is split runs of those special
interest publications coming in and being available for
advertisers—who are currently using other vehicles, by
the way, as Lil said—for them to now have a place to
put ads in the magazine sector if they choose to do
that. They say nothing about Canadians' ability to
produce those kinds of magazines all of a sudden.
Mr. John Godfrey: But if I'm a Canadian yacht
manufacturer and there are no Canadian boating
magazines, is the only specialized vehicle for me to
try to get to the Canadian market then an American
Ms. Lilia Lozinski: There's a lovely magazine
called Cottage Life.
Mr. John Godfrey: Right.
Ms. Lilia Lozinski: It's very targeted, very
Mr. John Thomson: There's also Pacific Yachting
and Canadian Yachting.
Ms. Lilia Lozinski: Sorry; now we're getting
Voices: Oh, oh.
Mr. John Thomson: If you look at that catalogue
of magazines, which has
been distributed, there are nearly 300 different titles
there. There are few imaginable special interests that
some entrepreneurial Canadians have not somehow found a
way to address with a magazine, even though the
economics are strained, to say the least. There are
people who believe in these areas, and are so interested
and passionate about them that they'll do it out of
their basement or garage or with three friends. They
will find a way to get magazines out that are outside
the conventional economics, and also inside.
On the subject of youth, we have some fantastic
children's magazines in this country. One of the top
national magazine awards this year was won by
Chirp magazine, a new magazine for
preschoolers, for toddlers. It's terrific. It's as
good as anything I've seen in the world.
Mr. Michael Atkins: In fairness—actually, not
in fairness—to Terry, some
of those magazines he referred to are still publishing.
Somebody else is publishing them.
Mr. John Godfrey: I didn't want to get into that.
Quickly, the freeze—or is that inappropriate in terms
The Chairman: Yes. I think we'll move on for
now. You can come back after, Mr. Godfrey.
Mr. John Godfrey: Fine. Thank you.
The Chairman: I have a request from Mr. Bonwick,
followed by Mr. Bélanger.
Mr. Paul Bonwick: Thank you, Mr. Chair.
First of all, I
want to thank you for coming forward and to
congratulate you for actually providing some substance
and some factual detail to back some of your statements
rather than just broadbased statements or aggressive
statements saying, “This is the way it must be”.
Rather, you've provided us with graphs and something we can
actually examine, something that substantiates your statement.
It's very well done.
As the committee is moving along here, we've heard
from a variety of witnesses, and I'm starting to form an
opinion—that Bill C-55 is not about
censorship. It's not about protection. It's not
about subsidies of a magazine industry or a specific
section of our economy. It's about Canadian values,
Canadian culture, Canadian messages, Canadian
At the risk of repeating myself, what I'd like to do
is provide you with a couple of questions I've tried to get
out at different points in time, and to get your perspective
on them. I'll try to come full circle as I do so.
The first question involves distancing yourself.
From a federal government perspective, do you see a
responsibility for the federal government in ensuring
that Canadians have access to Canadian stories, to
Canadian publishers, to Canadian vehicles to deliver
Mr. Terry Malden: We definitely believe in
that. Despite the fact that we have a profit motive
behind our position, I think all of us believe that as
I was watching a newsmagazine program on TV the other
night, and it was talking about I think the 90th
anniversary of the Yukon gold rush. It was a story
about people going up the Chilcoot Trail in
celebration of the 90th anniversary. They interviewed
people as to why they were doing it. One woman
said she had read all about it in Maclean's
magazine when she was a kid, and when she heard about
this, she wanted to do it. My wife turned to me and
told me I should take that clip to the hearing.
Because that's what we're
talking about; American magazines wouldn't tell that
Mr. Paul Bonwick: The question itself seems
simplistic in nature. It's funny, because
the chap from Time who had
travelled up from New York had stated that, yes, he
sees the federal government as having that kind of
responsibility as well. But as we travel through the
questions, I think it comes right back full circle
again, then: How does the federal government ensure that
very simplistic question, and in turn that simplistic
Could you tell me what percentage of Canadian
advertisers—and I know there are competitors here at
the table—represent, proportionately speaking, the total
component of advertising within your magazines?
How dependent are
you on strictly Canadian advertisers?
Mr. Michael Atkins: It depends on your market. In
the business press in particular, there's tremendous
variance. In the high-tech sector, the number of
advertising Canadian companies would be 25%. Other
sectors may well be much higher, but it does vary by
So we can't give a flat answer to
that. In some areas it's quite low, and in other
areas it's quite high.
Mr. Terry Malden: Speaking for Maclean Hunter,
we have medical publications where
100% is Canadian advertising, and we have industrial
publications where 35% is Canadian and 65% comes from
Mr. Paul Bonwick: I don't mean to be rushing you
along, but I have four or five questions I want to
get through here. Again, it's open to the panel for
comment, whomever wants to share in it, if the answers
could be short.
As an expert in the industry, do you see anywhere
where Bill C-55 restricts Canadian people having
access to foreign
publications; censorship, in other words?
Mr. John Thomson: Absolutely not.
Mr. Paul Bonwick: Because that was certainly a
word that was used on different occasions yesterday.
Again, as experts in the industry—I'm a lay person
just trying to go through this stuff—do you see any
censorship provisions in Bill C-55 on editorial
content, as you've reviewed it?
Mr. John Thomson: No, absolutely not.
Mr. Paul Bonwick: Because there were a lot of
statements made yesterday on censorship and freedom of
the press. That was a general direction of the
Perhaps there were people brighter
than I am, reading it, and I just missed it, but I didn't
see anything that was censoring editorial content.
The Chairman: Mr. Malden, if you want to be on the
record, you have to do more than shake your head.
It won't appear in print.
Mr. Paul Bonwick: Obviously, then, by way of
response you don't....
Based on Mr. Godfrey's comments,
again based on four expert opinions here, do you see any
provisions in the bill—and I think this is incredibly
important for advertisers, as we'll be hearing from them
next week—restricting them from advertising in foreign
publications on a general level? Have you seen
anything in there on that to suggest that?
Mr. Terry Malden: No.
The Chairman: Can I pass on, and come back to you?
Mr. Paul Bonwick: Well, if I'm out of time, obviously.
The Chairman: Monsieur Bélanger.
Mr. Mauril Bélanger (Ottawa—Vanier, Lib.): I'll
pass in favour of Paul. He's on a roll here.
The Chairman: All right.
There you go.
Mr. Paul Bonwick: I have one last question.
Then perhaps I can draw a conclusion and ask for your
opinion on that conclusion as well.
You've shown us a very detailed analysis—and I thanked
you at the start—showing obvious cost-of-production
advantages for split runs or for a publication that is
producing, for example, 10 million versus
100,000, or whatever the number might be. Yet the
gentleman from Time yesterday stated unequivocably,
very clearly, there was no cost-of-production
Based on that cost-of-production advantage, do you see
an opportunity whereby foreign publications could come
in and markedly reduce their display advertising or
their advertising rates in such a way as to just make
you completely uncompetitive, and thereby not an
Mr. Terry Malden: Yes, absolutely, although the
example we gave in the appendix was not based on
economies of scale; it was based on just the absence of
costs because of a split run approach to
But, yes, in addition to that there are all kinds of
economies of scale because of the fixed cost nature of
much of what goes into publishing.
Ms. Lilia Lozinski: On your point, you used a
number of 10 million. Please understand that
a lot of these magazines in the U.S. market are
printing 2 million to 5 million copies. So
ultimately, to keep the button on the press
going, their unit cost, obviously,
is much less in competition—in Canada,
say—with a Canadian Living or a
Chatelaine, at 600,000 or 800,000 copies.
Mr. Paul Bonwick: I think it's incredibly
important that the record show that, because the
opposite was stated yesterday.
In conclusion, I go back full circle to my
original question. If the government has a
responsibility to Canadians, to make sure they
have access to Canadian stories, to Canadian culture,
to make sure there's a Canadian mechanism
or Canadian vehicle in place to deliver those
things—and it's been clearly demonstrated that
split runs would have an incredibly negative
impact on your industry, on your publications;
that there are no censorship provisions; that there are
no provisions in there
to restrict Canadian advertisers from using foreign
publications—then I would suggest that Bill C-55 is
Hence the reason for my very first
statement, that I see that this is not about censorship
protection or subsidy but rather about protecting
those things that are so important to Canadians—that
is, Canadian values and messages.
Mr. Terry Malden: We agree.
Mr. Michael Atkins: We're on the record.
Mr. John Thomson: Perhaps I can comment on what you
Yes, Canadians governments do have that responsibility,
and that's why Canadians elect governments, precisely
to protect their
Canadian distinctiveness and Canadian institutions.
If that wasn't the case, if Canada wasn't different,
the institutions that are
symbolized by the building we're in, and that are
here today, wouldn't need to exist. And yet
what we have is American
publishers who want to treat Canada as if it were a 51st
Mr. Paul Bonwick: Well said.
The Chairman: Thank you, Mr. Bonwick.
Mr. Mauril Bélanger: Il a déjà tout dit.
The Chairman: Mrs. Lill.
Ms. Wendy Lill: A lot of the conversation has been
around readers and advertisers. In
light of the fact that we have all the Governor
General's award winners for literature here today in
the House of Commons, I'd like to turn the focus to
the writers and the cultural workers, and the impact
that not having some type of legislation such as Bill C-55
would have on these people.
Again, in the age of
quantifying things, I would like to know from you, if
you have any sense of it, the number of writers, editorial
writers, photographers—Canadian cultural workers—involved
in this industry who will be adversely
affected by not having this bill.
Ms. Lilia Lozinski: I would just reiterate the points
I made earlier. I'll use the example of Elm
Street. We publish eight issues a
year. On average, we employ 35 to 45 Canadian writers,
photographers, and illustrators. So over the
course of the year, for that one publication, we would
employ about 360 people for Canadian
content, photography, illustration, and styling.
Ms. Wendy Lill: I guess I'd like to think that
this kind of statistic would be accumulated, because
we're talking a major job sector. I think governments
and the public would want to know the impact
on our Canadian creators.
Mr. Terry Malden: Could we come back to you with
an answer for that one?
Ms. Wendy Lill: Absolutely. That would be
Mr. John Thomson: It's certainly in the tens of
Ms. Lilia Lozinski: Yes. Collectively, if you did
all of the Canadian magazine industry, it'd be huge.
Mr. John Thomson: I think StatsCan has that
Mr. Terry Malden: We'll get back to you on that.
Ms. Wendy Lill: Okay. Thank you.
Mr. Mauril Bélanger: Mr. Chair,
I'd like to have the floor
very briefly to table a document, if I may, once we're
done with the questioning.
Mr. Eric Lowther: Can I ask just one more?
The Chairman: Yes, Mr.
Mr. Eric Lowther: And then we'll conclude, unless
there are other questions, of course.
I was interested in Mr. Atkins' comments earlier to
Mr. Godfrey's question about some of the Canadian
magazines in the States that probably wouldn't
sell because they have Canadian stories.
Do you feel, Mr. Atkins, or are you suggesting, that
none of your members expect to expand internationally
and adopt this technique of split run editions to help
pay for their expansion?
Mr. Michael Atkins: Well, it's possible that
somebody would, or might like to, but I think the only
reason a Canadian magazine exists is to reach Canadian
Mr. Eric Lowther: So if they want to expand into
other markets and use the split run technique,
you're saying, intrinsically, we just don't
do that as Canadians.
Mr. Michael Atkins: The reality is, it's possible.
There may well be some Canadian
entrepreneurs who are in effect publishing what might
be a North American magazine. It's entirely possible.
But the absolute preponderance of Canadian magazines that I'm
aware of—and I'm involved in the weekly newspaper
business and the trade business and the consumer
side—is that we tell Canadian stories. And those Canadian
stories don't sell in Houston. They don't care about
Mr. Eric Lowther: But you could sell American
stories in America and still be a Canadian magazine,
the same split run.
Mr. Michael Atkins: Yes, that's possible. It's
conceivable that you could write a Canadian magazine
about New York, I suppose, and find a way to be
successful. That's possible. I'm not sure there are a
lot of people who would find that's the way they'd want
to spend their lives, but it's possible.
You see, the Canadian magazine industry is quite unique. It's
not exportable. It's not like another industry where
you can say, well, we'll make it better and then export it
The best thing we can do is write
compellingly about the Canadian experience, and by and
large, the people who are interested in the Canadian
experience live here, and want to know about it. So it's
not an exportable commodity.
You could find some
exceptions, no doubt. You might do some kind of
magazine that would find some currency in the United
States. I don't deny that's possible. But the
preponderance of our activity is to tell Canadian
stories of interest to Canadians.
Mr. John Thomson: It's really a one-way street.
The United States is a very large, very self-confident
and very self-reliant country. They live in such a big
island in our world that they don't need to be all that
aware of what goes outside their island, because it's
such a large world inside their country.
Here in Canada, at one-tenth the size, we, like many small
countries, have to be informed about what goes on
outside our borders. Consequently, there's very
little demand for information about Canada in the
States. The volume
of demand in the United States for information about
Canada, originating in Canada, is much less than the
reverse, because as Canadians we just have to be aware
of this elephant sleeping to our south.
Mr. Eric Lowther: Okay. Are you saying, then,
we're smaller, it's okay for us to do split runs in the
States, but because they're bigger it's not okay for
them to do it here?
Mr. Michael Atkins: There'd be no split run. It's
not a split run. If you
felt like it—and there are, no doubt, some people who
do, or would—you could create a North American
magazine, but you certainly wouldn't create
a Canadian magazine with
the thought that you were going to export that into the
United States successfully. There is not enough
Mr. Terry Malden: Canada isn't unique in that it
isn't a big exporter of magazines, and we're not unique
as publishers in not looking at exports as an important
growth opportunity. I think the numbers show that most
countries in the world, most publishers in countries
in the world other than the United States,
export maybe 1% of their total
circulation. The exception is the U.S., where I
think it's 5%. And almost all
that 5% comes to Canada.
When the U.S. exports its titles to other countries
outside of North America, there are different magazines
that get read in those other countries. They localize
the content. It's only the Canadian-American
relationship that allows them to export magazines
unchanged and get an interested audience.
To your point about what about us producing split
runs, Michael is absolutely right. I have confidence
that as smart publishers, we could successfully produce,
if we chose to, North American magazines with
circulation in Canada and the United States, and then we
could do split runs into Canada just the way the
But the policy objective would not have been
achieved, because to do that we would have to eliminate our
Canadian content. And this isn't about keeping us in
business other than as a way to ensure that Canadians
have Canadian content. It's not about us maximizing
our profits; it's about Canadian content.
Mr. John Thomson: And I think it could be said
that when the Canadian magazine publishing industry
threatens the very survival of the American magazine
publishing industry, and threatens the ability of
Americans to tell their own stories to themselves,
no doubt Canadians will look reasonably on reasonable
measures by the American government to defend their
Mr. Eric Lowther: What I find surprising—well,
not surprising, but interesting—is that, from
you're saying, Mr. Malden, your altruistic
commitment to Canadian culture supersedes your
commitment to making your business succeed.
Mr. Terry Malden: No. I didn't mean to say that.
What I meant to say was
that if we chose to grow our business in that route, we
could. Instead, what we've chosen to do is to operate
a business with the one competitive advantage we
have—that is, that we know how to produce content
about Canada that is of interest to Canadians.
why, on the point you were making yesterday, that
this measure has no content requirements, our answer
is, look, if you allow us to compete in a viable,
competitive environment, the one competitive advantage
we will use to make sure that we have a successful
business is producing Canadian content. We can do that
better than foreign publishers can. And we don't have to
be told to do that in any kind of legislation, because
it's in our interest to do that.
We may care about it as
Canadians, as we all do, but from a business
perspective, we're producing Canadian content not out of
altruism but because it happens to be the best business
model for us as Canadian publishers.
Mr. Eric Lowther: Thank you. I appreciate that
The Chairman: I think I have an intervention from
Mr. Bélanger, then we'll close it to questions.
Mr. Dennis J. Mills (Broadview—Greenwood, Lib.):
Mr. Chairman, I have an intervention too. I have a
The Chairman: I realize that.
Mr. Mauril Bélanger: Mr. Chairman, there have been
references for the last two days to a particular study.
In fairness to the members of this committee, the
government will table that study. It's not available
in both official languages at the current time, but
hopefully by next Tuesday it will be tabled, and will
be directed to the clerk for distribution to members of
The Chairman: Thank you, Mr. Bélanger.
Mr. John Godfrey: What was the
subject of this study? Perhaps you can remind us.
Mr. Mauril Bélanger: This was referred to
yesterday and today, in both presentations, one by
Time-Warner and today. This is the study by
Harrison Young Pesonen and Newell.
The Chairman: Thank you, Mr. Bélanger.
I think we'll close this part of the meeting. We have
two brief items of business afterwards. I would like
members to stay to finish those. It won't take very
Meanwhile, I would like to thank you very
much, Mr. Malden, and your colleagues, for being
clear and forthright, and for making your point
of view quite
Mr. Terry Malden: Thank you.
The Chairman: I think we'll talk about our
agenda first. We have to clear that
before I give the floor to Mr.
Mills. It won't take very long to clarify one way or
I think the clerk has given
you a letter we received from Lang Michener on behalf
of the representatives of the advertising industry of
Canada, who were slated to appear on November 24.
Lang Michener says some of them can't appear
before December 1, and they would like to have a
I would suggest to you that there are
problems with this. We have this schedule that has
been slated until November 26, because there's another
piece of legislation before the House, Bill C-48. We
have to do the clause-by-clause.
perspective of my discussions with the clerk, and
looking at the schedule, the only thing I could suggest
to them is that if they want to switch to the 24th or
the 25th, which is still open, that will be in
order. Otherwise, I don't see how we can accommodate them
beyond the 26th.
I would like to put it over to the
members to discuss briefly.
Mr. Paul Bonwick: I would move that we not change
the meeting date, unless it's for the one day.
Mr. Chair, you outlined our schedule, our
agenda, yesterday or the day before, and it took you
about 10 or 15 minutes to go through everything we
have to deal with. We have an extremely tight
Although the committee certainly welcomes
witnesses to come forward and present their position on
various forms of legislation, it's a privilege to be able to
come and present to the House of Commons what their
particular position is. So I think to try to
readdress our entire schedule....
I don't see a lot of
need for debate or discussion on the issue; flexibility
for 48 hours, yes, and anything more than that, no.
The Chairman: There's a motion before us.
there any discussion on this? Do you want to discuss
it or do you want to go to a vote?
Mr. Dennis Mills: Put it to a vote.
Mr. John Godfrey: Or just an
The Chairman: If all the
members agree, then we'll just move on with that
motion. If you want to have a motion, we'll have a
Some hon. members: Agreed.
(Motion agreed to—See Minutes of Proceedings)
The Chairman: So it is decided. I will instruct
the clerk to write to Lang Michener to offer a
substitution of dates, in which case I
will advise the members in good time of the switch.
We have a motion now before us from the
Mr. Dennis Mills: Thank you, Mr. Chairman.
As you know, we ran into some technical glitches a
couple of weeks ago when the committee had to go to
Toronto for the NHLPA, plus the experts in gaming.
I must tell you that all parties
participated in this meeting. We took it on our own to
sort of backstop the translation, rental of room, etc.,
that was required. We managed, actually, to get the
Rogers organization in Toronto to do the taping of the
event, in both official languages, for nothing. They
in turn handed it over to CPAC.
So you can see that
this motion is about 66% less than the one that was in
front of the committee three weeks ago. I'm hoping
the committee will approve this so that members
can be reimbursed.
By the way, all our air fares, etc., were done out of
our own travel points.
The Chairman: I would like to say to the members
that according to the rules, normally you have to give
24-hours' notice of motion, but because it's
just a housekeeping item, I hope members will agree to
give consent so that we can deal with this thing and go
on from here. It's only a very small matter.
Mr. Benoît Sauvageau: Bien sûr.
The Chairman: In that case, do any members have
any questions or comments before
this is submitted to the budget committee?
Mr. John Godfrey: I assume there is a
detailed accounting of those—
Mr. Dennis Mills: Yes, the clerk has a backup
for all of that.
Mr. John Godfrey: As long as there's a paper
record that shows exact expenditures.
Mr. Dennis Mills: Oh, yes.
The Chairman: The budget committee will certainly
not pass it without it, will it.
The question has been called.
(Motion agreed to—See Minutes of Proceedings)
The Chairman: Mr. Bélanger.
Mr. Mauril Bélanger: There is another motion
before us, Mr. Lowther's motion from last Tuesday.
The Chairman: No, that's not a motion. And it was
dealt with the other day. All I wanted to say was
that Mr. Lowther made a motion pursuant to Standing Order
106, backed by four members. According to
106, we have to hold a meeting on the subject that was
discussed the day before within 10 sitting days, which
means we'll have to organize a meeting within two weeks of here.
It refers to the motion we discussed, that
pursuant to Standing Order 106,
a meeting of the Standing
Committee on Canadian Heritage shall be convened within
ten sitting days for the purpose of examining the
process by which the report on Canada's compliance with
the United Nations Convention on the Rights of the Child
This is a subject that is within the
jurisdiction of the Department of of Canadian Heritage. The
motion is acceptable. We discussed it. We actually voted on it
last Thursday, did we not?
Oh, I see. There was no vote on it. It was
give notice of the motion.
Mr. Paul Bonwick: Just for everybody's benefit, I
don't think it's a motion. My understanding on
procedure here is that if four members of the committee—
The Chairman: Yes, that's right. It's just
Mr. Paul Bonwick: —want to submit, through the
chairperson, a request for a witness to come forward to
speak to a standing committee of the House of Commons,
then that witness is hereby summoned. It's not open
for debate or discussion; rather, it's up to the
chair to schedule that at the earliest convenience.
The Chairman: You're quite correct. Thank you
for the correction.
So we have to have a meeting
within 10 sitting days of the time of that letter,
dated November 2, 1998. We'll schedule that and
let you know.
Mr. Eric Lowther: Mr. Chairman,
I have a little point of
clarification. Mr. Radford may help me out in
Yes, according to the standing order, we ought to
have a meeting on this topic, but it's my understanding
that doesn't necessarily mean we can call witnesses
without the agreement of the people who are at the
committee today. So part of my request would be that we'd
have the ability to call some of the key witnesses that
could explain this process to us, if the committee
members would be so inclined to allow, to make this
Mr. Paul Bonwick: If you're going to request
witnesses, Mr. Lowther, what I was going to suggest to
you is that I sit on the subcommittee on human rights.
Over the last 16 months we've been dealing with human
rights issues abroad, child human rights issues.
Although this report, I think, touches on several
different ministries, it certainly fits very nicely
within that committee's mandate.
This afternoon, I believe, we're
meeting, and I'd certainly be prepared to bring forward
that there should be an opportunity to review
this, or certainly to get a position on behalf of the
bureaucrats in regard to that topic.
So perhaps we could forward it.
The Chairman: Mr. Lowther, could I suggest
this? Perhaps you and Mr. Bonwick's committee, through
the clerk, could negotiate how we proceed from here.
You've given us notice, notice in due form, and from
there on it's just a case of finding out what the best
way of doing it is.
Mr. Eric Lowther: Well, I would like to suggest we go
ahead with the meeting, as we've scheduled. The only
question I'd like to know is whether this committee
would allow us to submit some witnesses for appearance
at that committee meeting. I don't really want to shift
the date, if we can help it, now that we kind of
have one, within the standing orders. I just wanted
to know if I
could bring some witnesses.
Mr. Mauril Bélanger: Mr. Chairman, if I may, we
have an element of business in front of the
committee that we should be dealing with.
To have this spring
up at this moment certainly could be construed as a
Mr. Eric Lowther: Absolutely not.
Mr. Mauril Bélanger: Mr. Bonwick, of the
committee, has offered a very worthwhile suggestion
that this be referred to the subcommittee dealing with
human rights, and there seems to be resistance to that.
So if it's a matter of delaying tactics, then let's
deal with it as such.
And I would like to see any
list of witnesses the member would like to suggest
put in writing to the committee so that we can deal
with that as a committee.
Mr. Eric Lowther: If I may speak to that, Mr.
Chairman, this is certainly not a delaying tactic.
Secondly, Mr. Bonwick's suggestion was, when we were
talking about witnesses, perhaps having people come
from his human rights committee as witnesses, not that
we defer to that committee. Or that was my understanding.
An hon. member: No, the other way around.
Mr. Eric Lowther: That was in the context of what
we were discussing, witnesses coming before this
So I'd like to hold to the
standing order and press ahead.
The Chairman: According to the standing order,
you have a right to have a meeting called. As regards
witnesses, I don't see any unanimous consent today.
So we'll just see. Maybe you could discuss it with the
clerk, submit a request. If within one meeting it can
Mr. Eric Lowther: Sure.
The Chairman: —then we'll do it. We have to
have a meeting anyway.
Mr. Eric Lowther: Good.
The Chairman: Mr. Mills.
Mr. Dennis Mills: Mr. Chair, I forgot to mention,
when I talked about the motion, that next week our
committee would be circulating to all members of this
committee our final draft report so that
members will have a chance to react to it.
The Chairman: All right. Thank you, Mr. Mills.
Thank you. The meeting is adjourned.