Quebecor Media Inc.

Quebecor Media Inc.

March 11, 2009 11:34 ET

CRTC Hearing on Canadian Broadcasting Via New Media

Quebecor Media believes taxing ISPs amounts to taxing Canadian consumers

MONTREAL, QUEBEC--(Marketwire - March 11, 2009) - A new tax to promote the production of original Canadian content for the Internet is not needed. Taxing Internet Service Providers (ISPs) for this purpose amounts to taxing Canadian consumers, under a false pretext.

"The regulatory exemptions for new media and mobile services must be maintained," said Pierre Karl Peladeau, President and Chief Executive Officer of Quebecor. "We also believe it is critically important for the future of Canadian content to accelerate the deregulation of conventional media, and to refrain from introducing mandatory fees to finance the production of new media content. Canadians are paying enough taxes and it would be unconscionable to further increase the tax burden in the midst of an economic crisis. This would be unproductive and, in any event, illegal. If we truly wish to promote the production of original Canadian content, the industry must be freed of the existing regulatory straitjacket, which is plainly incompatible with the freedom that prevails in the new media universe."

"We are proud to be contributing to the Canadian economy, in accordance with the objectives set out in the Broadcasting Act, and to be offering growing numbers of Canadians improved telecommunications services since the monopoly situation has been ended," said Mr. Peladeau. Since we began providing Internet access service in 1985, we have invested $1.9 billion in our infrastructure. "Levying a new tax on our ISP and wireless telephone revenues would limit our capacity to accomplish our mission to the benefit of all our customers."

Reinventing our ways of doing things

In Quebecor Media's view, the ongoing revolution in the media universe is forcing media organizations to rethink their business models, particularly since the boundaries between print, broadcasting and telecommunications are falling one by one. "New media have freed citizens from the dictates of the television schedule, enabling them to watch the programs they want when they want," said Mr. Peladeau. "Increasingly, content is available on the Internet or on mobile devices. If they are to go where the audiences are, the media must have the latitude and the means to become developers and producers of content for all platforms, including mobile, which promises to become a leading medium."

Help for conventional television

Finally, Quebecor Media again raised the issue of the future of conventional television, noting the extremely precarious position of conventional broadcasters and underscoring their importance for expanding the presence of Canadian content in new media. If broadcasters are to remake themselves into generators of original content that can go where consumers are and attract mass audiences, they need to be able to obtain broadcast rights to a production on all platforms in exchange for their contribution to its financing. This is the only way to secure the future of Canadian production on both conventional and new media, for financing is now available only on a multiplatform basis, which is where the potential for profit exists.

"We believe that instead of trying to impose new controls, the CRTC should review the requirement for broadcasters to use independent producers and it should consider the licence fees paid by broadcasters as a real investment that entitles them to exploit rights to successful programs on all platforms," said Mr. Peladeau.

"Similarly, the CRTC should review its approach, which is based on quotas and so-called priority programs, and tells the broadcasters where to spend their money. At a time when they are facing an unprecedented crisis, Canadian broadcasters need to invest in successful programs rather than continuing a practice which makes their investments in content a dead loss, made primarily to meet regulatory obligations."

Exploitation rights are the crux of the matter

Quebecor Media does not believe that the presence of Canadian content online can be increased by attempting to regulate the Internet or through more financial support from the taxpayer. The problem lies primarily in the management of rights and copyright.

In this respect, the collective agreement signed on February 25, 2009 by the Union des artistes and TVA helps lay the foundations for the future of television production, for it defines, for the first time, precise parameters for the use of content on all new platforms, and demonstrates that TVA is able to make specific agreements with the various industry players in order to increase the presence of Canadian content in new media. Terms of trade agreements (umbrella agreements) are not necessary for this purpose: negotiation in a free market is a win-win solution.

"We cannot apply the traditional broadcasting model to new media, for in the digital age its limitations are clearer than ever," said Pierre Karl Peladeau. "Attempting to do so will only hasten the system's demise and undermine Canada's chances of success in the new digital age."

Quebecor Media Inc. is a subsidiary of Quebecor Inc. (TSX:QBR.A)(TSX:QBR.B), a communications company with operations in North America, Europe and Asia. Quebecor Media owns operating companies in numerous media-related businesses: Videotron Ltd., the largest cable operator in Quebec and a major Internet Service Provider and provider of telephone and business telecommunications services; Sun Media Corporation, the largest publisher of newspapers in Canada; TVA Group Inc., operator of the largest French-language over-the-air television network in Quebec, a number of specialty channels, and the English-language over-the-air station Sun TV; Canoe Inc., operator of a network of English- and French-language Internet properties in Canada; Nurun Inc., a major interactive technologies and communications agency with offices in Canada, the United States, Europe and Asia; magazine publisher TVA Publishing Inc.; book publisher and distributor Quebecor Media Book Group Inc.; Archambault Group Inc. and TVA Films, companies engaged in the production, distribution and retailing of cultural products; Le SuperClub Videotron ltee, a DVD and console game rental and retail chain; and Quebecor MediaPages, publisher of print and online directories.

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