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Last Chance for Canadian Content: Quebecor Tells CRTC Canada Must Move Quickly to Meet the Challenges of the Digital Age

Last Chance for Canadian Content: Quebecor Tells CRTC Canada Must Move Quickly to Meet the Challenges of the Digital Age

MONTREAL, QUEBEC -- (MARKET WIRE) -- 04/15/08 -- Canada must prepare to meet the challenges of the digital age by promoting the production of high-quality Canadian content and meeting the needs of consumers, who increasingly are able to watch the programs they are interested in when and where they want, on the platform that suits them best. If it fails to adjust to the new realities, Canada will, to all intents and purposes, have chosen to lock itself out of the global television industry. Pierre Karl Peladeau, President and Chief Executive Officer of Quebecor Inc., made the comments today, arguing that the approximately 400 rules and regulations governing Canada's broadcasting industry - many of which were designed for a world that no longer exists - are stifling this country's potential to play a leading role in the industry.

Reforming the regulatory framework to promote Canadian content

Mr. Peladeau surveyed the new digital environment and maintained that Canada needs to realize that its broadcasting system cannot long survive in its current state, with potentially dire repercussions for Canadian content and the people who produce it. "Within a few years, the Internet may be the main distributor of television programs, piping content over a global network that escapes regulation."

Mr. Peladeau noted that a distribution monopoly no longer exists in Canada: consumers can almost always choose between cable and satellite, and increasingly can opt for new distribution services such as IPTV, mobile broadcasting and the Internet. "Given this context, if regulation has the effect of limiting consumer choice or artificially increasing the cost of services without adding value, consumers will simply turn their backs on the system and find what they want elsewhere."

Specialty channels

"The specialty channels are no longer fringe players. The regulatory setup that allows the specialty channels access to advertising revenues in addition to mandatory carriage fees gives them a formidable position in the advertising marketplace, since they are able to offer advertisers very attractive multi-channel packages. Together, they dominate the market, while the market share of conventional broadcasters is melting like snow in the sun."

Private conventional broadcasters are being squeezed. They cannot count on advertising revenues to ensure their profitability and survival. Meanwhile, they are subject to wildly disproportionate regulatory obligations and costs, when compared with the specialty channels. And yet it is up to the conventional broadcasters to provide the lion's share of Canadian content in the form of full news and current affairs coverage, major dramatic series and diverse programming. "We have to try to square the circle and survive without carriage fees, with falling advertising revenues and an unchanging regulatory burden. This is a situation that cannot long endure."

Fees for all channels

Quebecor believes that all broadcasting services - conventional broadcasters and specialty channels alike - should be entitled to collect carriage fees. The offering party, the broadcaster, should be able to sit down with the distributor to settle on a fair price for the product, terms and conditions for the distribution of the service, and its inclusion in the packages offered to consumers. Quebecor believes each broadcaster should be entitled to a fair price for its products, which means the right to withhold permission for a distributor to carry its channel or channels. The resulting dynamic would force the three central players in the broadcasting system - broadcasters, producers and distributors - to excel in order to claim their place in an industry that soon will have no borders:

Undue advantages for public broadcasting?

Mr. Peladeau also pointed out that the public broadcaster is in a much more advantageous position, with four revenue streams: a substantial government subsidy, a large portion of the funds distributed by the Canadian Television Fund, advertising revenues, and carriage fees from its specialty channels.

"It is baffling that while the LCN all-news channel, owned by TVA, has the largest audience share in its market, RDI, the CBC's French-language news channel, collects a carriage fee three times as high. It is also shocking to learn that the public broadcaster is now calling for carriage fees for its two main channels. As a public service, the CBC cannot contend it is part of the same free market as private broadcasters that take real risks to offer their audiences a quality product, and lay claim to parliamentary appropriations, advertising revenues, the Canadian Television Fund, and carriage fees for its conventional and specialty channels, all at the same time."

Canadians want Canadian content

According to a Praxicus survey commissioned by Quebecor, the public agrees: 86% of respondents favour policies to promote the production of Canadian programming and Canadian content; 74% support change and innovation in the television industry; 65% believe the regulatory framework should be reformed to allow Canada to join the digital revolution as soon as possible.

Repeating Quebecor's commitment to the production of quality Canadian content and to maintaining the predominance of Canadian content, Mr. Peladeau argued: "If our goal is to enable Canadians to compete in this lucrative industry, which is part and parcel of the knowledge economy and a creator of wealth in advanced societies, we have no choice but to rely as much as possible on the laws of the market."

www.ocanada.tv website informs Canadians:

Quebecor took the opportunity to announce the launch of a new website, www.ocanada.tv, which seeks to inform Canadians of the potential for Canadian television in the future. The site is divided into four fact-filled sections covering television production, distribution, broadcasting and regulation in Canada. Each of the four sections contains three subsections: "Did you know," which provides information on the state of Canadian television; "The new digital environment," which surveys the opportunities created by digitization; and "Building a new world," which discusses ways to promote the creation and distribution of Canadian content.

Quebecor Inc.

Quebecor Inc. (TSX: QBR.A)(TSX: QBR.B) is a holding company with interests in two companies, Quebecor Media Inc. and Quebecor World Inc. Quebecor holds a 54.7% interest in Quebecor Media, which 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; Quebecor MediaPages, a publisher of print and online directories; 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, and Le SuperClub Videotron ltee, a DVD and console game rental and retail chain. Quebecor World is a commercial print media services company with operations in North America, Europe, Latin America and Asia.

Contacts:
Quebecor Inc.
Luc Lavoie
Executive Vice President, Corporate Affairs
514-380-1974 or Mobile: 514-947-6672
[email protected]

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