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Appendix 1

Letter from CONNECTUS Consulting Inc.

November 20, 2008

Mr. Jay Thomson
Vice President
Regulatory & Policy
Canadian Association of Broadcasters
45 O'Connor Street, Suite 700
Ottawa, Ontario

Dear Jay:

We understand that the CRTC has requested additional information pertaining to the study we recently completed for the Canadian Association of Broadcasters (CAB) on Described Video in Canadian Private Television.

Specifically, the Commission has requested that the CAB "identify and monetize the factors considered by the independent consultant when determining the costs associated with the post-production and distribution of described video content."

As you know, CONNECTUS Consulting Inc. undertook a series of interviews with private broadcasters, BDUs and descriptive video production houses in completing the study on Described Video for the CAB. The information derived from these interviews comprises a significant component of the study's findings, and forms the basis of the cost information reported. It is also important to emphasize that the cost estimates provided to us represent current averages based on existing regulatory requirements and production capacity; these current estimates could very well increase if the present circumstances were to change.

There are three points to note here.

First, broadcasters uniformly indicated that the current cost of Described Video averages $1,600 for one hour of English-language programming and $1,750 for one hour of French-language programming. Because descriptive narrative is added to a program following that program's completion, the cost is identified by broadcasters as part of a program's post-production costs.

On page 18 of our Report, we note the comments of broadcaster participants:

But producing DV versions of a television series adds significant costs to post-production budgets. For example, adding description to the children's program Franklin in both English and French increases the cost of post-production significantly - approximately $42,000 for 26 half-hour episodes in English and 26 half-hour episodes in French at a cost of $800 for each half-hour produced. Applying this formula to, for example, three different television series would add in excess of $125,000 to the annual post-production expenditures of a private broadcaster.

The quoted figure of $1,600 is the approximate fee currently charged to the broadcaster for the work involved in scripting, taping, editing and inserting description for a given one-hour program. The above illustration is thus broken down as follows:

• $1,600 / 2 = $800 for a 30-minute program such as Franklin
  
  
• The current estimated cost for 26 English-language episodes of Franklin ($800 X 26) = $20,800
  
  
• The current estimated cost for 26 French-language episodes of Franklin ($800 X 26) = $20,800
  
  
• Total current estimated cost to the broadcaster: $41,600
  
  
• Assuming the same costs for three television series: $41,600 X 3 = $124,800

In fact, the costs for the French-language version of Franklin would be slightly higher, as French-language private broadcasters interviewed for the study reported the current cost of DV per hour of programming at $1,750.

Second, we note that there is an editing error on page 18 of our Report. We state:

There are also additional distribution costs involved, estimated at approximately $30,000 per year for the average broadcaster.

In fact, this sentence should actually appear two paragraphs below, in a brief discussion of BDUs and should read:

There are also additional distribution costs involved, estimated at approximately $30,000 per year for the average BDU.

Again, the figure of $30,000 in current annual DV distribution costs was provided by BDUs interviewed for the study, but this figure was not broken down by study participants. We noted that in Quebecor's appearance at the CRTC Accessibility Hearing on November 17, 2008, the same figure of $30,000 in DV distribution costs was noted with respect to Videotron.

Third, we note on page 18 of our Report:

As noted by several participants in the Study, the process of producing and distributing DV also trigger a number of 'below the line' costs beyond the actual cost of versioning the program, including salaries, feeds, the creation and distribution of digital copies, the remixing of sound, etc. Broadcasters point out that there is 'much more than meets the eye in terms of how much an hour of DV can cost you. It goes beyond what we pay (the DV production house)'.

While private broadcasters interviewed for the study uniformly identified the presence of 'below the line costs', these were not monetized by study participants.

We trust that this satisfies the request for additional information. Please let us know if any further clarification is required.

Yours truly,

Original signed by

Richard Cavanagh
Partner

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Appendix 2