CFTM-TV (TVA) re J.E. (Entreprises Pendragon)

QUEBEC REGIONAL COUNCIL
(CBSC Decision 97/98-0390)
Y. Chouinard (Vice-Chair), R. Cohen (ad hoc), M. Gervais,S. Gouin and P. Tancred

THE FACTS

On September 19, 1997, CFTM-TV (Montreal) (“TVA”) reported on
a company's unsuccessful efforts to produce a visitors' guide for the Eastern Townships on
J.E., TVA's information and public affairs program. The report (a full transcript
of which is provided in its original French in Appendix A) included interviews with the
company’s president and small business persons who had lost the money they had paid
for advertising in the guide. The president was questioned based on the following
erroneous calculation by the reporter:

Michel Johnson: Faisons un petit calcul trèsconservateur. Si on se fie à la liste de clients présenté par Pendragon, 180 compagniesauraient donné un minimum de 200$ chacune, pour un grand total de 360 000$. La seuledépense connue pour Pendragon est cette page web, qui a couté quelques centaines dedollars. Page web qui, d’ailleurs, reste inconnue pour la plupart des Internautes.

The interview with the President of Entreprises Pendragon
(“Pendragon”) was as follows:

Michel Johnson: Nous sommes allés demander desexplications à [nom du président]. La première rencontre ne nous a pas beaucoupéclairés. Le même jour, [le président] a accepté de nous rencontrer à nouveau.

Le président: Je ne suis pas un fraudeur, ni un crosseur. OK ?Moi, je suis une personne très honnête.

Michel Johnson: Le président de Pendragon explique sadéconfiture par une subvention du gouvernement provincial qui n’est jamais arrivée.

Le président: On nous a dit qu’on a pas, on était pas unecompagnie, qu’on était une compagnie à risque. OK ? On a refusé à ce moment là ;j’ai la copie de la lettre ici. Qu’est-ce que tu veux faire ? Sauf que là à cemoment là, il est trop tard. Fait-que, nous, on était sûrs de l’avoir, mais on nel’a pas eue. Malheureusement, on n’a pas eu le temps de se retourner donc ons’est retrouvés le bec à l’eau.

Michel Johnson: [Le président] jure ne pas avoir touché 360000 $ mais bien 76 000 $ en revenus publicitaires. En ajoutant l’argent du planPaillé, c’est près de 130 000 $ qui ont été dépensés en matériel et ensalaire. [Le président], quant à lui, a empoché 30 000 $ pour 9 mois de travaille. Il afait une faillite personnelle et a remis le materiel à la Caisse populaire. Il dit êtreune victime, au même titre que les commerçants.

Le président: Les gens, là, je pourrais en traîner en courmais j’ai pas d’argent pour le faire. Je suis obligé de me débattre comme jele peux et je n’ai pas une cent. Mais sauf que là, je trouve que si J.E.faisait correctement les choses, peut-être que ça m’aiderait à me sortir du trou.

Michel Johnson: Ce serait quoi faire correctement les choses?

Le président: Faire l’émission comme elle devrait êtreet pas faire en sorte que je passe pour un ostie de fraudeur.

The Letter of Complaint

On October 1, 1997, the President of Pendagron complained to the CRTC
about J.E.'s report. His letter read in part as follows:

[Translation] This misleading report which was broadcaston September 19 at 7 p.m. gave the impression that I, [complainant's name], who was at thetime President of Entreprises Pendragon Inc., defrauded my clients of the sum of $360 000.This is completely false!

On August 12 1997 at 8 p.m., Mr. Michel Johnson, a J.E.reporter, came by my house with my consent in order to do an interview and tapepart of the segment of this infamous report in which I would prove that there had not beenany fraud involved. This reporter was given full access to my financial records, mydeposits and receipts, my bank records and the balance sheet, in addition to proof of thebusiness's closing and my official bankruptcy. I invited this individual to come look atthe bank records at the Caisse Populaire in order to show him that he was mistaken in hisbelief that I was a rogue. All the documents prove my version of the facts but,despite this proof, J.E. went ahead with its misleading report which left theimpression that I had misappropriated this sum of money. Moreover, I had told thisreporter that it was not possible to defraud consumers when you are on a “planPaillé” (a start-up program for new businesses) and when the Caisse Populaire, themain lender, tracks all expenses and receipts. Moreover, a scoundrel would never give theaddress of his own private residence. All business records gave my personal address andthe business's private residence, which is one and the same and which continues to be! TVAalso put an ad in the Journal de Montréal on September 19, 1997 for thisinfamous show.

This deceitful show has tarnished my reputation and that of my spouseand we are going to demand compensation. How can people, in complete freedom andwithout just cause, destroy publicly and wrongly the life of a person in front of over 250000 viewers? I think there is a limit to freedom of the press. And it is up to the CRTC tolimit this freedom and this invasion of privacy. In a very short time, I have lost my job,my income, my business and I was forced into personal bankruptcy. And to top it all off,they have voluntarily and without just cause tarnished my professional and personalreputation on t.v.; that is just too much. Someone will have to do his homework!

On the morning of August 12, 1997, at 8 a.m., I was forced to have thepolice take away the J.E. crew from my private property, situated in a purely residentialarea. These individuals were obstructing the exit of my spouse from the premises and wereharassing her with questions. I must also tell you that the September 19 broadcast was notrealistic because the reporters were attempting to destroy my company's website by sayingthat it did not exist and that it had only one page. However, how do you explain that, ontelevision, we clearly saw the site (which exists) and which contains over 200professional Web pages? This site was never closed! Here is its address:http://www.Generation.Net/pendrag~. Concerning the payment in advance of all publicity,let me tell you that that is the way it is done in this business, a first payment isalways required! And this is in no way fraudulent! Our clients were offered theopportunity to pay in three or even four instalments.

I still have all the documents required to prove my good faith andwhich prove that the company voluntarily closed its doors by returning all its assets tothe principal creditor because it could no longer pay its debts. A document which, by theway, was given to the reporter on the morning of August 12 in front of police officers. Inconclusion, I would like to underscore that there exists in Canada a Bankruptcy ProtectionLaw. I am under official bankruptcy since July 4, 1997. The conversation with the JEreporter on August 12 at 8 p.m. was tape recorded with his permission. The conversationlasted 20 minutes.

The Broadcaster’s Response

TVA's Legal Counsel replied to the complainant on November 24, 1997 in
the following terms:

[Translation] First, I don’t think it is right tospeak of a complaint against J.E. given that your comments relate to a singlereport on the steps undertaken by Les Entreprises Pendragon to create a visitors’guide.

In any event, I wish to emphasize that this report was part of J.E.,an information and public affairs program which deals with a variety of topics or publicinterest with a common theme of general public protection.

We deny all allegations that the program was false and misleading basedon the fact that testimonials were obtained from credible people, all according togenerally recognized journalistic guidelines. Moreover, it is false to purport that thereport left the impression that Pendragon was guilty of fraud or money misappropriationsince it merely mentioned that a specified amount must have been collected, and that thismoney was most likely used to pay salaries and various unidentified expenses.

More specifically to the point that the business benefitted from the”plan Paillé”, we would like to draw your attention to the fact that it isclearly mentioned in the report and you also had the opportunity to explain that the wholething flopped when the grant was denied to your business because it was too high risk.

With respect to your allegations of invasion of privacy, I would liketo underscore that the address of your public company was the same as your personal homeaddress and therefore we cannot talk of invasion of privacy when it is a place of publicbusiness.

With respect to the possibility that there may have been damage done toyour reputation and to the reputation of your spouse, and without acknowledging that thismay have occurred, I note that, in my view, there was no doubt that this was a topic ofpublic interest and therefore there could not have been wrongful injury to reputation.

Without limiting the generality of the preceding, permit me to pointout that asking for full payment in advance for publication of advertisements in thevisitors' guide runs contrary to generally accepted practices as well as the ConsumerProtection Act.

As to the facts set out on page 2 of your letter, I would like tounderscore that it is wrong to purport that your spouse’s exit was in any wayobstructed by TVA or J.E. or that she was harassed with questions. As to theexistence of the website, we never said it did not exist but we noted that its existencewas fleeting.

The complainant was unsatisfied with this response and requested, on
December 15, 1997, that the CBSC refer the matter to the appropriate Regional Council for
adjudication. His request for adjudication was accompanied by a letter dated December 7,
1997 (included in its original French in Appendix B) which reiterated his contention of
“innocence” and indicated that he sought compensation for the injury he has
suffered as a result of J.E.’s report.

THE DECISION

The CBSC’s Quebec Regional Council considered the complaint under
the Codes of Ethics of the Canadian Association of Broadcasters (CAB) and the Radio
Television News Directors Association (RTNDA). The texts of the relevant provisions read
as follows:

CAB Code of Ethics, Clause 6 – News

It shall be the responsibility of member stations toensure that news shall be represented with accuracy and without bias. The member stationshall satisfy itself that the arrangements made for obtaining news ensure this result. Itshall also ensure that news broadcasts are not editorial. News shall not be selected forthe purpose of furthering or hindering either side of any controversial public issue, norshall it be designed by the beliefs or opinions or desires of the station management, theeditor or others engaged in its preparation or delivery. The fundamental purpose of newsdissemination in a democracy is to enable people to know what is happening, and tounderstand events so that they may form their own conclusions.

Therefore, nothing in the foregoing shall be understood as preventingnews broadcasters from analyzing and elucidating news so long as such analysis or commentis clearly labeled as such and kept distinct from regular news presentations. Memberstations will, insofar as practical, endeavour to provide editorial opinion which shall beclearly labeled as such and kept entirely distinct from regular broadcasts of news oranalysis and opinion.

It is recognized that the full, fair and proper presentation of news,opinion, comment and editorial is the prime and fundamental responsibility of thebroadcast publisher.

RTNDA Code of Ethics, Article 1

The main purpose of broadcast journalism is to informthe public in an accurate, comprehensive and balanced manner about events of importance.

RTNDA Code of Ethics, Article 2

News and public affairs broadcasts will put events into perspective bypresenting relevant background information. Factors such as race, creed, nationality orreligion will be reported only when relevant. Comment and editorial opinion will beidentified as such. Errors will be quickly acknowledged and publicly corrected.

RTNDA Code of Ethics, Article 3

Broadcast journalists will not sensationalize news itemsand will resist pressures, whether from inside or outside the broadcasting industry, to doso. They will in no way distort the news. Broadcast journalists will not edit tapedinterviews to distort the meaning, intent, or actual words of the interviewee.

The Regional Council members viewed a tape of the report in question
and reviewed all of the correspondence. The Council considers that J.E.’s
report violates the provisions of the CAB Code of Ethics and RTNDA Code of
(Journalistic) Ethics
which require accuracy in reporting.

The Content of the Report

As the Council has stated on numerous occasions, it takes no issue with
the broadcaster’s choice of story to tell. Freedom of expression and journalistic,
creative and programming independence are guaranteed to broadcasters under subsection 2(3)
of the Broadcasting Act. As stated in CKVR-TV re News Item (Car Troubles)
(CBSC Decision 97/98-0235, July 28, 1998):

The Council notes that, under the Broadcasting Act

,broadcasters enjoy “journalistic, creative and programming independence”. TheCouncil is of the view that this independence is also a cornerstone of the interpretationwhich should be given to the industry Codes which members of the CBSC have agreed to abideby. Accordingly, the Council does not question the broadcaster’s determination of thenewsworthiness of this consumer report.

Nor does the Council take issue with the content of the report in
general terms. It considers that the report was structured in such a way as to be
fair and balanced (although the end-result of the report may have been less than fair due
to a faulty premise which is discussed below). The Council notes that a delicate balance
must be struck in dealing with “involved” complainants. As stated in CFRN re Eyewitness News

(CBSC Decision 96/97-0149, December 16, 1997), the complaint of an aggrieved party does require particular attention to the words used in the letter of complaint on the assumption that the partymay be expected to know more about the facts surrounding his or her complaint. The Councilis, however, equally aware, that an aggrieved party may come to an issue with a”thinner skin” regarding any allegations made. There is, in that sense, a veryparticular balance to be brought to the viewing of such issues.

In another case similar to the one at hand, CFCN-TV re
“Consumer Watch” (Travel Agency)
(CBSC Decision 95/96-0240, December 16,
1997), the president of a discount travel agency complained that reports about his
business did not give “the other side of the issues.” In finding no breach of
the Code, the Prairie Regional Council made the following comments on the fairness and
balance requirement of the RTNDA Code:

It appears to the Council that the complainant, inalleging that the story should have included “the other side of the issues”,considers that the fairness and balance requirement for news reports means that negativecomments about a company must be balanced by positive comments. The Council disagrees.Were the complainant’s view correct, there could never be a negative or critical newsreport. At the end of the day, it is the reporting of the newsworthy event whichmust be evaluated for its objectivity and fairness and not the overall effect of the newsreport on the person or company who is its subject…

In this case, the Council considers that the complainant’s
argument that J.E. “should have done the right thing” to be unrealistic.
There was a story to be told and the story the broadcaster chose to tell did not have to
be positive towards the business targeted. In the end, the complainant may have wished
that the report had not been aired at all, but the Council certainly does not consider
that the mere fact that the report was negative vis-à-vis Pendragon constitutes a
breach of the Codes.

A Mathematical Error of Magnitude

While the Council finds no fault with the report’s structure
or the broadcaster's choice of story to tell, it does consider that the gross
miscalculation on the reporter’s part created inherent unfairness in the report. The
reporter attempted to calculate “a conservative estimate” of the amount of money
Pendragon could have collected from local small businesses in its failed attempt to
publish a visitor’s guide. He stated (and the numbers were put up on the screen)
that, if 180 clients each paid the minimum of $200, Pendragon should have collected $360,000.
While the Council understands that the addition of the extra zero (making the relatively
small sum of $36,000 the rather huge sum of $360,000) may have been inadvertent, it was a reckless
error on a centrally material issue in the report. Moreover, the error was compounded
by the reporter who relied on the exaggerated number as the basis for his questioning of
Pendragon’s president. The fact that the president was given the opportunity to deny
that he had ever collected the alleged sum of money does not, in the Council’s view,
begin to counterbalance the damage done by the use of an utterly unwarranted and
exaggerated figure by the reporter, who is, after all, in control of the playing field.

The Council notes that this gross mathematical error is not the only
source of confusion in the report. When confronted by the president’s contention that
he only collected $76,000 in advertising revenues in total, the reporter
inexplicably added to this amount the money allegedly never received as part of a
government grant, the “plan Paillé”, bringing the total to $130,000. This
calculation was provided just moments after the interview and despite the fact that the
president went to great lengths to explain that it was the denial of grant money which
caused the business to fail in the first place.

The Council finds that the inexplicable sloppiness surrounding the
information relating to potential revenues collected by Pendragon created an unfair
report. In a similar case, CITV-TV re “You Paid For It!” (Immigration) (CBSC
Decision 95/96-0088, December 16, 1997), the Prairie Regional Council found that the
broadcaster had failed to make the important distinction between immigrants and refugees
in a report which required such distinction to be made. It found that this inaccuracy
constituted a breach of the RTNDA Code of Ethics:

[T]he Council considers that CITV’s failure goesfurther than merely lacking “tightness”. The report on the issue of governmentspending in the area of immigration confused money spent on immigrants, i.e.foreigners who are accepted into Canada in the hopes that they will spur economic growthfor the country, with money spent on refugees, i.e. people who are accepted intoCanada out of humanitarian compassion. The confusion of money spent with respect to bothgroups in the context of the statement that a treasury critic “doesn’t believethat many of the bills paid by the Department of Citizenship and Immigration are payingoff” was grossly misleading and had the overall effect of portraying allnewcomers to Canada are “free-loaders”.

It appears to the Quebec Regional Council in this case that, as in the
CITV-TV case referred to above, the reporter attempted to make his story more provocative
than could ever have been supported by the facts. The Council considers that the error was
so gross that the correct amounts at issue, if accurately calculated (at
one-tenth of the figure actually used), may not even have given rise to the story at
all
.

The Council finds that by presenting a report which contained a serious
inaccuracy resulting from a gross mathematical error and a sloppy presentation of facts
surrounding the issue of potential revenues collected by Pendragon, TVA failed in its
obligation, pursuant to Clause 6 of the CAB Code of Ethics and Article 1 of the
RTNDA Code of Ethics, to present news with accuracy and fairness. Moreover, the
Council is of the view that the report had the overall effect of sensationalizing the
story of a failed entrepreneurial effort, contrary to Article 3 of the RTNDA Code.

Broadcaster Responsiveness in addition to assessing the relevance of the Codes to the complaint,
the CBSC always assesses the responsiveness of the broadcaster to the substance of
the complaint. In this case, although the Council’s view differs from that of
TVA’s Legal Counsel, it considers that the broadcaster addressed fully and fairly all
the issues raised by the complainant. Consequently, the broadcaster has not breached the
Council’s standard of responsiveness.  Nothing more is required.

BROADCASTER ANNOUNCEMENT OF THE DECISION

The station is required to announce this decision forthwith, in the
following terms, during prime time and, within the next thirty days, to provide
confirmation of the airing of the statement to the CBSC and to the complainant who filed a
Ruling Request.

The Canadian Broadcast Standards Council has found that TVA breachedprovisions of the Canadian Association of Broadcaster’s and Radio and Television NewsDirectors Association’s Codes of Ethics in its September 19, 1997 broadcast ofJ.E. The Council finds that, by presenting a report which contained a seriousinaccuracy resulting from a gross mathematical error and a sloppy presentation of factssurrounding the issue of potential revenues collected by a now bankrupt small business,the broadcaster failed in its obligation to present news with accuracy and fairness.Moreover, the Council finds that the inaccuracies had the overall effect ofsensationalizing the story of a failed entrepreneurial effort.

This decision is a public document upon its release by the Canadian Broadcast Standards Council.