Category Archives: CMF

Prime Time – Talking About TV

The theme of Prime Time 2014 is Talk TV – the hashtag for the CRTC’s consultation with the public about the current and future Canadian broadcasting system.  A lot of the panels led into that theme.  But even if they didn’t, that’s pretty much all anyone was doing today – talking about TV.

After a breakfast burrito, large latte and talk about CRTC expenditure and exhibition requirements with my tablemates over breakfast, the keynote was an interesting talk by Wendy Bernfeld on the European VOD/OTT rights market.  Wendy came out of the Canadian broadcasting system but has been in Europe for about 20 years (I worked with her when she headed up the Atlantis Amsterdam office).  Her basic thesis was that there are now so many VOD buyers who are trying to acquire catalogues to either compete with Netflix or establish themselves before Netflix that this is now a good time to either make a lot of non-exclusive deals or a few big exclusive deals and reap the rewards.  For those making those European deals themselves, her slides will be very helpful just to help get to know who the players are and CMPA will be posting the slides at some point.  It was good to hear someone talk positively about revenue opportunities with OTT and in the fractured universe.  She also provided insight on the shifting windows of VOD – they no longer have a set order in windowing but can be before, during or after the main screen (i.e. theatrical or primary broadcast) release.  A good piece of advice for those dealing with broadcasters who have retained certain distribution rights was to cut those rights holders in to their deal so that the deal can be made and everyone win rather than just assume that it can’t be done because you don’t have those rights.

Rita Cugini (so strange not to be referring to her as Mme Cugini as I always did when she was a CRTC Commissioner) moderated a Talk TV Super Panel with Raja Khanna from Blue Ant, John Morayniss of EOne, Louis Audet of Cogeco, Kevin Crull of Bell, Michael Hennessy of CMPA and Christina Jennings of Shaftesbury.    As Blue Ant is a small group of independent services it was no surprise that Raja Khanna was an advocate of regulation, though he suggested that the key question was ‘regulation of what’.   At the very least that regulation needs to ensure that the small broadcasters have a place to ensure diversity in the system.   I did react negatively when he brought up the 17 year old YouTube sensation making ‘big bucks’ on that platform and cited that as the future of content.  In the first place, how many people are making that kind of money (I couldn’t find stats but I don’t think THAT many in Canada).  And second, it ignores the fact that people like to watch big budget dramas, which need broadcast partners to be financed.  Some people also like short form or edgy content that can be found on YouTube but mass market content like “Saving Hope” and “Big Bang Theory” will always be popular and need a platform.   Michael Hennessy pointed out that the evidence for this was that the top pirated content is all mainstream television.  [Devil’s advocate – why would they need to pirate YouTube videos?].

It always surprises me when I agree with anything that the top guys at Bell, Rogers or Shaw say, and truthfully, that doesn’t happen very often.  But Kevin Crull said a few things that I agreed with.  For one, he suggested that a problem with the CRTC’s TalkTV consultation is that people will always say that they only want to pay for what they watch but they forget the discovery process that they went to, to find that content.  You need the larger pool of content to pick from.  I do agree.  The other point that he made that I agree with was that with the business models under pressure we have to ensure that changes in the system don’t reduce the money that is available for Canadian content because it can’t be done for less.  Now I kinda think he’d like to do it for less but the point is no less valid.

The next panel that I attended was the Canadian Broadcaster Programming Panel.  I have to say that I was expecting it to be as boring as it has been in the past with programmers saying very little about what they were actually looking for.  We didn’t get a lot about what they want to buy but it wasn’t boring.  It started with an offensive comment from Bill Brioux (who I am otherwise a fan of for his reporting on Canadian TV, particularly as a resource for ratings) about how the programmers on the panel were all women and did that affect their programming decisions.  Yeah, that didn’t go over well with many people in the audience or the twittersphere.  I’d love to hear someone ask an all male panel (which happens SO often) if their gender affects their decision-making.

There were some good nuggets to pull out of the panel.  CTV is experimenting with niche content by doing a 6-episode order of a darker story adapted from a Giles Blunt thriller.  The CBC finds it difficult to program niche content since their CMF envelope is based on mass eyeballs (as is everyone else’s but there’s a political point there).  Sally Catto (CBC) does see an opportunity to aggregate an audience across multiple platforms and in that safely create niche content (which prompted me to launch a “Bring Back Michael Tuesdays and Thursdays” campaign – feel free to use the hashtag #bringbackMTAT – I know not likely but wouldn’t it be nice . . . ).  Both CTV and Global are trying again with comedy but as Corrie Coe pointed out ‘drama is hard but comedy is harder’.  It’s not about not knowing how to do it or not having the talent – it’s just hard and you have to keep trying before you get a hit.  [The US has a much higher ratio of failed tries to hits – commentators often forget that.]

Then we got into the dustup with Mr. John Doyle – or rather I unintentionally did when I tweeted that Corrie Coe disagreed with him and thought “Orphan Black” and “19-2” are both golden age shows.  See John Doyle’s column Where is Canada in the Golden Age of TV?  He took exception to my tweet; others took exception to his position that we don’t have great TV and should.  There was a flurry of tweets.  Broadcasters and producers and creators feel very strongly that Canadian TV is in general quite good these days and we have some really great shows.  The more important issue, for many, is that Canadian TV is really popular with audiences these days with shows like “Saving Hope” earning 1.6 million audiences every week.  [And for those who say it isn’t very Canadian – when was the last time one of the story lines involved a patient’s inability to pay their bill or having treatment refused by an HMO – think how often they were ER story lines – hmm?].

After that there was the fun question – what show would you like to steal from a competitor.  I would like to see that question become a staple of the Broadcaster Programming Panel as it tells you so much about the programmer and the broadcaster.  Sally Catto and Tara Ellis would both love to steal “Orphan Black”.  Corrie Coe would like “Lost Girl”.   Vanessa Case of Blue Ant, the only non-drama group on the panel would like “Amazing Race Canada”.  My only comment to those choices is – when exactly did Showcase become Space2 and except for the regulatory nature of service issue is this a problem?

More schmoozing at lunch (and explaining CanCon rules to a young producer because the CRTC Commissioner I was sitting beside wouldn’t let me inflict bodily harm) and then an interesting panel moderated by CRTC Chair Jean-Pierre Blais on the Future of Television.  Noreen Halpern (EOne) and Mark Bishop (marblemedia) were terrific – really passionate about creating content and needing the rules to evolve to be able to continue to support Canadian content.  They both see the day when there are no silos of funding or licensing because the platform is not relevant – you release it when and where it makes sense for the story.  That world is coming and we need to work now of the framework to support it so that we continue to have a robust Canadian industry in the future [that’s what I’ve been saying!].  I never really got the points that Tom Perlmutter (NFB) was making.

The New Business Models was a very popular breakout panel but I chose instead the International Markets panel.  I won’t write out all the really good tips here but I will Storify the whole conference and I encourage you to look for the specific advice given in this panel.  Experienced producers shared really specific tips about how to attend markets and go to pitch meetings and there were some great tips for both newbie producers and more experienced producers.  Some times you don’t think about comfy shoes.  I do find myself having difficulty ensuring that I get enough sleep at any event like a market while also ensuring that I leverage the social events and the scheduled events.  There just aren’t enough hours in the day.

Friday was mostly a day for Canadian feature films.  The issue that rippled through a few talks and panels was whether the solution to increasing audiences for Canadian feature films was online distribution or television broadcast.  I wish there had been a panel that had allowed Carolle Brabant (Telefilm) and Patrick Roy (CAFDE) to debate the issue since Telefilm seems firmly in the position that we need to get more Canadian features digitized so that they can be downloaded while CAFDE believes that Canadian broadcasters need to make more of a commitment to Canadian features since more people watch television than download.  I think a case can be made that both strategies could and perhaps should co-exist but they do play into different policy solutions.  Dave Forget of Telefilm presented a research study that provided a picture of feature film viewing habits of Canadians and that supported both positions – Canadians mostly watch features in the home and that is mostly but not exclusively on broadcast.  Online is of increasing importance.  The research also pointed out that Canadians pick features on the basis of genre, story and cast with director 6th and producer 10th.  This is of interest because Telefilm’s funding prioritizes producer and director and has always been more director-focused.

I have to describe to you my favourite moment of the conference.  It was unanticipated, unplanned brilliance.  The Governor General, His Excellency The Right Honourable David Johnston, came to be interviewed as part of a Canadian feature film promotion project that he’s working on with the CMPA and other partners.  Before he got up to the stage the Canadian women’s hockey team tied the score with moments left in the game.  Our GG is a huge hockey fan and it was such a pleasure to see him jump up and hold out two fingers in each hand to demonstrate that it was now a 2-2 game.  It was authentic.  When he was on stage though, the women scored the winning goal and his response was to lead us in O Canada while the screen behind him flipped to the live feed.  I’m tearing up just thinking about it again.  What a Canadian moment.  And that’s what we’re all about when it comes right down to it.  Sharing our stories with each other.

You may ask how I felt about Prime Time – was it worth going?  Yes.  I always see people, both Toronto people and those from around the country, and it is important to connect, especially for me in my independent consulting career.  I had a few business meetings.  I promoted a few clients to other stakeholders.  There is one more young producer who understands how our Canadian Content support system works and why.  I picked up a few interesting bits from the panel sessions.  Should you go?  Well, honestly, it depends on what you do in the industry.  There isn’t a lot at Prime Time for digital producers except the ability to meet TV producers (who won’t be showing up at digital conferences – this is a problem).  There isn’t much for creators unless you are also trying to manage the business side of production because this is a business conference.  If you are a producer or work with producers or need to meet producers then you should come to Prime Time.

I’ve updated this post with my Storify of Prime Time 2014 tweets.  It isn’t as complete as I would have liked because Storify and Twitter just didn’t co-operate and at times wouldn’t show me tweets that I knew were there – sigh.  But you can get a feel for things if you weren’t there.

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CRTC’s Tangible Benefits Policy Review

The CRTC is currently in the midst of a review of its Tangible Benefits Policy.  This is the policy that requires purchasers of television and/or radio assets to pay a percentage of the purchase price to programs that will benefit the entire broadcasting system.  This policy was initially put in place because while there is a competitive bid process to acquire a licence in the first place, there is no such competitive process when purchasing the assets of an existing licensee.  The CRTC decided to institute the Tangible Benefits Policy to help to ensure that the prospective purchaser was the best possible purchaser (i.e. had the assets to pay the benefits package as well as the purchase price) and that the entire broadcasting system would benefit from the transaction and not just the shareholders of each entity.

Over the years tangible benefits have been assessed on a case-by-case basis but in accordance with policies and precedents that have been established.  At times this worked well and proposed benefits would fit roughly within the established practice and stakeholders would focus on the value of the transaction or aspects of the proposed programs that they wanted tweaked.  However, once the BDUs started buying the broadcasters they got aggressive with the benefits packages and we started seeing self-serving proposals and ones that had nothing to do with the policies or sometimes even the broadcasting system (see Shaw-Global and Bell-CTV (2010)).  This took up a lot of Commission staff time and stakeholder time as part of the public hearing process.   From my perspective the worst development was when purchasers started coming up with new proposals during the hearing and trying to negotiate their benefits packages at that time.  Stakeholders had to scramble to get enough of an understanding of new proposals to be able to comment on them in their presentations or reply interventions.

So the Commission is now reviewing the policy to try to streamline it so that there are very clear guidelines for how to prepare the Tangible Benefits packages.  You might be asking yourself why now when there are no big benefits packages in our future.  My response to that is – says who?  I have heard many times over the years the statement that there are no more possible acquisitions because the media consolidation process has been completed, yet acquisitions keep happening.  For example, Bell has acquired CTV twice and each time had to pay benefits.  You just never know what the future will hold. 

The Commission issued its call for comments on a proposed revised policy on October 21, 2013 and the first submissions were filed January 13, 2014.  There is a right of reply and those will be filed by January 28, 2014.  We can then expect a decision from the Commission some time in the early spring.  Note that the Call for Comments also included comments on a revised valuation policy but that gets into accounting and valuation policies that would be better left to accounting professionals to comment on.  I’m also focused here on television rather than the radio benefits policy, which is similar in concept but slightly different in the detail.

Generally the CRTC is proposing that rather than the bulk of tangible benefits being self-administered by broadcasters for their own programming, 80% would go to the CMF and the Certified Independent Production Funds (“CIPFs”) with the other 20% being discretionary (i.e. social benefits but could also go to independent production or digital media production).  The breakdown between CMF and CIPFs would be the traditional breakdown of BDU revenues between those agencies, namely 80% to CMF and 20% to CIPFs. 

The initial submissions are somewhat predictable.  All the private broadcasters are against the benefits policy to begin with.  They ignore the fundamental reason for it (lack of a competitive licensing process at that stage) and call it a ‘tax on purchasers’ (Corus) or no longer needed because there is plenty of other production financing (Rogers).  If the Commission must continue the policy then they would like to keep the current case-by-case approach since that allows the most flexibility.   For them.  [Note that the CBC is in favour of the revised Tangible Benefits Policy as it would mean that they, or their producers, would get access to funds that they do not generally have access to.]

On the other hand, the content creators who have been major beneficiaries of the Tangible Benefits policy generally support the CRTC’s proposed new policy but would like to see a variety of tweaks to the proposal.   For example, DOC would like to see a portion of the benefits go to a non-broadcast fund.  The CMF and CIPFs all require a broadcast trigger, which is generally fine except that DOC is finding that broadcasters increasingly do not want to air documentaries.  As an organization they are exploring other avenues to get to documentary-loving audiences and this proposal furthers that goal.  

Most of the content creators would like to see the split 85% on screen and 15% discretionary, consistent with past practice (though DGC would like to see it 83.33% on screen and 17.67% discretionary).  CMPA points out that the increased split will make up for the fact that as a third party fund, the CMF and CIPFs will have administrative costs that will need to be deducted (though strangely the WGC doesn’t think they should be able to deduct admin fees because the additional administration would be minimal – I don’t think they’ve been on either side of a production financing application).    

One of the arguments that a few stakeholders made to support money going to the CMF is the trend that we’ve started to see towards lower BDU revenues and therefore a drop in their contributions to the CMF.  Future benefits are seen as a way to make up for the expected growth in revenue shortfall.

There is some concern that the CMF’s funding criteria under its Contribution Agreement is much more limited than Tangible Benefits have been over the years.  The CMPA called for benefits money being spent by CMF and CIPFs consistent with the Tangible Benefits Policy rather than the Contribution Agreement or other existing criteria.  That would mean, for example, that the language split would be in accordance with the language split of the assets being acquired rather than the 2/3-1/3 of the CMF.  It would also mean that some of the categories of programming that have had access to benefits (eg. feature films and local news) but are not supported by CMF and the CIPFs, would somehow still have access.

It’ll be interesting to see the replies on January 28, 2014, if there are any.  I’m not sure that there’s really much more to say.  Many of the points of the content creators can be worked out in a more defined policy – and many of them are quite valid points in my opinion.  I don’t see the Commission agreeing with the broadcasters that the Tangible Benefits Policy should be thrown out the window or that the Commission continue with the case-by-case approach.  It was just too much work for everyone involved (well – except maybe the purchasers who seemed to be coming up with vague proposals the day they submitted their applications). The recent Corus decisions seem to have signaled that self-administered benefits have had their day.

 

CRTC’s Corus Decisions – A Few Lumps of Coal In With The Presents

C’mon – I had to go with a holiday themed subject line on the last real working day before the holiday break.

Yes, the CRTC decided that it was in the public interest to allow Corus to buy the Teletoon services and Historia and Séries+.  The interesting stuff (for a CRTC watcher like myself) is in the detail.  A lot of detail.  Don’t worry, I do have holiday baking to do so I’m only going to touch on what are for me the most interesting points.

A lot of people were watching the Historia and Séries+ part of the hearing to see whether the CRTC would agree that benefits would only be payable on the half that Corus was buying from Bell and not on the half that they were buying from Shaw.  There has been a lot of confusion on whether Shaw and Corus are related or not (even at Shaw and Corus).  There have been long rumoured plans for Shaw to take over Corus fully but a requirement to pay benefits would make that a costly reorganization.  Well, it looks like they can go ahead.  In both the Historia and Séries+ decision and the Teletoon services decision, the CRTC made a clear statement on how they see Shaw and Corus.  Are they one or two?  Depends.

For the purposes of determining effective control, Shaw and Corus are considered part of the same ownership group as they are both controlled by JR Shaw.  But when applying the group-based licensing policy, Shaw and Corus are two designated licence renewal groups. [para 14 in Teletoon and 18 in Historia and Séries+].  So – no benefits are triggered by the acquisition of the Shaw ownership of Historia and Séries+ and none will be triggered when Shaw buys Corus.  I’m not sure that I agree but the clear statement is helpful.

The decision clears up what has been a very odd situation with Terms of Trade and Teletoon.  While Teletoon’s owners Bell and Astral had both signed a Terms of Trade agreement with the CMPA, Teletoon said that it was not a signatory so took the position that the Terms of Trade didn’t apply.  Well, it does now and it is a condition of licence for all Corus properties.  The CRTC took it further and requires Corus to enter into a Terms of Trade agreement with the AQPM (the French producers in Quebec) within one year and to start negotiations with APFC (the French producers outside Quebec).

The benefits payable under both decisions have been increased.  For Teletoon they were increased from $24.9 million to $26.02 million to reflect leases and cash on hand.  For Historia and Séries+ the increase was from $13.86 million to $14.48 million to reflect cash on hand.  The one thing we can always count on is that the valuation will go up because the CRTC found one or more ways that the purchaser tried to reduce the benefits payable.

Most of the benefits proposed have been accepted.  What interesting is the additional requirements.  The self-administered benefits cannot be spent on production just for Corus properties (generally the benefit of self-administering benefits).  ‘Benefits should be used to create and acquire the best possible Canadian programming to be made available on whatever services Canadians choose.  As such, the benefits resulting from this transaction should be made available to a wide range of producers for broadcast on a variety of services so that they do not exclusively benefit the Teletoon services’.  [para 73.  The same line is in the Historia and Séries+ decision at para 72.]  Corus might as well give the money to the CMF or other independent funds if it can’t be run out of their commissioning department.  Combine this with the proposed benefits policy that has 80% of benefits going to independent funds and we have a clear signal of the impending death of the self-administered benefits fund.

Corus had proposed that 75% of production benefits would go to independent production.  This was of concern for many as Corus owns Nelvana and that 25% would therefore go to its own productions.  The CRTC agreed and Nelvana was cut out of benefits.  They will go 100% to independent production.   Yup, that’s definitely a piece of coal.

In the Bell-Astral decision we had what I believe was the first allocation of a portion of benefits to OLMCs.  Keeping in mind that the Chair of the CRTC and the Vice-Chair of Broadcasting both grew up in OLMC communities, it is not that surprising that there is a renewed interest in supporting OLMC communities.  [and I will add OLMC to the Acronym Decoder].  Both decisions require 10% of the programming benefits to go to OLMCs, consistent with the Bell-Astral decision.

There are two funds that still need to be finalized in both decisions, the Script and Concept Development Fund and the Export Fund.  Stakeholders had objected to the Export Fund as not being an onscreen benefit (Corus had been very vague in its application and at times described it both as a fund to promote programs internationally and as a way to help producers find international financing) but to ensure that it will be an onscreen benefit the CRTC has required that any funds will result in the production of new programs and that those programs are broadcast on a Canadian service.  Effectively it is a ‘foreign presale’ fund rather than an after market distribution fund.  Corus has until January 30, 2014 to file an agreement with either Telefilm or CMF for these two funds.  If Corus can’t come to an agreement with either Telefilm or CMF then the funds will go to the self-administered (but not for Corus’ benefit) funds.

The filter that benefits must be of a benefit to the entire broadcasting system has also been applied to the offscreen or social benefits.  Frequently in the past there have been tenuous connections between the recipients of social benefits and the broadcasting system (I remember an allocation to the Girl Guides of Canada that didn’t make much sense).  The CRTC is being very clear that Corus will have to report on how the funds were used to the benefit of the broadcasting system and hinted that a proper use would be script development, pitching events, professional development and the opportunities to meet OLMCs.  One social benefit, the Corus Inner City Childhood Obesity Research Initiative, was denied for not being clearly of benefit to the broadcasting system (and being very vaguely described in general).

There were a few changes to the licence terms of the Teletoon services that will be of interest.  Corus requested a CPE for Teletoon of 31% but the CRTC set it at 34% with an allocation of 9% specifically to French language programming to allay concerns that collapsing Teletoon into the Corus group could swamp French programming.  Teletoon’s PNI is set at 26% and Teletoon Retro’s at 4%.  That effectively increases Corus’ group PNI from 9% to 12%.  This is all good news so hopefully when the benefits expire Corus will still be spending healthy money on Canadian programming.

The CMPA had requested a condition of licence that Teletoon air 90 hours of Canadian programming as well as the expenditure requirement.  The CRTC did not approve it on the basis that they are leaning towards regulation that focuses on creation rather than exhibition in order to keep pace with changing audience behaviour and provide broadcasters with greater flexibility.  This was also a theme in the Group Licensing Policy, though that policy did not completely get rid of exhibition requirements.  What I find interesting though is that the Commission also denied Corus’ request to remove the requirement to air one hour of Canadian programming during prime time on Teletoon Retro.  That was on the basis that the Commission didn’t want Teletoon Retro to have a completely foreign prime time broadcast.  So exhibition requirements are still sometimes necessary.

There is more nitty gritty in the decisions but my holiday baking calls.  Happy holidays to you all!  Hopefully you can take a proper break and I will see you in the new year.

Corus Acquisition of Teletoon, Historia and Séries+

The Corus hearing for these transactions, and the licence renewal of the services, was November 5-6, 2013.  There wasn’t a lot of traffic on social media so it looks like few people were paying attention (I did the buik of the tweeting when I wasn’t restarting my computer and downloading plugins – the CRTC doesn’t like Macs and I’d lost the plugins that worked when I updated to Mavericks – argh!), but there were a few issues raised that are worthy of mention.

As a reminder, Corus is buying these services because the Commission told Bell Media that they needed to divest of them in order to prevent dominance in the marketplace.  English creator stakeholders (CMPA, DGC, WGC, On Screen Manitoba) expressed concern that the resulting company will dominate the children’s market because Corus already has YTV and Treehouse.  Conflicting stats were submitted to show Corus dominated the children’s market (CMPA’s stats as also used by DGC and WGC) or did not (Corus’ stats).  Methodology wasn’t clear – was CMPA talking about percentage of programming or audience?  If audience, is it a percentage of all viewing by children or just of viewing on children’s services.  Corus kept saying that they had not included children’s viewing of Netflix.  While Netflix Kids is definitely competition it is exempt from the regulated system so clearly does not apply.  But what is the right measurement?  I hope that the CRTC addresses this in their decision as it can come up again when dealing with market dominance in a genre.

Fear of market dominance also led some stakeholders to recommend safeguards against programming being spread across all Corus stations to the detriment of each service.  The Commission pointed out that there were nature of service definitions that should prevent that as well as existing overlap limits between YTV and Treehouse but stakeholders looked for more.  In its reply phase Corus agreed to a limit of 10% overlap between Teletoon and YTV, the two services with the greatest potential of overlap given their respective natures of service.

An allocation of the benefits package to an Export Initiative was quite controversial.  It got a lot of air time at the hearing because both Corus and the CRTC seemed genuinely puzzled that the creative community in both languages was not interested in the program.  On the surface the objection was that as described (funding things like attendance at markets in order to solicit foreign sales) the program would not directly fund new production.  Stakeholders were repeatedly asked how they would amend the program so that it would be an onscreen benefit but they refused to respond.  They wanted the money allocated to production (or in the case of the WGC – development) instead.  Discussion got a little heated between the Chair and Michael Hennessy of the CMPA on this topic.  Hennessy kept saying that promotion was a broadcaster’s job and benefits should go to production so that there is something to promote.  That’s a fine argument except right now there are a lot of benefits monies in the system so it’s a bit harder to argue need (let’s revisit this in 2017 when benefits have been spent and BDU contributions to the CMF have plummeted due to OTT).  It also fails to take into account that the producer (and often the talent) share responsibility with the broadcaster to promote the show.  This isn’t service work where you just produce it and walk away.  Remember that Blais has said that under his watch the Commission would not be protectionist but ‘promotionist’ so this kind of a program that would promote Canadian programs outside the country and leverage foreign financing for domestic production is the sort of thing that he is looking to do.

Commissioner Raj Shoan asked Corus if they would consider tweaking the Export  fund so that it would finance presales or subsequent season sales to directly link to production (and be more clearly an onscreen benefit) and Corus was fine with that.  We’ll see where this one goes.

Part of the transaction involves Corus buying Shaw’s half of Historia and Séries+ along with Astral’s half.  Corus does not want to pay benefits on the Shaw half because they are related companies and Corus says no control is being transferred.  There was a fair bit of discussion of this as this transaction could be nothing more than a litmus test to see if the argument flies before Shaw purchases Corus and consolidates operations.  It prompted a reference to St. Augustine from JP Blais and I have to say that’s the first time I’ve heard such a reference at the CRTC and definitely the first time that I’ve ever heard Shaw-Corus compared to the Holy Trinity.  It’s a tricky issue indeed though as Shaw and Corus want to be treated as the same company for some purposes but not for others.  I’m looking forward to the decision on this one.

After Corus submitted their application for these transactions, and before the hearing, the CRTC released its proposal for a new benefits policy for comment.  It is open for comment till December 5, 2013.  Part of the proposed new benefits policy is that 80% of benefits would be allocated to third party funds (80% to CMF and 20% to the independent funds).  While the proposed benefits do not comply with this proposal they do not have to as there is no policy yet.  The Commission clearly telegraphed its interest in going down that route though so Corus advised that if the Export Initiative does not comply as an onscreen benefit, rather than wrap it in with self-administered programming benefits, it would transfer them to Telefilm or CMF and it would be up to one of those parties to figure out how to arrange a program that supported export and was still an onscreen benefit.

There were other issues but these are my favourite.  There is one other point to mention though.  In his opening speech, Blais reminded everyone of the Commission’s Talk TV public consultation and specifically encouraged content creators to participate.  Many of us think of public consultations as something that our non-industry friends and neighbours participate in but Blais is specifically asking us industry types to get involved too so that the CRTC has “access to the broadest diversity of views possible”.  [which can be read as ‘we don’t want to hear from just the trolls’ – reading the online forum can be painful!] So go to the online forum, join a Flash! Conference, send in your views.  Start by checking out my previous blog post.  If you are member of an organization, ask if they will be running a Flash! Conference.  [The Academy of Canadian CInema and Television is running one November 21, 2013].  This is your chance.

Update:  The CRTC’s twitter account has informed me that the stream for their next hearing will be Mac-friendly.  Yay!!!

CMF 2013 Consultation Process

Yesterday the Canada Media Fund kicked off its industry consultation process leading up to the release of new guidelines for the next two-year period starting April 2014.  The consultation process informs CMF staff and board of industry issues, reacts to proposals from the CMF for changes to the guidelines and offers a forum to air grievances.  I went on a twitter rant earlier this week about the structure of the consultation process, which I will summarize here before getting into how the first Focus Group went.

I ranted because the CMF has been doing this consultation process for a few years now but there seems to be confusion about how it works.  Of all of the funding bodies, in my opinion the CMF has the most structured, open and comprehensive consultation process.  But there are a few levels with different purposes and it seems that people are getting confused.

Starting with Toronto yesterday, the CMF are going across Canada conducting Focus Groups.  The schedule is here.  Focus Groups are an opportunity for stakeholders to raise issues from their personal experience with the past guidelines and talk about local or regional issues.  CMF staff are there to listen rather than solve problems.  CMF staff also present statistics on recent performance and raise topics that they would like feedback on.  I found in yesterday’s meeting, the CMF were much more focused on what questions they would like feedback on from stakeholders than in past years.

If you can’t make it to a Focus Group then you can address the questions or raise your own issues in the online forum after reading the deck from the Focus Group presentation.  [At this point there does not seem to be an online forum – I couldn’t find it.  I’m waiting to hear back from CMF on its location and will update this when I hear]

The issues raised and the questions answered inform the Working Groups which meet in October and November.  While the Focus Groups are open to anyone, the Working Groups are invitation only.  Representatives of the producer organizations, other funders, guilds and unions and broadcasters meet with CMF staff and usually one or two CMF board members on themed meetings (e.g. Regional Incentives, Documentaries, Broadcaster Performance Envelope calculations, Funding Mechanisms).  At these meetings CMF present proposals for change, modeling on the impact of proposed changes, stats on the impact of previous guidelines and they solicit feedback.   These are roll up the sleeves and try to solve problems meetings.  Feeding into that process are Advisory Committees with subject matter experts who advise CMF staff on technical issues.  Currently there is an Advisory Committee that meets to provide expertise on digital media metrics.

Once the Working Groups have all met then there is a National Focus Group.  This is also invitation only and is comprised of many of the same people as the Working Groups but summarizes the whole process for those who may have missed a meeting or two and presents conclusions and recommendations that will go to the CMF Board.  The Board works with staff to make decisions and we then see the results in the spring before the new guidelines go into effect April 1, 2014.

It is a complicated and time-consuming process but it gets work done.

If you want to know the issues being addressed during the process then I suggest you read the deck.  There are a lot of them.  Many are being presented to see IF people care and are not serious proposed changes.  Some are presented because the CMF wants to know if they are on the right track or not.  And you can always raise new ideas.  I Storify’d tweets from the Toronto session yesterday so if you weren’t following along on Twitter you can get a recap there.  I hope that in future sessions people use the #cmfconsults hashtag so the rest of us can follow along and see if there are regional differences in opinion (I assume so).

There was a good crowd out for the Toronto Focus Group though I had the feeling that there were more videogame producers there than tv producers, or even other digital producers.  That may be because those other producers were also being represented there by the CMPA and Interactive Ontario but it is important for CMF to hear from individual producers who have had direct experience with the CMF.  I was pleased to see a contingent from the new kid on the block, the Independent Web Series Creators of Canada (IWCC) who have not previously had specific support from the CMF though it sounds like that may change in the future.  The usual guilds and unions were out in force as well as most of the broadcasters.

There were long discussions about how the Experimental Fund doesn’t work for videogame producers who just want start up money for their commercial titles.  I have to admit to only half listening because I’ve heard this one every year and it ignores the fact that the mandate of the fund is innovation first.  But CMF seemed willing to discuss ways to tweak the Experimental Fund, including a pilot program to work with incubators and VCs, provided that they do not lose sight of their mandate.

A line of discussion that I was much more interested in was the declining BDU revenues and the growth of new digital platforms.  There’s a real push-pull there.  Producers want to be able to trigger CMF funding through digital broadcasters (particularly but not limited to independent web content creators) because increasingly Canadians are choosing to enjoy their content through these new channels and they have become viable business models.  But if those digital broadcasters are not also contributing to the system then they will be benefitting from an ever-shrinking pool of BDU money while leaving less for the traditional broadcasters.  To make it worse, those digital broadcasters are in part the cause of the shrinking pool of BDU money.  The CRTC has previously said that it will not regulate OTT (ie digital broadcasters) as the business models were still evolving and they saw OTT as complimentary to traditional media.  A review of the Digital Media Exemption Order isn’t even in the current CRTC 3 Year Plan though the Order suggested that it would be up for review in 2014 when it was renewed in 2009.   The CMF has started to see a decline in BDU revenues so it seems pretty clear that OTT is having a negative impact on mainstream broadcasters and the CMF’s ability to fund its programs.  It was good to hear CMF say that something needs to be done and CMF alone cannot make the necessary changes.  CRTC we’re going to be looking to you.

A Toronto-specific concern raised was about how regional incentives might be negatively impacting Toronto.  There was an interest in keeping analysis to the quality of the project and away from postal code but the CMF has a mandate to promote the regions and the Convergent Fund is not a subjective fund.  Film Ontario questioned whether CMF stats were able to identify if Toronto-developed television is being regionally produced in order to take advantage of the regional incentives.  Pre-development was introduced for regional producers only last year so it does skew the charts and make that analysis difficult.  And someone at the back of the room raised the question few are willing to say out loud – ‘does every jurisdiction in Canada need to be a production centre?’  That wasn’t up to the room to decide as support for the regions is within the CMF Contribution Agreement with Heritage and the CRTC has come down hard on broadcasters to support regional production.  Regional incentives aren’t going away.

There was much more discussed in the over 3 hour meeting – check out the Storify.  I’m also hoping that Sasha Boersma does a blog post about the consultations from the perspective of a wonky digital producer as she has promised (poke!).  If you are not in Toronto then I encourage you to participate in an upcoming Focus Group near you.  Even if you are not a client or potential client, the meetings are a great way to hear what’s going on in the tv and digital media industries – pretty good schmoozing too!

CBC Licence Renewal – More Than Just Ads on Radio

The CRTC issued its CBC licence renewal decision today and I of course have a few thoughts about it.  But first – my context.  While at the WGC I spent a lot of time over two years (due to hearing postponements) working on a submission and presentation to the CRTC on CBC’s licence renewal.  My thoughts here are informed by that thought and analysis but not limited by it.  I’m also in no way representing the WGC.  Remember – it’s just my own somewhat informed personal opinion.

Renewal was never at issue but just the terms of that renewal.  The decision to allow limited ads on Espace Musique and Radio 2 for three years has received most of the attention and will be the headline in the news but there’s an awful lot more in the 124 page decision.   As an English TV content person I have very specific interests – nothing about French tv or radio and little about radio.  With that in mind, here are a few comments.

The whole CBC Licence Renewal process was very belaboured and it was what I think of now as the ‘old’ style of broadcaster application.  As broadcasters have done for years, the CBC submitted an application that asked for a great deal of deregulation and included lots of  ‘trust us’ language.  Stakeholders objected and provided evidence that trust was a questionable strategy.  The CBC countered at the hearing and during the reply stage with compromises – often as a result of clear messages from the CRTC during the hearing.  This is the  ‘public hearing by negotiation’ that the Chair, Jean-Pierre Blais, has objected to on more than one occasion.  [This may be the last time that we see this strategy as in the Bell-Astral2 hearing Bell certainly heard the warning and came to the CRTC with its bottom line rather than an opening bid.]

In the meantime though, when assessing the decision you really need to look at both the original proposal and the final proposal when looking at the decision.  In several instances the Commission seems to have felt that the CBC made enough of a concession in their final proposal that it didn’t need to push it further.   You may not agree.

The crux of the matter though was how to balance ensuring that the CBC met its regulated mandate with the clear reductions in its parliamentary appropriation.  While the government has said that the CBC has a record high appropriation, the CRTC crunched the numbers and started the decision by saying that the 2011-12 appropriation was comparable in adjusted dollars to the 2002 appropriation though $180 million higher in actual dollars.  By the end of the next term in 2019, the appropriation will actually be $160 million less than 2002 in adjusted dollars.  So how does the CBC manage to meet its mandate with fewer resources?  The CBC argued that it needed flexibility to figure out on its own how to meets its mandate with fewer resources but the Commission definitely didn’t buy the blanket ‘trust us’ argument.  The CRTC decided that there had to be a few ground rules but they are going to allow more trust than most of the content creators are going to be happy with.  Here are a few highlights from the English TV perspective.

In a number of places the CBC had expectations and they are now conditions of licence.  There is no negative consequence to not meeting an expectation.  It’s a suggestion that may or may not be met.  As part of the licence renewal application for the next term, CBC will have to report on whether it met its expectations but not before.  A condition of licence however is enforceable and the CRTC can bring  the CBC back before it in a ‘show cause’ hearing or with a mandatory order (See the OWN hearing for a recent example of a show cause hearing and the resulting decision as an example of a mandatory order).

CBC had asked for a condition of licence (“COL”) of 7 hours of PNI per week when they historically had been commissioning 10 hours.   By the end of the hearing they moved to 9 hours of PNI and the CRTC has accepted that.  That doesn’t sound like a big difference and the CRTC made the point that quota should be less than historical commitments because going forward the funding would be less than historically received (despite CBC’s very positive revenue projections in the application).   But the decision also accepted the proposal that only 75% of PNI (or 5.25 hours) would be independent and that a minimum of 2 hours would be drama and 2 hours would be documentary.  Content creators and especially DOC fear that CBC would only do the minimum of 2 hours of documentary (down from current levels of 3 hours per week) and increase the amount of in-house production that they are currently doing.  The CRTC’s argument is that these are minimums, they ‘expect’ the CBC to exceed those minimums and they believe that the CMF guidelines and the CBC’s need to build audience and generate revenues will be enough incentive that additional regulation is not necessary.

Respectfully to the CRTC, I see some holes in that argument.  CMF broadcaster envelopes are based in large part on audience success (way complicated).  The CBC is not and cannot be all about chasing large audiences to increase their CMF envelope or their ad revenues because then it stops being a public broadcaster.   Its mandate includes offering a variety of programming so that all Canadians can find programming on CBC, not the same program to each and every Canadian.  This is why even at 3 hours a week, the CBC offers more documentary programming than the private broadcasters.  Any push for larger audiences in order to increase CMF or ad revenue is likely to mean fewer documentaries as they just do not have the same level of audience as prime time dramas such as “Republic of Doyle” or “The Rick Mercer Report”.   Regulation was needed to ensure that the CBC did not ignore its mandate in search of revenue.

Then there is the issue of the CBC’s excessive use of minority co-productions (“Tudors”, “Pillars of the Earth” etc.) to meet its Canadian content obligations.   The WGC proposed excluding them from calculation of PNI as they use few Canadian resources.   The goal was to find a solution to an imbalance in broadcasting co-productions that meant fewer opportunities for Canadian talent on Canada’s broadcaster.  Well, the Chair of the CRTC is well-versed in co-production policy from his previous employment at Heritage and the decision refers to the biggest policy hurdle to addressing the imbalance – the policy of ‘national treatment’ means that were the CRTC to agree to that exclusion, there could possibly be international trade repercussions.  However, at the hearing the Chair had countered that a possible solution was requiring an overall balance of co-productions within PNI so it was disappointing not to see that in the decision.

The CBC’s previous expectation that it broadcast Canadian programming for 75% of its day and 80% of its prime time period has now been entrenched as an enforceable condition of licence.  While some parties, such as ACTRA, wanted the CBC to move to 100% Canadian programming in prime time, the CRTC agreed to what I think of as the ‘Coronation Street exception’.  There would be riots in the streets if the CBC had to get rid of it, riots in the streets.

Now for kids – a subject near and dear to my heart ever since my earlier time with Owl Television.  CBC has stated that they want to move away from school age and youth programming and concentrate on preschool programming.  They stated this made sense because these age groups were leaving broadcast television and going online, where their needs will be met by CBC.ca.  No evidence was presented to support the departure of kids and youth from tv and Youth Media Alliance presented stats to the contrary.  However, the CBC had also not presented any evidence about what it is doing and how much it is spending on CBC.ca.  Many stakeholders, and particularly the Youth Media Alliance, presented arguments and evidence to demonstrate a need and a want for quality school age and youth programming for Canadians on CBC.  The CBC revised its proposal to a condition of licence of 15 hours of programming for children up to 12 years of age and an expectation of 5 hours for youth 12 to 17.  The CRTC ‘expects’ a reasonable allocation between preschool and school age programming.  There is a new requirement of 1 hour of original programming per week.

The good news in this is that the children’s obligations have moved from expectation to COL but the bad news is that youth programming hasn’t and there is no protection of school age programming within the allocation of 0 – 12.  Given that in the last licence term there was an expectation of 5 hours of youth programming that was completely ignored I don’t understand why the CRTC thinks that an expectation is good enough for the coming licence term.  The CRTC’s logic is that 1 hour of original programming is more of a commitment to original programming than zero but that still will not prevent the CBC from meeting its commitment as it does now through airing a lot of very old repeats.  At the hearing there were many passionate arguments about the obligation of Canada’s public broadcasters to meet the needs of its youngest citizens and I am afraid that we will be hearing these arguments again in 5 years.

There was one little part that I did enjoy in the kids part of the decision.  This Commission isn’t buying the argument that the last Commission agreed with – that families should just pay for YTV, Treehouse and Family Channel if they want kids programming.   The Commission stated clearly that as private conventional broadcasters have moved out of kids programming, it is even more important that the CBC as Canada’s public broadcaster support the kids and youth audience.  We just don’t agree on how that will happen.

During the hearing the CBC committed to broadcast one Canadian feature film per month but would not commit to when they would air them.  They wanted the flexibility to air them on Saturday afternoon or late in the evening.  Really late.  As most audiences are still watching tv during prime time, there were calls for a commitment to air Canadian feature films in prime time and not let the CBC dump them in off hours.  As I recall the DGC was pretty insistent on this point.  The CRTC has instead ‘encouraged’ the CBC to air Canadian feature films in prime time and in a regular slot in the summer (ie when there is no hockey).  I think an encouragement is even less than an expectation.

A really wonky request was for more detailed reporting to be able to assess whether CBC is meeting its expectations and COLs and encouragements (is that a word?) while the CBC was arguing for less reporting.  One in particular that interests me is the call for reporting on the CBC’s digital expenditures and revenues.  On the one hand the CBC is saying that it can get out of kids and youth programming because it is doing a lot for that age group online while on the other hand they are not reporting any of that activity because there is no requirement.  The CRTC reiterated that as a Digital Media Broadcasting Undertaking (DMBU – successor to the much loved NMBU) is exempt from licensing, there is no requirement to report other than the vague reporting that is currently reported to the public in an industry aggregated way.  Any greater reporting could somehow harm developing business models.  I hope then that the CBC will not be allowed to make the claim again at the next licence renewal hearing that these unreported activities can take the place of regulated activities.

The final piece of interest to me is on terms of trade.  The Commission declined to wade into the competing stories about why no agreement had been concluded (this had taken up a lot of hearing time) but was very firm and clear about its jurisdiction to impose a terms of trade agreement if it wants to, regardless of the CBC’s legal opinion to the contrary.  While it won’t at this time impose Terms of Trade, the CRTC gave the parties one year to conclude an agreement or risk a show cause hearing or a mandatory order (see above).  Will that be enough to break the log jam?  We can only wait and see and hope that it happens.     Terms of Trade are important to provide stability and certainty in negotiations and create a level playing field between parties so we do all need the CBC and CMPA to conclude Terms of Trade.

Oh, that’s a lot of stuff.  I congratulate you if you made it to the end.  Just imagine if I was interested in French TV and radio!

The Benefits Bulge*

It might have been lost in the dropped jaws reaction to Kirstine Stewart’s sudden move from CBC to Twitter Canada, but yesterday Mario Mota released his 2013 Canadian Television Benefits Monitor. The Report, which is available in detail to subscribers and summarized in his press release, tracks each year English-language broadcasters’ reporting on their CRTC-mandated tangible benefits packages. Those are the benefits required to be spent on the Canadian broadcasting system as a condition of approval of an acquisition of Canadian broadcasting assets. The 2013 Report tracks spending for the year ending August 31, 2012. It takes this long for the broadcasters to report to the CRTC, for the CRTC to publicize the reports and for Mario to then review and analyze the reports.

We are currently enjoying substantial benefits spending on Canadian television and we now have the data to demonstrate that. Due to benefits packages primarily from Bell, Shaw and Rogers that were determined in 2011 but finally started to be spent in 2012, benefits spending jumped from $52 million in 2010-11 to $177 million in 2011-12. Not all of that was for onscreen benefits (i.e. television programming) and the Commission did allow for unprecedentedly low allocations for onscreen benefits for Bell-CTV and Shaw-Global. Even so, onscreen benefits spending increased from $44 million in 2010-2011 to $113.5 million in 2011-12. That is an increase of 158%.

Benefits are to be spent roughly equally in each year but broadcasters will not be sustaining this level of spending in each year going forward. This may in fact be a high water mark, perhaps with next year. Some packages expire in 2014, others in 2015 and the final ones in 2019. There will be smaller packages approved for Bell-Astral 2 (most of which will go to French television or radio but some for TMN), and Teletoon and Family Channel transactions are still to be determined. Currently, according to the Report the total to be spent by 2019 on onscreen programming is $355.4 million.

To give some context to these numbers, the 2011-12 budget for CMF English Performance Envelopes was $189 million. So last year’s onscreen benefits spending of $113.5 million was 60% of the full amount that was available from CMF from the performance envelopes. Additionally, benefits are to be incremental to what a broadcaster already has to spend on Canadian programming through their CPE and/or PNI CPE (see Acronym Decoder). That’s the other part of the story that we do not know yet – how much did the broadcasters spend due to the Group Licence Policy before they started spending benefits money. We need to know that before we can really get a sense of how much money is in the system for Canadian programming.

But it’s a lot! We know that much. What happens when it has all been spent? I have said this before and I am not alone – we have an opportunity here to leverage increased spending on Canadian programming to try and create permanent positive change. Last year in an article in Carrt (subscription needed) Mario Mota suggested that we leverage the increased funding in Canadian programming by implementing Non-Simultaneous Substitution (“NSS”). NSS would break English Canadian broadcasters dependence on the US schedule, give Canadian programs stable timeslots thereby increasing audiences and therefore increasing revenues. If NSS was in place, the benefits-funded “Bomb Girls” would not have been pulled off the air for a simulcast of “Survivor” and might have had a chance at a better time slot when it did return. [See Kate Taylor at the Globe and Mail].

There are technical hurdles to NSS and I am not qualified to discuss them. NSS is just one of the ways though that we can try and take advantage of the current ‘bulge’ in Canadian programming. We have audiences watching Canadian drama in higher numbers than they have in years. How do we sustain that appetite for Canadian programming and the willingness of Canadian broadcasters to keep spending money on Canadian programming when they no longer have to. I agree, getting rid of simultaneous substitution so that Canadian broadcasters have to rely on their Canadian programming is another solution. I am just not sure that the Canadian broadcasters could survive a cold turkey withdrawal of their crack cocaine. Then again, who says it would have to be cold turkey?

What else can we do? Perhaps future benefits should be put in endowments like they used to be so that they could have long term sustained investment in Canadian production as the Independent Production Fund, Cogeco Fund and others have been able to do. That is something for the Commission and broadcaster applicants to consider. Perhaps some of the benefits money yet to be approved could go to building audience demand (i.e. promotion, social engagement, sustaining a star system) so that broadcasters risk alienating their audience if they stop funding Canadian programming. [Note – in no way am I advocating a return to entertainment magazine programming, a notorious broadcaster boondoggle that was intended to build a star system but instead allowed Canadian broadcasters to spend money on promoting a lot of US programming with Canadian stars in it instead of spending it on actual Canadian programming.]

I am sure that there are other things that we could do to leverage this ‘golden opportunity’ if we put our minds to it. We need to learn from the last golden age – the mid-90s. We had so many great programs that Canadians loved to watch: “Street Legal”, “Due South”, “Da Vinci’s Inquest”, “Road to Avonlea” to name just a few. Those shows trained screenwriters, directors, actors and producers and developed a talent pool. When the money dried up with the 1999 TV Policy, which got rid of an expenditure requirement for broadcasters, a lot of the talent went south and did not return. That is what we are risking if we do not have a plan in place for post-2019. We are right now growing our talent pool but will they have careers here in a few years.

*And for the record, I was thinking more of a cow in the middle of a snake kind of bulge, nothing Jon Hamm-ish.