Category Archives: CRTC

Let’s Talk TV – Let’s Talk About It ALL!

Well, it’s ambitious. I’ll say that for the Let’s Talk TV consultation. It can even said to be HUGE!

To recap, yesterday the CRTC released both the Notice of Consultation on the third stage in the Talk TV consultations (the first stage being the online discussion board and the second stage being the Choicebook) and as well released its response to the government’s s. 15 order to report on the feasibility of pick and pay. These two releases need to be read together.

First, to reiterate, the s.15 request  was for the CRTC to provide the government with a report on the impact of any pick and pay measures for pay and specialty services and how any such measures would still ensure that the majority of services received were Canadian and that BDUs continue to give priority to Canadian services. The report is only the next stage of the process and not the final stage. The CRTC’s proposal for pick and pay options will be discussed as part of the Talk TV consultation and after receiving evidence from various stakeholders (deadline June 25, 2014) and discussing it at the hearing (starting September 8, 2014), the CRTC will then make a decision.  It could easily be a decision to not implement any pick and pay because of the expectation of harm to the system (I doubt that but it’s possible).  What it will not be is a decision to implement full pick and pay because of the social policy goals of the Broadcasting Act.   I’m saying this because the gap between public perception and the reality of the process annoys me.

So, what is the CRTC’s proposal? The CRTC proposes that BDUs offer:

–       A small, all-Canadian basic service that includes only the local Canadian conventional stations, the mandatory carriage services, the provincial edunets and in some cases community channels and provincial legislatures services.

–       Promote the availability of the small Canadian basic

–       Allow pick and pay on pay and specialty services

–       Allow consumers to create their own packages for pay and specialty services

This proposal gives Canadians the option to stick with their packages or if they really really don’t want all of those channels go to a skinny basic and pay for individual pay and specialty services. The hearing will review specific issues with this proposal such as the impact on more niche specialty services, the impact on BDUs and the impact on program producers from such a proposal. It will be interesting to see how the consumer groups respond. I hope they all try and conduct some studies or economic modeling to put some evidence behind their responses but practically there are limits to what evidence can be provided. We just don’t know how consumers will behave if offered this proposal. How many would reduce their packages and buy just a few services, especially if those services by necessity have to be more expensive when sold on their own? I like tv and a choice of services so I’m not likely to do it. I know sports fans who might. How many are in each camp – does anyone have a clue?

This topic on its own could fill a hearing with each sector of the industry weighing in because of the potential impact of any pick and pay system. It isn’t the only topic. On the assumption that you have not read the Public Notice I’ll skim over the issues.

–       Increased access to non-Canadian services

–       Remove Simultaneous Substitution completely (which allows broadcasters to replace the US ads on the US programs they buy with Canadian ads they have sold – I honestly did not think removing it would ever be discussed in my lifetime) or replace it with Non-Simultaneous Substitution (which allows them to replace the ads whenever the Canadian broadcaster airs the US program)

–       The importance, or not, of local programming

–       How will programs be delivered in the future and do we need to change the funding model for support of Canadian programming to keep up?

–       Does the CRTC need to continue to require exhibition of Canadian programs or is funding enough? Should there be regulation of promotion?

–       Support of underserved audiences such as OLMCs, Aboriginal audiences, third language communities and persons with disabilities.

–       Is support for independent programming and distribution services required (i.e. VI Code).

–       Enhanced measurement of audiences using set-top boxes and the privacy issues that are triggered by that discussion.

–       Maintain, or not, the Genre Exclusivity Policy (i.e. should History be allowed to morph into Discovery and Showcase to morph into Space)

–       Simplified licensing of services

–       Better communication of changes to consumers by services and BDUs

–       Improved parental controls

–       Competition within the BDU market

–       Dispute resolution between BDUs and subscribers

Each one of these topics could be a hearing on its own. They do relate to each other and impact each other so I understand why they are bundled together but this is going to be a difficult hearing for most stakeholders. I’ve participated in these ‘all you can eat buffet’ style hearings and they are hard. You just don’t have the time or resources to address every issue so you pick your top issues and hope that other stakeholders address the ones that you can’t get to. Reading all of the other submissions alone is time-consuming but necessary. The Commission did remind smaller groups that they can apply to the Broadcasting Participation Fund for financial assistance (and I remind you as well) but it is still going to be a costly year for stakeholders.

On the upside – I’m definitely looking forward to some interesting discussions during the September hearing.

 

Is Primetime Still Important – You Betcha!

The Canada Media Fund (CMF) has asked me to write the occasional blog post of television issues and my first one was released today. I just want to give a little more context to why I thought it was a necessary topic – space and tone were limited there (I had to sound more pro and less convo as I do here).

If you were listening to the Rogers licence renewal hearing last week you would have heard a reminder as to why a discussion about the continued importance of prime time is important. Or if you read Andrew Coyne today, you would get another reminder. Everyone seems to think that prime time is out the door or has one foot in the doorway. The stats say otherwise.

In the Rogers licence renewal hearing, Rogers argued that they did not need to broadcast ethnic news in prime time because their audience is going digital and can pick up all their news online. They would rather air reruns of US programming in that time slot and make more money. In a unscientific but illustrative poll, Commissioner Raj Shoan asked many of the intervenors if they or their stakeholders watched Omni and particularly the ethnic news online. Very few admitted to watching online and in fact most were adamant that they and their stakeholders wanted to watch their news on broadcast and in the evening. This was what they were used to. I’m sure that this was no surprise to Rogers. Though BBM data is notoriously difficult when it comes to capturing ethnic audiences (not large enough sample sizes) they must know from feedback from their audience that the broadcast schedule is important to them. Rogers still tried to make the argument that we are in an on demand world as a way of trying to reduce regulation and increase revenues. It sounded to me like the CRTC wasn’t buying it but we’ll see.

Today’s piece by Andrew Coyne puts the on demand world a little further out at ‘a few years, maybe two’ as part of his argument that we no longer need the CBC, CanCon, the CRTC and the Broadcasting Act. His argument ignores the facts, such as those quoted in my CMF blog post, which demonstrate that tv viewing is not actually dropping. The growth of on demand, currently at least, means that we are watching more video entertainment in total given the opportunities of digital platforms. So yes, for the foreseeable future we do still need the CBC, CanCon, the CRTC and the Broadcasting Act.  And regulation that ensures that there is the choice of Canadian programming in primetime when most Canadians are watching.

Content is Missing from Digital Canada 150

First, let’s have a quick refresher course on our long wait for a National Digital Strategy. In the summer of 2010, then Minister of Industry Tony Clement launched a public consultation (together with the Ministers of Heritage and Human Resources) on what should be included in a National Digital Strategy though the government called it a Digital Economy Strategy and put a clear emphasis on infrastructure and economy.  [Note – I would link to the consultation but as of writing all those public documents are offline. I will update when I can.]. We were promised a strategy document in the fall, then spring of 2011 and then pretty much annually we’d be told that it would be coming ‘soon’. There were those of us who thought there would never be a National Digital Strategy.

Why do we need one? Other countries such as Australia, the UK, the European Union, and even the US, have created National Digital Strategies to set a plan and measurable goals. What are we going to do to move into the future, make sure that every citizen has the tools that they need, has the protections and can fully enjoy the benefits of the new digital world? How will Canada make sure that it is competitive internationally? How are we going to measure our progress? Where will we put our emphasis – economy, skills training, infrastructure, privacy, content?

Today the government released Digital Canada 150. It’s an odd document. It has five pillars: Connecting Canadians, Protecting Canadians, Economic Opportunities, Open Government and Canadian Content. [Note that Skills Training or anything else to do with the Department of Human Resources, one of the sponsors of the original consultation, is absent.] In each pillar it sets out a few items that are forward thinking and celebrates the government’s past achievements. I think we were hoping for a more forward thinking document. I was. As with a lot of the government’s activities these days, it seems to have been written with an eye on the next election. How else do you explain unbundling of TV channels as a Digital Canada topic? It’s a nice sound bite aimed at getting votes when the reality is that providing Canadians with more choice while still living up to the goals of the Broadcasting Act is a very complex exercise and is unlikely to result in both more choice and less cost for consumers.

There is a goal to extend broadband coverage to 98% of the population by providing $305 million to extend 5mbps to rural areas. This is a reasonable target speed (though some jurisdictions have set faster speeds as their goal) but is only about coverage. Universal broadband as a concept is about coverage and affordable access. Citizenship in today’s digital world means that every Canadian should have affordable access to broadband. This goal does nothing to achieve that. But the rural voters probably will love it.

Back to content though. What does the Digital Canada 150 promise us as tools to give Canadians ‘easy access to Canadian content that will allow us to celebrate our history, arts and culture’ (Digital Canada 150 pg. 21)? Two Heritage Minutes per year every year until 2017. The Canada Book Fund and the Canada Music Fund will become permanent funds. There will be continued support of the Virtual Museum, the Memory Project (veterans stories), digitization by Library and Archives Canada and the NFB. Nice, but we asked for a lot more fundamental changes to be able to provide Canadians with access to Canadian content in the digital age and beyond.

What is missing? Canada Media Fund, Canada Book Fund, Canada Music Fund and more have all had digital content or distribution tacked on to their existing mandates, generally with no increase to their funding. Consumers are no longer accessing or engaging with content through silos. For example, magazines and books are read on iPads with hyperlinks to video. There needs to be a comprehensive overhaul of the funding mechanisms for Canadian content to ensure that they meet the social policy goals of the Department of Canadian Heritage and are structured appropriately.

The government did make the Canada Media Fund permanent and that was a great thing. But it did not increase the CMF’s funding when it extended its mandate to digital media. As Canadians shift to digital platforms and cut or reduce their cable packages, the CMF’s revenue from the BDUs is starting to shrink. Additional revenue sources need to be found if Canadians are going to continue to have access to the excellent Canadian programming choices that they have now. This could be additional funding from the government or a contribution from the ISPs or the OTT services, both of which are benefitting from the consumer shift to digital platforms.

The Broadcasting Act and the Telecommunications Act should be merged into a Communications Act. New technologies and distribution models have frequently left the CRTC unsure as to which Act applies or whether either does, leaving it to the Courts to determine. Vertically integrated companies like Shaw, Rogers, and Bell are governed by both Acts at different times. These companies are able to shift revenues to divisions, such as the ISP divisions, with no or less regulation. A Communications Act would ensure that the Canadian broadcasting and telecommunications system was, where necessary, Canadian-owned and regardless of platform made the appropriate contribution to the production and exhibition of Canadian programming on that system.

The CBC has always had a mandate to provide information and entertainment to all Canadian across the country in both languages. Digital platforms make it easier for it to meet that mandate but at the same time repeated budget cuts have made it harder for the CBC to fulfill that mandate. There should be a review of the CBC’s mandate in light of the opportunities of digital platforms and a clear provision of sufficient funds so that the CBC can meet that mandate.

Another ask was for more support for original digital media through labour-based tax credits. Extending the film and video tax credit to web series and creating an interactive media tax credit would help develop a labour market of skilled talent in these newer digital content areas.

The government reformed the Copyright Act recently but it is up for review as of 2017. At that time, the Copyright Act should be amended to ensure that creators and owners are appropriately compensated when their works are exploited on digital platforms. The last amendment did not appropriately address that issue.

Skills training is a subject that was completely left out of Digital Canada 150, which is odd considering that it was a prominent aspect of the consultation. The content sector has called for improvements in training both at university and for mid-career training so that creators can take full advantage of innovations in digital content creation and distribution. There are gaps in the labour market that need to be filled if the sector is going to be internationally competitive.

Despite a full pillar titled Canadian Content, there isn’t much in Digital Canada 150 for the film, television and interactive digital media sectors.

 

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.

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.

How the IIC Canada Conference Was Relevant for a Content Policy Wonk

As I usually do, I’m going to organize my thoughts and tell you what I got out of the conference that I just attended. I’m writing on my iPad in my fave lounge with my fave brown drink so apologies in advance if there are any typos.

IIC Canada conferences tend to have themes, often more than one (last year there was a day on promoting CanCon and then the second day was so,pure Telecomm we went lobbying on the Hill instead). This year there was one clear message – the state of the wireless market in Canada. Well, every Tom, Dick and Harry’s particular vision of the state of the wireless market in Canada. This meant competing charts and analysis that frankly left me unsure what to believe. We may or may not pay more than most countries for wireless but if we do it’s because our network is so great and we’re heavy users. But it might also be because of high profits being earned by Bell, Rogers and Telus.

This was a very timely discussion because of the recent worries that Verizon was going to enter the market and eat every one’s lunch resulting in the wireless ad campaign which prompted a government attack ad and Telus buying Public Mobile but the government preventing them from buying Mobilicity. A number of speakers were arguing that the current government animosity to the wireless sector was not good for anyone, and definitely not consumers (but might be the wireless sector’s own fault since they started it).

If you’re a content person you may be asking – why should I care? Think for a minute about how your content is being watched. Is it all on broadcast? I doubt it. The audience is increasingly seeing no difference between watching a show on their tablet, their phone or their tv. Though Marc Séguin of the CMPA and Chris Guttman-McCabe of CTIA (a US wireless trade association) had an argument about whether CMPA members were focused on TV and not therefore paying attention to digital content, I think that was a red herring. Guttman-MCabe was talking about his kids viewing content on their iPads and I’m pretty sure at least some of it was TV. We are moving to a world where mobile or broadcast are just delivery platforms and not different forms of content (though admittedly our funding mechanisms aren’t there yet). So the the state of the mobile industry, how much it costs, fighting between the government and the industry all are relevant to us. A dysfunctional industry will not help us figure out how to rejig the funding mechanisms the way we need. Wireless needs to be our partners in the same way that broadcast does, but they and the government need to get their act together first.

The other directly applicable issue was the conversation about consumers. What is the difference between consumers and citizens and what impact does that have on us? CRTC chair JP Blais has said that his job is to look at issues from the perspective of consumers, citizens and creators. He appointed a Chief Consumer Officer – Barbra Motzney. The consumer angle has been a new filter for those of us who deal with the CRTC. It was very useful to hear discussions of the difference between consumer and citizen.

The rest of the benefit that I got from IIC Canada was less tangible. I chatted with other policy wonks at Heritage, CRTC and cultural organizations. I let people know what I’m doing. I told them about the fundraising that we’re doing for the Alan Sawyer Memorial Award (more on that in the next post). I wore heels and a jacket for the first time in months (can’t get totally out of the habit of that!).

Not for everyone but a good couple of wonky days for me. And it was great to touch base with the Ottawa chapter of the Canadian media policy wonks for a little wonktacular.

What’s the Significance of a S. 15 Study?

You may have missed this in the Rob Ford scandal of the day, but today the Government announced that it was calling on the CRTC to report on ‘television channel choice’ under s. 15 of the Broadcasting Act.  Specifically Minister of Heritage Shelly Glover said:

“our Government believes Canadian families should be able to choose the combination of television channels they want . . . This decision is an important step in defending Canadian consumers, who want choice and flexibility in their television services.  Our request will ensure that the CRTC develops a more complete roadmap to unbundle TV channels.”

You may be scratching your head on this.  Yes, the CRTC did just launch its Talk TV consultation and among the many questions being asked are:  “If you subscribe to cable TV or satellite TV, how satisfied are you with the way your channels are packaged?”.  Why does the government need to do this and what is the significance of a s. 15 report?

First, the CRTC decides on its own what it is going to study and what public hearings it will hold.  The one exception is if, under s. 15 of the Broadcasting Act, the Governor in Council asks the CRTC to hold a hearing or make a report on any matter under the CRTC’s jurisidiction.  So the significance of the s.15 request is that the CRTC must now report on that narrow issue to the government rather than its usually reporting which is just to the public.  But is that all?

We have to ask ourselves why the government would ask for a report on one question when it is going to get a report (we all will) on the many questions which are part of the Talk TV consultation. This appears to me to be a political response to a very complex issue that the CRTC is trying to look at in its entirety.  It speaks to voters without having to actually implement any changes.

The government has done this before.   I’m sure that you remember the very public fight that went on between the broadcasters and cable companies over Fee For Carriage (which then morphed into Value for Signal).  September 16, 2009 the government requested under s. 15 a report on the implications of a value for signal regime.  The issue had come up time and time again during public hearings and most recently under the April 2009 hearing on the renewal of licences for the private conventional stations (i.e. Global, CTV etc.).  As part of the licence renewal decision, the Commission decided that it would hold a hearing in the Fall of 2009 on, among other things, a value for signal regime.  That hearing was pre-empted by the s. 15 notice which effectively hived off the issue from the other outstanding issues and resulted in its own public consultation.

Did the outcome change because it was a s.15 report and not a regular hearing?  I don’t think so.  There was more of a public consultation than had probably been planned. From the perspective of an industry stakeholder we had the same submission process and public hearing.  The broadcasters and BDUs had the same fight in the media and in the hearing room that they would have otherwise.  There was no legislative response from the government.  And the whole issue became moot when Shaw bought Global and Bell bought CTV.   However, there might have been a political win from the government being seen as a champion of the consumer who was being caught between the broadcasters and the BDUs but little practical impact.

In this case, the CRTC could decide to hold a separate consultation on unbundling or just report specifically on the topic from the existing hearings.  They were given the deadline of April 30 to deliver the report to the government so it is expected that they will prepare it as they are preparing the report on the public consultation. The s. 15 request adds a political layer to the consultation and but it may not have any practical impact beyond the extra workload on CRTC staff.

Update:  Cartt.ca (subscription) has a link the the actual s.15 order as well as a description of the relevant parts of the order and its relevance.

What’s all this about data?

Warning – this is a wonky post.

In last week’s Corus CRTC hearing there was one recurring line of questioning that I thought deserved its own blog post because I suspect that most of you are not aware of its full significance and might need some context.

Commissioner Raj Shoan asked each of the English creator groups (ACTRA, CMPA, WGC and DGC) if they could identify any impact that the new Group Licensing Policy (frequently referred to as GLP and now an entry in my Acronym Decoder) had had on their sector.   Jay Thomson of CMPA and Peter Murphy of the DGC responded that the creators do not have access to the spending data to assess how spending on a group basis and through PNI compares with the previous regulatory framework.  (CMPA para 1615, DGC para 2033-2035).

In the Reply phase of the hearing Gary Maavara responded that the creators had enough information from the CRTC Pay and Specialty Financial Summaries to determine what impact GLP was having on the pay and specialty sector.  (para 2386)

In my opinion, this is wrong.

Back in the summer of 2012, I was a part of the creators’ group that went to the CRTC and asked for detailed reporting that reflected the new GLP framework (Disclaimer – because of that involvement I do feel some ownership of this issue, still).  Existing reporting provides stakeholders with OTA aggregated reports on spending by program category, pay and specialty aggregated reports on spending by program category, individual pay and specialty service revenue and total program spending reports, aggregated conventional spending by corporate group and by program category and benefits spending by corporate group.

Seems like a lot of reports, right?  Yes, but there are no reports by the entire group and corporate groups are now able to allocate their CPEs across the group, with certain conditions.  There are also no PNI reports (by group or service or licence category) and the regulatory framework allows groups to allocate their PNI CPE across a group, with certain conditions.

Why are these reports necessary?  The GLP was put in place to provide broadcasters with flexibility in their programming and expense allocation across their corporate group without letting them decrease their Canadian programming obligations and specifically protecting more expensive Programs of National Interest.  After many years it had been proven, through extensive data, that the previous priority programming policy framework had allowed broadcasters to meet their obligations through low cost programming, resulting in a significant drop in spending on Canadian drama and documentaries.  The creative community hopes that GLP works and reverses the trend in spending but wants to see the data to ensure that it works.   If it isn’t working – well it’s better to learn that earlier and try to deal with any problems promptly rather than have the system fail Canadian programming for 11 years (that’s not an exaggeration sadly).   If it is working – well I’d love a good news story!

I understand from the creator’s group that while the CRTC is working on the question of reporting, no decisions have been made and the requested reports from the first year of the GLP (2011-12) are not available.  It is a tricky issue dealing with what legally can be provided, what the CRTC’s obligations are and pushback everyone knows will come from the broadcasters.   I’m not sure why Commissioner Shoan asked the question that he did, unless it was to see if the creative groups had other ways of measuring impact.  Production is up.  CMPA’s Profile says that (2012 had a 21.3% increase over 2011), there are more Canadian shows in the Top 30 than in previous years, there are production crews all over Toronto streets (and other cities but I live in an area of Toronto where crews love to shoot so let me tell you – I’ve noticed an increase!).  The real issue is whether the increase in production is because of benefits (and will drop when they expire) or because of the GLP or some combination.  There are other questions like whether PNI is being appropriately allocated amongst drama, documentaries and award shows or all being spent on the more expensive drama shows.  None of these questions can be answered with the existing reports.

Hopefully the issue will be resolved soon.  In the meantime, the existing reports only tell half the story.

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!!!