Category Archives: Heritage

The CIPFs and Digital Media

In my last post I went over the ‘permissions’ and ‘requirements’ of the CRTC’s new regulatory framework for Certified Independent Production Funds (“CIPFs”).  Since then you have heard a lot about the decision to reduce eligibility for Canadian productions from 8 points to 6 points. However, there is another issue that has been quietly bubbling away and now is generating a great deal of concern.

First, a little context.  In CRTC 2010-833, the CRTC amended the existing regulatory framework for CIPFs to formally allow CIPFs to fund digital media associated with television programming and to allow funding of standalone digital media provided that it was limited by a cap of 10% of the revenues received by a CIPF from a BDU.

“the Commission is of the view that there is little cause for concern over permitting the funding of new media projects linked to television programs as any new media content created as a result of such funding would still serve to support traditional television production. The Commission also concludes that the existence of a link to a television program will create a self-limiting process in that the producers and broadcasters will want to ensure that sufficient amounts remain for television production and development and will therefore make decisions in their own best interest. It will also be at the discretion of the funds whether they choose to fund program-related new media projects. As such, the Commission considers that a cap on such new media projects is not necessary.” [para 17]

So it was very confusing to read the new framework and see the phrase “the Commission will maintain a 10% limit on funding that can be allocated to non-programming digital content” [para 45] when there had been no cap on associated ‘new media’ to maintain.  Now, the definitions have been updated so that digital no longer includes digital-first linear video, but the result of the new wording is that all other digital media associated with a television program is now limited to 10% of BDU revenues.

Given the seriousness of this change, various organizations have been in touch with the CRTC to confirm that indeed this interpretation is correct. The potential consequence is significant as it would mean that most of the CIPF funding for digital media that both digital media and television producers have relied on will have to be re-allocated to  only television programming.  At a time when digital media is an essential element in discoverability this is a puzzling development.  Affiliated digital media drives audiences to the television, extends their experience with the television program and the broadcaster, builds both brands, and helps to sell the television show internationally.  Digital media can help documentaries extend their reach and their impact.  In some genres, most notably children’s, international buyers rarely license the television program unless there is associated digital media.

A few years ago I authored a study on co-production opportunities in digital media and in that study I learned that few countries around the world have any funding for digital media associated with television programming.  With the funding that we have, Canadians have become leaders in the field and are sought after for co-productions not just for their potential access to funding but also for the expertise that they have now developed.  Companies like Shaftesbury, Breakthrough, Secret Location, DEEP, DHX Media and Xenophile have developed international reputations as talented television and digital media producers and been able to compete in international markets because of the early and consistent support of the Bell Fund.  Is this not what the CRTC said it wanted?

Moreover, at a time when Minister Mélanie Joly is in the middle of the #digicancon consultation, the timing of limiting the ability of the Canadian broadcast system to leverage digital media to drive audiences to the broadcast platforms and to make foreign sales is hard to understand.  The CRTC seems to be taking two steps back while Heritage is trying to take one step forward.

The Bell Fund has asked for a transition period to be able to react to the new rules, as the decision was effective September 1, 2016.  They have also asked for an increase to the 10% cap, given the significant potential damage of such a small cap.  The CRTC has said that it cannot make amendments to an existing decision but instead it turned the request into a Part 1 application which is now a public consultation.  If you wish to comment on the Bell Fund’s request you can do so through the link on that page.  The deadline is November 28, 2016.   There is no guarantee that any changes will be made but at least there is a forum for industry feedback.

Full disclosure – I have a working relationship with both the Bell Fund and Interactive Ontario, the trade association representing interactive digital media producers in Ontario.  I am not speaking for either of them with this post but trying to explain for you guys what is going on – as I do.  If you would like more information you can reach out to either of those organizations.

Heritage Committee on Local TV

This morning I listened to the Standing Committee on Canadian Heritage (#CHPC).  It was their first meeting on a study on ‘The Media and Local Communities’ which is also their first study.  I tuned in because it’s the first real meeting for this committee in this Parliament and I wanted to hear them interact with senior staff at Heritage and the CRTC (and then last minute additions from Industry – I mean Innovation, Science and Economic Development – and the Competition Bureau).  I’m not that interested in local tv but I’m glad I did tune in.

I was talking to my local MP, Julie Dabrusin, on the weekend since she sits on the Heritage Committee and I realized when I spoke to her about the local tv study that her interests in it were broader than my interpretation of the terms of reference of the study.  The minutes describe it as:

“… how Canadians, and especially local communities, are informed about local and regional experiences through news, broadcasting, digital and print media; the unintended consequences of news media concentration and the erosion of local news reporting and the impact of new media”

In listening to the meeting though I was struck by how wide ranging the questions were. Heritage started off by giving a very rapid ‘Canadian media policy 101’ talk with what sounded like (the feed was audio-only) a lot of slides.  A few of the MPs sounded overwhelmed.  It should be remembered that I believe Pierre Nantel (NDP) and Hedy Fry (Lib) are the only MPs there with previous experience on the committee.   So some of the questions continued on the 101 theme (‘how is Canadian media funded’ – I think I heard Helen Kennedy’s sigh before she started counting the ways) while others went off on to topics like diversity, funding for digital media, local news, newspaper consolidation, Broadcasting Act objectives, the Bell-Astral merger and the inability for anyone to make any money on digital platforms (that was a Conservative MP statement without any evidence).

The CRTC could not really say much because their local tv proceeding is outstanding and there are rules about not discussing a pending proceeding.  They did chat a bit about why LPIF wasn’t renewed, which honestly could have been the topic of a whole meeting as it had been a whole hearing.  They made a pitch that they are lowering barriers to innovation and encouraging broadcasters to evolve to multiplatform businesses, though without specifics.  Innovation, Science and Economic Development made some odd statements about how millennials don’t care about funding for digital media, just access and making money from their content.  Umm, just because you can make content for peanuts doesn’t mean you want to.   The Competition Bureau said they didn’t care about whether diversity of voices was impacted by consolidation, only if there was a negative economic impact.

There were some good questions but my favourites unfortunately were thrown in at the end when there wasn’t time for answers so we won’t hear them publicly.  Julie Dabrusin asked if the CRTC planned to update the 8 year old Diversity study (I swear I didn’t plant that question) and Hedy Fry asked who was in a position to regulate digital platforms for accuracy.  I suspect Scott Hutton of the CRTC was pretty happy there was no time to answer that last one!  The answers should be incorporated in their report so I’ll be looking for them.

Things could obviously change over the minimum 10 meetings that will be devoted to this study but based on today the Committee will be asking all sorts of questions about the media landscape and I’ll try to pay attention when I can.  It’s good to hear what the MPs are interested in and what topics they need help on (i.e. yes, there are businesses making money with content on digital platforms).

Heritage Committee Report on the Canadian Feature Film Industry

The Standing Committee on Canadian Heritage recently released its report on its study on the Canadian Feature Film Industry. Over the spring a number of feature film stakeholders had appeared before the Committee or sent in submissions and this report is the result.
First a little context. Standing Committee reviews can be useful to study a sector within their jurisdiction, raise issues and make recommendations to the government. There is no obligation for the government to act on these recommendations or to even comment on them. These are the dying days of this Parliament and it is unlikely that the government will even notice this Report. However, it can also educate and inform Department of Canadian Heritage staff and help them to develop policies that could be implemented in the future.   As well, given that we are leading up to an election, this kind of a study could inform party platforms or future government proposals.

I recommend reading this report for a couple of reasons. If you are new to Canadian feature film policy it is a fairly accurate (not always the case) overview of the current state of the industry.   A wide selection of stakeholders appeared before the Committee and many topical issues and proposed solutions were presented. If this is your field then it is also interesting to see which issues the Committee as a whole, and the Opposition parties in supplementary proposals, felt worth recommending.

I found a couple of the recommendations of particular interest. A few of their recommendations went beyond government to other bodies, which technically speaking are outside the Committee and the government’s jurisdiction. In Recommendation 5 and 6 the Committee recommended that the CRTC include feature films as a separate category within PNI and that it review its PNI policy to specifically support feature film. As the CRTC is an arm’s length body this recommendation is like the Canadian government making a recommendation to the U.S. State Department on foreign policy. Further, there is a policy development process at the CRTC that is a great deal more rigorous than a Parliamentary Committee review. We might not like the current result of the process but the government cannot step in and make specific changes (there is a policy direction process but that’s more general).

Recommendation 10 is a recommendation asking the CBC to enhance its support of Canadian feature films, including on digital platforms but without a recommendation to increase the CBC’s budget to enable it to do so (which is in the government’s jurisdiction). The NDP expressed in their supplement the belief that the CBC should have sufficient resources to fulfill its mandate without a specific recommendation about what was needed to do that.

There were a couple of very specific recommendations related to the tax credits which could make a huge difference to feature film producers. For years the CMPA has been lobbying to eliminate the ‘grind’, where tax credits are reduced by the amount of assistance received from other levels of government (e.g. provincial tax credits). The Committee did not go so far as to recommend its elimination but that the problem should be studied. The Liberals in their supplement also supported the recommendation from witnesses that 75 – 85% of tax credit payments should be moved up to reduce the interim financing costs. This would be a great measure that would not cost the government anything but would create significant budget savings. I would only add that it should not be limited to feature film tax credits.

The final recommendation that interests me comes from both the NDP and Liberal supplements and was ignored by the main recommendations. Both parties recommended that OTT services should provide data to Heritage (or Heritage and the CRTC in the case of the Liberals) on consumer habits, Canadian films available, revenues and costs in order to assist policy development.  So this is a recommendation that the government MAKE Netflix and Google do what the CRTC was unable to make them do during the CRTC hearing. Nice thought but given that they deny that the CRTC has jurisdiction, I doubt that they would agree that the Canadian government has jurisdiction. I think it’s a lovely idea and yes it is data that the policy makers absolutely need to have for accurate policy development but it isn’t terribly realistic.

International Digital Media Co-Production: A Guide for Canadian Companies

Today Interactive Ontario launched the International Digital Media Co-Production Guide for Canadian Companies.  I’m rather proud of it since IO hired me to research and write this report and it consumed a great deal of my Winter 2014.  I’ve given you the link to the report on the IO website but you can also find it on CMF, OMDC and Bell Fund’s websites (as funders of the study) and CMF also has a French version.

You should check it out if you’re interested in digital media co-production.  I spoke with a number of producers and stakeholders in Canada and outside to identify the advantages and disadvantages to this kind of business structure as well as the different business models that producers are experimenting with.  The report also has tips for how to get started in the international marketplace and a section that provides specific resources for UK, France, Germany, Australia and New Zealand.    It’s both a big picture report and a handy tool for producers.

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.

 

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.

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!