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.