Tag Archives: Canadian Radio-television and Telecommunications Commission

Does Canadian TV need an overhaul? Maybe. Probably.

Yesterday, Scott Stinson questioned whether we needed the CRTC in his column in the National Post.  I dismissed it as the usual ‘free market’ knee jerk ‘I hate the CRTC, I want my Superbowl ads’ kind of article.  So I was surprised that people within the creative industries were positively circulating it.  That set me off on a twitter rant.  I am calmer now so will aggregate my thoughts into a post.

Stinson’s article seems to have been prompted by two things.  The first, jokes from the WGC Screenwriting Awards, I won’t address as I was, not surprisingly, not there.  The second catalyst was the current mandatory carriage hearings, which Stinson suggested was a ‘lot like deciding who would get access to the horse and buggy even as Henry Ford was unveiling the Model T’.   He’s not wrong there but his thesis I have a problem with:  ‘why do we have the CRTC, exactly?  And just what do we get out of this wacky regulated system?’.  That’s where my rant started.

What do we get?  A Canadian broadcasting system.  That means Canadian-owned broadcasters who have a regulated commitment to fund and air Canadian programming.  Stinson says that because of the subsidies, we have a system ‘where anyone who wants to make a series in Canada has to ensure first that it will qualify for subsidies’.  Well, if we didn’t have the subsidies how exactly would Canadian television producers make a series?  We are a small market dominated by the U.S. media industry, which dominates most of the world.  We do not have a large enough population or economy for the private sector to finance television.  Without the CRTC protecting Canadian ownership of the broadcasters we would only have U.S.-owned broadcasters.  Why would they license Canadian television rather than amortize their costs and broadcast the same schedule that they air in the U.S. ?  They wouldn’t.

Stinson makes reference to recently cancelled “Less Than Kind” and “Bomb Girls” as examples of failure.  “Less Than Kind” only exists because of CRTC-mandated benefits.  It ran for 39 episodes despite the death of its lead actor.  A pay broadcaster picked it up after the primary broadcaster, Rogers, decided to no longer support it.  To me, this is a success story.  “Bomb Girls” did so exceptionally well in 6 episodes that Shaw decided to license a second season for 18 episodes.  CRTC-mandated benefits made it possible.  After substantial audiences in the first season, for some reason Shaw decided to broadcast the second season at the same time as “Murdoch Mysteries” on CBC.  I believe that was the major reason why “Bomb Girls” didn’t enjoy the same level of audience in the second season – competition from another, similarly themed, Canadian drama series that was already several episodes into its season.  Not a US drama series but a Canadian drama series.  “Murdoch Mysteries” was also dropped by Rogers (which frankly is trying to find itself as a Canadian broadcaster), picked up by the CBC and has been enjoying over 1.2 million viewers each week.  Another success story (and don’t even get me started about “Flashpoint”, “Orphan Black”, “Motive” and quite a few other success stories).

Television production spiked in 2012 from $2.12 billion in 2011 to $2.57 billion in 2012 according to the CMPA 2012 Profile Report.  We do not yet know whether the spike was completely due to the large amount of benefits that are now flowing into the system or in some way also due to the Group Licence Policy and CPE and PNI CPE (see the Acronym Decoder).  Next week, Mario Mota of Boon Dog will release his annual “Canadian Television Benefits Monitor” but in a tweet he teased that “2011-2012 TV benefits spending about the same as previous 4 yrs combined”.  There is more money in the system and more Canadian television is being produced, because of regulation (i.e. the CRTC), than in years.

Yes, the hearing for s. 9(1)(h) mandatory carriage licences does seem anachronistic (as Michael Macmillan of Blue Ant said today).    Which is probably why the CRTC is being so tough on applicants and their requests for mandatory carriage and, for incumbents, rate increases. CPAC was questioned on its need for maintained mandatory carriage since it is recognized as essential to Canadians and owned by the 6 biggest BDUs.  APTN was asked when it would be able to stand on its own feet without mandatory carriage and strongly urged to figure out how to do just that.  Every new applicant was challenged to justify how it was ‘exceptional’ enough to qualify for mandatory carriage.  Canadians do not want their cable bills to increase and I believe that Blue Ant was right today when it said that increased cable bills could lead to increase cord cutting or cord shaving which would be detrimental to the existing broadcasting system.   (Yes, cable bills have been going up for years without subscriber loss but there are reasonable alternatives now.)  But does that mean that the CRTC should not have this hearing and that somehow having the hearing justifies its dismantling?   No.

Does the Canadian broadcasting system need improvement?  I think we can all agree to that, including the CRTC.  Without the CRTC how do we do that?  Do we advocate scrapping the Broadcasting Act and the CRTC with it and let the free market dictate what gets made and who airs it?  I seriously do not think that any of us want the broadcasting system that we’d end up with then, it as it would likely be nothing but retransmission of US signals.  Or perhaps we should work within the CRTC framework to improve the system.  Canadian broadcasters are holding on tightly to the old models that have worked so well for them but their days are numbered unless they adapt.  The unregulated system is growing and we risk being lost in that world.  The current lack of Canadian programming on Netflix is a harbinger of what is to come.   The current high level of Canadian television production risks being a lost golden age unless we spend the time now to figure out how to ensure that regardless of platform we still have high quality Canadian television production and Canadians know that it’s out there.

That’s what we have to do.  End of rant.

CRTC S.9(1)(h) etc. Hearing

That’s what I’m calling this hearing for now. It’s a grab bag of renewals of mandatory carriage, applications for existing services to get mandatory carriage, new services to get mandatory carriage and a few independent specialty services to get renewal.  The full hearing notice is here.  All 13,018 interventions are here (though most have to do with wanting or not wanting Sun News Network).  Warning – this post is pretty wonky!

First – what exactly is mandatory carriage?  Under s. 9(1)(h) of the Broadcasting Act, the CRTC can require a satellite or cable company to carry a service, rather than leave it to the service to negotiate carriage.  If a service has mandatory carriage then its revenue stream and its audience is certain.  A service has to make an exceptional contribution to Canadian expression, contribute in an exception manner to the overall objectives of the Broadcasting Act and make exceptional commitments to original, first-run Canadian programming.  As mandatory carriage adds to the basic cable or satellite package and therefore increases the cost of those packages to consumers, there has traditionally been a very close review of that ‘exceptionality’ and few services have passed the test.  Examples of existing s.9(1)(h) services in English are CPAC, The Weather Network, APTN and CBC News Network.

The industry intervenors on this public hearing (submission deadline was February 27, 2013) are lining up on two sides of the mandatory carriage issue.  The cable and satellite companies do not want to add any new services to the basic package.  They are arguing against increased costs to consumers.  Generally cable and satellite companies argue from a place of great self-interest but in this I suspect that they are also reflecting the general mood of the marketplace.  Telus filed a public opinion study by Strategic Counsel that demonstrates a distinct lack of interest in increasing the basic package.  Our cable bills are high.  Consumers have a great reluctance to increase them at all for anything.

Generally, the English content creators (i.e. producers, talent unions) are only weighing in on the services which broadcast or might broadcast independently produced drama and documentaries:  Vision TV, APTN and the proposed new service Starlight.  There are a few concerns which some of the stakeholders would like to see addressed at the hearing but in general the content creators would like to see Vision TV given mandatory carriage, APTN get its increased rate and the new service Starlight launch with mandatory carriage.   All three services will support the independent production community in Canada and this is important.  Starlight is proposing a new solution to the problem of underfinanced and underbroadcast Canadian feature film.

The issue that the CRTC will have to grapple with is whether the support that each of these services provide to the independent production community, and the programming that they offer to Canadians, is exceptional enough to require Canadians to pay more to their cable company.  While the media is going to be most interested in the kerfuffle that is Sun News Media’s request for mandatory carriage, the Canadian independent production community will be more interested in the Starlight application.  As a new service aimed at solving a problem that the CRTC has itself identified – Canadians do not have enough access to Canadian feature films – has Starlight met the test necessary to require Canadians to pay for it?  I anticipate an interesting discussion.

But let’s not forget the independent specialty service renewals.  The CMPA has pointed out that a number of these services have asked for relief from their Canadian programming obligations (CPE) on the basis that the 2010 Group Licence Policy granted a reduction in CPE for the large corporate groups but contrary to that policy’s explicit statement that the policy would not apply to independent specialty services.   That policy balanced greater flexibility to broadcast group with specific obligations to Canadian programming and PNI.  It is very difficult to apply it to an individual service.

It also appears to be sliding under most people’s radar that Blue Ant (Travel + Escape, Bold, Bite, Aux and more) is asking to be treated as a group for the purposes of its CPE obligations and to be able to count in-house production for the purposes of calculating its obligations to independent production.  That last bit is pretty nervy and I’m confident that the CMPA is all over it.  So let’s go back to the concept of a ‘group’ under the 2010 Group Licence Policy.  The concept of Broadcast Groups was created to allow groups to air programs across their various services and count them towards a pooled obligation.  Bell could decide to air a program on CTV, CTV2 and/or Space in any order.  This regulatory framework was consistent with how the large corporate groups were licensing programming.  But does it make sense for a much smaller group of services, some of which are quite different from each other?   That will be the discussion.

The Public Hearing on these applications will start April 23, 2013. I’m experimenting with the hashtag #91hetc.  What do you think?