Tag Archives: CMF

CBC Licence Renewal – More Than Just Ads on Radio

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

CMF Performance Envelopes – What Do the Numbers Mean?

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Today the CMF released its performance envelopes for each broadcaster for 2013-14.  That means that we all now know how much each broadcaster’s production and development envelopes are at the CMF.  As envelopes are based on a nightmarishly complex set of calculations based on ‘factor weights’ (more on that in a second), they can fluctuate, sometimes wildly, from year to year.  If you are a creator or producer it is important to know the size, and possible change, of a broadcaster’s envelope before you start pitching them or trying to get a greenlight.  And if their envelope went down this year, a look at their factor weight performance might help you find a way to pitch your show as a way to improve performance next year.  More on that in a second too.

First let’s talk about the overall pool.  As I mentioned earlier, BDU revenue growth is slowing and it has an impact on the CMF.  They are projecting a decline in BDU contributions next year and have cut operating costs by 6% and the total Performance Envelope by 4.6%.  So almost all of the broadcasters have been cut by at least a little bit.  Some years there have been very significant swings due to a particularly successful audience year, regional production or above-threshold investment or the opposite but there aren’t any such major swings this year.

Envelopes are calculated using Factor Weights, which reward the broadcaster for meeting certain goals and given them a greater share of the money.  It is a very complicated process as the calculations are also broken down by genre:  drama, children’s, documentary and variety and performing arts.  The factors are 1) Audience Success (Total Hours Tuned), 2) Audience Success (Original First Run), 3) Historic Performance, 4) Regional and 5) Digital Media Investment.  The factor weights have differing impacts on each broadcaster depending on their programming priorities, history, language and makeup of their corporate group.

The results for production are here.  CBC has a slightly smaller envelope at $58 million (-$4mill).  Bell Media is slightly larger at $32.5 million (+$759K).  Their huge uptick in production due to benefits spending (and the larger audience from all that original production) will likely have a greater impact next year.  Shaw is down a little at $27 million (-$2mill).  Corus is also down a little at $21.9 million (-$1.8mill).  Rogers has the single largest increase to $9.7 million (+$3.8mill).  While their level of production has stayed the same (replacing Murdoch Mysteries with Seed and Package Deal) the increase comes partly from the two new shows being regional. APTN loses the most at $4.05million (-$4.778), in large part due to a drop in regional production and digital investment.

It’s also worth noting that there are a few new entrants:  Afroglobal Network, Ethnic Channels Group, New Tang Dynasty and The Weather Network.  Changes last year to the guidelines means that they (along with a few other smaller specialty services) have minimum envelopes which are actually large enough to allow them to commission shows or partner with a larger broadcaster to commission shows (and grow their envelope).

So what do you do with this knowledge if you are a creator or producer?  The first priority is always matching the project to the broadcaster who is looking for that kind of material. But you can add elements to your pitch if you think that your project could help your target broadcaster with their Factor Weights, particularly regional or digital media investment.  If the broadcaster you’re pitching says that they have less money this year then check the list and confirm it.  Almost everyone will be tightening their belt a little bit this year – except those with benefits to spend (i.e. Bell, Shaw and Rogers).  If you are pitching a smaller broadcaster then think of ways that they might be able to partner with another broadcaster so that your project can help them grow their envelope.  Showing an understanding of their challenges might help you get through their door.

[Thank you to Suzanne Keppler, Manager, Program Reporting at the CMF and fellow wonk, for assistance with some of this data.  She is the Performance Envelope Queen.]

Canadian Media Policy – Is There Any Fun Left?

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Recently one of my wonks said over cocktails that all the big tv policy issues had been dealt with and now there was nothing to do but get the work done.  I’ve been thinking about this and I have to disagree.  After years of fighting a decline in Canadian television programming and particularly Canadian drama there is now the Group Licence policy, expenditure requirements and Programs of National Interest (PNI).  Once Bell-Astral is done, it is unlikely that there will be any more large acquisitions.  Or so they say (I’ve heard that one before).  There is a lot of benefits money in the system, there are PNI expenditure requirements and the BDU contributions to the CMF are still going strong.  So what is there to worry about?  Promotion?  No – I’m not going there.

We have a really big challenge that few seem to be considering.  We should be thinking now about how to fix the system that is going to be broken in a few years.  The Bell-CTV and Shaw-Global big pots of benefits monies will be spent by 2017.  By that point, BDU subscriber erosion will likely be very real as more and more cut the cord, buy their iTunes series subscriptions, watch Netflix or catch up the next day on broadcaster digital players.  [Update:  Yes, I did notice that the CRTC released 2012 financial results for BDUs right after I first posted this, and that demonstrates that erosion hasn’t happened yet as subscribers have grown by 2% for cable, though dropped by 1.8% for satellite.  But revenue growth is slowing, most likely due to subscribers cord shaving, ie paying for fewer services though staying in the system.  CMF contributions have grown but that growth has slowed down as well – and note that contributions to Canadian programming are just CMF, LPIF, independent funds and other BDU mandated contributions, not benefits or CPE as they are reported at the broadcaster level.  I stand by my worries for the future.]  BDU contributions to CMF will go down and this government is unlikely to make up the difference.  So how are we going to finance Canadian television?

I can hear the voices saying ‘why do we need to’ and that is an exhausting argument to deal with but I’ll say this quickly.  Canadians want Canadian television.  Look at the audience numbers for “Murdoch Mysteries”, “Motive”, “Cracked” and “Bomb Girls” just to mention a few on the air right now.  I do not believe that Canadians watch those shows just because they are Canadian but because they are good tv that tells stories that Canadians want to watch and reflect values that Canadians share.  So it is important as a society that we continue to be able to offer Canadians the choice to watch quality Canadian television.

How are we going to fund it?  I have not yet heard a viable proposal for how we are going to continue to offer Canadians choice in 2018.  The ISP levy is the cleanest but since the case was lost at the Supreme Court of Canada it will most likely require legislative change.  There is so much resistance to the idea though, particularly from the BDUs who are also ISPs, that an ISP levy is not likely to be an easy solution.  At Prime Time, the Chair of the CRTC told producers to look outside Canada for financing and explore co-ventures.  The problem with relying on foreign financing is that the resulting programs are overly influenced by the creative interests of that foreign financing and we end up with “Sue Thomas F.B. Eye” rather than “Flashpoint”.

It worries me that I’m not hearing conversations about how to solve the problem.  I am reading about the imminent death of Can Con regulation so those on the other side are gleefully anticipating the future.  For those who understand that the system has to change but there still needs to be a system, there aren’t any round table discussions, working groups, calls for papers or one-day symposiums so that we can try to figure this out.  Everyone seems to be taking a breather after a very hectic five or six year period and I get that.  However, if we’re not careful we are going to wake up in a few years with a broken system and no way to fix it.  No amount of promotion is going to help if there are no Canadian shows available to watch – on any platform.