Tag Archives: CRTC

CMF 2013 Consultation Process

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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!

A Hodge Podge of CRTC Decisions (Independent Licence Renewals)

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Or is it a mish mash?  I’m not sure of the technical term here but last Friday afternoon when most of the world was either sitting on a patio or packing up the car for the last summer long weekend, the CRTC released a whole pile of renewal decisions.  Several of them are of interest.

As you will remember, when the s.9(1)(h) hearing was posted, the call for comments included a number of non-appearing licence renewal applications for independent (i.e. not part of the large groups like Bell, Shaw, Rogers and Corus) broadcasters.  They were to some extent lost in the hubbub over the mandatory carriage applications but a few stalwart stakeholders weighed in.  I outlined a few issues that interested me in an earlier post.

I won’t go through all of the decisions but I do want to mention a few themes that came to mind as I read them.  The first is that almost all of the broadcasters asked for reduced CanCon expenditure and/or exhibition requirements.  This is partly because they can no longer include the CMF top up as part of their expenditure requirement.  As the top up was part of broadcasters’ calculations when they proposed their CPEs in their licence applications, the Commission has decided that it is fair to allow them to make new proposals at a lower level.  Most of them had reductions approved but not necessarily the full extent that they asked for.  ‘Why’ is interesting.

There seems to be a real attempt by the Commission to rationalize the various Cat A (and a few Cat B) licences so that there is some consistency of conditions of licence.  Services were licensed at different times, with different competitive environments and natures of service so to some extent they should have differing terms but the conditions of licence have morphed into a crazy quilt where the rationale is not always evident.  Where it doesn’t make sense to have different terms, the Commission has gone for consistency.  So, while OUTtv asked for a reduction in their CPE from 49% to 35%, they were granted 40%.  ONE asked for a reduction from 41% to 30% and they were granted 40%.  Blue Ant’s Cat A’s were granted 40% CPEs as well.  Most Cat A’s have a CPE of 40% so there’s the reason for the pattern.

Superchannel also asked for a reduction in CPE from 32% to 27% and they were granted 30% because Superchannel is a pay service and the more established TMN and Movie Central have 31% CPE and Family Channel (equally established but for some reason lower) has a CPE of 30%.  The Commission made that decision on the basis of consistency and did not accept Superchannel’s arguments that it has been having a hard time getting started and needs the break.  Here’s the interesting part.  Superchannel has had a hard time getting started and did have to complain to the Commission because they couldn’t get carriage or even if they did have an agreement, the BDUs weren’t letting their consumers know that Superchannel existed.  But the Commission based its decision on a) Superchannel made commitments to win their licence in a competitive bid so shouldn’t be allowed to make less of a commitment now that they  have the licence and b) they were in serious and regular non-compliance at the time that they asked for the break.  Superchannel also asked for a break in their regional outreach and script development commitments ($1 million annually for regional and $2 million annually for script development) and the Commission gave it to them but on the condition that they also pay the unspent commitment of $6 million, which averages out to a total of $2.5 million per year instead of the $3 million they were supposed to spend.   [Note – if you’re a screenwriter you might want to go knock on Superchannel’s door as they have to spend $1.5 million in script development annually.]

But that leads me to another theme.  When you are asking the Commission for a break, it helps if you have been following the rules over the last licence term.  Blue Ant asked for a number of concessions including being treated as a modified group under the group-based policy so they can allocate their CPE across the group.  They do not technically qualify because they have no conventional services but the Commission decided to agree because a) it is important to diversity in the system to have strong independent broadcasters and b) Blue Ant had demonstrated its commitment to Canadian programming through its historical CPE.

Now Blue Ant didn’t get everything that they asked for so there is a limit on what you can get just by being a good broadcaster.  I think that it was a little cheeky of them to ask that their inhouse production be treated as independent in order to qualify under independent production requirements, particularly using the argument that the independent production sector is small now due to consolidation.  Blue Ant’s services are lifestyle, reality and documentary services for the most part and there is no shortage of small producers working in those genres.  The Commission correctly denied the request in order to help those small producers continue to find sources for their programming.

Another item of interest across a number of decisions is the refusal to require that the independent broadcasters adhere to Terms of Trade.  The rationale is that Terms of Trade are necessary to balance the uneven bargaining positions between large broadcasters and small producers but with these independent broadcasters there is no such imbalance and the producers do not need help in their negotiations.  I wonder if the really small producers who work with these independent services feel the same way.

There was a lot more there of course so if you’re interested in the individual independent services, then check out the specific decisions.

CRTC S.9(1)(h) Hearing (Mandatory Carriage) Decision

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For background, last March I wrote a post that explained what mandatory carriage means and talked about the applications that I was most interested in.  The hearing took place the week of April 23, 2013 and the decision was released today.  13 of the 22 applications for mandatory carriage were denied as the CRTC reiterated that mandatory carriage was reserved for services that ‘make exceptional contributions to meeting the objectives of the (Broadcasting) Act’.  See Fagstein’s blog for a good chart form summary.

Most of the mainstream media and social media focus has been on the Sun TV application for mandatory carriage (which was denied) – see Simon Houpt and Steve Ladurantaye of the Globe and Mail for excellent coverage of the topic) but I have always been much more interested in the other applications which had the potential to impact the Canadian content part of the broadcasting sector – APTN, VisionTV, Starlight.  There were also several licence renewal applications of interest, particularly Superchannel and Blue Ant, but those have not been released.  There was however, one aspect of the Sun TV decision that I think is worth noting (in addition to the upcoming policy hearing on Canadian news services which will address the bigger picture of whether all Canadian news services need regulatory assistance).  The Commission noted that not only did Sun TV not demonstrate how its service would make an ‘exceptional’ contribution to the objectives of the Act – it never referenced the Act in its application.  #duh (sorry – couldn’t resist).  Further, the service didn’t make ‘exceptional’ expenditure and exhibition commitments to Canadian programming beyond what other Canadian news services, which do not have mandatory carriage, make.

But enough about Sun TV.  APTN received a renewal of their mandatory distribution order on the basis that its service was consistent with the objectives of the Act, it was important that the service be widely available across the country and that APTN is ‘exceptional in its contribution to Canadian expression and reflects attitudes, opinions, ideas, values and artistic creativity that would not otherwise be seen on television’.  As well, should the BDUs only carry the service where concentrations of aboriginal populations warranted it, then many who were spread out around the country would not have access.  This is a good description of the bar required for a service to be entitled to mandatory distribution – exceptional contribution to the objectives of the Act, and anticipation that the market would not provide the service consistently across the country.

However, APTN also asked for an increase in their subscriber rate from $0.25 per sub to $0.40.  It requested the increase to keep up with inflation, improve programming and make more programming available on multiple platforms.  The Commission accepted that an increase was warranted but given that an increase in the subscriber rate will mean an increase in the cost of the basic package, decided that a $0.06 increase would be a good balance between APTN’s need and the consumer’s reluctance to pay more for basic cable.

The Commission used the same balance language when it agreed to an increase for CPAC.  The $0.01 increase ‘represents a good balance between the impact on the price of the basic service for Canadian consumers and the ability of CPAC to improve its programming’.  This is the consumer filter that we have been told will be applied to all decisions clearly at work.

There were two proposed youth-focused services that applied for mandatory distribution – Fusion and Dolobox.  It was interesting that both had significant user-generated content and online components and both were denied at least in part on the basis that there were enough existing alternatives in the online world that the Commission did not see a need to issue mandatory distribution and broadcasting licences.  I heard both presentations and I could not understand why they were at the CRTC as it seemed like a backwards looking business model for forward-looking services.

Speaking of which, then there’s Starlight.  While I strongly support the idea of finding a way to make it easier for Canadians to find and watch Canadian feature films, I was part of the camp who thought that Starlight for all of its good intentions, was not the solution because of its reliance on mandatory carriage in its business model (See also Denis McGrath’s Facebook post on the subject –- sometimes a former blogger has a relapse).  As you can see from those services that received or maintained mandatory carriage, the Commission looked very closely at whether a service was exceptional enough to warrant increasing the cost of basic.

The Commission did not feel that the proposed service was exceptional enough because Canadian VOD and pay services are required to licence all Canadian services that are available so Canadian films are not unavailable.  [Now, as Mario Mota pointed out in a tweet, pay is about $20/month on top of basic, which is not very accessible to Canadians so there is a flaw in that argument.]  Starlight would to some extent duplicate the offering on pay and VOD so would not provide additional diversity to the system.  I would agree except to the extent that Starlight was planning to reach into the back catalogue to films not currently or rarely available (some rightly so of course).

Part of Starlight’s strategy was to show general support for the service and it conducted a survey to demonstrate a high level of interest.  Unfortunately that strategy seems to have backfired as the Commission felt that the high level of interest demonstrated that Starlight could be successful as a discretionary service.   However, Starlight applied for mandatory distribution because it not only wanted to be sure that it was available in every home but also it needed the revenue to fund its original feature film financing plan.  This plan could not be financed without a mandatory distribution order.  The Commission felt that Starlight had not demonstrated that the existing funding for feature films was insufficient.  I think that another way of putting that is ‘don’t force consumers to solve the problem of insufficient feature film financing’.

Over the years Vision has applied for mandatory carriage several times on the basis that its multifaith programming and its focus on its 55+ audience offers needed diversity in the broadcasting system.  Vision expressed concern that as an independent service it runs the risk of vertically integrated companies moving it from a basic package to a discretionary package in order to make room for their own services.  A move like that would draw fewer subscribers and therefore reduce Vision’s revenue.  The Commission accepted the arguments of BDUs that the BDUs would not want to risk the wrath of Vision’s audience if they moved Vision out of basic (and warned the BDUs that the Commission would need to see good reasons if they ever did so).  Vision also has recourse to the Commission should the BDUs treat Vision unfairly.  The Commission also pointed out that Vision is no longer the only other faith programming service so there is no extraordinary need for Vision’s particular service.  Or in other words – it’s all good so there’s no need to regulate.

One of the few new mandatory orders granted is worth mentioning.  It went to The Legislative Assemblies of Nunavut and the Northwest Territories for a geographically limited broadcast of recorded and live coverage of proceedings in their Assemblies in aboriginal languages, English and French.  The service clearly supports the objectives of the Act, there was a demonstrated demand and a demonstrated market failure.  Bell ExpressVu stated no plans to carry the service and Shaw agreed to but without any time commitment.  And possibly most importantly, the service did not ask for a subscriber fee.

The general feeling about this hearing was that the Commission would not grant many or possibly any new mandatory orders but would maintain the existing ones in order to keep a lid on the cost of basic cable and this is pretty much what they have done.  The decisions were clear so if any service seeks to apply for a mandatory order in the future they will definitely know what issues to address in their application.  There will be an increase to the basic cable rate but it should not be significant (Fagstein came up with wholesale increases of $0.31 per subscriber per month in English and $0.63 in French, which Mario suggests may be used by the BDUs to justify $1 increases in your bill).

In many ways those of us who watched the hearing felt that it was a throw back to an earlier era when broadcast television was the only way that you could reach an audience.  That is so not the case any more.  Now the question is whether the rejected applicants, and those contemplating new services in the future, turn to digital platforms to reach audiences and whether the CRTC needs to be there to ensure that the objectives of the Broadcasting Act aren’t being undercut by these new platforms.  Yeah, I went there.

Bell-AstralFinal

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Mirko Bibic must be heaving a huge sigh of relief that the transaction has finally been approved.  Bell won’t be happy with all of the details but it’s at least done and from my perspective, the additional conditions are things that they can live with.   They might have to hire a new body to manage the new reporting requirements but that won’t cost much.

As always, my perspective on this transaction (which is my own alone) is focused on the English television side of the deal (Steve Faguy does a great job on the radio market with an emphasis on Montreal, which was so hotly contested).  There are some parts of the decision though that are noteworthy in that they signal the Commission’s thinking in the upcoming rationalization of the benefits policy (part of the Three Year Plan).

The big clear message from the top was that this transaction was still carefully reviewed for the public interest and was only approved as being in the public interest with the addition of a few new safeguards.  The revised application wasn’t a slam dunk.  “The Commission finds that but for these safeguards, it would not have been persuaded that the present transaction is in the public interest, and would not have approved it.” (para 28).

Aspects of the Vertical Integration code will now be enforceable conditions of licence, there are conditions around negotiation of non-linear programming rights, access to advertising availabilities by competitors and affiliation agreements have to be filed shortly after they are signed.  These all relate to a number of allegations that were made during both Bell-Astral1 and Bell-Astral2 that Bell was already treating smaller BDUs and independent programming services unfairly due to its size and would only get worse if it got bigger.  Rather than make any determination on the validity of these allegations (many of which were not supported at the hearing by evidence of the unfair activity) the Commission has taken the position that the new bigger Bell will have more opportunities to be anti-competitive so there’s a greater potential (whether or not they are anti-competitive now) and that potential has to be protected against.  The final piece to this is the warning that the Commission will not hesitate to act if they are presented with evidence that Bell is acting anti-competitively.

A lot of the decision was dedicated to a revised valuation.  This section will be of value to valuators of future transactions.  One of the parts that I liked was the valuation of leases related to the out-of-home business (billboards).  As those leases relate to an unregulated side of Astral, the Commission had asked for an auditor’s report of how they came to the valuation.  This is one of the ways that broadcasters artificially reduce benefits payable by increasing the value of unregulated assets that can be deducted from the calculation.  Instead of an auditor’s report, Bell filed an accountant’s report explaining how the valuation was made.  As they didn’t get an independent verification as requested, the Commission did not deduct the value of the leases related to the out-of-home business from the valuation.  Lesson – provide the Commission exactly what they ask for or it will cost you (Note – the same thing happened to Shaw when it acquired Global so they had warning).

So the value of the transaction was increased from $4.017 billion to $4.154 billion.  The Commission then changed the allocations between TV, radio and unregulated assets.  It is also worth noting that Bell tried to argue that SVOD  (i.e. TMN on Demand) services were unregulated but the Commission added them back in as extensions of regulated assets. They did not do the same for the value of digital assets such as websites related to broadcasters, which is something that I had argued for in Bell-Astral1.  The bottom line for benefits then is $175.4 for television and $71.5 for radio.  Note that radio was increased from the usual 6% to 7% of the value of the assets because of the size of the transaction.  An increase for size for radio has been done recently (Corus) but that argument hasn’t worked for the television side for years.  It is likely that the television transactions are just so large that the transactions could not support an increase in the benefits formula.

Unlike previous transactions, the Commission has not decided for Bell how they will allocate the increased benefits but instead require them to file a proposal on how they will be spent by July 29th.  I hope that the result and the final approved benefits are public.  In the past when the Commission has left the final package to later determination there have been letters that you had to know to ask for to be able to find out what exactly was agreed to.  Not good for the process.

Most of the television benefits were approved as proposed but there were some exceptions.  The proposal to allocate $3million to CAFDE for a fund for the promotion of feature film was not approved.  Bell is to come back with a new proposal for the promotion of feature film.  What is odd is that there really isn’t any direction as to what needs to be fixed.  What is clear is that the Commission didn’t buy the argument of feature film producers such as the Producers Roundtable of Ontario that the funds should go to feature film production before promotion.

OLMC’s (Official Language Minority Communities) have been a major concern of the Commission this past year at this hearing and at CBC.  After many years of making presentations about the need for specific allocations they earned an allocation as part of the CBC licence renewal and an allocation of 10% of each of the English and French envelopes of the benefits package.

An important wonky determination is that 100% of PNI not only has to be independently produced but also original.  If a program airs on TMN and then on CTV (or airs on Citytv and then TMN) it only is original for the first broadcaster unless both broadcasters participated in the financing of the production.  This is similar to the Canada Media Fund’s definition of original.

Bell proposed an allocation of $2.73 million to Consumer Education as part of the social benefits.  The Commission has found this to be too vague and is requiring more detail with a direction that it would be appropriate to fund The Broadcasting Accessibility Fund, MediaSmarts and the Centre d’études sur les medias.  Lesson – if you don’t provide detail then the Commission just might decide for you.

Social benefits will have to be reallocated on a language basis as well.  They were majority English but have to be consistent with onscreen benefits, which were allocated along the lines of the value of the services in each language – 69% French and 31% English.

Bell had proposed that a significant portion of the television benefits in English would be spent over three years starting in 2017 because of the large amount of benefits for English television currently in the system.  A number of the creator groups objected to this.  The Commission did not agree to this proposal because some of the communities (OLMCs) and some genres of programming (documentaries) are not participating in the current benefits bulge and need the funds now.  Benefits will be paid in equal installments over the next seven years.

As part of the application, Bell made a number of ‘intangible’ benefits proposals that in some ways the Commission is treating as tangible.  In particular they are asking for more detail on the new position of ‘Canadian Programming Champion’ to ensure that it’s not just BS and Bell will have to file annual reports to demonstrate what the champion did, what their budget was, who they met with and what projects were funded.  This report will be public.  As well, the commitment to regional offices has been expanded from Vancouver and Halifax to include Winnipeg and detail as to their mandate has to be filed and then reported on annually.  The regional communities have experience with regional offices that have no authority and exist only to fulfill benefits requirements (*cough* CHUM-Craig *cough*) and the Commission wants to ensure that doesn’t happen again.

I was surprised to see the Commission re-evaluate Astral’s group CPE and PNI because that issue hadn’t been aired much but it does make sense.  Bell will have to sell off a number of the Astral specialty services and several of them are low CPE and PNI services which reduced the overall historical average CPE and PNI for the group.  The Commission is asking Bell to make a proposal but their preliminary view is that CPE should increase from 30% to 32% and PNI from 16% to 18%.  Remember that Astral’s group CPE and PNI will still be calculated separately from Bell so this is important to ensure that services like TMN and Family Channel maintain their level of investment in Canadian programming.

There are quite a few details still to be worked out and proposals to be made by Bell by July 29th, so the dollars at play in each envelope are not yet certain.  Again I hope that that part of the process will also be public and we will have a clear, public decision on the final makeup of the benefits package that we don’t have to go hunt for.  Please.

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!

The CRTC’s 2013-2016 Three-Year Plan

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The CRTC’s updated Three-Year Plan was released yesterday.  This is a useful document for stakeholders to get a general idea of when larger policy hearings are intended to be conducted.  It can help in budgeting, though there will always be more hearings than are in the plan, and in research planning.  For those who haven’t read it, from a broadcasting perspective these are the CRTC’s planned activities that I think are worth noting for stakeholders (under the CRTC’s heading ‘Create’):

–       There will be a ‘conversation with Canadians’ about television in 2013-14.  I have no idea what that means but I assume that we will hear shortly.

–       The genre protection policy was to be internally reviewed in 2013-14 but that has now been postponed to 2014-15.

–       The policy for Cat A services will be reviewed in 2015-16 to see if it is time to license more of those services.  Cat A’s have priority carriage and CanCon obligations that Cat B’s don’t have.

–       In 2013-14 there will be a written consultation on the commercial radio policy

–       The CRTC will internally research Cultural Diversity policy in 2013-14, possibly undertake a public fact-finding consultation in 2014-15 and may then have a public hearing on cultural diversity policy in 2015-16.  There already is in place a cultural diversity policy that aims at ensuring that broadcasting is cultural diverse in employment and programming and the broadcasters have reports that they have to file each year to demonstrate their activities to that end.  It will be interesting to see if this policy is working well or not.

–       The CRTC will undertake the same research, fact-finding, public consultation process for Ethnic Broadcasting, both television and radio.

–       There will be a review of Native Radio Policy in 2015-16.

–       The Tangible Benefits Policy will be reviewed by written consultation as will the valuation policy, in 2013-14.  A new policy will not be implemented until 2014-15.  The knee jerk reaction is to suggest that there will be no more major transactions by that time but every time someone says that the market turns around and presents us with another major acquisition.  It isn’t going to hurt to have greater clarity on what are acceptable benefits package allocations and on how the CRTC assesses valuation of assets for determining the amount of those benefits.  I was on a panel at the 2012 Law Society of Upper Canada’s Biennial conference on Communications Law and Policy where both stakeholders and broadcasters called for greater clarity and consistency in both valuation and tangible benefits policy.

–       Rogers’ TV licences are up for renewal in 2014-15.  They have added several new stations since they were last licensed so expect a call for a higher commitment to Canadian programming and their resistance to that.

–       In 2015-16 Bell, Shaw and Corus have their group licences up for renewal.  We have not yet seen the reports of the first year of their licence term so it is early to speculate on what the issues will be for renewal – but there will be issues.

The headings for Connect and Protect have quite a few topics as well.  Feel free to review the Plan if you’re interested in what the CRTC has planned for telecomm, pay phones, broadband performance,  wireless code of conduct, 911 services and more.

I’m going to not think about the CRTC for the rest of the day.  Next week it’s Bell-Astral2 for the whole week so I don’t know about you but I need just a little break after almost two weeks of #91h.

The Benefits Bulge*

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It might have been lost in the dropped jaws reaction to Kirstine Stewart’s sudden move from CBC to Twitter Canada, but yesterday Mario Mota released his 2013 Canadian Television Benefits Monitor. The Report, which is available in detail to subscribers and summarized in his press release, tracks each year English-language broadcasters’ reporting on their CRTC-mandated tangible benefits packages. Those are the benefits required to be spent on the Canadian broadcasting system as a condition of approval of an acquisition of Canadian broadcasting assets. The 2013 Report tracks spending for the year ending August 31, 2012. It takes this long for the broadcasters to report to the CRTC, for the CRTC to publicize the reports and for Mario to then review and analyze the reports.

We are currently enjoying substantial benefits spending on Canadian television and we now have the data to demonstrate that. Due to benefits packages primarily from Bell, Shaw and Rogers that were determined in 2011 but finally started to be spent in 2012, benefits spending jumped from $52 million in 2010-11 to $177 million in 2011-12. Not all of that was for onscreen benefits (i.e. television programming) and the Commission did allow for unprecedentedly low allocations for onscreen benefits for Bell-CTV and Shaw-Global. Even so, onscreen benefits spending increased from $44 million in 2010-2011 to $113.5 million in 2011-12. That is an increase of 158%.

Benefits are to be spent roughly equally in each year but broadcasters will not be sustaining this level of spending in each year going forward. This may in fact be a high water mark, perhaps with next year. Some packages expire in 2014, others in 2015 and the final ones in 2019. There will be smaller packages approved for Bell-Astral 2 (most of which will go to French television or radio but some for TMN), and Teletoon and Family Channel transactions are still to be determined. Currently, according to the Report the total to be spent by 2019 on onscreen programming is $355.4 million.

To give some context to these numbers, the 2011-12 budget for CMF English Performance Envelopes was $189 million. So last year’s onscreen benefits spending of $113.5 million was 60% of the full amount that was available from CMF from the performance envelopes. Additionally, benefits are to be incremental to what a broadcaster already has to spend on Canadian programming through their CPE and/or PNI CPE (see Acronym Decoder). That’s the other part of the story that we do not know yet – how much did the broadcasters spend due to the Group Licence Policy before they started spending benefits money. We need to know that before we can really get a sense of how much money is in the system for Canadian programming.

But it’s a lot! We know that much. What happens when it has all been spent? I have said this before and I am not alone – we have an opportunity here to leverage increased spending on Canadian programming to try and create permanent positive change. Last year in an article in Carrt (subscription needed) Mario Mota suggested that we leverage the increased funding in Canadian programming by implementing Non-Simultaneous Substitution (“NSS”). NSS would break English Canadian broadcasters dependence on the US schedule, give Canadian programs stable timeslots thereby increasing audiences and therefore increasing revenues. If NSS was in place, the benefits-funded “Bomb Girls” would not have been pulled off the air for a simulcast of “Survivor” and might have had a chance at a better time slot when it did return. [See Kate Taylor at the Globe and Mail].

There are technical hurdles to NSS and I am not qualified to discuss them. NSS is just one of the ways though that we can try and take advantage of the current ‘bulge’ in Canadian programming. We have audiences watching Canadian drama in higher numbers than they have in years. How do we sustain that appetite for Canadian programming and the willingness of Canadian broadcasters to keep spending money on Canadian programming when they no longer have to. I agree, getting rid of simultaneous substitution so that Canadian broadcasters have to rely on their Canadian programming is another solution. I am just not sure that the Canadian broadcasters could survive a cold turkey withdrawal of their crack cocaine. Then again, who says it would have to be cold turkey?

What else can we do? Perhaps future benefits should be put in endowments like they used to be so that they could have long term sustained investment in Canadian production as the Independent Production Fund, Cogeco Fund and others have been able to do. That is something for the Commission and broadcaster applicants to consider. Perhaps some of the benefits money yet to be approved could go to building audience demand (i.e. promotion, social engagement, sustaining a star system) so that broadcasters risk alienating their audience if they stop funding Canadian programming. [Note – in no way am I advocating a return to entertainment magazine programming, a notorious broadcaster boondoggle that was intended to build a star system but instead allowed Canadian broadcasters to spend money on promoting a lot of US programming with Canadian stars in it instead of spending it on actual Canadian programming.]

I am sure that there are other things that we could do to leverage this ‘golden opportunity’ if we put our minds to it. We need to learn from the last golden age – the mid-90s. We had so many great programs that Canadians loved to watch: “Street Legal”, “Due South”, “Da Vinci’s Inquest”, “Road to Avonlea” to name just a few. Those shows trained screenwriters, directors, actors and producers and developed a talent pool. When the money dried up with the 1999 TV Policy, which got rid of an expenditure requirement for broadcasters, a lot of the talent went south and did not return. That is what we are risking if we do not have a plan in place for post-2019. We are right now growing our talent pool but will they have careers here in a few years.

*And for the record, I was thinking more of a cow in the middle of a snake kind of bulge, nothing Jon Hamm-ish.

New Broadcasting Participation Fund

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Last Spring, as part of the CRTC’s approval of the Bell-CTV transaction in 2011, the CRTC approved Bell’s proposal to create a Canadian Broadcasting Participation Fund. The goal of the Fund is to help public interest and consumer groups participate more often and more effectively in CRTC broadcasting proceedings. The Fund will reimburse internal and external costs of lawyers, expert witnesses and consultants necessary to draft submissions and attend at hearings. There is a grid for approved costs for the lawyers, expert witnesses and consultants but also for reimbursement of travel, accommodation and meals.

The guidelines are modeled on the guidelines that support reimbursement of costs in telecommunications proceedings. Unfortunately those guidelines are drafted in a way that assumes that the reader has also read the various decisions that support the process of reimbursing costs of participation in telecommunications proceedings. So they’re not that clear. For example, an Applicant is defined as someone who applies. The goal is to support nonprofit public interest and consumer groups and individuals (though the forms are drafted as applicants are only groups and not individuals). I did confirm with the Fund that individuals could apply. Public interest is not defined but there is the suggestion that it includes ‘advocacy and service groups’. The Fund confirmed that two of the key determining factors in eligibility are that the applicant’s intervention is relevant to the proceeding and that they are non-commercial (i.e. no broadcasters).

Bell allocated $3 million of their mandatory benefits to the Fund. They have also proposed allocating another $2 million to the Fund from the upcoming Bell-Astral2 acquisition, so if approved the total Fund will be $5 million. The Fund was  launched last Friday and it is now accepting applications for reimbursement. As the Fund was initially approved March 26, 2012, it will reimburse costs from participation as of that date.

Participation in broadcasting proceedings can be expensive. A submission can be more effective when at least reviewed if not drafted by someone with experience with the rules and regulations of the CRTC, including the details of the Broadcasting Act. Hearings are fairly formal proceedings where commissioners will challenge intervenors on their position to better understand them and get information on the record. There are a number of organizations that have to pick and choose which proceedings they will participate in because they just can’t afford to weigh in on all the ones that affect them or their membership. Few individuals and small organizations attend, particularly if they are located outside Ottawa. It is hoped that this Fund can address those concerns and help the CRTC hear from more than the usual suspects.

[Yes, this post could possibly sound self-serving but honestly, I’m interested in sharing widely the availability of this Fund because I think it will increase the quality of discussion even if intervenors were to use it just to cover travel costs. My heart goes out to those passionate individuals and small groups who find the issues important enough to spend their own money to attend. I’d like to see more of them, more of the Marjorie’s, and I would like them to be able to get some help.]

Does Canadian TV need an overhaul? Maybe. Probably.

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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.

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.