Tag Archives: Television

New CIPF Regulatory Framework – But What Does It Mean?

Yesterday, August 25, 2016, the CRTC released its new Broadcasting Regulatory Policy (2016-343) – a Policy Framework for Certified Independent Production Funds (“CIPFs”).  There are some minor and major changes to how CIPFs will be managed and the kinds of productions they will be able to fund going forward.

First, the framework sets the rules for how a CIPF has to be set up in order to be certified by the CRTC.  A fund needs to be certified to allow BDUs to allocate some of their mandated contribution to it.  A fund does not need to be certified if it does not need or want those contributions.  For example, while the Independent Production Fund is certified as a CIPF, its funding is based on an endowment so its management is outside of this framework.  However, most of the CIPFs do rely on BDU contributions so will need to abide by the new framework.

There are two types of changes to the framework:  1) new requirements in order to be certified and 2) new permissions which a CIPF may wish to take advantage of.  With that in mind, let’s look at each of the changes in turn.

Requirement: Eliminate Licensed Broadcaster Commitment

Going forward, CIPFs must no longer require a broadcast licence or development commitment from a licensed broadcaster as a condition of funding.  This is to allow greater flexibility in funding by producers as they can access OTT services provided that those services are accessible to Canadians (so yes to Netflix Canada but no to Hulu).  However, tax credits still require a licensed broadcaster so there will not be many productions that will be able to take advantage of this new flexibility at the moment.  It may provide more opportunities for web series, however.  Additionally, CIPF funding is awarded as part of a subjective assessment and each one may decide that in its assessment it will reward a licensed broadcaster commitment with more points as evidence of greater potential audience.  It may be difficult, though not impossible, for a project with a non-traditional broadcaster to be competitive with projects with traditional broadcasters.

Requirement:  Redefining “new media project”

I find this one odd.  “New Media Project” has now been re-categorized as “non-programming digital content” by removing programming content such as webisodes from the definition.  While the Notice of Consultation asked intervenors to consider whether the current definition of “new media project” needed to be updated and many said that it did (mobisode anyone?), the CRTC makes no reference to any intervenor asking for “new media project” to be redefined in that way.

It is more troubling because those who work in interactive digital media (“IDM”) know that most IDM associated with television includes video content either as clips or even within the IDM.  Walls between forms of content are breaking down and this redefinition feels like a belated attempt to put up a wall that the industry does not need or want.  Those in Ontario are currently experiencing a similar challenge with changes to the Ontario Interactive Digital Media Tax Credit draft regulations which attempt to remove streaming sites from eligibility but went too far and remove digital media with any form of video from eligibility.  Standalone web series may still be financed through the change to the broadcaster requirement (and because IPF is outside this framework) but as the new definition (‘innovative projects such as story-driven videogames, interactive or customizable web content, apps and all other similar types of non-programming content’) is very brief it is not clear whether the inclusion of video within ‘non-programming digital content’ will exclude it from eligibility.

Requirement: Maintain cap of 10% on non-programming digital content

CIPFs were limited to spending no more than 10% of their fund on ‘new media projects’ or now ‘non-programming digital content’.  A number of the CIPFs wanted greater flexibility to allocate more or less of their funds to digital media while on the other side the broadcasters wanted to keep the cap to ensure that most of the funds stayed within the licensed system.  The cap is being maintained, though for the more restricted definition of non-programming content.

Permission:  Canadian content certification points

Sigh.  How many times do we have to talk about this?  OK, so the CIPFs can now fund projects with a minimum of 6 CAVCO points.  But will they?  The decision says, without evidence, that the current limit of 8 points ‘excludes many productions that could otherwise be of high quality and qualify as Canadian’.  What exactly isn’t getting funded?   Bueller?

For those of you who were around during the Canada Media Fund review in 2008 (which excludes all of this current Commission), you will recall that when parties argued that CMF needed to lower its point count because lower point count shows would sell better, lots of evidence was presented to show that in fact 10/10 point Canadian programs sell better than 6 point (what we used to call ‘industrial’) programming.  It is hard to get more Canadian these days than “Murdoch Mysteries” and it sells all around the world.  When we used to produce a lot of 6 point productions there was a market internationally for “Andromeda” and “Mutant X” but it has pretty much dried up as international markets focus more on domestic production.  A high quality production that reflects a distinct domestic voice such as “Murdoch Mysteries” or “Motive” but also “Doctor Who” or “The Bridge” or “Wentworth” sells better internationally. It just does.

On a more practical note, how will these 6 point projects get financed?  For one, CMF still requires 8 points. Will the 6 point projects be competitive in the selection process with 8 and 10 point projects with greater sales potential?  A key sentence in the decision is “CIPFs will continue to have the discretion to finance the productions of their choice, based on their expertise and measurements of success”.  So only time will tell as to whether this change will have any real impact.

Permission:  Eligibility of Co-Ventures and Co-Productions

While the discussion in the decision is about treaty co-productions and co-ventures, the actual decision is only about co-ventures, this current Commission’s pet project.  This is probably because treaty co-productions are not actually ineligible for CIPF funding, though the CIPFs have rules to ensure that only majority Canadian co-productions benefit from Canadian funding.  Co-ventures have not been eligible.  Few productions use co-ventures (a system that allows Canadian producers to partner with non-treaty producers, i.e. from the U.S.) because they are too hard to finance. As well, the control that is then given over to the U.S. partner is not that attractive.  The Canadian partner must have 50% of creative control and profits but realistically co-ventures are U.S.-driven projects.

Time will tell whether CIPFs will actually allocate more funds to co-ventures or whether this is flexibility they really did not want or need.

Permission: Script and Concept Development

Previously, the requirement for a broadcast licence prevented CIPFs from funding early stage development except through non-BDU funds (i.e. endowments).  The removal of the requirement for a broadcast licence automatically frees up CIPFs to allocate more funds to early stage development, or even slate development, if they so wish.

Permission:  Promotion Funding

CIPFs have not been able to specifically fund promotion, an increasingly important part of any production in the crowded marketplace.  However, the CIPFs have limited funds and many stakeholders are concerned about money being reallocated from production to promotion.  It is therefore up to each CIPF as to whether it wants to reallocate any of its limited resources specifically to promotion.

Requirement:  Measurement of Audience Success

CIPFs each make subjective assessments of projects and decide to fund the ones that meet their criteria, including the greatest potential for success.  CIPFs were concerned that any formalization of that process would impede the subjective analysis but also attempt to standardize what are inherently non-standard funds which cover many different niches of programming and audience.  The CIPFs are likely relieved that the decision is instead to require the CIPFs to report on the audience success criteria used rather than to change them in any way.

Requirement:  Accessibility

CIPFs will now have to ensure that all programming that they fund is closed captioned and includes described video.  They are not required to fund it but to disclose it.  While broadcasters require closed captioning and described video, by requiring CIPFs to ensure that a project has it before it is funded, the theory is that this rule will ensure that productions are developed with accessibility guidelines in place rather than dealt with after the fact in post-production.  This will have little effect on CIPFs except as a check box on their application form but may have a positive effect on production planning for accessibility.

Requirement:  Reflection of OLMCs

There are no requirements currently to reflect in any way Official Language Minority Communities (OLMCs).  The new framework will require that one person on the selection committee for a CIPF will be responsible for ensuring that OLMCs are properly reflected in decision making.  Annual reports will now have to track OLMC projects.  There is no quota system so it is not clear how the Commission will define ‘properly reflect’ and what penalty there might be.  Many CIPFs already fund OLMC projects on a regular basis so this may only be an added reporting requirement.

Requirement:  Governance

The Notice of Consultation hinted at possible major changes to the governance of the CIPFs, which worried many intervenors who could not see any problems that needed to be fixed.  However, with vertical integration there were some concerns about how the Boards of the CIPFs were constituted in order to ensure that they remain independent of their contributors.  Two thirds of Board members must now be independent, rather than previously no more than one-third could be members representing BDUs.  The definition of independent excludes employees, officers, directors etc. of a contributor or its affiliates.  For example, an employee of CTV would be independent of Bell under the old rules but not under the new rules.

Additional wording was also added to the conflict of interest language to require that decisions are made ‘absent of actual or perceived conflicts of interest’ but without setting any specific criteria to abide by.

Requirement:  Reporting

While most CIPFs publish annual reports there was no requirement to do so nor any criteria for those reports.  This is now standardized with few additional criteria beyond what most CIPFs already report on.  They will also have to submit audited financial statements.  The Commission understands that this could be an administrative burden for smaller funds which might not be able to cover the cost of an audit, particularly with the cap of 5% on administration costs.  These smaller funds can apply for an exemption from the audit if they can prove it would be unduly burdensome.

 

This revised policy framework will go into effect September 1, 2016 however it will take time for the funds to review and implement the changes into their guidelines, and have those changes approved by their boards.  There are no transition rules so it is not clear how quickly the CIPFs will have to change those parts of their guidelines that must change, before the Commission declares them offside of the new policy framework.  The only real penalty is being de-certified so hopefully the Commission will give the CIPFs at least one fiscal year to implement all the necessary guideline changes and possibly even board changes.

Prime Time in Ottawa 2016

I live tweeted the annual CMPA conference, then Storified my tweets and those of others (twice – I lost the connection on the train and then my work – argh!!) and after thinking about it for a bit put it all into some context in a TV, Eh! post.

On a personal note, while not all the panels were interesting to me (everyone has different assessments based on their level of knowledge and interest), Prime Time is still a ‘must schmooze’ event for me.  I saw lots of people and had both fun and useful conversations.  I was reminded that more people read this blog than show up in the stats because some of you cut and paste posts and circulate them by email.  I’m not saying you shouldn’t but I apparently shouldn’t be discouraged if it just says 36 people read a post.  And I should blog more.  Promise.

 

Let’s Talk TV – Let’s Talk About It ALL!

Well, it’s ambitious. I’ll say that for the Let’s Talk TV consultation. It can even said to be HUGE!

To recap, yesterday the CRTC released both the Notice of Consultation on the third stage in the Talk TV consultations (the first stage being the online discussion board and the second stage being the Choicebook) and as well released its response to the government’s s. 15 order to report on the feasibility of pick and pay. These two releases need to be read together.

First, to reiterate, the s.15 request  was for the CRTC to provide the government with a report on the impact of any pick and pay measures for pay and specialty services and how any such measures would still ensure that the majority of services received were Canadian and that BDUs continue to give priority to Canadian services. The report is only the next stage of the process and not the final stage. The CRTC’s proposal for pick and pay options will be discussed as part of the Talk TV consultation and after receiving evidence from various stakeholders (deadline June 25, 2014) and discussing it at the hearing (starting September 8, 2014), the CRTC will then make a decision.  It could easily be a decision to not implement any pick and pay because of the expectation of harm to the system (I doubt that but it’s possible).  What it will not be is a decision to implement full pick and pay because of the social policy goals of the Broadcasting Act.   I’m saying this because the gap between public perception and the reality of the process annoys me.

So, what is the CRTC’s proposal? The CRTC proposes that BDUs offer:

–       A small, all-Canadian basic service that includes only the local Canadian conventional stations, the mandatory carriage services, the provincial edunets and in some cases community channels and provincial legislatures services.

–       Promote the availability of the small Canadian basic

–       Allow pick and pay on pay and specialty services

–       Allow consumers to create their own packages for pay and specialty services

This proposal gives Canadians the option to stick with their packages or if they really really don’t want all of those channels go to a skinny basic and pay for individual pay and specialty services. The hearing will review specific issues with this proposal such as the impact on more niche specialty services, the impact on BDUs and the impact on program producers from such a proposal. It will be interesting to see how the consumer groups respond. I hope they all try and conduct some studies or economic modeling to put some evidence behind their responses but practically there are limits to what evidence can be provided. We just don’t know how consumers will behave if offered this proposal. How many would reduce their packages and buy just a few services, especially if those services by necessity have to be more expensive when sold on their own? I like tv and a choice of services so I’m not likely to do it. I know sports fans who might. How many are in each camp – does anyone have a clue?

This topic on its own could fill a hearing with each sector of the industry weighing in because of the potential impact of any pick and pay system. It isn’t the only topic. On the assumption that you have not read the Public Notice I’ll skim over the issues.

–       Increased access to non-Canadian services

–       Remove Simultaneous Substitution completely (which allows broadcasters to replace the US ads on the US programs they buy with Canadian ads they have sold – I honestly did not think removing it would ever be discussed in my lifetime) or replace it with Non-Simultaneous Substitution (which allows them to replace the ads whenever the Canadian broadcaster airs the US program)

–       The importance, or not, of local programming

–       How will programs be delivered in the future and do we need to change the funding model for support of Canadian programming to keep up?

–       Does the CRTC need to continue to require exhibition of Canadian programs or is funding enough? Should there be regulation of promotion?

–       Support of underserved audiences such as OLMCs, Aboriginal audiences, third language communities and persons with disabilities.

–       Is support for independent programming and distribution services required (i.e. VI Code).

–       Enhanced measurement of audiences using set-top boxes and the privacy issues that are triggered by that discussion.

–       Maintain, or not, the Genre Exclusivity Policy (i.e. should History be allowed to morph into Discovery and Showcase to morph into Space)

–       Simplified licensing of services

–       Better communication of changes to consumers by services and BDUs

–       Improved parental controls

–       Competition within the BDU market

–       Dispute resolution between BDUs and subscribers

Each one of these topics could be a hearing on its own. They do relate to each other and impact each other so I understand why they are bundled together but this is going to be a difficult hearing for most stakeholders. I’ve participated in these ‘all you can eat buffet’ style hearings and they are hard. You just don’t have the time or resources to address every issue so you pick your top issues and hope that other stakeholders address the ones that you can’t get to. Reading all of the other submissions alone is time-consuming but necessary. The Commission did remind smaller groups that they can apply to the Broadcasting Participation Fund for financial assistance (and I remind you as well) but it is still going to be a costly year for stakeholders.

On the upside – I’m definitely looking forward to some interesting discussions during the September hearing.

 

The CRTC Wants You To Talk About TV

Today the CRTC released its public consultation on the state of the Canadian broadcasting system.  I assume that most of my readers are involved in the Canadian broadcasting industry and are not members of the general public (I’m not sure about you readers from Russia or the former SSR of Georgia).  So you may be asking yourself “should I get involved in this stage or wait for the industry consultation next spring?”*  You might want to get involved now.  If you are part of a member-based organization then I definitely think that you should get your members involved now.  We’re all part of the public, right?

The CRTC has set up a lot of different ways to get involved.  Find the official invitation here.  You can call, email or fax your thoughts.  There is a discussion forum, similar to past public consultations such as the ones on the wireless code or the CBC.  And new for CRTC public consultations is the encouragement to hold “Flash!” Conferences.  I don’t know the logic behind “Flash!” – flash mob?  It has nothing to do with the software.  The CRTC wants Canadians to gather, talk about the issues, and send the CRTC a report.  Interesting.  There’s a toolkit to facilitate the “Flash!” Conferences and the CRTC has limited funds to subsidize the cost of running them for smaller organizations (apply by November 13, 2014).  There doesn’t seem to be a push to get Canadians to use social media other than the request to use the hashtag #TalkTV (Note:  I may cave but at the moment I’m not using #TalkTV because it is already an active hashtag for people to talk about Canadian and US talk shows.  I’ll stick to #CRTC and #CdnTV for now.)  Update:  The FAQ suggests that there will be Twitter chats and a Reddit AMA.  Should be interesting.

What are the topics?  In most of the material there are only three general topics mentioned.

Programming:  What do you think about what’s on television?

Technology:  What do you think about how you receive television programming?

Viewer toolkit:  Do you have enough information to make informed choices and seek solutions if you’re not satisfied?

Those are pretty vague and general topics but if you dig into the Notice of Invitation you’ll find more detail on the questions and context for them.  I’ve put them all together in one place for ease of use (for you and for me).

Programming

1. What television programs are most important to you (children’s programming, comedy, documentaries, drama, feature films, news, sports, reality TV, variety, other)? Why?

2. Do you know which of the television programs you watch are Canadian? If so, how do you know which programs are Canadian? Would it be important for you to know which programs are Canadian? Why?

3. What programs do you consider to be local television programming—programs about your city, your province, other? How important is local news to you? Why? How important is community access programming and “community TV” to you? Why?

4. Do you think the programming on television is fully reflective of Canada’s cultural, ethnic, linguistic, geographic and demographic diversity? If not, what’s missing? How important is reflection to you? Why?

5. What do you think programming will look like in the next 5 to 10 years? Why? Would you be satisfied with that situation? Why?

Technology

1. How do you prefer to watch television—on a traditional television set, online, on a smart phone, etc.? Why? How do you usually watch television programs—live, on-demand, recorded on a PVR, other? Why?

2. If you subscribe to cable TV or satellite TV, how satisfied are you with the way your channels are packaged?

3. What type of television service do you subscribe to—cable TV, satellite TV, Internet Protocol TV (IPTV) or other?  Do you intend to stay with your type of television subscription in the next few years or switch to something else? What would make you stay? What would make you switch?

4. How do you think we will receive and watch television in Canada in the next 5 to 10 years? Why? Would you be satisfied with that situation? Why?

Viewer Toolkit

1. How satisfied are you that your television service provider supplies the information you need to understand your service options, including packaging and pricing?

2. Are you experiencing barriers that prevent you from changing your television packages or switching to another television distributor? If so, what are those barriers?

3. How satisfied are you that your television service provider supplies the information you need to make informed choices about programming that you may consider inappropriate for you or your family?

4. Do you have a visual or hearing impairment? If so, how satisfied are you with the tools available to enable you to share in our television culture?

5. Do you know where you can voice your concerns over television content, your television services and bills?

6. How do you think we will make informed content choices as program viewers and consumers in Canada in the next 5 to 10 years? Why? Would you be satisfied with that situation? Why?

I think these are really great questions.  All of us would like to know what the general public thinks of these questions.  For too long at public hearings all sides of the industry have tried to speak for the general public and what they want from our broadcasting system.  I just wonder how the CRTC is going to get people motivated to get involved.  There isn’t any hot button issue like there is whenever you deal with the CBC or want Canadians to talk about their cell phone bills.  This is big picture thinking that most Canadians, I think, would rather someone else do for them.  I suspect that organizations with agendas will be the easiest to motivate.  We know how important this is so perhaps we should start with our own people.  Gather and have a “Flash!” Conference in the next two months so that a report on the conference can be filed by January 10, 2014.  [Shameless Self-promotion – you can hire me to help you do that.]  I assume that anything gathered will be useful as well in the industry consultation.   Spread the word about the consultation.  The more ‘general public’ who hear about this and get involved the better for the industry.

*As part of this invitation to the public, the CRTC released its updated schedule on the industry consultation on the state of the Canadian broadcasting system.  There will be a call for submissions Spring 2014 and a public hearing September 2014.  Expect that one to be a doozy!

It’s all about the fans

As an advocate for Canadian media I have been told time and time again that Canadians don’t watch Canadian television, go to Canadian movies or play on Canadian websites because it just isn’t good enough. We have the stats to prove otherwise but that doesn’t stop the trolls (who are sometimes even mainstream media) from slagging the stuff that we make here. I wish they all had spent the weekend at Fan Expo to see the truth. We have a star system, we have crazy fans, we have a huge audience for our home-grown content. This is a good news story (and a good news blog post). And honestly – if someone tries to tell me today that we don’t make good stuff I think that I might slap them.

I’ve been going to FanExpo for a few years now. The first year (2010) there was one Canadian property at FanExpo – the steampunk web series Riese (that’s the wikipedia reference – I couldn’t find a Canadian source to watch it as it’s geoblocked on Syfy.com) – I saw some fans still cosplaying characters from that webseries this year – which is quite cool. Each year since then the Canadian contingent has grown. This year there were panels and booths and cast signings for “Lost Girl”, “Call Me Fitz”, “The Listener”, “Murdoch Mysteries”, “Orphan Black”, “Bitten” (which hasn’t even aired yet but has a huge following based on Kelly Armstrong’s books – which I first learned about at last year’s FanExpo) and several other series which are American but shot here such as “Warehouse 13” and “Defiance”. The Independent Production Fund hosted a booth for several of the web series that they have funded. Across from them was the booth for “Ruffus The Dog’s Steampunk Adventure” (which apparently Gina Torres loved – #geekheaven). The animated web series “Captain Canuck” had a booth where Kris Holden-Reid, who voices the main character, did signings (I stood there for a while and ogled him – have to admit it). Quite a few indie gamers had booths. The Canadian presence was huge.

And the fans loved it. I spent some time on Saturday in line with fans and I really enjoyed meeting people. In the “Murdoch Mysteries” line people kept talking about being in line to see Jack and that confused me until I realized that was Yannick Bisson’s character name from “Sue Thomas F. B. Eye” (an industrially Canadian series from 2002-2005). My favourite fans were the lady in her 60s and her 90 year old mother in a walker. “Jack” was the mother’s favourite actor on TV. Both mom and daughter were pretty excited when the cast made a fuss over them. [Note – FanExpo is not just for geeky gamer boys and Lolitas. This story shows just how mainstream it has become.]

I took a break from the madness of FanExpo on a Saturday and went early to line up for “The Listener” panel and sit and read my graphic novel. I had passed a surprise “Listener” cast signing and let the women around me know that it was going on and offered to save their places for them. Then I started talking to the identical twins behind me. They now introduce each other as ‘clones’ after becoming big fans of “Orphan Black”. We talked clones (Will there be a new one next season?) and “Bitten” casting (can Supergirl play a werewolf? They think so) and they raved about how terrific everyone they met had been.

When the ladies came back from their cast signing one had brought me a poster and another invited me to join her in her VIP front row, as thank yous for their incredible experience meeting the cast. Awwwww! Listenerds are the best!

It’s not just about meeting the stars though. At each panel I attended (or heard about), fans got a chance to ask questions about story and in a few cases pitched story ideas for future seasons. [Christina Jennings was quite taken by a few of the “Listener” fan ideas.] They loved meeting the creators when they had a chance – I heard about how great it was to meet co-creators John Fawcett and Graeme Manson of “Orphan Black”.

And then there were the “Bitten” ears. Everyone who went to their panel got a pair of wolf ears. You could tell after the panel was out and the rest of FanExpo (including the Nathan Fillion line which I was in instead of the panel – sorry guys) was infiltrated with wolf ears. Brilliant.

As we all know Nathan Fillion is Canadian. I’m not sure everyone knew how proud of that fact he remains. He made that clear and the crowd roared in appreciation (I have to admit it – I almost teared up). And yes, an appreciation for our Canadian talent who have gone south and done well for themselves is an integral part of our Canadian media world. Which is not the same as only promoting our ex-pat stars.

So what did I learn from this? Canadian fans are very aware that they are Canadian and different from Americans (you should have heard the crowd loudly correct George Takei when he said both Canada and the US entered World War II with the bombing of Pearl Harbour). We are proud that we are polite and generous whether we are celebrities or fans. We love our Canadian television not because it’s Canadian but because it’s great stuff. It competes with and is just as good as the American shows. We have a star system that seems to have grown organically just on the basis of that great television.

It’s not that the broadcasters do NOTHING – no, they do promote their Canadian programs and talent but just not enough. So the producers and talent take on promotion when they have the time and money to do so. Some of it is as simple as jumping in on social media (I think more than a few fans will be joining Twitter to twatch the “Listener” finale next Wednesday after the cast talked about regularly twatching) and the lack of ego that leads to free cast signings when the big US stars are charging mega bucks and limiting the number of autographs.

Some people are catching on – loved the sneak peeks from Shaftesbury and seriously if someone could send me some wolf ears I swear I’d wear them. Somewhere. Space does a great job at working FanExpo. We can do more. We can grow the audience with more fan support. And if the audience grows then maybe, when benefits money runs out and BDU contributions to the CMF drop, then just maybe broadcasters will see that it’s in their best financial interest to continue to give the audience the great Canadian TV that they have come to expect, with the stars and stories that they love.

Every year I tell people what a great experience it is to go to FanExpo if you work in Canadian television (and digital media but this year I focused on the tv side – maybe next year). Our task now is to support the fans throughout the year. Seriously guys, I don’t think a hashtag is going to do it.

Bell-AstralFinal

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.

Funding Application Tips – Partnerships

I probably should have done this post on Partnerships before last week’s post on how not to screw up your funding application but there you go.  I’m doing it now.

One of the biggest ways that a project can fail (in general, not just with funding applications) is in picking the right partners to work on the project.  This is co-producers or digital media and television producers or creative partners.  The same rules/guidelines apply.

Audio-visual media is a collective work.  None of us can create (high quality commercial) film, television and digital media on our own.  We need to work with other people to bring complimentary skills together to get the end product completed.  I think that we all understand that a screenwriter, producers, director, actors and crew are needed to produce but this also applies to the producer.  Sometimes it is skills that are needed, for example when a smaller production company or series creators partner with a more experienced production company to take on a bigger challenge.  Sometimes it is financing as when a Canadian production company partners with a treaty co-production partner.  And then there are the partnerships between formats when a tv producer partners with a digital media producer to create affiliated digital media content for a television program.

Early on in my career I learned a few key rules on partnerships from a tv producer who became a broadcaster and then a winemaker and is back to being a broadcaster.  I like to sum them up as ‘can you get drunk with your intended partner?’  It may seem frivolous but bear with me.   You get drunk with people you like (most of us do anyway).  Production is hard and you should only do such hard work with people you like and trust, can talk to and feel that you can rely on.  This means spending time with people and getting to know them before signing an agreement.  Put the relationship ahead of the deal.

How do you do that?  Meet lots of people and companies before decided which one you want to work with.  Attend markets and conferences where you can meet a lot of people (and socialize with them!).  Talk to your friends and colleagues about their experiences with those companies.  Yesterday I told a story about the reactions of two different companies to an event that I was trying to set up and the person I told it to heard the story as more evidence that one company was a better potential partner for her than the other company.  It wasn’t the point of my story but it definitely informed her opinion about which one she would rather work with.

It is more than likeability and ethics though.  What you look for in a partner depends on what you need but you need to be certain that your partner has it and isn’t just BS’ing you or entertaining magical thinking about their abilities.  That’s the due diligence part that you have to do.   Can they bring that financing to the table – check out their past projects.  Can they produce the digital media component – check out their past projects.  Do they have the distribution skills or marketing skills that you lack – check out their team.  Right now possibly the biggest problem in convergent media production is tv producers partnering with digital media companies who do not have the skills and experience to produce what the tv producers are looking for.   For example, if a convergent project is going to be about developing and supporting the television audience with content then a digital media shop that has only created websites that sell products will not have the necessary skills.   The result, if it can be funded, just may be garbage.

If you don’t know the sector that you’re exploring for a partner then consider hiring a consultant who works in that area to help you find potential partners.  Yes, it does sound like hiring a matchmaker but it can work.  Some organizations are partnering with other organizations to facilitate matchmaking, for example WIFT’s Digiscape in partnership with CMPA, CWC and Interactive Ontario.   Go to funders’ websites and check out what they’ve funded and who produced it.

OK, so you’ve found your dream date, now what?  An effective partnership comes out of both parties clearly understanding the strengths that each bring to the partnership, the roles they will each perform and being completely on the same page about what is being produced.  You can do this in a co-production or services agreement but you also need one or more meetings where you can talk about the big picture and all the little details that it will take to get there.  I cannot tell you how often I have been able to see in a funding application that partners appear to have completely different ideas about what they are producing.   An effective partnership involves constant communication – which of course isn’t difficult because you do like each other, right?  [see above re getting drunk together]   You do not carve up the responsibilities and go off and do your thing, assuming that your partner is off in their corner doing their thing and somehow magically it will all get put together and end up being fantastic!

Ideally you want to have such a fantastic working relationship with your partner that you can work with them again and avoid all of this hard finding your partner work.