Tag Archives: Terms of Trade

Dueling Industry Conferences

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It’s hard not to compare industry forums when they are back to back.  Thursday the Banff Media Festival held its “Content Industries Connect” conference at the Ritz Carlton.  Swanky.  It was a paid event.  In the past it had been part of the Academy’s Screen Week but this year while during Screen Week it wasn’t affiliated with the Academy (there’s a story there somewhere but I don’t know it).  Friday the official Industry Forum took place, hosted by the Academy, CMPA and DGC.  It was free for members of those three associations and took place at the TIFF Lightbox.  Not quite as swanky but the seats were more comfortable.

I don’t know if anyone went to all of both.  I was signed up for both but came late to Banff and skipped out of one of the Industry Forum panels.  It’s just too much of a time commitment to do both.  Most people seemed to pick one or the other.  The topics were quite similar but Banff was the only one with a Media Leaders panel so my impression is that the senior executives chose to pop in to the end of the Banff day to attend the Media Leaders panel and bypassed the Industry Forum.  The Industry Forum was more grassroots given the free admission for members of those organizations.  The speakers seemed to be aware of that and targeted the production community rather than the executives with their discussion.    So while the topics were the same, they ended up being quite different days (I’m not going to compare the cocktail parties though for me the food at the Industry Forum won – quinoa battered shrimp and lamb chops!).

As someone who attends a lot of conferences I didn’t think I’d miss much by skipping the Banff panel on The Future of Content in a Multiplatform World and based on the tweets and what I heard, it was the same talk we’ve been hearing for the past year from Vice, Shomi, Blue Ant and CBC. I don’t know anyone who attended the panel on brand engagement with speakers from Hyundai, Microsoft and Kraft and the tweets don’t tell me much either.  Honestly, it seemed an odd choice for the content crowd.  I finally made it to the conference in time for the “Letterkenny” panel.  Full disclosure – I haven’t seen it all (I don’t have CraveTV) but every second of “Letterkenny” that I’ve seen makes me laugh.  I enjoyed the clips, hearing about the process, learning about its success (more views on CraveTV than any other show in its catalogue including Seinfeld and South Park) and its renewal announced during the panel.

Then there was the Media Leaders panel.  Banff has it every year that they have done this event.  This year there were only two leaders after consolidation (and CBC cancelled) – Mary Ann Turcke from Bell Media and Doug Murphy from Corus.  Talking to people afterwards there was one word that seemed to sum up the panel and it’s not a polite word.  It starts with a b.  There was a very negative reaction to Doug Murphy’s discussion of the CRTC’s decision to not require Terms of Trade as part of broadcast licences – they’re now free to treat every deal like a snowflake.  Yes, a snowflake.  Which ignores the very real imbalance in bargaining power between the mega-broadcasters and most independent producers.  There was a marked contrast between this Media Leaders panel and the one last month at Prime Time – this one was channeling ‘sunny ways’.  Everything is going to be great.  Netflix isn’t a threat as they’re now starting to partner with it, get high profile casting because of its involvement and negotiate windows.  It’ll be interesting to see if they go back to ‘Netflix is heralding the end of the world as we know it if you don’t deregulate us’ mantra next time they’re in front of the CRTC.    They were also pretty positive about pick and pay.  Sure a few of their services will die but producers shouldn’t worry because the remaining ones will only be bigger and better.  Since the jury is still out on this big shift in consumer behaviour due to pick and pay that has been predicted by some, this could mean that pick and pay is going to be used as an excuse to close up some of the underperformers. Again – we’ll have to wait and see what happens in front of the CRTC.

Now off to the Industry Forum.  The first panel was on discoverability.  I’m still not sure we’re all talking about the same thing (push vs. pull) but this panel was a lot more about new techniques to find audiences and provide them with what they want than the discoverability panel at Prime Time which talked more about traditional marketing using digital platforms (and I believe that it was also programmed by the CMPA since it was branded Prime Time Any Time).  In particular, it was useful to hear about Richard Kanee (CBC) and Ramona Pringle (interactive digital media producer) experimenting in finding and engaging audiences.  I appreciated Kanee’s admission that the CBC had missed social media engagement opportunities in promoting “Strange Empire” (you can’t expect him to take responsibility for the whole marketing mess) and his admonition that producers and broadcasters shouldn’t always chase the latest new thing.  Some of the tried and true engagement methods, like email newsletters, still work and should remain part of your strategy instead of running after all the riskier new methods.  Final favourite bit of wisdom from the panel was that the studios (and broadcasters and producers) should be learning audience engagement from the YouTubers who have learned how to find, support and grow their audiences.  Casting them in a mainstream television show isn’t enough to migrate their audience, but if the YouTubers develop their own television show their audience will recognize the authenticity and watch.

The next panel was on co-production featuring three Canadian majority copros:  “Book of Negroes”, “Born to be Blue” and “Room”.  There was a good discussion of why go copro – the added money allowed them all to afford higher profile talent which generated more sales.  It also allowed them to access government funding rather than distributor advances which meant casting the best person for the part rather than for international sales.  Unfortunately, that government funding helped those stars become international hits and now it’s unlikely that anyone in Canada can afford them so for me there is a flaw in that system.

I have to admit that I stepped out and missed the “Orphan Black” panel not because I don’t love the show (I do!) but because I’ve seen a few “Orphan Black” panels over the years.  I ran into a few others doing the same thing so we did our own networking.  We went back in for the keynote speech from Colin Brown, who among other things is a professor of film and economics at NYU.  He gave a very insightful presentation on the international markets for feature films and how they differ between markets and between films and the business case for investing in a mid-size studio producing a slate of mid-range budget films.  His add-on bit about Canada was less insightful as the audience did not need to be told who are the Canadians in Hollywood or that we should be prouder of all the great talent who have left.  As someone who has spent their entire career in the domestic film and television industry I was not impressed.   But I am thinking about what Canadian stories might be naturals for the Chinese and Egyptian markets.  Hmm.

So did we need two such conferences in two days?  Nope.  They could have been merged and been one great day – as long as they kept the quinoa-battered shrimp.

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CRTC’s Corus Decisions – A Few Lumps of Coal In With The Presents

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C’mon – I had to go with a holiday themed subject line on the last real working day before the holiday break.

Yes, the CRTC decided that it was in the public interest to allow Corus to buy the Teletoon services and Historia and Séries+.  The interesting stuff (for a CRTC watcher like myself) is in the detail.  A lot of detail.  Don’t worry, I do have holiday baking to do so I’m only going to touch on what are for me the most interesting points.

A lot of people were watching the Historia and Séries+ part of the hearing to see whether the CRTC would agree that benefits would only be payable on the half that Corus was buying from Bell and not on the half that they were buying from Shaw.  There has been a lot of confusion on whether Shaw and Corus are related or not (even at Shaw and Corus).  There have been long rumoured plans for Shaw to take over Corus fully but a requirement to pay benefits would make that a costly reorganization.  Well, it looks like they can go ahead.  In both the Historia and Séries+ decision and the Teletoon services decision, the CRTC made a clear statement on how they see Shaw and Corus.  Are they one or two?  Depends.

For the purposes of determining effective control, Shaw and Corus are considered part of the same ownership group as they are both controlled by JR Shaw.  But when applying the group-based licensing policy, Shaw and Corus are two designated licence renewal groups. [para 14 in Teletoon and 18 in Historia and Séries+].  So – no benefits are triggered by the acquisition of the Shaw ownership of Historia and Séries+ and none will be triggered when Shaw buys Corus.  I’m not sure that I agree but the clear statement is helpful.

The decision clears up what has been a very odd situation with Terms of Trade and Teletoon.  While Teletoon’s owners Bell and Astral had both signed a Terms of Trade agreement with the CMPA, Teletoon said that it was not a signatory so took the position that the Terms of Trade didn’t apply.  Well, it does now and it is a condition of licence for all Corus properties.  The CRTC took it further and requires Corus to enter into a Terms of Trade agreement with the AQPM (the French producers in Quebec) within one year and to start negotiations with APFC (the French producers outside Quebec).

The benefits payable under both decisions have been increased.  For Teletoon they were increased from $24.9 million to $26.02 million to reflect leases and cash on hand.  For Historia and Séries+ the increase was from $13.86 million to $14.48 million to reflect cash on hand.  The one thing we can always count on is that the valuation will go up because the CRTC found one or more ways that the purchaser tried to reduce the benefits payable.

Most of the benefits proposed have been accepted.  What interesting is the additional requirements.  The self-administered benefits cannot be spent on production just for Corus properties (generally the benefit of self-administering benefits).  ‘Benefits should be used to create and acquire the best possible Canadian programming to be made available on whatever services Canadians choose.  As such, the benefits resulting from this transaction should be made available to a wide range of producers for broadcast on a variety of services so that they do not exclusively benefit the Teletoon services’.  [para 73.  The same line is in the Historia and Séries+ decision at para 72.]  Corus might as well give the money to the CMF or other independent funds if it can’t be run out of their commissioning department.  Combine this with the proposed benefits policy that has 80% of benefits going to independent funds and we have a clear signal of the impending death of the self-administered benefits fund.

Corus had proposed that 75% of production benefits would go to independent production.  This was of concern for many as Corus owns Nelvana and that 25% would therefore go to its own productions.  The CRTC agreed and Nelvana was cut out of benefits.  They will go 100% to independent production.   Yup, that’s definitely a piece of coal.

In the Bell-Astral decision we had what I believe was the first allocation of a portion of benefits to OLMCs.  Keeping in mind that the Chair of the CRTC and the Vice-Chair of Broadcasting both grew up in OLMC communities, it is not that surprising that there is a renewed interest in supporting OLMC communities.  [and I will add OLMC to the Acronym Decoder].  Both decisions require 10% of the programming benefits to go to OLMCs, consistent with the Bell-Astral decision.

There are two funds that still need to be finalized in both decisions, the Script and Concept Development Fund and the Export Fund.  Stakeholders had objected to the Export Fund as not being an onscreen benefit (Corus had been very vague in its application and at times described it both as a fund to promote programs internationally and as a way to help producers find international financing) but to ensure that it will be an onscreen benefit the CRTC has required that any funds will result in the production of new programs and that those programs are broadcast on a Canadian service.  Effectively it is a ‘foreign presale’ fund rather than an after market distribution fund.  Corus has until January 30, 2014 to file an agreement with either Telefilm or CMF for these two funds.  If Corus can’t come to an agreement with either Telefilm or CMF then the funds will go to the self-administered (but not for Corus’ benefit) funds.

The filter that benefits must be of a benefit to the entire broadcasting system has also been applied to the offscreen or social benefits.  Frequently in the past there have been tenuous connections between the recipients of social benefits and the broadcasting system (I remember an allocation to the Girl Guides of Canada that didn’t make much sense).  The CRTC is being very clear that Corus will have to report on how the funds were used to the benefit of the broadcasting system and hinted that a proper use would be script development, pitching events, professional development and the opportunities to meet OLMCs.  One social benefit, the Corus Inner City Childhood Obesity Research Initiative, was denied for not being clearly of benefit to the broadcasting system (and being very vaguely described in general).

There were a few changes to the licence terms of the Teletoon services that will be of interest.  Corus requested a CPE for Teletoon of 31% but the CRTC set it at 34% with an allocation of 9% specifically to French language programming to allay concerns that collapsing Teletoon into the Corus group could swamp French programming.  Teletoon’s PNI is set at 26% and Teletoon Retro’s at 4%.  That effectively increases Corus’ group PNI from 9% to 12%.  This is all good news so hopefully when the benefits expire Corus will still be spending healthy money on Canadian programming.

The CMPA had requested a condition of licence that Teletoon air 90 hours of Canadian programming as well as the expenditure requirement.  The CRTC did not approve it on the basis that they are leaning towards regulation that focuses on creation rather than exhibition in order to keep pace with changing audience behaviour and provide broadcasters with greater flexibility.  This was also a theme in the Group Licensing Policy, though that policy did not completely get rid of exhibition requirements.  What I find interesting though is that the Commission also denied Corus’ request to remove the requirement to air one hour of Canadian programming during prime time on Teletoon Retro.  That was on the basis that the Commission didn’t want Teletoon Retro to have a completely foreign prime time broadcast.  So exhibition requirements are still sometimes necessary.

There is more nitty gritty in the decisions but my holiday baking calls.  Happy holidays to you all!  Hopefully you can take a proper break and I will see you in the new year.

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.