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CanCon 101 – Part 2

In the first part in this series, CanCon 101, I wrote about what makes a show Canadian (i.e. point system, spending, ownership etc.). This post takes it to the next step – what are a broadcaster’s obligations when it comes to airing Canadian programming. Not to worry – I won’t lose myself down the rabbit hole of detail on broadcaster CRTC commitments but will try to stick to a top level explanation.

First, there are (still) both expenditure requirements and exhibition requirements. I say still because there are misconceptions out there that we are in a total on demand world and scheduling doesn’t matter (tell that to people trying to avoid “Game of Throne” spoilers on Twitter Sunday evenings) and that exhibition regulation no longer exists. Prior to the 2010 TV Policy there were only exhibition requirements for ‘priority programming’ and an overall day quota for exhibition and the result was a lot of cheaply made Canadian programming. Expenditure requirements were brought in to ensure that not only was there sufficient quantity of Canadian programming but also sufficient quality.  The Talk TV decision limited exhibition requirements to prime time (down from both the prime time and all day quota) as of the next licence renewals in 2016.

Another important concept is that we now have group-based licensing. So Shaw, Bell, Corus and Rogers are licensed as corporate groups. This allows those broadcasters to pool their Canadian Programming Expenditures (CPE) across the group and spend more on one service and less on another. Each service has a CPE that takes into consideration its genre of service (e.g. a higher commitment for children’s services, lower for third language services) but as a group their CPE is 30%.

One caveat is that conventional services can allocate a maximum of 25% of their CPE to specialty services, which is to prevent broadcast groups from moving all of the Canadian programming to the specialty services, where they would get smaller audiences (leaving the mass audience spots for their U.S. programming). The benefit is that broadcasters are free to air a program on a specialty first and then on their conventional service (e.g. “19-2” airing on Bravo and then CTV) or vice-versa (Global’s “Rookie Blue” airs on Showcase) to maximize the audience. The downside is that these programs are broadcast across the entire group for one licence fee, reducing potential revenues to producers and potential new programming for audiences.

The other expenditure requirement is for Programs of National Interest (“PNI”), which are defined as dramas, documentaries and award shows that promote Canadian works. Note that drama is a defined term that includes comedy and feature film. The level of PNI expenditure is based on a group’s historical spending in most cases (Rogers has had to increase their spending as they acquire more channels in their network).

The result of these regulations is a system that provides broadcast groups with flexibility in their spending and exhibition but requires minimum spending on PNI in prime time. So how does Shaw get away with no new Canadian drama in the fall schedule? Exhibition regulations do not require original programming so can be filled with reruns. The prime time exhibition requirement covers 6pm to 11pm so is also fulfilled by news, entertainment magazine shows, reality programming (i.e. “Big Brother Canada”) and sports. Expenditure requirements also do not specify original programming but it is a lot harder to spend PNI dollars on licensing old programming so tends to be spent on new programming. However, expenditure requirements are reported on an annual basis based on when the money is spent (i.e. during the show’s production) and not when it airs.

So the broadcaster is free to decide to air all of their Canadian drama and documentaries in the summer (when fewer people are watching TV but also there is less competition from US shows) or spread them out around the year. They can commission shows one year and not air them until the next year or later. The CRTC has consistently stayed away from ‘micro-regulation’ and insisted that broadcasters know best how to program their schedules.   Shaw can decide how it wants to spend its money, and it tends to spend it on one or two big budget dramas like “Remedy” and “Rookie Blue” rather than a number of smaller budget dramas.

So how is that Bell Media consistently has more Canadian drama than Shaw? Diane Wild alluded to the answer in her assessment of the fall schedules – benefits spending. When a broadcast licence changes ownership, the CRTC requires that a percentage of the purchase price has to be spent on programming (and off screen benefits as well) to benefit the system as a whole and this ‘benefits spending’ has to be incremental to what they are already required to spend.

Bell has acquired more other services (Bell buying CTV twice, CITY specialties and Astral) than Shaw (Global and taking over the obligations from Global buying Alliance Atlantis) or Rogers (the CITY conventional channels and a few smaller specialties). Some notable examples of benefits spending have been on “Corner Gas”, more episodes of “Degrassi” and the development of “Flashpoint”. Over the years the benefits spending has also triggered more Canada Media Fund allocations, which are in part based on historical spend (as well as audience success, regional spending and digital media investment), resulting in more money to spend on Canadian drama, documentaries, children’s and performing arts shows (the four categories supported by the Canada Media Fund).   It will be very interesting to see whether Bell’s level of support of Canadian drama (they do very little documentary work) continues once their benefit spending expires in 2018.

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Kelly Lynne Ashton

Kelly Lynne has over twenty years of experience on the business side of Canadian film, television and digital media as an entertainment lawyer.She took a slight departure to produce children’s digital media. When it was time for something new, moved back to business affairs but now in film, television and digital media. More recently she discovered that all along her true calling was as a Canadian media policy wonk. Now she assists clients with research projects, policy and strategy development, government and government agency submissions and social media consulting.
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One thought on “CanCon 101 – Part 2”

  1. Thanks for the explanation Kelly. Now I wonder if that Talk TV decision to limit the exhibition requirements to primetime will cause Shaw to actually make more dramas. They currently have Vikings, Beauty & the Beast and now-cancelled Continuum plus those two boring-sounding dramas they announced for next year. Only Rookie Blue has aired on Global but that may or may not be ending. I likely will continue to be disappointed in Shaw’s efforts in making successful Cancon. I really like Vikings and I’m just getting into Rookie Blue but with both Remedy and Continuum cancelled there’s nothing new on the horizon that sounds interesting.

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