“While content remains king, the incontestable truth is that the viewer is Emperor.” – Jean-Pierre Blais

Today Jean-Pierre Blais, Chair of the CRTC, announced a Talk TV decision focused on content.  Honestly, I’m not sure if the decisions will make the viewer feel that they have all the power but they are definitely going to change the landscape.  They range from minor decisions to major ones and also more than a few suggestions for other agencies. I counted 16 separate topics in the decision, with many of those topics referring to future proceedings or licence renewal hearings. So the world isn’t changing today. Well, it is a little.

The big picture message is that while we are not yet in an on demand world, in order for Canadian programming and broadcasters to compete in that evolving on demand world, not only does regulation have to change but so does the production sector. The emphasis is on big budget drama production that will be able to compete with American programming and internationally and will be easier to promote. This causes some concern for anything other than big budget drama programming. But let’s get into the highlights of the decision first.

First, many of the exhibition quotas for Canadian programming will be eliminated at the next licence renewal. The 50% Canadian in prime time quota has been retained for conventional broadcasters as the evidence shows that for those broadcasters, that is when most Canadians are watching television. It has been removed for the overall day and specialty services will have a flat 35% quota. It had been suggested during the hearing that Canadian quotas could be removed for the daytime and few, if anyone, had objected. It should also be noted that part of the rationale was that in order to meet the current quotas, many broadcasters were airing the same shows across their services with excessive repeats so the quotas were not achieving the desired goal of increase choice of quality Canadian programming. That’s hard to argue with.

Next, all services (except for those with fewer than 200,000 subscribers which will now be exempt from licensing and therefore all regulation) will now have a Canadian Programming Expenditure requirement. They will be maintained at current levels until the usual review at licence renewal, at which time services without a CPE will be assessed one based on historical spending. This gives services time to adjust, though there should be little adjustment. It widens the base and ensures that everyone is participating in the system. It is also the next step in the plan to ensure there is more money spent on quality programming.

Then we have the pilot projects. If you were following the Talk TV hearings you might remember John Morayniss of EOne Entertainment talking about his idea to have a category of program funding for bigger budget but less Canadian (and therefore more commercial) programs. It seemed out of place because it had little to do with the topics of the hearing or CRTC jurisdiction but Blais loved the conversation.   Now we see just how much he liked the conversation as evidenced by the two pilot projects.

For both there will be two types of programs that will be certified as Canadian though they do not fall within the guidelines. One is for adaptations of successful Canadian novels and the other is for programs with budgets over $2 million. They must have Canadian screenwriters, one lead performer and 75% of the costs paid to Canadians (not spent in Canada but TO Canadians who might live anywhere) but they do not have to be owned by Canadians. Note that while they are certified Canadian and qualify for broadcast purposes, those productions will not qualify for other domestic funding programs such as CMF or the domestic tax credit (though they will for the production service tax credit) so I assume that the thought is that a U.S. studio or broadcaster will happily finance most of the cost.

I’m very curious to see how often these exceptions are used. Keep in mind that broadcasters have steered away from literary adaptations lately because it is more cost-effective to promote ongoing series than a one off television movie. Also, it is a fundamental concept of government funding that it support the development of a Canadian industry. It is questionable to what extent a big budget drama owned by non-Canadians and created by and starring Canadians living in Hollywood helps the Canadian industry.

In addition to wanting to shift support to ex-pat Canadians, the decision also suggests that there are too many producers in Canada. Too many are thinly capitalized and are not sustainable as they live project to project. I will not argue that point but I will question how the sustainability of the independent production sector is the CRTC’s responsibility? It does have to ensure that the broadcasting system includes a significant contribution from that sector but that’s it. At the same time, the decision talks about wanting broadcasters to own more of the content so that they have an incentive to promote it, which is contradictory to an independent production sector with a focus on international sales. Broadcasters (Blue Ant and Corus say this repeatedly) want to own 100% of a program, relegating the producer to nothing more than the service producer that the decision complains about.

The CRTC urged provincial and federal governments to review their funding guidelines to incentivize co-production, promotion, foreign distribution and original online production, find new mechanisms to support sustainability and for the CMF to remove broadcast triggers for its funding. All those decisions are outside their jurisdiction. The CRTC will review the policies for certifying independent production funds such as the Independent Production Fund and Shaw Rocket Fund to ensure that they allow for ‘greater flexibility’. It is hoped that any major change would only be as the result of a hearing and not just imposed on those funds.

The genre exclusivity policy and nature of service definitions are gone immediately. There will be nothing to stop History Channel from airing more shows about Outlaw Bikers or to stop OLN from airing Whisker Wars. Except the market. It is up to you now to ensure diversity of programming (and no dreck). Make your voice heard. One of the problems with enforcing genre diversity was the constant attempts by group broadcasters to air programs across their group, regardless of the service’s genre. It is expected by the CRTC that with lower Canadian quotas there will be less pressure to do that (but they’ll still be motivated to lower costs by amortizing programming across services).

So once producers have produced bigger budget dramas and broadcasters have them in prime time then what? Promotion and discoverability.   Starting today, independent broadcasters (i.e. Vision, Oasis, APTN) will be able to spend up to 10% of their Canadian Programming Expenditure requirement on promotion costs. The big vertically integrated companies have sufficient resources and do not need that break. The CRTC believes that more needs to be done to ensure discoverability in an on demand world but isn’t sure exactly what (very little was said at the hearing) so will be convening an invite-only Discoverability Summit in Fall 2015 to try to determine what can be done.

You will notice of course that the emphasis here has been on big budget drama. If I was interested in producing any other kind of drama or say maybe a documentary, I might start packing my bags. The kids producers might want to hold off on packing just yet as the CRTC did admit that there was conflicting data at the hearing (basically kids programming organizations said the sector was at risk while broadcasters said it was not) so they want to get hard evidence. There will be a hearing to create kids program categories so that the data can be tracked. That puts a decision a few years down the road but it is a necessary first step.

That’s enough for this post. The Hybrid VOD part of the decision deserves its own post.

If you’re keeping score, we now have had four decisions from the Talk TV hearing. The first one was issued November 6, 2014 and prohibited 30 day notice periods for cancelling television, telephone and internet services. Not a big decision but one that gave hints that consumer choice was going to continue to be a theme of Talk TV. Now we have three more small but significant decisions, announced January 29, 2015  by the Chair of the CRTC, Jean-Pierre Blais, in London, Ontario.

The first decision today was a warning that if broadcasters shut down their over the air (“OTA”) transmitters, they would lose the regulatory privileges that were originally granted with the licensing of their OTA services. The two big privileges that no broadcaster is going to want to lose is mandatory carriage on basic and simultaneous substitution (‘simsub’). Both of these two privileges are fundamental to the conventional broadcasters’ business model.

During TalkTV broadcasters expressed a desire to get rid of their OTA transmitters as a way to reduce costs. The CRTC has quoted stats from Numeris that 9.1% of Canadians access broadcasting over the air. That’s actually higher than I thought and is a significant portion of the population. They were a particularly vocal portion of the population during the online consultation part of TalkTV. Today’s decision goes further than just supporting that population though. At times in his speech Blais sounded like a commercial for OTA antennas, advocating it as a high quality, low cost solution to those nasty BDUs:

“The next few years could yield renewed interest for OTA broadcasting, especially in urban areas where eye-popping image quality, channel selection and, of course, the absence of cost, could convince more consumers that they need not be enslaved to cable and satellite service providers if they want to enjoy high-quality television programming.” – Jean-Pierre Blais

The second decision is the one getting the headlines – no more Superbowl simsub from 2017 on. Consumers complained bitterly about missing out on the Superbowl ads and it is year after year the biggest source of complaints to the CRTC. Bell Media has bought the rights to broadcast the Superbowl but we don’t know for how many years. Either way, it will have a significant financial impact on this one broadcast group. The decision also refers to enforcement to improve simsub performance – no more sleeping at the switch and having the feed cut off improperly.

Frankly, I’m surprised at the Superbowl decision. Sure, the CRTC is fed up with the cranky complaints and having to explain themselves every year but does it justify the lost revenue?

Finally, the third decision may seem the most esoteric but probably is the most important for the future. Bell and Vidéotron were directed to stop excluding their mobile broadcasting services from their customers’ monthly data caps. They were basically promoting their own services by giving them a fast lane. The CRTC has been a leader in the world in creating rules and practices for Net Neutrality and they continue to with this decision. Vertically integrated media businesses will not be allowed to favour their own services.

Blais has promised the rest of the decisions in the coming weeks and months. In his speech he compared the decisions to repairing old bridges while building new ones. Repeatedly. According to the infographic that was published with the decision, we’re only ¼ of the way there so lots more construction analogies to come.  Ultimately, we will have to look at these decisions as a whole, see the whole bridge, before we understand the real impact. And will we like what we see when we get to the other side? That’s a question for another day.

When the Canadian Screen Awards are announced each year (and before that the Geminis), there are always some people who wonder why their favourite Canadian show wasn’t nominated. Sometimes, well, it just didn’t make the cut, but some of those shows aren’t actually Canadian.   So here’s a primer on what makes a show Canadian both for funding and CRTC regulation and for the Academy of Canadian Cinema and Television (not actually completely the same thing).

Government-related or CRTC-mandated funding (e.g. Canada Media Fund, Independent Production Fund) and provincial or federal tax credits all rely on the Canadian Audio-Visual Certification Office (“CAVCO”) to determine eligibility. CAVCO has a set of rules that can be summed up generally as Canadian-owned, Canadian-controlled, 75% of the budget spent on Canadians and a minimum of 6 out of 10 key crew. Those key crew are director, writer (one of them must be Canadian), top two lead actors (one has to be Canadian), composer, editor and production designer. Director and writer are 2 points each so it adds up to 10 points.

[To complicate matters a little bit more, the CRTC has its own certification process for programs that will qualify as Canadian for CRTC-purposes when broadcast. All CAVCO programs are Canadian for the CRTC but not all CRTC-certified programs are necessarily Canadian for CAVCO. Trust me – you don’t want me to go there.]

However, different funds have additional rules so a show could be minimally Canadian but not qualify for funding. For example, among other additional rules, the Independent Production Fund requires 8 out of 10 points and the Canada Media Fund requires 10 out of 10 points. These additional rules are to ensure that Canadian taxpayers and cable subscribers are funding truly Canadian shows.

People get confused when they see shows like “Supernatural” and the “Arrow” and they know that they’re shot in Canada so think they are Canadian. What about “Beauty and the Beast” and “Haven”? There is a difference between the two types of shows. “Supernatural” and “Arrow” are American-owned and controlled and hire very few Canadians in key creative positions. They are known as ‘service’ productions because often a Canadian production company is hired to provide the service of producing the show for the American studio.

“Beauty and the Beast” and “Haven” however fall in a middle ground often called Industrial Canadian. They are owned by Canadian production companies and qualify as minimum Canadian productions. They can earn the Canadian production tax credit and count as Canadian for a broadcaster but are not eligible for CMF or other such funds.  While both kinds of shows hire a lot of Canadians in crew positions and often in smaller performing roles, generally only the Industrial Canadian show will hire Canadians in any of the key creative roles.

In the past the Academy of Canadian Cinema and Television only required that a television show qualify as minimally Canadian under CAVCO or the CRTC in order to be eligible for consideration for awards. However, the result was that minority co-productions with minimal Canadian involvement, such as “The Borgias” and “The Tudors”, were being held up as examples of the best of Canadian television. Frequently that involvement would be post-production and a few actors and possibly a director.  While the treaty co-production system is based on Canada equally being the minority partner as it is the majority partner and both kinds of programs qualifying as Canadian, some people did not think it was right that a minority co-production should compete in the best program categories and lobbied the Academy to change the rules.

So now these international co-productions can only compete in the “Best Drama” or “Best Mini-Series” categories if at least 50% of the episodes were both written and directed by Canadians. If a minority co-production has less than 50% of its episodes both written and directed by Canadians then it is eligible under Best International Drama. Any Canadian who has worked on the International drama will still be eligible in their craft category.   That explains why “The Great Martian War” and “The Vikings” are competing for Best International Drama and not Best Drama or Best Mini-Series but crew from “The Vikings” are nominated for Best Director, Best Sound and Best Visual Effects and “The Great Martian War” has a Best Production Design nomination.

So that’s why service productions like “Supernatural” are never nominated for Canadian Screen Awards (they aren’t Canadian) and why “The Vikings” is Canadian but is sitting in the International Drama category.

I’m talking OTT and SVOD in Canada here so I’m not going to finish the quote.  I played around with Shomi during the free 30 day trial that I was entitled to as a Rogers subscriber. Then Bell Media was nice enough to give me a 30 day guest pass to the mobile version of CraveTV (since I’m not a Bell subscriber that’s all I could get). So I’ve played around a little, to the extent possible.

Here’s my problem. What I would really like to have is impossible either because of outdated business models, Canadian broadcast regulation or a lack of Canadian OTT regulation. I’m stuck.

I would like to have a service that flows seamlessly between my television and my iPad (my kid would also like it to work on her shiny new Nexus phone) so that I could switch platforms in mid-episode or at least keep track of which episode I’m on in mid-binge. This is possible with Netflix but not possible with Shomi and CraveTV because their OTT platforms (the tablet, web and phone platforms) and SVOD (Subscription VOD on your TV) are licensed separately (OTT being exempt from regulation and SVOD being fully regulated).

I would like a Canadian service that supports Canadian programming on all of its platforms. Shomi and CraveTV have to make a contribution to Canadian programming and provide a quota on their SVOD platforms according to VOD regulation, but have no such obligation for their OTT platforms. Netflix has no requirement at all.

I would like to watch the Golden Globes and know that I have access to the cool new shows like “Transparent” (Shomi quickly announced during the awards that they will be carrying it, it is on OTT service Amazon Studios in the U.S.) and “House of Cards” (on Netflix) without having to pay separate OTT subscriptions for each one. Exclusivity is a model that only frustrates the consumer in the Internet world.

I would like to be able to be a Rogers cable, internet and wireless subscriber (well, maybe not but I am anyway) and subscribe to CraveTV. CraveTV is only available to Bell, Telus and a few smaller BDUs and is unlikely to be available to subscribers of their competition. While Shomi and CraveTV are very similar in how they work, and both have lovely interfaces on the mobile platforms (though both were buggy on their web platforms), I would like to have the option to subscribe to CraveTV if I want to and not be locked in to Shomi because of my cable provider.

So, as a Canadian and a lover of television, CRTC regulation and the BDU business models are not working for me right now.

If you’ve been following along with the two week CRTC hearing then like me you’ve probably hit your broadband data cap (12 hours of hearing on Sept 10^th just killed me) and you’re wondering if it was worth it. What happens now? What did we get out of it?

First, it’s not really over yet. A number of stakeholders had very specific undertakings to deliver more information by 5pm PST September 19th. Some of it will be on the public record while other information will be held to be confidential (if requested and if the CRTC agrees). We will see what Google decides to do about their undertakings as like Netflix, they may not want to acknowledge the CRTC’s jurisdiction. What data is delivered will trickle out over the next few days.

By now you’ve heard about the fireworks between Netflix and the CRTC and you are on one side or another of the debate [If you haven’t heard – Netflix was asked to provide lots of information and wanted a better confidentiality guarantee than other stakeholders get and the Chair of the CRTC got really angry at the request for special treatment]. Netflix has until 5pm Monday to deliver their copious orders (they would not take undertakings so were given orders) to produce information. If they give the data they will be confirming CRTC jurisdiction (at least in some eyes). If they do not they will be escalating the conflict and we have no idea what the CRTC will do next.

The next stage is that intervenors can submit Replies to the CRTC by October 3^rd. Replies can be responses to things that other intervenors said or clarifications of what was said by an intervenor but should not be new evidence.

Then the record will be complete and the CRTC will deliberate. As the Chair said in his final address, the Commission will make its decision based on the evidence presented, in accordance with the CRTC’s governing statute. Why is this important? Three times during the hearing members of the government made statements about what they would not allow to happen coming out of this hearing. The public, including some journalists, seem to think that the government can interfere with an ongoing hearing in that way. The Chair was trying to remind everyone that is not the case. The government may take steps after the decision is rendered but not before.  Without a doubt this could influence their decision-making but the process must be respected.

I doubt that there is any willingness to extend a financial contribution to foreign OTT but the Commission seemed very interested in what Netflix could do to promote Canadian programming within the general recommendations (and not just as a separate genre), which it apparently is doing in France and Netherlands.  Even that however, would be exercising their jurisdiction to regulate Netflix, which the Commission has stated they have had all along by issuing the Exemption Order.  Netflix may see it otherwise.

However, I will not make any predictions about what the decision will look like or even when we will see it. Big policy hearings can take months to process the decision on all of the issues. Going into the hearing I will admit that it seemed like the Commission was likely to stick pretty close to its proposed framework but aspects of it were consistently called into question. For example, the proposal to eliminate simsub from events like the Superbowl was almost universally rejected by broadcasters and producers, given the importance of both revenue and the promotion slot to Canadian programming.   I think the record will show no agreement on what would happen with a pick and pay world or how much it will cost consumers so I could not guess which option we will end up with.

A few conversations surprised me. The Commission spent more time than in any hearing that I can recall talking about children’s programming. Unfortunately the focus was too often on how you define ‘children’ and not enough on ensuring that all Canadian children have access to Canadian programming. If there will be some kind of skinny basic then either conventional channels have to air children’s, the skinny basic has to include at least one children’s service or the CRTC has to decide to limit support to the preschool educational content on CBC and educational broadcasters. I hope the decision is not the last one but we’ll see.

The other one that surprised me was the idea that removing daytime exhibition requirements would free up money to be spent in prime time. Broadcasters like their daytime programming and were loathe to give it up. That will not be the solution. I was not surprised by the very loud objection to getting rid of local transmitters as a way to pay for local television. OTA advocates tend to be very passionate about their cause.

Blais was very interested in a proposal from E One to encourage big budget co-ventures with the U.S. with looser Canadian content regulations but higher rate of return.  This fit right into what appears to be Blais’ personal interest in a greater use of the CRTC co-venture rules.  It was unfortunate that E One was on the last day so that the creative community could not explain how shows with U.S. studio partners may make more money but do use less Canadian talent and tell fewer Canadian stories. Those kinds of shows can be made today within the rules but it appears that E One would like the financial support that is currently limited to more Canadian productions.

A public hearing like this by its nature is an opportunity for a wide variety of stakeholders to put forward their positions and it is the Commission’s job to assess the often competing evidence and make a decision.   A lot of effort was put into this hearing so while some are hoping for the status quo, many are hoping it was worth it and we will get significant regulatory change that will help the Canadian broadcasting system survive the coming shifts in the media landscape.