OK, it turns out this decision is so huge it needs three posts.

If you are a creator of Canadian programming, or a fan of Canadian programming (and I’m assuming that you are one or the other if you are on this blog), then you may be wondering what impact this decision will have on the independent production sector and therefore the Canadian programs you work on or watch. It’s hard to say but here are some of the issues.

Throughout Jean-Pierre Blais’ speech and the decision there is the underlying philosophy of ‘quality over quantity’. That is a shift from the balanced ‘both exhibition and expenditure’ approach of the last TV Policy which sought to provide Canadians with both high quality entertainment but also a choice of diverse entertainment as required by the Broadcasting Act. [emphasis mine]

By removing all day quotas and focusing the exhibition requirement for conventional broadcasters on prime time, the CRTC has prioritized big budget drama. Yes, there are still Programs of National Interest (“PNI”) to support documentaries and award shows as well as drama but the flexibility of PNI has allowed broadcasters to put most of their money into the higher audience big budget dramas. The CRTC seems ok with that.  I suspect documentary producers are not.

Without daytime quotas broadcasters will be less interested in running older Canadian dramas during the day (we may finally see the last of “The Littlest Hobo”) or in airing domestic daytime programming like “The Social” or “Cityline”. Often the daytime shows were inexpensive programming produced in-house by broadcasters so that may have little impact on the independent production sector. However, one of the reasons cited for this change was the broadcaster habit of amortizing their costs and filling their quotas across their services with the same programming. Is it a bad thing to miss opportunities to watch “Corner Gas” ten gazillion times on each Bell Media service as they wring every last CanCon quota out of it and instead get perhaps another “Orphan Black”? Perhaps not but the CRTC may have gone too far in the extreme if all we get are a few dramas on each service.

More evidence of the ‘quality over quantity’ approach is the two exceptions to Canadian certification, one for literary adaptations and the other for budgets over $2million per hour. Leaving aside the affront to Canadian screenwriters’ originality (hey, I worked at the WGC for 6 years so I’m still sensitive to these things) by seeming to say that adaptation is automatically better than original (apples and oranges but adaptation is easier to promote), that exception together with the big budget exception is encouraging broadcasters to commission more expensive but less Canadian programming (they don’t have to be owned by a Canadian company or shot in Canada as long as the money is spent 75% on Canadians) and still get CanCon credit for it. These exceptions won’t qualify for most other Canadian program funds (as they are now) so few may be able to take advantage of it but they do demonstrate a bias.  More importantly, the exceptions have the potential to undermine a domestic independent production sector.

The other theme of the decision that impacts independent producers were the statements that there are too many independent producers and the industry must move towards sustainability.  The CRTC is not completely wrong that the industry needs to be more sustainable but the decision does reflect a poor understanding of how shows are financed, produced and exploited.   Many of the 900 television production companies referred to in the decision were incorporated solely for a particular production for tax credit and other funding reasons and are actually owned by a larger, permanent company.

The decision goes on to say that most producers act like service producers, unable to exploit their content. In my experience, most producers work very hard to exploit their productions throughout the world and on every possible platform in order to earn maximum possible revenues. The Canadian presence at international markets is quite significant.  The harsh reality though is that increasingly jurisdictions favour domestic programs over international ones.

It’s been said before but sadly I feel like I need to say it again – the independent production sector is trying to create and produce hits but there is no magic formula to follow to achieve them. I don’t know anyone trying to make mediocre crap that no one wants to see. Even if that was true at one time, the CMF funding model based on audience success motivates everyone in the production and broadcast chain to produce popular programming.

The other impact on independent production is the announcement that adherence to Terms of Trade will no longer be a condition of licence. That means that not having a Terms of Trade agreement will no longer be a breach of that licence. At a time when broadcasters are fighting back and trying to get out of Terms of Trade agreements, the producers have lost their one big stick to keep them at the table.  The larger producers will probably be fine because they have enough bargaining power to negotiate their rights but small to medium size producers will have no choice but to again take whatever deal is presented to them.

It appears that the CRTC has taken this step because it believes that if broadcasters were able to acquire international rights (which they cannot do under Terms of Trade), then the broadcasters would do a better job of promoting the programs. Leaving aside the issue of whether Canadian broadcasters have any skill in international distribution (they do not), if they had international rights as well as domestic then the producer would start to look more like a service producer than they do now.   Isn’t that what the decision railed against?

[For added reaction to the Terms of Trade issue, check out the tweets of the CMPA’s Michael Hennessy, Storify’d here.]

The larger production companies will likely be able to weather this regulatory storm but I am concerned about the small to medium sized companies across the country. That means I am also concerned about the diversity of programming and choice that will be available to consumers like myself.   That’s not me trying to wrap myself in the public interest but a genuine concern as an avid viewer of Canadian television.

From CBC:

BC Almanac: Canadian TV and the CRTC
TV eh? publisher Diane Wild on Canadian TV and the CRTC. Listen here.

I wanted to do the Hybrid VOD part of today’s decision separately because I think it warrants a little more context. As you will recall from my earlier post You Can’t Always Get What You Want, Shomi and CraveTV were oddly set up from a regulatory perspective. I struggled to understand how they were licensed and then finally it became clear to me (with some help from friends in the know) that both services were actually two services rather than one. The VOD service on your set-top box was regulated as a VOD service and the OTT service on your tablet/computer/phone was exempt under the Digital Media Exemption Order. That created the very odd situation that the VOD service had CanCon obligations but the OTT version did not but the consumer thought it was all the same service.

Very confusing, right? Even executives at Shomi and CraveTV were confused as they publicly stated that they had no CanCon obligations at both Banff Connect and Prime Time (though Bell’s Kevin Goldstein had no doubts about the twin-spirited nature of CraveTV).

The other problem though was that as an authenticated service (you have to identify yourself as a subscriber of a cable or satellite company that has a business agreement with Shomi or CraveTV as the case may be), if you were a subscriber of say Rogers then you could not subscribe to CraveTV. Or vice versa.

Today’s decision focused on the issue of exclusivity, which is a third issue that addresses the problem that, for example, Bell subscribers have no way of seeing “Transparent”, which is exclusive to Shomi. The CRTC’s argument is that it is ok if Netflix has exclusive content (e.g. “The 100”) because any Canadian can access it through their choice of internet provider. The same cannot be said of the exclusive content licensed by Shomi and CraveTV.

So the CRTC created a new licensing category for these ‘Hybrid VOD’ services, which makes total sense to me. The CRTC reiterated that to operate in Canada a service has to be authorized by the CRTC under a licence or an exemption order and then it must abide by the rules of that authorization (*cough* Netflix *cough*).   If a service is going to operate under the Digital Media Exemption Order then it has to be available to all Canadians over the internet. So a Hybrid VOD service can only take advantage of the Digital Media Exemption Order (and therefore no CanCon obligations) if it is ‘offered on the Internet to all Canadians without authentication to a BDU subscription’. Those exact words are key because Bell Media has always said that they offer CraveTV to Rogers and Shaw and it’s not their fault that Rogers and Shaw aren’t interested. The CRTC has sidestepped the whole issue of competition by saying that no BDU subscription can be required.

The exact wording of the new exemption has to still to be agreed upon and that could be contentious as Bell, Rogers and Shaw all fight to stay both exempt and not exempt. And we know that Bell is not afraid to appeal. So don’t expect any changes overnight but they could be coming.