Last Thursday the CRTC announced the second phase of its Talk TV decisions (Blais Speech; Decision). The Commission’s efforts are being cast as a significant overhaul of the regulatory framework for TV in Canada, but are they?
Out with the Old (Maybe)
Cast against the anachronism of film and TV quotas forged in the 1920s when Canada was still a member of the British Empire and the CBC just coming into being a decade after that, followed by the Broadcasting Act of 1968, and a long chain of events ever since, Blais’ message was clear: the regulatory edifice built up over the past century must be cleared away. The 21st century is the ”œAge of Abundance”, and with people increasingly using broadband internet and mobile devices to access content from around the world, the time for change is now.
Some Significant Steps Forward
At the top of the list of things to be discarded are Canadian content quotas during daytime hours. In prime-time, half the hours must still be filled with Cancon while quotas for pay and specialty cable channels have been harmonized downwards to 35% versus their current range from 15-85%. Genre protection for specialty TV channels will be eliminated and licensing requirements for discretionary channels with less than 200,000 subscribers have been dropped.
These moves open room for new services to emerge and could make it easier for people to pick and pay for TV channels they want — depending on the next instalment of the CRTC’s ”œTalk TV” decision next week.
Another cornerstone of the CRTC’s new approach to TV is to go from protection to promotion, and from a focus on quantity to quality, it says. The CRTC wants to encourage the production of fewer but bigger budget, higher quality TV programs that it hopes can attract Canadian and global audiences. While such efforts have been in the works since the late 1990s, the greater sense of urgency attached to this goal and changes in the means to get there are new.
To such ends, two new pilot projects were announced to fund big budget productions. The Commission also encouraged the government to change the Canadian Media Fund so that financial support can be funnelled to fewer but larger production companies and without the requirement for them to have a licensing agreement in place with a broadcaster (read: Bell, Shaw, Rogers, Quebecor, or the CBC) — in essence cutting out the middleman and giving independent producers direct access to CMF financial support. There is also a push for more international co-productions, and to get the fruits of such efforts into as many foreign markets and as many distribution platforms as possible, from Netflix, to Apple, Amazon, and so on.
The CRTC also adopted measures that aim to help staunch the problems that have beset journalism in the past several years. To this end, TV news services will be required to dedicate at least 16 hours a day to original programming, maintain news bureaus in a least three regions outside their main live broadcast studio and to have the ”œability to report on international events”. Given the fact that news budgets have been slashed across the country for years, one can hope that such measures may help to stem the tide.
Beware of Vested Interests Wrapping Themselves in the Flag and the Public Interest
In a world in which the forces of the status quo loom large, these changes will rattle some. Anticipating resistance from some well-established quarters, Blais took aim at those who would fight to turn-back the clock:
If you hear criticisms of our decisions ask yourself this question: Are the arguments advanced by these critics those of the public interest or are they rather those that find their true roots in private entitlement, dressed up to look like they are founded on the broader public interest? This town is full of lobbyists whose job it is to spin their client’s private interests into something else, to wrap themselves up, as it were, in the flag, and to puff about Parliament Hill with an air of shock and dismay.
Three Steps Backwards
If we stop the discussion here, then yesterday’s ruling appears to take on the industry and its’ phalanx of lobbyists in order to yank Canadian TV into the 21st century. However, other measures give cause pause for concern.
A Cull of Independent TV Production Companies is Needed
First among these is the CRTC’s view that too many independent television production companies exist, many of which are set up for one-off projects and then wound down. Pointing to an estimate that there are 900 such companies, the CRTC argues that
. . . This project-by-project system hinders growth and does not support the long-term health of the industry . . . . The current situation is no longer tenable. The production industry must move towards building sustainable, better capitalized production companies capable of monetizing the exploitation of their content over a longer period, in partnership with broadcasting services that have incentives to invest in content promotion.
Yet, stand back and questions immediately emerge. The idea that there are 900 firms appears inflated alongside the Canadian Media Production Association’s estimate that 350-400 such companies exist and that a quarter of them have been created for specific projects and wound down immediately afterwards. Moreover, about 20% of those firms account for 80% of the industry’s revenue.
The existence of a vast pool of precarious, short-term production outfits is the norm in the film and TV business, not just in Canada but LA, New York, Wellington, London, Mumbai, almost everywhere (see Tinic and Gasher). This has long been the case, not just in film and TV, but the publishing industry since the 16th century and across the cultural industries from the last half of the 20th century (see Miege and Thompson).
Finally, the CRTC’s notion that too many creators exist stands at odds with the idea that it is supposed to be fostering more diversity, not less. Moreover, it also sounds a lot like the tired old ”˜national champion’ strategy which has created the highly concentrated telecoms and media industry and high levels of vertical integration that currently exist and which are the source of so many of the problems being faced today to begin with.
Tearing up the ”œTerms of Trade Agreements”
Yesterday’s decision discards the ”˜terms of trade agreements’ between producers and the large vertically-integrated media companies – Bell, Shaw, Rogers, Quebecor – that were put in place in 2011 and 2012 after years of protracted negotiations. Consolidation has reduced the number of sources that producers can go to for financing, rights deals and distribution – the real levers of power in the ”˜cultural industries’. The terms of trade agreements tried to offset this reality by creating standard terms of trade and a ”˜use-it-or-lose-it” clause that required broadcasters to use the rights they acquired within a year or turn them back to the producer; international and merchandising rights were reserved for producers.
Disputes over such issues, especially for mobile and internet rights, continue. They were a cornerstone of license renewals in 2011 and 2012 and a key reason why many of the producer interests reluctantly signed off on Shaw’s acquisition of Global in 2010 and Bell’s take-over of CTV and Astral Media in 2011 and 2013, respectively. Discarding the ”˜terms of trade’ deal is another victory for the vertically-integrated giants and a big loss for independent producers, as head of the CMPA, Michael Hennessy, intimated earlier today on Twitter.
Vertical Integration and ”œTied TV”
The CRTC also treads lightly when it comes to TV services delivered over the internet and mobile, such as Bell’s CraveTV and Shomi, a joint venture by Rogers and Shaw. Unlike Netflix, or HBO, CBS’s ”œall access”, and other services in the US, these services are not available to everyone in Canada over the internet but tied to a subscription to one of Bell or its partners’ (i.e. Telus and Eastlink) TV services in the case of Crave TV or to Rogers and Shaw’s internet or TV subscribers in the case of Shomi. They are defensive measures designed to protect Bell, Rogers and Shaw’s existing business models and the established TV ”œsystem” generally.
If the CRTC really wanted to disrupt the status quo then these attempts to leverage old ways of doing things into the emerging areas of distributing TV over the internet and mobile services would have been a primary target for action.
Instead of tackling the issue head-on, however, the ruling seems to skirt the issues by creating a new category — ”œexempt hybrid video-on-demand” model – intended to encourage companies to offer TV services to everyone over the internet without being required to subscribe to any of the companies’ other TV or internet services. In return, they could offer exclusive content and be relieved of obligations to fund and showcase Canadian content, as Figure 1 below shows. This is the same treatment that all stand-alone OTT services get under the Digital Media Exemption Order, but with the idea that such services could be distributed across the companies’ closed cable networks and the ”˜open internet’ as well.
A Bell statement concluded that the decision will not change the way it offers CraveTV; Rogers has remained mum.
The ruling, however, puts the Public Interest Advocacy Centre and Consumers Association of Canada’s recent challenge against Crave TV and Shomi on the grounds that the services play fast and loose with the broadcasting and telecoms acts, as well as the CRTC’s Digital Media Exemption Order, on hold (see here). PIAC-CAC responded to the decision by saying that they
are skeptical today’s decision will have the effect of motivating Bell, and Rogers and Shaw, to make their content available online to every Canadian as a true ”˜over-the-top’ service. . . . What today’s decision does not do is declare that Bell, Rogers and Shaw are such ”˜hybrids,’ and therefore it appears that the commission will allow the closed, tied model to continue.
Plus à‡a Change?
Reducing content quotas and eliminating genre protection are important departures from the past, while taking steps to foster better quality program production may produce fruit. The push to rationalize the TV production sector around fewer and more highly capitalized companies, tearing up the terms of trade agreement, and letting Bell, Rogers and Shaw’s ”˜tied TV’ offerings off the hook, however, all appear to reinforce the power of well-established players who have pushed so hard to hold back the tides of change that the CRTC claims to be promoting.