The New Canada Media Fund: A glass half full, or half empty?

CCA Bul­letin 8/09

March 12, 2009

 

Why this should inter­est you

The audio-visual sec­tor in Canada rep­re­sents a large source of employ­ment for the cul­tural sec­tor and the most widely con­sumed form of cul­tural expres­sion. Hill Strate­gies recently noted that “although artists work in many dif­fer­ent sec­tors of the econ­omy, the indus­try with the high­est num­ber of artists is arts, enter­tain­ment, and recre­ation (52,600 or 38% of all artists).” In 2004 The Cul­tural Human Resources Coun­cil noted that the labour force of A/V and live per­form­ing arts was 97, 335, with a labour force growth of 35% between 1991 and 2001. This new Canada Media Fund encour­ages the pro­duc­tion of Cana­dian con­tent, but also stim­u­lates the con­tin­ued growth of an impor­tant labour sec­tor in the Cana­dian cre­ative economy.

We believe that the fund­ing and gov­er­nance of Cana­dian con­tent mat­ters to all cul­tural pro­duc­ers, artists, and those inter­ested in Cana­dian cul­ture and her­itage. For these rea­sons, the Cana­dian Con­fer­ence of the Arts has closely observed the evolv­ing fund­ing struc­ture for Cana­dian con­tent and media. The Cana­dian Tele­vi­sion Fund “cri­sis” has been on our radar for the past two years and this week’s announce­ment is an impor­tant evo­lu­tion of that file.

Just the Facts

The Min­is­ter of Cana­dian Her­itage, the Hon. James Moore, announced on Mon­day the cre­ation of a new Canada Media Fund through the merger of the Cana­dian Tele­vi­sion Fund and the Canada New Media Fund, whose sur­vival had been announced in the Jan­u­ary 27 bud­get. The new gov­er­nance struc­ture is sched­uled to be announced in a few months and fully in place by fis­cal year 2010/11; until then both funds will oper­ate under exist­ing structures.

The new fund will receive $135 mil­lion dol­lars per year from the gov­ern­ment in each of the next two years, the cur­rent level of gov­ern­ment sup­port for the exist­ing pro­grams.  This will be added to the con­tri­bu­tions of cable and satel­lite com­pa­nies (BDUs) as man­dated by the CRTC.  The CMF will fund the pro­duc­tion of Cana­dian pro­grams that are made avail­able on at least two plat­forms, includ­ing television.

The Gov­ern­ment out­lined four key prin­ci­ples behind its decisions:

1. Get gov­er­nance and account­abil­ity right. The gov­ern­ment will replace the cur­rent gov­er­nance struc­tures with a “smaller, fully inde­pen­dent board made up of nom­i­nees of the funders …”
2. Reward suc­cess and require inno­va­tion. The new fund will favour projects in high def­i­n­i­tion and those which “have achieved and demon­strated the most poten­tial to achieve suc­cess in terms of audi­ences and return on invest­ment.”  Money will also be pro­vided for the devel­op­ment, ver­sion­ing, mar­ket­ing and pro­mo­tion of programs.
3. Focus the invest­ment on what Cana­di­ans want. Empha­sis will be put on drama, com­edy and children’s pro­gram­ming.  Doc­u­men­taries, vari­ety and per­form­ing arts pro­gram­ming will get sup­port only if they past a test demon­strat­ing that the mar­ket alone would not sup­port them.
4. Level the play­ing field. Fund­ing will be expanded to include broad­caster– affil­i­ated pro­duc­tion com­pa­nies and pro­duc­tion cre­ated in-house by the broad­cast­ers.  The CBC/Radio-Canada’s guar­an­teed access to 37% of the CTF enve­lope will be removed.

Analy­sis

The announce­ment is caus­ing mixed reac­tions.  The pos­i­tive news is:

On the other hand, the Minister’s announce­ment seems to accede to all other requests from the cable oper­a­tors who ini­ti­ated the cri­sis and who were on hand at the press con­fer­ence to show their approval.  “Account­abil­ity”, “pro­grams Cana­di­ans want to watch” and “level play­ing field” were all part of Shaw’s and Vidéotron’s ini­tial demands.

The “level play­ing field” is estab­lished by pulling away the guar­an­teed enve­lope for the CBC/Radio-Canada, and by open­ing up fund­ing to broadcaster-affiliated pro­duc­tion com­pa­nies and in-house pro­duc­tions.  Since 2005, based on his­tor­i­cal per­for­mance data, the CBC/SRC had been guar­an­teed access to 37% of the CTF, most of which sup­ports drama pro­duc­tion.  In the new model, the pub­lic broad­caster  will have to com­pete with all other broad­cast­ers for the money, as will other pub­lic broad­cast­ers like TVO and Télé-Québec.  This, plus the empha­sis on rat­ings suc­cess, has many peo­ple wor­ried that less pop­u­lar con­tent (doc­u­men­taries, per­form­ing arts, and chil­dren pro­gram­ming) will suf­fer greatly from the new rules.  Given the cur­rent finan­cial chal­lenges, this could be a sig­nif­i­cant blow to the CBC/Radio-Canada.  Also, until now, the CTF funds have been dis­trib­uted solely to Canada’s inde­pen­dent pro­duc­tion com­mu­nity.  The expan­sion of eli­gi­bil­ity will take place directly at the expense of this impor­tant sector.

The gov­er­nance struc­ture put for­ward by the Min­is­ter also raises ques­tions.  The first of these con­cerns the state­ment that as the “fun­ders” BDUs should be respon­si­ble for decid­ing how the funds are allo­cated (“account­abil­ity.”).  This firstly ignores the ori­gins of the CTF.  In 1993, cable oper­a­tors were allowed to keep half of what was sup­posed to be a tem­po­rary cap­i­tal expen­di­ture sur­charge (“Capex”) in exchange for pro­vid­ing the other half to sup­port Cana­dian con­tent pro­grams.  In that con­text, all money in the new Canada Media Fund is pub­lic money, in this case a tax on cable sub­scribers.  It is thus ques­tion­able to give BDUs five of the seven seats of the new Board respon­si­ble for divvy­ing up the money.

Despite the fact that the CRTC stud­ied the issue and twice found the accu­sa­tions unsub­stan­ti­ated, the removal of inde­pen­dent pro­duc­ers and broad­cast­ers from the Board is designed to solve the con­flicts of inter­est which were sup­posed to plague the cur­rent gov­er­nance model.  But, with the con­sol­i­da­tion of own­er­ship, some BDUs are now own­ers of tra­di­tional tele­vi­sion sta­tions and spe­cialty ser­vices, which means they may well be in a posi­tion to grant them­selves pref­er­en­tial treat­ment.  Instead of acced­ing to the cable com­pany demands, if the issue was solv­ing con­flicts of inter­est, the Min­is­ter could have allo­cated seats on the Board for rep­re­sen­ta­tives of the tele­vi­sion industry’s pro­fes­sional asso­ci­a­tions, a pro­posal they have been mak­ing for many years.

Beyond this remain­ing con­flict of inter­est, one can only won­der what Cana­dian pro­gram­ming will be approved by the BDUs now charged with decid­ing what pro­grams Cana­di­ans “want to watch.”  Many remem­ber that when one of them appeared in front of the Stand­ing Com­mit­tee on Her­itage in 2007, he sin­gled out the CSI series as the kind of “sound pro­gram­ming invest­ment” he had in mind.  Mean­while, the con­ven­tional broad­cast­ing net­work owned by another BDU has asked the Com­mis­sion to remove from it all require­ments to broad­cast Cana­dian pri­or­ity pro­gram­ming (drama, doc­u­men­tary, children’s, etc.).

Tell me more

Min­is­ter Moore’s announce­ment this week is meant to be the con­clu­sion to the cri­sis cre­ated two years ago when two key cable oper­a­tors, Shaw Cable and Vidéotron, with­held their monthly CTF con­tri­bu­tions. To jus­tify act­ing uni­lat­er­ally, the two cable com­pa­nies said the CTF was “inef­fi­cient, wasted money on pro­grams that view­ers don’t watch and shouldn’t be pro­vid­ing 37 per cent of its bud­get for inde­pen­dent pro­duc­tions that end up on the pub­licly funded Cana­dian Broad­cast­ing Cor­po­ra­tion (CBC).”  Build­ing on con­cerns expressed in 2005 by Audi­tor Gen­eral Sheila Fraser, they accused the cur­rent Board of direc­tors of the CTF of con­flict of inter­est and of lack of accountability.

The cri­sis led hear­ings by the Stand­ing Com­mit­tee on Cana­dian Her­itage and to the cre­ation by the Cana­dian Radio-television and Telecom­mu­ni­ca­tions Com­mis­sion (CRTC) of a spe­cial Task Force, which con­ducted a series of pri­vate, behind-closed-door-consultations before releas­ing a set of 24 rec­om­men­da­tions to the CRTC in June 2007. The most con­tentious of the Task Force’s rec­om­men­da­tions was to “cre­ate a sep­a­rate ‘market-oriented pri­vate sec­tor fund­ing stream’ with the money remit­ted by the BDUs to allow the pro­duc­tion of commercially-driven tele­vi­sion shows with “sim­ple and flex­i­ble pro­gram guide­lines” and dimin­ished require­ments for Cana­dian cul­tural con­tent or input”.  A full year later, the CRTC included this par­tic­u­lar rec­om­men­da­tion in a report it pre­sented to then Min­is­ter of Cana­dian Her­itage, the Hon. Josée Verner, con­cern­ing the future of the CTF.

Cre­ated in 1996, the CTF is a public-private part­ner­ship funded by the Gov­ern­ment of Canada, cable com­pa­nies and direct-to-home satel­lite ser­vice providers.  With an annual bud­get of approx­i­mately $250 mil­lion ($150 mil­lion of which comes from money col­lected by the dis­tri­b­u­tion under­tak­ings for that pur­pose) its role is to assist the cre­ation and broad­cast in peak view­ing hours of high-quality, culturally-significant Cana­dian tele­vi­sion pro­grams in both offi­cial lan­guages by both major­ity and minor­ity offi­cial lan­guages pro­duc­tion sectors.