|
Broadcasting Public Notice CRTC 2005-8
|
|
Ottawa, 27 January 2005 |
|
Incentives for original French-language Canadian television drama
|
|
In this public notice, the Commission
reviews the comments received in response to Proposed measures
to ensure that French-language Canadian drama remains a key component
of peak time viewing – Call for comments, Broadcasting Public Notice
CRTC 2004-38, 8 June 2004, and
announces revised measures to encourage the attainment of its objective
of maintaining, within the programming broadcast during peak time
by French-language television licensees, a proper balance of original
French-language drama, including a minimum number of high-cost programs
or series. The appendix provides a summary of the incentive program
applicable to original French-language Canadian drama and describes
the terms for its implementation. |
|
A review of the comments received in
response to Proposed incentives for English-language Canadian
television drama – Call for comments, Broadcasting Public Notice
CRTC 2004-32, 6 May 2004,
announcing incentives for English-language Canadian drama is the
subject of Incentives for English-language Canadian television
drama, Broadcasting Public Notice CRTC 2004-93,
29 November 2004. |
|
Background
|
1. |
In Support for Canadian television drama
– Call for comments, Broadcasting Public Notice CRTC 2003-54,
26 September 2003 (Public Notice 2003-54),
the Commission sought comment on actions it might take to ensure that
high quality, original French-language Canadian drama programming
remains a key component of the peak viewing period. |
2. |
The Commission reviewed all the comments
received in response to Public Notice 2003-54.
Subsequently, in Proposed measures to ensure that French-language
Canadian drama remains a key component of peak time viewing – Call
for comments, Broadcasting Public Notice CRTC 2004-38,
8 June 2004 (Public Notice 2004-38),
the Commission sought public comment on a series of proposed incentives
designed to ensure that quality, original French-language Canadian
drama programming remains a key component of peak time broadcasting
by French-language television licensees. |
3. |
Public Notice 2004-38
proposed four types of original French-language Canadian drama broadcast
by conventional television stations or specialty services that would
qualify for the proposed incentives and rewards. The proposal can
be summarized as follows: |
|
Type (a): the broadcast in peak time (7 p.m. to 11 p.m.)
of 10-point original drama funded by the Canadian Television Fund (CTF)
with a production budget of at least $800,000 per hour and minimum
licence fees, as set by the CTF.
|
|
Benefit: three minutes of additional advertising
for each original hour of drama broadcast.
|
|
Type (b): the broadcast in peak time (7 p.m. to 11 p.m.)
of 10-point original CTF-funded drama with a production budget of
less than $800,000 per hour and minimum licence fees, as set by the
CTF.
|
|
Benefit: two minutes of additional advertising
for each original hour of drama broadcast.
|
|
Type (c): the broadcast in peak time (7 p.m. to 11 p.m.)
of 10-point original French-language drama not funded by the CTF,
with a production budget of at least $800,000 per hour and licence
fees consistent with CTF standards.
|
|
Benefit: seven minutes of additional advertising for each original
hour of drama broadcast. In addition to the three minutes indicated
as a reward for Type (a) programming, there will be an additional
four minutes for not accessing CTF funding.
|
|
Type (d): the broadcast in peak time (7 p.m. to 11 p.m.)
of 10-point original French-language drama, not funded by the CTF,
with a production budget of less than $800,000 per hour and licence
fees consistent with CTF standards.
|
|
Benefit: six minutes of additional advertising for each original
hour of drama broadcast. In addition to the two minutes indicated
as a reward for Type (b) programming, there will be an additional
four minutes for not accessing CTF funding.
|
|
No additional advertising minutes will be awarded for the
production of original drama subsidized through ownership transfer
benefits or commitments tied to the awarding of a new licence.
|
|
The utilization of additional advertising minutes must be
limited, during broadcast hours, to a maximum of 14 minutes per
hour.
|
|
For each type of drama, the hourly production budget would be
evaluated on the basis of CTF guidelines. Implementation of the
triggers and benefits would be by condition of licence.
|
|
Licensees would be required to submit a detailed report to the
Commission at the end of each broadcast year. Information contained
in this report would be cross-checked against the Commission’s logs.
|
4. |
In Public Notice 2004-38,
in addition to the considerations relating to the proposed incentives,
the Commission asked questions regarding: |
|
the definition of an original broadcast within the context of a
future incentive program;
broadcast times for drama directed to children;
the number of additional advertising minutes proposed as a reward
for the various types of drama that would qualify; and
measures to ensure that revenues derived from the four advertising
minutes awarded for non-CTF-funded drama are actually used for the
production of drama.
|
5. |
In this public notice, the Commission reviews
the comments received in response to Public Notice 2004-38
and sets out a series of revised measures designed to facilitate the
achievement of its objective. |
6. |
The incentives set out in this public notice
apply only to French-language licensees. A series of measures designed
to encourage the achievement of the Commission’s objectives with respect
to English-language Canadian television drama is set out in Incentives
for English-language Canadian television drama, Broadcasting Public
Notice CRTC 2004-93, 29
November 2004 (Public Notice 2004-93). |
|
Review of comments received in response to Public Notice 2004-38
|
7. |
The Commission received 15 submissions in
response to Public Notice 2004-38,
including: |
|
five from broadcasters: TVA Group Inc. (TVA), TQS inc. (TQS), the
Canadian Broadcasting Corporation (CBC), Astral Média inc. (Astral),
and Télé-Québec;
six from industry associations: the Canadian Association of
Broadcasters (CAB), the Association des producteurs de films and de
télévision du Québec (APFTQ), the Union des artistes (UDA), the
Société des auteurs de radio, télévision et cinéma (SARTEC), the
Quebec Council of the Directors Guild of Canada (the Guild), and the
Association of Canadian Advertisers;
four from the general public.
|
8. |
The submissions consisted of comments of a
general nature on the objective and the soundness of the proposed
measures, and comments dealing more particularly with specific
adjustments to the proposed measures that the Commission should consider
in order to achieve the desired objective. |
|
Comments of a general nature
|
9. |
TVA was very much in favour of the
Commission’s proposal, provided certain adjustments were made. TVA was
of the view that these incentives are an original and effective tool for
ensuring that drama continues to occupy an important place in
French-language television broadcasting. However, TVA maintained that
these measures should be restricted to private broadcasters. |
10. |
TQS was opposed to an increase in
advertising minutes as an incentive. In its view, any incentives for
French-language drama programming should not be introduced at the
expense of the other programming categories, specifically those that are
recognized as priority programming. TQS maintained that it should not be
subject to the same requirements that would apply to TVA. |
11. |
Astral was opposed to giving advertising
minutes as an incentive for the broadcast of all original Canadian
drama. It proposed instead to limit advertising minute credits to the
broadcast of original Canadian drama over and above the average number
of hours broadcast by the licensee over the previous three years. In
this regard, Astral asked Cossette Média inc. (Cossette) to carry out a
study of the impact of the proposed incentives on the French-language
television market in Quebec. According to Astral, this study
demonstrated the disruptive and harmful effects the incentives would
have on the French-language broadcasting system. |
12. |
The CAB stated that the private
broadcasters agree that it is not appropriate to increase regulatory
obligations in order to meet this challenge. Instead, new mechanisms
should be found to support the production of drama. However, in light of
the divergent positions of French-language broadcasters, there was no
consensus among CAB members on the advertising-based incentives.
Consequently, the CAB chose not to adopt a position. The CAB pointed out
that the CBC has publicly stated that it is not seeking additional
advertising revenues. The CAB therefore maintained that, if the
Commission decides to institute incentives based on additional
advertising minutes for each hour of original television drama, the CBC
should not be allowed to avail itself of such incentives. |
13. |
The CBC stated that the Commission’s
current proposals would not result in a satisfactory resolution of the
basic problem, which is one of funding. In its view, as for the
French-language market, this model cannot generate the substantial
levels of advertising revenues predicted by the Commission. According to
the CBC, the Commission should revisit the role of private production
funds and encourage or require that the amounts paid out under the
Commission’s policy on "tangible benefits" be put directly into the
CTF’s budget or into its envelope for television drama. |
14. |
Télé-Québec was of the view that the
Commission’s new proposals contain a number of positive elements, and it
was pleased that the Commission recognizes the important role played by
drama series directed to youth. Télé-Québec specified that in its case
the 12-minute advertising cap per hour does not apply, and that the
proposed additional minutes should be added to its current authorized
maximum of eight minutes per hour. |
15. |
A number of interveners, including the
APFTQ, the UDA and the Guild, submitted comments on the Commission’s
objective. These organizations proposed that the objective should
instead be to increase the number of hours of original French-language
Canadian television drama during peak viewing times. In their view, over
the past several years there has been a significant reduction in the
number of hours of television drama offered by French-language
broadcasters. They expressed concern that, because the incentives
proposed by the Commission reward all hours broadcast, they could result
in a reduction in the number of hours of original Canadian television
drama, rather than help maintain the status quo or bring about any
increase in the number of hours. They were of the view that the
Commission should award advertising minute credits only for the
broadcast of additional hours of original Canadian television drama over
and above the broadcaster’s average over the preceding three years. |
|
Adjustments to the proposed incentives
|
16. |
A number of interveners proposed amending
or broadening the definitions of original and first run programming. The
UDA proposed notably to include programs that were filmed in both
languages through double shooting as original programming in both
markets because they are considered as such by the CTF. TVA proposed
that a program aired previously by a Canadian specialty or pay service
should qualify, provided the broadcaster had pre-purchased the program
in question. |
17. |
TVA proposed that the trigger threshold for
the three advertising minutes (high-cost drama) be set no higher than
$500,000, instead of $800,000. Télé-Québec did not feel that the
$800,000 threshold reflected the reality of the French-language market.
|
18. |
The Guild stated that a broadcaster should
not qualify for the two-minute credit unless the drama that it is airing
has a production budget of at least $250,000 per hour. |
19. |
The incentive for original Canadian drama
directed to youth generated a great deal of interest. Most interveners
were pleased that the Commission recognizes the important role this type
of drama plays. The APFTQ noted that the Commission has limited itself
to programming directed to children (2 to 12 years) and stated that
programming directed to teenagers (12 to 17 years) should benefit from
the same treatment. Several interveners, including TVA and Télé-Québec,
were of the view that broadcasters should determine the broadcast times
that are suitable for children. |
20. |
The CAB proposed that the Commission bring
back the 150% credit for 10-point television drama directed to youth,
in accordance with the terms first set out in Recognition for Canadian
programs, Public Notice CRTC 1984-94,
15 April 1984 (Public Notice 1984-94).
The CAB was of the view that any broadcaster that airs a program in
the first two years following its original airing and who participated
in the funding of the program should also be entitled to this credit.
|
21. |
The CBC supported the incentives that have
been proposed to stimulate drama productions funded without accessing
the CTF, provided that the expected advertising revenues materialize. If
the Commission should decide to go that route, the CBC expected that its
internal drama productions could be recognized as productions funded
without CTF assistance, since it assumes all of its own production
costs. |
22. |
The APFTQ suggested that the Commission
develop a separate incentive for theatrical feature films (Category
7(d)) that takes into account its special funding method and the
principle of orderly sequential showings in multiple windows. The APFTQ
pointed out that, based on the current definition, the first window
broadcast of a drama on pay television (video-on-demand, pay-per-view,
and pay television) will automatically deprive the "non-pay" broadcaster
(conventional or specialty) of the credit for the second window
broadcast. This separate incentive should allow advertising minute
credits for the first "non-pay" broadcaster to show the film, provided
that the broadcaster has paid significant broadcast licence fees toward
the film’s budget and that this feature film raises the licensee’s
average in this regard over the preceding three years. The UDA also
supported this particular incentive aimed at the broadcast of Canadian
feature films shown for the first time on non-pay television. |
23. |
Astral was of the view that the third level
of advertising minute credits proposed by the Commission could lead to a
breakdown in the ordered and sequential market for the production of
feature films broadcast on television because, according to the
proposal, a drama film that is not supported by the CTF could qualify
for additional credits over and above the initial credit of four
advertising minutes per hour. |
24. |
Astral pointed out that the best way to
encourage maintaining the contribution made by pay television to the
funding of development and production is to maintain the existing rules
regarding equity investments by pay television services in theatrical
feature films. |
|
Call for additional comments: impact of the proposed incentives on
the advertising market
|
25. |
In response to Public Notice 2004-38,
Astral submitted a study carried out by Cossette demonstrating that
the proposed incentives would have a significant impact on the current
French-language advertising market. The study estimates that the implementation
of the proposed incentives would have generated revenues of between
$24 million and $30 million in 2003. The study was also intended
to show that a portion of these revenues would have been diverted
from the advertising revenues of French-language specialty services.
|
26. |
Because this study contained data and hypotheses
that were likely to raise a number of questions, primarily from the
principal interveners, the Commission invited all interveners who
submitted comments as part of the proceeding relating to Public Notice
2004-38 to review the study
submitted by Astral and, if they wished, to submit their comments
to the Commission, with a copy to Astral, no later than 27 August
2004. Astral then had one week in which to prepare its response to
those comments. |
27. |
Four interveners responded with additional
comments: TVA, TQS, the CBC and the APFTQ. In general, the interveners
reiterated their respective positions, as set out in their submissions
in response to Public Notice 2004-38.
In its comments, TVA submitted a study by Carat Expert (Carat) designed
primarily to demonstrate that the impact from the implementation of
the incentives would be more of the order of $12 million, and not
in the range described by Cossette. |
28. |
In its response, Astral brought forward a
number of clarifications and corrections to the data contained in the
study prepared by Carat and submitted by TVA. However, in referring to
the findings in the Cossette study, Astral maintained that [translation]
"the incentives proposed by the Commission would have resulted in an
increase in revenues to the conventional French-language networks of
from $24 million to $30 million … that these tens of millions of dollars
in advertising revenues would be shifted from the specialty services,
primarily, and from the conventional broadcasters who place few programs
in the weekly top-rated 30 programs to the dominant broadcasters in the
field, namely TVA and, to a lesser extent, the CBC … that these are
substantial amounts that will result in serious disruptions in the
advertising market … that these disruptions and negative effects will be
produced without a single additional minute of original Canadian drama
being added to the existing supply." |
29. |
In view of the positions set out by the
interveners and the significant discrepancy between the data submitted
following the call for additional comments, the Commission then asked
TVA, the CBC, TQS and Télé-Québec to submit detailed data relating to
original television drama aired by them during the last three broadcast
years, as well as their projections for the broadcast of original drama
for the year 2004-2005. |
|
Examination of the issues involved
|
30. |
The Commission appreciates the submissions
received as part of the second stage of the current proceeding and the
cooperation of the interveners and broadcasters during the additional
information process designed to evaluate the impact of the proposed
incentives on the French-language advertising market. |
31. |
In the analysis that follows, the
Commission reviews whether it should re-examine the proposed objective,
considers the adjustments proposed by the interveners, proposes a number
of adjustments or clarifications required before the program can be
implemented, and attempts to assess the impact of the revised measures
on the French-language advertising market. |
32. |
More specifically, in the sections that
follow, the Commission presents its analysis and findings with regard to
the following issues: |
|
a) the Commission’s objective
|
|
b) incentives vs. regulatory approach
|
|
c) the definition of French-language "original program" and "drama
program"
|
|
d) incentive program eligibility threshold
|
|
e) the impact of the proposed incentives
|
|
f) hourly production costs – eligibility criteria
|
|
g) original drama programming directed to youth
|
|
h) Télé-Québec
|
|
i) eligibility criteria and rewards for drama programming that is
not funded by the CTF
|
|
j) funding of drama programming through ownership transfer benefits
|
|
k) drama programming produced in house by licensees
|
|
l) investment in drama programming
|
|
m) licence fee "top-ups"
|
|
n) implementation of the drama incentive program
|
|
o) evaluation of the incentive program
|
|
a) The Commission’s objective
|
33. |
In Public Notice 2004-38,
the Commission proposed the following objective: |
|
To maintain, within the programming broadcast during peak time by
French-language television licensees, a proper balance of original
French-language drama, including a minimum number of high-cost
programs or series.
|
34. |
Several interveners, notably industry
associations such as SARTEC, the UDA and the Guild, were of the view
that the Commission should instead have as its objective to encourage
the production and broadcasting during peak viewing times of a higher
number of original French-language Canadian drama programs. In their
view, the incentives are not enough to ensure that drama programming
maintains a key role during peak viewing hours. |
|
The Commission’s analysis and determination
|
35. |
In Public Notice 2004-38,
the Commission recognized that "in the last two years, with the
introduction of new types of television programming that, like drama,
are capable of attracting large audiences, the peak time programming
schedules of conventional private broadcasters have changed."
|
36. |
However, the Commission established that,
given the amount of expenditures devoted to drama production and
French-language drama viewership results, its concern was not the
resolution of a problem, but the maintenance of a significant
contribution by conventional French-language broadcasters to the
production of original drama programming. |
37. |
Since the publication of Building on success
– A policy framework for Canadian television, Public Notice CRTC
1999-97, 11 June
1999 (the television policy), the Commission has recognized a significant
contribution to all priority programs. Unlike conventional English-language
broadcasters, conventional French-language broadcasters are not constrained
by the simultaneous broadcast of U.S. programs during peak viewing
times. Accordingly, there is generally a large number of Canadian
priority programs broadcast during the week on Canadian French-language
stations in peak viewing hours. |
38. |
In Public Notice 2004-93,
the Commission noted that there is a particular need in the English-language
market to increase the number of hours and the expenditures on original
Canadian drama programming in order to increase the audiences for
this type of production. |
39. |
Although the number of original dramas
offered by conventional French-language broadcasters is declining, the
Commission considers that the current level of such programming and the
viewership results it generates are such that it is unnecessary at this
time to apply the same objectives to the French-language market as those
that have been set for the English-language market. |
40. |
As indicated in Public Notice 2004-38,
drama remains one of the key scheduling drivers for conventional French-language
broadcasters. In light of the television policy set out in the television
policy and the present program of incentives to encourage original
Canadian drama, the Commission is of the view that conventional French-language
broadcasters will continue their efforts to maintain a proper balance
between the different types of Canadian priority programs aired during
peak viewing times. |
41. |
Accordingly, the Commission reiterates that
its objective for the French-language market is to maintain, within the
programming broadcast during peak time by French-language television
licensees, a proper balance of original French-language drama, including
a minimum number of high-cost programs or series. |
|
b) Incentives vs. regulatory approach
|
42. |
SARTEC, and the French-language
professional associations in general, favoured a regulatory approach
rather than a series of incentives. |
43. |
For its part, however, the CAB argued that
private broadcasters do not wish to see an increase in the number of
regulatory requirements in order to meet this challenge, but would
rather see new means brought in to support the production of drama
programming. |
|
The Commission’s analysis and determination
|
44. |
In light of the significant historical
contribution by conventional French-language broadcasters to original
Canadian drama and of the commitments given by these broadcasters when
their network licences were last renewed, the Commission is of the view
that the incentives, as modified in this public notice, will be
sufficient to maintain a proper balance of original drama programming
during peak viewing hours. However, it will analyze the results of the
licensees involved, notably when it comes time for their licences to be
renewed, and particularly with respect to their network licences. |
|
c) The definition of French-language "original program" and "drama
program"
|
45. |
In Public Notice 2004-38,
the Commission invited interveners to comment on a possible definition
for "original program," and proposed the following definition: |
|
An original program is a program that has never before been
distributed by any licensee of a broadcasting undertaking and that
will be distributed for the first time by the licensee.
|
46. |
Virtually all the interveners submitted
comments, in one form or another, on the question of the definition. The
CAB recommended modifying the definition of an original program to allow
the first airing of a program by each broadcaster who participated in
the funding at the pre-production stage to qualify. |
47. |
TVA proposed to broaden the definition of
"first run" to allow a program that had been previously distributed by a
Canadian specialty or pay service to qualify, provided that the
broadcaster had pre-purchased the program in question. |
48. |
TQS proposed to allow for greater
flexibility, primarily for new television genres, such as hybrids and
reality programs requiring a certain amount of scripting and staging,
while still allowing for improvisation. |
49. |
The CBC defined as original, a program that
is distributed for the first time by the licensee and that has never
before been distributed by another broadcasting undertaking licensee in
the same language market, including a production funded through, among
other things, licence fees from a number of broadcasters sharing the
exhibition windows. |
50. |
The APFTQ submitted that it would prefer
that an original program be defined as a program that no licensee of a
conventional television or specialty undertaking has previously
distributed in the same language and that the licensee is distributing
for the first time. |
51. |
The UDA suggested the following definition:
[translation] "a program that has never been previously distributed by
another licensee of a broadcasting undertaking and that is distributed
for the first time by the licensee. The program must have been written
and presented in French by Canadian artists." The UDA added that
programs filmed through double shooting should be considered original
programs in both markets, because they are deemed as such by the CTF. |
52. |
SARTEC requested that the definitions of
"original program" and "first run" be tightened. It was satisfied with
the definition of original program, but argued that in the case of
French-language service, this definition should apply only to the
broadcast of a program [translation] "written and shot in French." The
definition of first run should also apply to specialty and pay services.
|
53. |
The Guild stated that an original program
is a program that has never been previously distributed by any
broadcasting undertaking licensee and that is being distributed for the
first time by a licensee. Original programs include productions that are
distributed in the language in which they were originally shot, as well
as programs shot simultaneously in English and in French. The definition
of first run set out in the television policy for specialty services
includes programs shot in English, then translated into French. The
Guild was of the view that, were the incentive model applied to
specialty services, programs translated from English into French should
be excluded from the definition of original program, because they
provide no work opportunities for Francophone artists. |
|
The Commission’s analysis and determination
|
54. |
The definition of "original program"
proposed by the Commission in Public Notices 2004-38
and 2004-32 limits access
to incentive program rewards to a single broadcaster. There seems
to be a consensus among the interveners that the definition should
include broadcasters who participate in the financing of a drama prior
to the start of production and that, if in fact more than one broadcaster
is involved at this stage, then each one should qualify for the incentive
credit on its first broadcast. In the case of Canadian feature films,
a specialty service or conventional television broadcaster could provide
a second window after a first run on a pay television service. These
two elements fall within the objectives that have been set, and in
view of the production costs for this type of production, should normally,
subject to specific benchmarks, encourage increased production of
original drama programs. |
55. |
The Commission also notes that the definition
proposed in Public Notice 2004-38
does not sufficiently clarify the issue of original drama programs
produced in the French language or the distinction to be made between
double shooting and synchronized dubbing. These issues need to be
examined in order to ensure that the incentive program actually achieves
its desired objective. |
56. |
Allowing English-language Canadian drama
programs broadcast in their dubbed versions by a French-language
broadcaster to qualify would go against the stated objective, which is
to encourage the maintenance of a proper balance of original drama
produced in the French language, and could have the direct impact of
significantly reducing the number of original drama programs produced in
the French language. |
57. |
However, the Commission points out that
implementing incentives for original French-language drama does not in
any way affect the Canadian content credit given to broadcasters for
airing Canadian dramatic films in their original language or in the
dubbed version. |
58. |
The Commission is of the view that the
reservation mentioned above regarding Canadian dramatic films aired in
their dubbed versions should not apply to productions filmed through
double shooting, which involves shooting separately in each of the two
official languages. In this case, it is obvious that the production
includes two originals, and that each of these originals should be
recognized in their respective markets. |
59. |
In light of the above, the Commission has
determined that, for the purpose of the incentive program, the
definition of an "original program" is as follows: |
|
An "original program" is a program that, at the time of its
broadcast by a licensee, has not been previously broadcast by the
licensee or, subject to the exceptions set out below, by any other
licensee.
|
|
A licensee may also count a program as an original program, for the
purpose of the drama incentive program where:
|
|
a) the licensee contributed to the program’s pre-production
financing, and the program has only been previously broadcast by
another licensee that also contributed to its pre-production
financing;
|
|
b) the program has only been previously broadcast by a licensee of
a pay television, pay-per-view or video-on-demand undertaking;
|
|
c) the licensee has contributed to the pre-production financing of
the program and the program has previously been broadcast by no more
than one conventional television service or one specialty service
within the licensee’s multi-station ownership group, except that where
a multi-station ownership group owns or controls more than one
conventional television service the program may only be counted as
original on one of those conventional television services; or
|
|
d) the program has been previously broadcast in English by a
licensee, but was produced originally in both English and French and
otherwise satisfies the definition of original program; a program that
was originally produced in English only will not qualify as an
original program even when it is broadcast with a French-language
sound track or with French-language captioning.
|
|
For the purpose of this definition,
|
|
A "conventional television service" means a service composed
of
|
|
a) one conventional television station; or
|
|
b) more than one conventional television station in which the
programming broadcast during peak time, exclusive of commercial
messages, and any part of the service carried on a subsidiary signal,
is the same on each station at least 80% of the time, whether or not a
network licence has been issued.
|
|
A "multi-station ownership group" means a group of stations
and/or services owned or controlled by the same person or entity, and
is composed of
|
|
a) more than one conventional television station;
|
|
b) one or more conventional television stations and one or more
specialty services; or
|
|
c) more than one specialty service.
|
60. |
With respect to the definition of "drama
program," the Commission notes that in Appendix II of Definitions
for new types of priority programs; revisions to the definitions of
television content categories; definitions of Canadian dramatic programs
that will qualify for time credits towards priority programming requirements,
Public Notice CRTC 1999-205,
23 December 1999, the Commission set out its definitions of drama
programs that would be eligible for the 150% time credit as follows: |
|
The Commission will award a 150% time credit against the required
hours of priority Canadian programming for each category 7(a) to 7(e)
dramatic program broadcast during the peak viewing period (7 p.m. to
11 p.m.) which:
|
|
a) is aired for the first time on television on or after 1
September 1998;
|
|
b) has a duration of at least one half-hour, including a reasonable
amount of time for commercial breaks;
|
|
c) is recognized as a Canadian program, qualifies for either a C
number or an SR number from the Commission and achieves 10 points
related to the key creative positions; and
|
|
d) contains a minimum of 90% dramatic content.
|
61. |
The Commission considers that the incentive
program for Canadian drama should define "drama program" in a manner
consistent with existing incentive programs. Accordingly, the Commission
considers that, for the purpose of the drama incentive program, "drama
program" means a program that: |
|
a) is described by a category from 7(a) to 7(e), as set out in
Schedule I to the Television Broadcasting Regulations, 1987;
|
|
b) has a duration of at least one half-hour, including the time
devoted to permitted advertising material;
|
|
c) contains a minimum of 90% dramatic content; and
|
|
d) qualifies as a Canadian program as defined in the Television
Broadcasting Regulations, 1987.
|
|
d) Incentive program eligibility threshold
|
62. |
In Public Notice 2004-38,
the Commission set out the criteria that it wished to adopt to make
original French-language drama programming eligible for the incentive
program. It proposed to associate the relevant rewards with all programs
that meet these criteria in a broadcast year, regardless of the number
of hours of Canadian drama programming the licensees have aired in
previous years. |
63. |
A number of interveners indicated that the
Commission may not meet its stated objective if it were to allow all
original drama hours aired by broadcasters to qualify for the credits
without regard to the number of hours of drama programming they aired in
previous years. The incentives proposed by the Commission could even
result in a reduction in the number of hours of original Canadian drama,
rather than help maintain the status quo or bring about an increase in
the number of hours, since they would be rewarding all hours broadcast.
|
64. |
To remedy this situation, a number of
interveners, including Astral and the APFTQ, proposed to limit
advertising minute credits to the hours of original Canadian drama
programming that exceed the average number of hours broadcast by the
licensee over the three preceding years. |
65. |
For its part, TVA indicated its support for
the incentives as proposed, specifying that [translation] "… the
proposed incentives will only compensate for a portion of the overall
negative trends that are currently working to reduce TVA’s ability to
contribute to the future success of drama programming." |
66. |
Among the major trends affecting the role
played by drama in its programming schedule, TVA noted the following:
|
|
a substantial growth in the number of specialty services, which
fragment the viewing audiences, advertising revenues and public
funding for drama productions;
a considerable increase in drama production costs; and
a reduction in the public funding of drama programming aired on
private French-language stations.
|
|
The Commission’s analysis and determination
|
67. |
The Commission considers that, in the
French-language market, incentives must be based on the objective of
maintaining a proper balance of drama programming during peak hours.
After examining the past performance of certain conventional
French-language broadcasters with respect to drama, the Commission
considers that awarding additional advertising minutes for all hours of
original drama programming aired may not achieve this objective. |
68. |
Commission logs indicate the number of
hours of drama programming broadcast by each licensee, but there is no
distinction made between programs produced with the support of the CTF
and other 10-point Canadian drama programs, nor is there any indication
of the number of points obtained by a program for Canadian content or
whether the program was funded through ownership transfer benefits. |
69. |
To add to its data, the Commission asked
conventional broadcasters TVA, the CBC, TQS and Télé-Québec to submit
detailed figures for eligible original drama they aired in the last
three broadcast years, as well as their projections for the broadcast of
original drama for the year 2004-2005. |
70. |
As noted earlier, the approach proposed by
Astral involves establishing an eligibility threshold based on the
average number of hours of original drama programming broadcast over the
past three years. However, taking into account the data received and the
declining trend in the broadcast of drama programming over the past
several years described by the industry associations, the Commission
considers that such an approach could result in a situation where no
French-language broadcaster would be able to take advantage of the
proposed incentives and, thus, would not invest any additional revenues
to neutralize some of the major negative trends that have been
described, notably by TVA. Such an approach could therefore result in
the continuance of this downward trend, which is particularly evident in
the production of high-cost drama. |
71. |
The Commission considers that the
incentives must first aim to neutralize the downward trend that has been
noted, particularly in the private sector, and attempt to motivate
conventional French-language broadcasters to maintain their significant
contributions to original drama programming. In proposing an incentive
designed to attenuate, through additional advertising revenues, the
impact of some of the trends described by the interveners, the
Commission is of the view that it will be able to meet its objective
without causing significant changes likely to affect the current balance
in the French-language advertising market. |
72. |
The Commission considers that setting an
eligibility threshold of 65% of the average number of qualifying drama
hours broadcast over the past three years by French-language
broadcasters should make it possible to achieve its goal and inject
sufficient sums of money in the form of additional advertising revenues
to encourage these broadcasters to maintain their significant
contributions to this type of programming, without adversely affecting
the current balance in the French-language advertising market. |
73. |
The eligibility threshold for each licensee
shall be determined by the Commission in the context of its
consideration of licence amendment applications to enable licensees to
take advantage of the incentive program. Unless otherwise specified by
the Commission, the eligibility threshold established for each licensee
shall remain the annual reference threshold in subsequent broadcast
years. |
74. |
In order to qualify for inclusion in the
calculation of the eligibility threshold, an eligible drama program must
meet the definitions of "original program" and "drama program," must not
have been either fully or partially funded through ownership transfer
rewards or commitments made on the issuance of a new licence, and must
have been aired during peak viewing hours (7 p.m. to 11 p.m.), except if
the program is directed to children or youth (2 to 17 years). In such
cases, the drama must comply with the criteria and the broadcast times
established for this category of programming. |
|
e) The impact of the proposed incentives
|
75. |
As demonstrated by the broadcasters during
the supplementary information process, the potential impact of the
proposed incentives will depend on a number of economic variables. The
variables will depend on a number of factors, including the degree of
participation by the broadcasters in the incentive program, their
individual programming strategies, the number of eligible drama programs
that are produced, their production costs, advertising rates that are
set and the revenues they generate. |
76. |
Based on the data provided, the Commission
estimates that the additional revenues that could be generated by these
incentives will be of the order of between $4 million to $6 million for
the 2004-2005 broadcast year. If that were to be the case, the estimated
additional revenues for the French-language market would represent less
than 1% of the total television advertising envelope and approximately
1/3 of the projected growth in advertising revenues for 2004-2005. |
77. |
The Commission is of the view that, when
converted into licence fees for the production of original drama
programming, the injection of an additional $4 million to $6 million
could prove to be an economic incentive that will slow the downward
trend in the broadcast of original drama programming noted in the past
several years, without affecting the balance in the French-language
advertising market. |
|
f) Hourly production costs – eligibility criteria
|
78. |
In view of the fact that average production
costs are lower in the French-language market, TVA proposed that the
trigger level for accessing the three additional advertising minutes
should be no higher than $500,000. Télé-Québec argued that the $800,000
threshold would not reflect the reality of the French-language market.
The Guild stated that a broadcaster should not qualify for the
two-minute credit unless the drama program it broadcasts has a
production budget of at least $250,000 per hour. |
|
The Commission’s analysis and determination
|
79. |
In Public Notice 2004-38,
the Commission emphasized that incentives were "aimed at maintaining
a proper balance of original French-language drama programming during
peak time, including a minimum of high-cost programs or series."The
Commission expressed concern with maintaining a minimum amount of
high-cost drama described by the CTF as having minimum production
requirements of $800,000 per hour. |
80. |
The incentive program proposed for the
French-language market does not exclude drama productions costing
between $500,000 and $800,000, but awards three additional minutes of
advertising only for high-cost drama, and two additional minutes of
advertising to any drama program having a production cost of under
$800,000 per hour. |
81. |
The analysis that led to Public Notice2004-38
emphasized the Commission’s concern with the decline in the number
of high-cost drama series, which are a driving force in the Quebec
film and television industry. Because the production budget is not
the only indicator of viewership success in Quebec and because high-cost
productions are likely to be the first to be withdrawn from production
planning, the Commission has determined that the three additional
advertising minutes will only be available for drama programs that
have a minimum production cost of $800,000 per hour. |
82. |
With respect to the proposal put forward by
the Guild suggesting that drama programs of less than $250,000 be
ineligible, the Commission points out that, historically, the television
industry working in the French-language market has demonstrated a
remarkable degree of creativity in producing drama programming at a cost
level that is much below the Canadian average, while still producing
appreciable viewership results. Further, the Commission would not want
to exclude certain drama series, especially in the field of programming
intended for youth, where the average hourly budget could be slightly
less than $250,000. |
83. |
In light of the growth in production costs
over the past several years and of the importance of viewership results
to broadcasters, the Commission does not expect that broadcasters will
abuse the limited budget category of drama programming in an attempt to
access the two additional advertising minutes. |
84. |
Since all conventional, educational and
specialty broadcasters are eligible for the incentives, the Commission
wishes to encourage all broadcasters to maintain or increase the
broadcast of drama programming in their respective programming
schedules. It has therefore decided that the two additional minutes of
advertising will be available for all qualifying drama productions with
an hourly cost of less than $800,000. |
|
g) Original drama programming directed to youth
|
85. |
In Public Notice 2004-38,
the Commission proposed to include in the incentive rewards Canadian
drama productions directed to children (2 to 12 years), when such
programs are broadcast at appropriate viewing times for children.
The Commission sought comments as to whether these hours should be
specified. |
86. |
The majority of interveners were pleased
that the Commission recognizes the important role of original Canadian
drama directed to children. Among the comments received, TVA and Télé-Québec
were of the view that broadcasters should be allowed to determine the
viewing hours that are suitable for children. Only the Guild specified
that the appropriate viewing times for children should be between 4 p.m.
and 9 p.m. |
87. |
The APFTQ noted that the Commission limited
its proposal to programming for children (2 to 12 years) and stated
that programming directed to teenagers (12 to 17 years) should benefit
from the same treatment. The CAB proposed that the Commission reinstate
the 150% credit for 10-point drama programming directed to youth,
based on the terms originally set out in Public Notice 1984-94.
According to the CAB, all broadcasters who airing a program in the
first two years following its initial airing and who participated
in the funding of the program should also be entitled to this credit.
|
|
The Commission’s analysis and determination
|
88. |
The Commission acknowledges that prior to
the publication of the television policy, drama programming directed to
children broadcast at appropriate times for that audience qualified for
a 150% time credit. In the television policy, this policy was changed,
with the result that only eligible drama programming broadcast between
7 p.m. and 11 p.m. qualified for the new credit. |
89. |
The CTF defines a drama program as any
entertainment program in the field of fiction. Dramas directed to
children or youth up to the age of 17 fall into the envelope of
programming for children and youth, whereas programming directed to the
family is considered by the CTF to be part of the drama programming
envelope. The CTF is of the view that drama programming directed to the
family is distinct from programming directed to children and youth
because it seeks to interest an audience of all ages – adults, as well
as children and youth, or adults without children. |
90. |
According to the CTF, "programming directed
to youth" is defined as programming intended specifically for youth aged
13 to 17. It should have young people as the lead performers and should
reflect the reality of that age group. In the case of programming
directed to children and youth, the CTF defines peak viewing hours as
the period in which the broadest audience of children and youth is
accessible. |
91. |
In the French-language market, the CBC and
Télé-Québec play a significant role in the production and broadcasting
of Canadian drama programming directed to children and youth. |
92. |
As pointed out by the APFTQ and other interveners,
based on the criteria set out in Public Notice 2004-38,
drama series directed to youth, such as Randam from Télé-Québec
and Watatatow from the CBC, which are not shown during peak
viewing times, cannot be considered eligible for the incentive program.
|
93. |
The Commission recognizes the importance
that public French-language broadcasters attribute to the 13 to 17 age
group by producing and broadcasting drama programs that reflect the
reality of this age group. Although programs such as Randam and
Watatatow are not directed to children (2 to 12 years) and are
not broadcast during peak viewing hours, they have historically been
recognized as high quality programming directed at young people. |
94. |
In light of the interventions, and based on
French-language market considerations, the Commission agrees to include
drama programming directed to the 13 to 17 age group in original
Canadian drama programs directed to children and youth that are eligible
for additional advertising minute rewards, despite the fact that they
are not broadcast during peak hours, provided that the programs meet the
following criteria: |
|
they reflect and address the realities of this age group;
the lead performers are from this same age group; and
the programs are aired at times appropriate to this audience.
|
|
h) Télé-Québec
|
95. |
In its intervention, Télé-Québec pointed
out that it was authorized to air only eight minutes of advertising per
hour, compared with the conventional 12 minutes. It stated that it
appreciated being allowed to qualify for the program and assumed that
the additional minutes would be added to the eight minutes already
authorized by condition of licence. |
96. |
In Public Notice 2004-38,
the Commission proposed a restriction limiting advertising to a maximum
of 14 minutes in any clock hour. In actual fact, this cap restricts
the broadcaster to adding only two additional minutes of advertising,
which represents a degree of protection for the viewer who, at any
given time, will not be subject to more than two additional advertising
minutes per hour. |
97. |
The Commission expects Télé-Québec to count
the additional advertising minutes credited to it for airing eligible
drama programming as being in addition to the currently authorized eight
minutes. The Commission also expects Télé-Québec, in its application for
a licence amendment enabling it to participate in the incentive program,
to consider restricting itself to the broadcast of no more than two
additional minutes of advertising in any clock hour, that is, a maximum
of 10 minutes of advertising per clock hour. |
|
i) Eligibility criteria and rewards for drama programming that is
not funded by the CTF
|
98. |
In order to reduce the pressure on the CTF’s
limited resources, the Commission proposed in Public Notice 2004-38
an additional reward of four minutes of advertising for each hour
of 10-point original drama that is broadcast during peak viewing hours
(7 p.m. to 11 p.m.) and is not funded by the CTF. These four
additional minutes were added to the reward for each eligible hour
of Canadian drama. The Commission estimated that, at least for the
largest broadcasters, the value of these four minutes of advertising
would largely replace the CTF contribution. |
99. |
In the same public notice, the Commission
questioned the relevance of such a measure in the French-language
market. The majority of interveners indicated that, in the
French-language market, it is rare to find a drama production that is
not funded by the CTF. However, TVA and the CBC indicated that this
measure could effectively be applied to the French-language market and
that it would be a source of new funding for the system, while still
encouraging the production of drama programming without CTF assistance. |
|
The Commission’s analysis and determination
|
100. |
The Commission recognizes that an incentive
program designed to effectively encourage drama programming that is
not funded by the CTF could represent a new source of funding for
the French-language market. Although few French-language drama productions
are produced without CTF assistance, the Commission notes the comments
of TVA and the CBC, which are currently the broadcasters that air
the majority of French-language drama, and confirms the proposal set
out in Public Notice 2004-38
designed to add four additional minutes to the reward for each hour
of eligible drama programming, provided that no funding was received
from the CTF. |
101. |
However, the Commission notes that in order
to qualify for benefits under this incentive program, the broadcasters
will have to fund drama productions themselves and, in fact, replace CTF
funding, long before they will be in a position to recover these amounts
through the sale of additional advertising minutes. |
102. |
The Commission considers that the most
effective means of reducing the risk associated with this incentive and
of making this incentive more attractive, is to allow licensees to use
the bonus advertising minutes allocated in lieu of CTF funding at the
end of the development phase of the production, instead of having to
wait until the production is broadcast. Before a licensee would be
allowed to use the bonus minutes, a dramatic production must have
reached the same stage of development as that which would be necessary
for it to qualify for CTF funding. All of an eligible project’s funding
must be in place and the key members of the creative team identified.
Sections C and D of the CTF application form specify the information
required. A licensee will be authorized to air the bonus advertising
minutes permitted by the incentive and to recover the amounts invested,
once all funding requirements equivalent to those of the CTF have been
met. Further, and in accordance with CTF guidelines, the production’s
shooting must begin in the year following the airing of the additional
advertising related to incentive reward for the production. |
103. |
Along with their annual reports on the
drama production incentives, licensees will be required to submit a
report on the status of each of their ongoing projects not funded by the
CTF. These reports must also indicate when the advertising resulting
from incentive rewards related to projects not funded by the CTF was
aired. These reports will enable the Commission to monitor each
production and, if it is determined that a production for which
additional advertising has already been aired will not be broadcast, the
Commission can reduce, by an equivalent amount, at some future date, the
number of advertising minutes awarded to the licensee. The Commission
considers that this will prevent a licensee from obtaining additional
minutes for productions that are never broadcast. |
104. |
Subject to the licensee having met the
annual eligibility threshold, the Commission has decided the following:
|
|
- Licensees who invest in a 10-point original drama program
broadcast in peak time, with an hourly production budget of at least
$800,000 and licence fees equivalent to those that are normally
required by the CTF, but that has not been funded by the CTF, will be
authorized to broadcast a total of seven additional advertising
minutes for each hour of such drama. The four minutes awarded in
exchange for the absence of CTF funding may be broadcast as soon as
financing for the production is in place and the key members of the
creative team have been identified, in accordance with the applicable
sections of the CTF application form. The three remaining minutes must
be aired after the production has been broadcast.
|
|
- Licensees who invest in a 10-point original drama program
broadcast in peak viewing time, with an hourly production budget of
less than $800,000 and licence fees equivalent to those normally
required by the CTF, but that has not been funded by the CTF, will be
authorized to broadcast a total of six additional minutes of
advertising for each hour of such drama. The four minutes awarded in
exchange for the absence of CTF funding may be broadcast as soon as
financing for the production is in place and the key members of the
creative team have been identified, in accordance with the applicable
sections of the CTF application form. The two remaining minutes must
be aired after the production has been broadcast.
|
|
- Principal photography on the project must begin in the broadcast
year following the airing of the additional advertising minutes.
|
|
- In the case of a production funded under this incentive, but not
broadcast, the broadcaster will be required to deduct, in the current
or following broadcast year, the number of minutes credited for the
production from the number of minutes of advertising awarded under the
incentives.
|
105. |
For each production funded under the non-CTF
incentive, the licensee must submit to the Commission, along with its
annual report on the drama incentives, the following information
obtained from the producer: |
|
- a financing structure that meets the requirements of section C of
the CTF 2004-2005 application form, clearly specifying the amount
received from the licensee and corresponding to the revenues that will
be generated by the four additional minutes of advertising;
|
|
- the names of the key creative personnel, as per section D of the
CTF 2004-2005 application form; and
|
|
- the planned start date for shooting the principal photography.
|
|
Safeguards tied to rewards for productions not funded by the CTF
|
106. |
In Public Notice 2004-38,
the Commission invited comments on how it could best ensure that revenues
derived from additional advertising minutes awarded for drama productions
not funded by the CTF are used for the production of Canadian drama
programming. |
107. |
The Guild indicated that [translation] "it
is essential that the revenues generated by the sale of these four
additional minutes be directed toward the producers." To ensure that the
revenues derived from the four additional minutes are directed to the
production of Canadian drama, TVA proposed adopting the solution that
Telefilm Canada (Telefilm) currently uses for tax credits, by ensuring
that these revenues are included in the financing structure of the
production in question. |
108. |
TVA also proposed that, for drama
programming not funded by the CTF, the broadcaster’s supplementary
licence required to complete the financing structure should be recorded
as the equivalent in revenues derived from the four minutes of
advertising. |
109. |
The APFTQ stated that it cannot predict the
effects that the application of the incentives proposed by the
Commission would have with sufficient accuracy to either support or
oppose it. However, the APFTQ noted that the Commission has not
specified whether this measure would apply solely to independent
productions. It noted, however, that this interpretation was possible
given the Commission’s indication that the proceeds from the four
additional minutes should be paid to the producer to, in part, replace
CTF assistance. |
|
The Commission’s analysis and determination
|
110. |
The data provided in the interventions by
the broadcasters, particularly in the Cossette and Carat studies, which
are part of the public record, included a number of possible estimates
as to the value of a 30-second commercial break broadcast by the various
conventional broadcasters. The Commission considers that these estimates
provide a starting point for negotiations between broadcasters and
producers. Furthermore, as part of their drama incentive reports,
broadcasters will be required to file with the Commission information
specifying the licence fee and the amount advanced as a result of the
four additional advertising minutes for each eligible drama program.
|
111. |
The annual reports on drama production
incentives will be protected by the Commission’s guidelines on the
handling of confidential information. These reports will provide the
Commission with the information needed to monitor the results of the
incentives in order to ensure that drama programming not financed by the
CTF is given a fair financial contribution from broadcasters. |
|
j) Funding of drama programming through ownership transfer benefits
|
112. |
In Public Notice 2004-38,
the Commission proposed that drama programs funded by a licensee as
part of an ownership transfer benefit or a commitment made at the
time of licensing should not qualify for the drama incentive program.
|
113. |
TVA indicated that the Commission should
award additional advertising minutes for the broadcast of original drama
programming funded within the context of tangible benefits. According to
TVA, [translation] "If the Commission and those who support its drama
programming objectives truly want to encourage the production of drama,
they must recognize that including ownership transfer benefits is an
excellent way to do this. Otherwise, the motivation for proposing such
benefits will be reduced in the future." |
|
The Commission’s analysis and determination
|
114. |
The Commission notes that the expenditures
linked to ownership transfer benefits ensure that the Commission
receives the best possible proposals for ownership transfers, taking
into account the size and nature of the proposed transaction.
Accordingly, these benefit-related expenditures and the resulting
programs represent an obligation that licensees are required to meet,
regardless of any participation in the Commission’s incentive program.
In the Commission’s view, licensees should not be rewarded for complying
with an existing obligation. |
115. |
The Commission therefore concludes that
drama programming funded in whole or in part through benefits or
commitments made at the time of licensing will not qualify for the
original broadcast hours incentive. In calculating the expenditure
incentive, drama expenditures associated with commitments made at the
time of licensing or ownership transfer benefits will be excluded. |
|
k) Drama programming produced in house by licensees
|
116. |
In its intervention, the APFTQ raised a
number of questions: |
|
- Do drama programs produced in house by the CBC or Télé-Québec
(which, by definition, do not qualify for CTF assistance) qualify for
the four additional minutes? If so, what weight should be given to the
fact that they are intended in principle to partially replace CTF
assistance?
|
|
- Do programs produced in house by a producer affiliated with a
private broadcaster, and that are not funded by the CTF, qualify for
the four additional minutes? If so, what weight should be given to the
fact that the proceeds from these four minutes are supposed to go to
the producer?
|
117. |
Other comments received in response to the
incentive model proposed by the Commission for French-language
broadcasters also raised the issue of whether drama produced in house by
a broadcaster should qualify for the benefits provided under the
incentive program, and particularly for the additional advertising
minutes relating to drama programming not funded by the CTF. |
|
The Commission’s analysis and determination
|
118. |
The Commission reiterates that when Public
Notice 2004-38 was published,
its objective was to ensure that the revenues derived from the proposed
additional minutes for eligible drama programming not funded by the
CTF revert to the producers, and are not counted as Canadian programming
expenditures in the annual reports filed by licensees with the Commission.
|
119. |
The Commission recognizes the efforts of
broadcasters who produce selected drama programming in house and have
these programs qualify for the two- or three-minute advertising credit,
depending on their respective production budgets. However, in light of
its objective and the monitoring mechanisms designed to ensure that
revenues relating to the bonus four minutes are remitted to independent
production, the Commission confirms that original drama programs
produced in house by a licensee will not qualify for the four additional
minutes of advertising allowed for Type (c) and Type (d) drama programs. |
120. |
In order to include drama programs produced
in house by a broadcaster without CTF funding, the Commission adds the
following two types of drama to the four existing eligible ones: |
|
Type (e): the broadcast in peak time (7 p.m. to 11 p.m.) of 10-point
original drama, produced in house by a broadcaster, with a production
budget of at least $800,000 per hour.
|
|
Benefit: three minutes of additional advertising
for each original hour of drama broadcast.
|
|
Type (f): the broadcast in peak time (7 p.m. to 11 p.m.) of 10-point
original drama, produced in house by a broadcaster, with a production
budget of less than $800,000 per hour.
|
|
Benefit: two minutes of additional advertising
for each original hour of drama broadcast.
|
|
l) Investments in drama programming
|
121. |
In Public Notice 2004-38,
the Commission proposed to authorize specialty services to record
their equity investments in drama programming, as a means to encourage
the few specialty services that commission Canadian drama productions
to make capital investments. The Commission therefore requested comments
on the best means of ensuring that a broadcaster’s investments are
truly at risk, and do not take the place of licence fees. |
122. |
As part of the process relating to Public
Notice 2004-32 involving
English-language drama, the CAB, CHUM Limited (CHUM) and Global supported
the Commission’s proposal. In their view, cases where capital investments
should qualify as expenditures for Canadian programming under the
incentive program are as follows: |
|
- the equity investment cannot be an advance or a loan and must be
truly at risk; and
|
|
- the equity investment must be the result of a separate and
distinct negotiation, that is, the producer must not require equity
participation as a precondition to the licensing of the production.
|
123. |
With regard to investments by specialty
services, Astral did not believe it was relevant or necessary to amend
the current rules, which permit both specialty services and conventional
services to record, as Canadian programming expenditures, any net losses
arising out of such investments. |
124. |
With regard to feature films, Astral was of
the view that the best way to encourage the maintenance of the
exceptional contribution made by pay television to the funding of
development and production, as well as to the acquisition, promotion and
distribution of Canadian theatrical feature films, is to maintain the
current rules regarding pay television service investments in theatrical
feature films. |
125. |
The APFTQ was of the view that the current
criteria whereby investments made by specialty services can be recorded
as Canadian production expenses are equitable. It was firmly opposed to
the proposal to allow specialty (or conventional) services to record the
full amount of their investments as Canadian production expenses,
without regard to the returns made on those investments. |
126. |
According to the APFTQ, the floor for
Canadian production expenses imposed as a condition of licence
frequently constitutes a ceiling. In such situations, allowing the
deduction of the full amount invested as Canadian production expenses
would reduce the portion of overall Canadian programming expenditures
that would be allocated to licence fees in a given year. This would
result in a progressive decline in the commercial value of Canadian
programs on the Canadian market. |
127. |
The CAB noted that, apart from certain
exceptions, because of the limited earning potential of French-language
drama productions on the open market, private French-language
broadcasters do not tend to invest significant amounts of equity
capital. Otherwise, the CAB had no comment on this issue. |
128. |
Telefilm did not object to the Commission’s
proposal to authorize specialty services to record their capital
investments that are truly at risk as expenditures for Canadian programs
under the incentive program. Telefilm pointed out its expertise in the
handling of equity capital and proposed to work with the Commission to
help establish the appropriate benchmarks. Telefilm noted the importance
of emphasizing that a broadcaster’s capital investments do not confer on
it any more rights than its share in the copyrights or the recovery
rights. The distribution agreements and the negotiations for broadcast
rights must remain separate. |
|
The Commission’s analysis and determination
|
129. |
The Commission notes that, in Public Notice
2004-38, the concept of
equity at risk is clearly defined as "... equity investments
in drama productions that have no guarantee of a return." |
130. |
The Commission understands the concerns of
certain interveners regarding the need for measures to ensure that these
investments are truly at risk. Amounts that are placed with a guaranteed
return constitute a form of loan rather than an at risk investment.
Since such returns reduce the level of risk, such investments should not
fall within the definition of equity at risk. Further, as was pointed
out by the Canadian Film and Television Production Association (CFTPA)
and Telefilm, in the case of English-language drama programs, the
negotiations for these investments should remain separate from those for
licence and distribution fees. |
131. |
In light of the comments received as part
of the process related to Public Notices 2004-38
and 2004-32, the Commission
agrees that it is essential to properly define an equity investment
that is truly at risk, using appropriate criteria. As noted by the
CAB, CHUM and the CFTPA, a guaranteed return on an investment is the
mark of an advance or a loan, and should not qualify as an investment
that is "at risk." The Commission supports the positions
of the CFTPA and Telefilm whereby equity investments by broadcasters
must be separate and distinct from licensing fee and distribution
rights negotiations. |
132. |
In light of the foregoing, the Commission
has determined that "at risk" equity investments in Canadian
French-language drama will qualify as eligible Canadian program
expenditures when the following conditions have been met: |
|
the investment is truly at risk and does not constitute the
equivalent of an advance or a loan. Any investment with guaranteed or
effectively guaranteed revenues will not be counted as an equity
investment for the purpose of this incentive; and
in keeping with normal industry practice, distribution and other
rights must be negotiated and defined separately from any equity
investment.
|
133. |
The Commission notes that specialty
services are not currently required to file with the Commission program
expenditures broken out by genre. Therefore, the Commission is unable to
determine the annual spending by specialty services on Canadian drama
and, as a consequence, these services are not able to benefit from the
incentive to increase expenditures on Canadian drama. If, in the future,
specialty services include spending by program genre in their CRTC
annual returns, the Commission could make the necessary adjustment to
the drama incentive program. |
134. |
Licensees who wish to take advantage of the
new benefits with regard to Canadian program expenditure requirements
must apply for an amendment to their relevant conditions of licence. |
|
m) Licence fee "top-ups"
|
135. |
The CTF awards financial support to qualifying
Canadian television productions (commonly known as "licence fee
top-ups") in the form of top-ups to licence fees paid by broadcasters
to producers. Pursuant to Public Notice 2003-54,
the Commission received a number of requests to modify the definition
of eligible Canadian programming expenditures to exclude licence fee
top-ups. Subsequently, in Public Notices 2004-38
and 2004-32, the Commission
determined that changing this policy would require a public process
and would not ensure an increase in Canadian programming expenditures.
Consequently, the Commission proposed to retain its current approach. |
136. |
In its comments filed pursuant to Public
Notice 2004-32, Telefilm
argued that licence fee top-ups effectively reduce broadcasters’ Canadian
program expenditure requirements. |
137. |
The Commission notes that, in 2002, licence
fee top-ups amounted to less than 5% of the total expenditures devoted
to Canadian programming by all specialty, pay or pay-per-view services.
Furthermore, the Commission considers that, given the increased
expenditures on Canadian programs that may result from allowing equity
at risk to count as an eligible expenditure, the concern expressed by
Telefilm will be alleviated. |
138. |
Accordingly, the Commission will not amend
its policy with respect to licence fee top-ups. |
|
n) Implementation of the drama incentive program
|
139. |
The drama incentive program set out in the
appendix to this public notice will be implemented by way of condition
of licence. Conventional television licensees that wish to participate
in this incentive program will therefore be required to apply for a
condition of licence that would, in most instances, permit the licensees
to broadcast advertising minutes over and above the 12 minutes per hour
permitted under section 11 of the Television Broadcasting
Regulations, 1987, up to a maximum of 14 minutes in any clock hour.
|
140. |
Any licensee that is subject to a condition
of licence that limits the authorized number of advertising minutes may
request an amendment to that condition in order to participate in the
drama incentive program. |
141. |
Any French-language broadcaster wishing to
take advantage of the incentives set out in this notice must, in filing
its application for a licence amendment, file information or confirm the
information it has previously filed with the Commission, in order to
determine the eligibility threshold that will apply to its licence. To
do this, the broadcaster will be required to supply a list of all
eligible drama programs aired during the 2001-2002, 2002-2003 and
2003-2004 broadcast years, specifying any information required to
confirm the number of hours of eligible drama programming. |
142. |
Conventional television licensees may use
the following text in applying for an amendment to a condition of
licence: |
|
In addition to the 12 minutes of advertising
material during any clock hour in a broadcast day permitted by subsection
11(1) of the Television Broadcasting Regulations, 1987, the
licensee may broadcast such additional minutes of advertising material
calculated in accordance with Incentives for original French-language
Canadian television drama, Broadcasting Public Notice CRTC 2005-8,
27 January 2005, as may be amended from time to time.
|
143. |
Licensees may accumulate reward minutes for
the broadcast of qualifying drama aired since l September 2004. However,
licensees will not be permitted to broadcast these reward minutes until
the appropriate conditions of licence have been approved by the
Commission. The Commission expects those licensees who wish to
participate in the drama incentive program to apply for the appropriate
condition of licence or amendment as soon as possible. |
|
o) Evaluation of the incentive program
|
144. |
In Public Notice 2004-38,
the Commission proposed to monitor the results of licensees participating
in the incentive program through a combination of the annual drama
incentive report, the licensee’s annual returns and the Commission’s
own logs. |
145. |
The Commission considers that full and
transparent annual reporting is essential to the success of its
incentive program. The annual drama incentive reports, if sufficiently
detailed and made public in a timely manner, will provide both the
Commission and interested parties with the necessary tools to evaluate
the program and to monitor compliance with its provisions. At the same
time, requesting an onerous level of detail or making public information
that would otherwise be protected by the Commission’s confidentiality
guidelines could discourage licensees from participating in the
incentive program. |
146. |
Accordingly, the Commission has determined
that each licensee that chooses to take advantage of the incentive
program will be required to file, along with its annual report, a report
describing its use of the incentives. This report must include the
following elements: |
|
data showing that the licensee has met the eligibility threshold
established in the application to amend a condition of licence
allowing it access to the incentive program;
data on the advertising minute credits for qualifying programs;
and
data on the use of accumulated advertising credits.
|
147. |
For each qualifying program, the licensee
must supply the following information: |
|
i) Information about the program
|
|
The type of program (pilot, one-off, made-for-television movie,
mini-series or high-cost series), final title of the program, duration
of the program excluding commercial breaks (in the case of a series,
the number of episodes, the duration of each episode, and whether it
was a seasonal program or the continuation of a series).
|
|
- The names and addresses of any and all production houses.
|
|
- The date and time of the broadcast on each conventional channel
and specialty service controlled by the licensee.
|
|
- The production budget determined in accordance with CTF standards,
specifically with respect to accounting, reporting, producer’s fees
and the corporate overhead policy. This document, which is to be filed
by the licensee (although it may be prepared by the producer at the
licensee’s request) will be protected under the Commission’s
confidentiality policy.
|
|
- The Canadian Audio-Visual Certification Office (CAVCO)
certification letter identifying the number of Canadian content points
awarded to the production and, where applicable, the CRTC
certification number.
|
|
- The title of the type of benefit reward for the program from the
list published in the appendix to this notice.
|
|
- For the 10-point programs produced with the help of incentives,
that is, original drama programming not funded by the CTF, the
following information must be supplied by the producer:
|
|
the production’s financial structure, presented according to the
standards set out in section C of the CTF 2004-2005 application
form, or its equivalent in future years, separately identifying the
amount awarded by the broadcaster for the four additional
advertising minutes;
|
|
- the key creative personnel – as per section D of the CTF
2004-2005 application form, or its equivalent in future years;
|
|
- the date on which principal photography will commence; and
|
|
- the status of each project in development for which the
incentive advertising minutes have been broadcast by the licensee
under the incentive program.
|
|
ii) Information on additional advertising
minutes in the programming schedule
|
|
An abbreviated analysis of the total advertising minute credits
qualifying for broadcast in the broadcast year of each conventional
television station and each specialty service, in accordance with this
public notice, including the additional minutes awarded under the
incentives.
The title, time and date of broadcast of the programs in which the
additional advertising minutes were aired, as well as the number of
minutes aired within each of the programs broadcast for each
conventional television station and specialty service.
|
148. |
If necessary, Commission staff will meet
with licensees in the 2004-2005 broadcast year in order to help
harmonize the presentation of the required reports. |
149. |
The annual drama incentive reports must be
filed with the Commission no later than 30 November of each year, in
conjunction with the annual returns. Subject to its confidentiality
policy, the Commission will do its utmost to place the reports on its
Internet site by the beginning of the following year. |
150. |
In an attempt to harmonize this drama
incentive program with the limitations on the sale of advertising set
out in the Television Broadcasting Regulations, 1987 and
conditions of licence, the Commission intends to institute a monitoring
program based on spot checks of various licensees’ program logs. These
spot checks will compare a licensee’s logger tapes to the Commission’s
computer logs in order to determine: |
|
a) whether the logs are an accurate reflection of the programs
aired; and
b) whether the programming broadcast complies with the applicable
regulations and conditions of licence.
|
151. |
Should a spot check reveal possible
non-compliance, a letter will be sent to the licensee concerned
providing an opportunity to comment on the results of the spot check. In
such cases, the Commission will take whatever measures are necessary to
ensure compliance. |
|
Secretary General |
|
This document is available in alternate
format upon request and may also be examined at the following Internet
site: http://www.crtc.gc.ca
|
|
Appendix to Broadcasting Public Notice CRTC 2005-8
|
|
Summary of the incentive program for original French-language
Canadian television drama
|
|
The following is a summary of the
Commission’s incentive program for French-language Canadian television
drama. It is intended to serve as a convenience to the reader, to be
read in conjunction with the public notice it accompanies. The
incentives summarized below will be effected by condition of licence.
|
|
Objective
|
|
To maintain, within the programming
broadcast during peak time by French-language television licensees, a
proper balance of original French-language drama, including a minimum
number of high-cost programs or series. |
|
Definitions
|
|
In addition to the definitions found in the
applicable regulations that apply hereto, the following definitions
apply for the purpose of the implementation and monitoring of the
incentive program for French-language drama. |
|
"eligible drama program" is a
program that meets the definitions of "original program" and "drama
program" and that |
|
- has not been financed, either in whole or in part, through
benefits arising out of the transfer of ownership or commitments made
at the time of licensing; and
- was broadcast during peak viewing hours, namely between 7 p.m. and
11 p.m., except in the case of programming directed to children or
youth (ages 2 to 17).
|
|
In such cases, the drama must meet the
applicable criteria and be broadcast during the applicable air times
for these program categories, as described in this Broadcasting
Public Notice CRTC 2005-8.
|
|
A "drama program" means a program
that |
|
a) is described by a category from 7(a) to 7(e) as set out in
Schedule I to the Television Broadcasting Regulations, 1987;
|
|
b) has a duration of at least one half hour, including the time
devoted to permitted advertising material;
|
|
c) contains a minimum of 90% dramatic content; and
|
|
d) qualifies as a Canadian program as
defined in the Television Broadcasting Regulations, 1987.
|
|
An "original program" means a
program that, at the time of its broadcast by a licensee, has not been
previously broadcast by the licensee or, subject to the exceptions set
out below, by any other licensee. |
|
A licensee may also count a program as an
original program, for the purpose of the drama incentive program, where: |
|
a) the licensee contributed to the program’s pre-production
financing, and the program has only been previously broadcast by
another licensee that also contributed to its pre-production
financing;
|
|
b) the program has only been previously broadcast by a licensee of
a pay television, pay-per-view or video-on-demand undertaking;
|
|
c) the licensee has contributed to the pre-production financing of
the program and the program has previously been broadcast by no more
than one conventional television service or one specialty service
within the licensee’s multi-station ownership group, except that where
a multi-station ownership group owns or controls more than one
conventional television service the program may only be counted as
original on one of those conventional television services; or
|
|
d) the program has been previously broadcast in English by a
licensee, but was produced originally in both English and French and
otherwise satisfies the definition of original program; a program that
was originally produced in English only will not qualify as an
original program even when it is broadcast with a French-language
sound track or with French-language captioning.
|
|
For the purpose of this definition: |
|
A "conventional television service"
means a service composed of |
|
a) one conventional television station; or
|
|
b) more than one conventional television station in which the
programming broadcast during peak time, exclusive of commercial
messages, and any part of the service carried on a subsidiary signal,
is the same on each station at least 80% of the time, whether or not a
network licence has been issued.
|
|
A "multi-station ownership group"
means a group of stations and/or services owned or controlled by the
same person or entity, and is composed of |
|
a) more than one conventional television station;
|
|
b) one or more conventional television stations and one or more
specialty services; or
|
|
c) more than one specialty service.
|
|
"CTF" means the Canadian Television
Fund. |
|
The "eligibility threshold" is the
number of hours of eligible drama that a French-language broadcaster
must broadcast before being able to access the additional advertising
minutes provided under the incentive program. This number is 65% of the
average number of hours of eligible drama programming broadcast by the
French-language broadcaster over the last three broadcast years prior to
the announcement of this program and must be confirmed by the Commission
at the time of the licence amendment that is required before the
broadcaster is eligible to participate in the program. Unless otherwise
indicated by the Commission, this eligibility threshold shall remain the
annual base reference for subsequent broadcast years. |
|
A "point," in relation to
a program, refers to the points a program has earned based on the
application of Appendices I and II to Certification for Canadian
Programs – A Revised Approach, Public Notice CRTC 2000-42,
17 March 2000. |
|
Incentive program and applicable benefits
|
|
Six types of original French-language
Canadian drama programming broadcast by conventional television stations
or by eligible specialty services that have previously met the
eligibility threshold can qualify for additional advertising minutes: |
|
Type (a): the broadcast in peak time (7 p.m. to 11 p.m.)
of 10-point original drama funded by the Canadian Television Fund (CTF)
with a production budget of at least $800,000 per hour and minimum
licence fees, as set by the CTF.
|
|
Benefit: three minutes of additional advertising for each original
hour of drama broadcast.
|
|
Type (b): the broadcast in peak time (7 p.m. to 11 p.m.)
of 10-point original CTF-funded drama, with a production budget of
less than $800,000 per hour and minimum licence fees, as set by the
CTF.
|
|
Benefit: two minutes of additional advertising for each original
hour of drama broadcast.
|
|
Type (c): the broadcast in peak time (7 p.m. to 11 p.m.)
of 10-point original French-language drama not funded by the CTF,
with a production budget of at least $800,000 per hour and licence
fees consistent with CTF standards.
|
|
Benefit: seven minutes of additional advertising for each original
hour of drama broadcast. In addition to the three minutes indicated
as a reward for Type (a) programming, there will be an additional
four minutes for not accessing CTF funding.
|
|
Type (d): the broadcast in peak time (7 p.m. to 11 p.m.)
of 10-point original French-language drama, not funded by the CTF,
with a production budget of less than $800,000 per hour and licence
fees consistent with CTF standards.
|
|
Benefit: six minutes of additional advertising for each original
hour of drama broadcast. In addition to the two minutes indicated
as a reward for Type (b) programming, there will be an additional
four minutes for not accessing CTF funding.
|
|
Type (e): the broadcast in peak time (7 p.m. to 11 p.m.)
of 10-point original drama, produced in house by a broadcaster, with
a production budget of at least $800,000 per hour.
|
|
Benefit: three minutes of additional advertising for each original
hour of drama broadcast.
|
|
Type (f): the broadcast in peak time (7 p.m. to 11
p.m.) of 10-point original drama, produced in house by a
broadcaster, with a production budget of less than $800,000 per
hour.
|
|
Benefit: two minutes of additional advertising for each original
hour of drama broadcast.
|
|
General conditions
|
|
a) Original French-language Canadian drama programming directed to
children (2 to 12 years) qualifies for the incentive program provided
that it is broadcast at viewing hours that are appropriate for
children.
|
|
b) Original French-language Canadian drama programming directed to
youth (13 to 17 years) qualifies for the incentive program, provided
that it is broadcast at times that are appropriate for that audience
and that it meets the following conditions:
|
|
- it reflects and addresses the realities of that age group;
- the lead performers are from that same age group; and
- it is aired at times appropriate to this audience.
|
|
c) No additional advertising minutes will be awarded for the
production of original drama programming financed in whole or in part
through ownership transfer benefits or commitments relating to the
awarding of a new licence.
|
|
d) Original drama programming produced in house by a licensee
cannot be listed as Type (c) or Type (d) programs, and therefore are
ineligible for the four additional advertising minutes described as
supplementary benefits replacing CTF assistance.
|
|
Implementation
|
|
- The drama incentive program will be implemented by way of
condition of licence. Conventional television licensees that wish to
participate in this incentive program will therefore be required to
apply for a condition of licence that would, in most instances, permit
the licensees to broadcast advertising minutes over and above the 12
minutes per hour permitted under section 11 of the Television
Broadcasting Regulations, 1987, up to a maximum of 14 minutes in
any clock hour.
|
|
- Any licensee that is subject to a condition of licence that limits
the authorized number of advertising minutes may request an amendment
to that condition in order to participate in the drama incentive
program.
|
|
- Any French-language broadcaster wishing to take advantage of the
incentives set out in this notice must, in filing its application for
a licence amendment, file information or confirm the information it
has previously filed with the Commission, in order to determine the
eligibility threshold that will apply to its licence. To do this, the
broadcaster will be required to supply a list of all eligible drama
programs aired during the 2001-2002, 2002-2003 and 2003-2004 broadcast
years, specifying any information required to confirm the number of
hours of eligible drama programming.
|
|
- Licensees may accumulate reward minutes for the broadcast of
qualifying drama aired since l September 2004. However, licensees will
not be permitted to broadcast these reward minutes until the
appropriate conditions of licence have been approved by the
Commission.
|
|
- For each drama type, the hourly production budget will be
evaluated under CTF guidelines.
|
|
Annual reports and monitoring
|
|
Each licensee participating in the
incentive program must file, no later than 30 November of each year,
along with its annual report, a report detailing the use of the
incentives. This report must include the following elements: |
|
- data showing that the licensee has met the eligibility threshold
established in the application to amend a condition of licence
allowing it access to the incentive program;
|
|
- data on the advertising minute credits for qualifying programs;
and
|
|
- data on the use of accumulated advertising credits.
|
|
For each qualifying program, the licensee
must supply the following information: |
|
i) Information about the program
|
|
- The type of program (pilot, one-off, made-for-television movie,
mini-series or high-cost series), final title of the program,
duration of the program excluding commercial breaks (in the case of
a series, the number of episodes, the duration of each episode, and
whether it was a seasonal program or the continuation of a series).
|
|
- The names and addresses of any and all production houses.
|
|
- The date and time of the broadcast on each conventional channel
and specialty service controlled by the licensee.
|
|
- The production budget determined in accordance with CTF
standards, specifically with respect to accounting, reporting,
producer’s fees and the corporate overhead policy. This document,
which is to be filed by the licensee (although it may be prepared by
the producer at the licensee’s request) will be protected under the
Commission’s confidentiality policy.
|
|
- The Canadian Audio-Visual Certification Office (CAVCO)
certification letter identifying the number of Canadian content
points awarded to the production and, where applicable, the CRTC
certification number.
|
|
- The title of the type of benefit reward for the program from the
list published in the appendix to this notice.
|
|
- For the 10-point programs produced with the help of incentives,
that is, original drama programming not funded by the CTF, the
following information must be supplied by the producer:
|
|
· the production’s financial structure, presented according to
the standards set out in section C of the CTF 2004-2005
application form, or its equivalent in future years, separately
identifying the amount awarded by the broadcaster for the four
additional advertising minutes;
|
|
· the key creative personnel – as per section D of the CTF
2004-2005 application form, or its equivalent in future years;
|
|
· the date on which principal photography will commence; and
|
|
· the status of each project in development for which the
incentive advertising minutes have been broadcast by the licensee
under the incentive program.
|
|
ii) Information on additional advertising
minutes in the programming schedule:
|
|
- An abbreviated analysis of the total advertising minute credits
qualifying for broadcast in the broadcast year of each conventional
television station and each specialty service, in accordance with
this public notice, including the additional minutes awarded under
the incentives.
|
|
- The title, time and date of broadcast of the programs in which
the additional advertising minutes were aired, as well as the number
of minutes aired within each of the programs broadcast for each
conventional television station and specialty service.
|
|
The Commission intends to institute a
monitoring program based on spot checks of various licensees’ program
logs. These spot checks will compare a licensee’s logger tapes to the
Commission’s computer logs in order to determine: |
|
a) whether the logs are an accurate reflection of the programs
aired; and
|
|
b) whether the programming broadcast complies with the applicable
regulations and conditions of licence.
|