CRTC Should Force Broadcasters To "Compete Just Like Any Other Sector": Last month, Jean-Pierre Blais, the chair of the Canadian Radio-television and Telecommunications Commission, delivered a much-discussed speech at the Canadian Media Production Association's annual conference. The CMPA is Canada's leading organization for the production of Canadian film and television programming and Blais' message was intended to both congratulate and challenge the industry.
On the congratulatory side, Blais noted the Canadian film and television
production had a record year in 2012, growing by over $500 million over
the prior year, by far the highest total and fastest growth in over a
decade. Canadian television production led the way, increasing 21.3 per
cent in 2011/12, for a ten-year high of just under $2.6 billion. Most of
the increase was due to English-language programming, with fiction
production growing by over 41 per cent.
Blais' challenge came in several forms, but my weekly technology law column (Toronto Star version, homepage version) notes the comment that attracted
the most attention was his remark that "under my watch, you will not see
a protectionist. I'm a promotionist." Most observers took the comment
to mean that the CRTC will not focus on mechanisms such as Canadian
content requirements and foreign restrictions as a means to advance
Canadian culture. Rather, with billions being spent on the creation of
Canadian programming, it is better to concentrate on marketing and
promotion of those works.
Yet there was a second comment that garnered less attention, but that
may ultimately prove more important. After encouraging the industry to
become more innovative and entrepreneurial, Blais warned "you will need
to compete, just like any other sector."
That may sound unremarkable, but to an industry that has often
focused on creating rather than competing, it represents a potential
For example, most of the funding for the record amount of
Canadian English-language television programming came from
taxpayers and broadcasters, not the original producers of the
content. According to Profile
2012, an annual report on the state of the industry, only
ten per cent came from private funding such as production
companies and private investors. Canadian distributors covered 18
per cent of the total costs, with foreign distributors kicking in
an additional nine per cent.
That still represents less than half of the total financing costs
for Canadian English-language television programming. Federal and
provincial tax credits provided the largest chunk of funding,
covering 29 per cent of the cost, while broadcaster licence fees
constituted another 25 per cent. The Canada Media Fund, which is
jointly funded by the taxpayers and cable and satellite providers,
covered the remaining ten per cent.
The notion of competing in the market should take centre stage
this week as the CRTC conducts its hearing on whether Canadians
who subscribe to cable and satellite television packages should be
required to pay for channels such as Sun News Network and
Starlight, a proposed all-Canadian movie channel. The regulatory
process has been likened to winning the lottery, since channels
selected for mandatory carriage are guaranteed millions in revenue
regardless of whether Canadians watch or even want the channel.
The best approach would be to scrap the mandatory carriage rules
altogether. Instead, the Commission could require cable and
satellite companies to offer all licensed channels to their
customers. That would enable consumers to decide what they want to
pay for and assuage broadcaster concerns that some distributors may
withhold access to their programming altogether.
That shift in approach would represent a significant change in
Canadian broadcast policy, effectively establishing a framework
that requires the industry to compete for subscribers. As CRTC
Chair Blais would say, just like any other sector.