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Let’s Talk TV – Delayering 50 years of Regulation in “the Age of Abundance”

In an important policy decision issued today, “The way forward – Creating compelling and diverse Canadian programming”, the CRTC announced “significant changes to bring the CRTC’s regulations and Canadian television forward into the Age of Abundance”, where content is everywhere online and on TV.  Commission Chair Jean-Pierre Blais warned the audience for his speech today to the Canadian Club of Ottawa that the sheer length of the policy decision – 323 paragraphs – “illustrates how complex it is to delayer regulatory rules built over the past 50 years.”

Genre Exclusivity

The delayering includes eliminating the genre exclusivity that many Canadian services have relied on for years.  This was no surprise, as the CRTC had previously announced its intention to review the policy and asked for comment not only whether to eliminate it, but also the “earliest feasible timeframe” to do so.

By way of background, the Commission has in the past licensed must-carry “Category A” services – such as HGTV Canada, Bravo!, Sportsnet 360, and YTV – on a one-per-genre basis.  Genre exclusivity is intended to prevent “head-to-head” competition for Category A services with each other, or with any other linear service in Canada.  Category A services have been insulated at least in part from competition with other Canadian services (may-carry Category B services, and Category C news and sports services).  The rules to authorize non-Canadian services for distribution in Canada have also prohibited “direct competition” with Canadian services as a condition of authorization.  The “must carry” and the genre protection privileges for Category A services were designed in large part to ensure that the services achieved enough revenues to meet their Cancon and related programming obligations, and thereby maximize their contribution to the creation of Canadian programming.

In a 2013 Discussion Paper commissioned by the CRTC, Broadcast consultant Peter Miller concluded that

Genre exclusivity cannot be considered ‘smart regulation’.  It has elements that make it internally contradicting, ambiguous, difficult to understand, costly to enforce, and it may possibly be just plain wrong-headed for today’s Canadian broadcast system.  […] The CRTC is not required to ‘rely on market forces to the extent possible’ in its regulation and supervision of the Canadian broadcasting system. But in this instance there is much to be said for doing just that.

In today’s decision, the CRTC stated that in the “Age of Abundance”:

the genre exclusivity policy is no longer needed to ensure programming diversity between services and [the CRTC] is therefore eliminating this policy. […] By eliminating this policy, the Commission is removing regulatory barriers so as to allow entry by new programming services, programming flexibility and greater domestic competition.

Genre exclusivity will be retained only in the conditions of licence (COLs) for the so-called 9(1)(h) services that benefit from a CRTC mandatory distribution order.  Such services include CBC News, The Weather Network, and the Aboriginal Peoples Television Network (APTN).  Limited genre protections also remain for mainstream sports services.

For all other Category A services, it remains to be seen how market forces of supply and demand will impact what has been a regulated and “exclusive” space.

The Commission has significantly “delayered” or revised regulatory requirements in a number of other areas, summarized below.

A.  “Leveling the playing field” for SVOD (subscription video-on-demand) services

A new category of “hybrid” SVOD services will be exempt from licensing.  These hybrid services would be available both over the closed facilities of a broadcasting distribution undertaking (BDU), and also delivered and accessed over the Internet.  Such SVOD services would be able to offer exclusive content – just as exempt online-only services can do – as long as that content is available over the Internet to all Canadians without BDU subscriber authentication.

The CRTC has issued a call for comments on revisions to the VOD exemption order and standard conditions of licence for VOD services.  Comments are due April 27.

B.  Promotion and “discoverability” of Canadian programming

Promotional and marketing expenses for Canadian-made content

Independent broadcasters may use up to 10% of the amount they invest in programs for marketing and promotion, including payments to other broadcasters for paid promos.

Local Availabilities to Promote Canadian Programs

Local availabilities, or “local avails”, are the two minutes per hour of reserved advertising time in non-Canadian specialty channels.  Broadcast distributors in Canada contract with the non-Canadian channels to insert promotional materials in these avails.

Under the current regulatory regime, 75% of this time is made available to Canadian broadcasters to promote their services, to promote the community channel, and for unpaid Canadian PSAs.  25% has been available to broadcast distributors for information on and promotions for distributors’ services.

Going forward, at least 75% of local avails must be used to promote first-run, original Canadian programs.  The remaining 25% can be used to promote Canadian channels and broadcast distribution services.

C.  Funding models for Canadian-made programs

As exceptions to the CRTC’s standard Canadian program certification process – and subject to certain streamlined criteria – the CRTC is launching the following pilot projects:

Pilot project 1:  CRTC will recognize adaptations of best-selling novels by Canadian authors as Canadian live-action drama and comedy productions.

Pilot project 2:  CRTC will recognize Canadian live-action drama and comedy productions with a budget of at least $2 million per hour as Canadian productions.

D.  Terms of Trade

In a 2007 policy decision, the CRTC encouraged the development of terms of trade agreements between broadcasters and independent producers.  In the years following that decision, the CRTC imposed adherence to a terms of trade agreement with the Canadian Media Production Association (CMPA) as a condition of licence for large English-language TV groups, and for the CBC.  The CRTC has now – to the surprise of many in the industry – stated that it will eliminate those conditions of licence effective April 29, 2016, stating that “it is no longer necessary for the Commission to intervene in this relationship by requiring adherence to terms of trade agreements”.

E. Cancon quotas

In its policy shift from “quantity to quality”, the CRTC is eliminating the daytime quotas for Cancon for local TV stations; the quota for prime time remains at 50%.  For specialty channels, 35% of all programs broadcast overall must be made by Canadians.  This sweeps away varied levels from 15% to 85%, depending on the service, and does away with a specific quota for prime time.

F.  Viewer Information:  Set-top boxes

Industry stakeholders are to form a working group to develop an audience measurement system based on STB data.  The group is to report back to the CRTC by June 10 on its progress on technical standards, privacy protections, a governance structure, and cost-sharing.

Privacy protection issues have long been raised in this area as a key concern.  The collection and sharing of viewer data has also received recent media coverage in the context of user commands to Smart TVs.  STB data collection, use and disclosure proposals can be expected to be watched closely by the Office of the Privacy Commissioner of Canada.

G.  National news services

Existing and new Canadian news services will have to meet additional regulatory criteria.  Going forward, they must broadcast an annual average of 16 hours per day, 7 days per week, of original programming.  95% of their programming must be drawn from specific news-oriented categories. They must also operate a live broadcast facility, and have news bureaus in at least 3 other regions.

Next Steps

The Commission has called for comments on the proposed exemption order for hybrid VOD services, and will be amending regulations and conditions of licence in further proceedings, to implement today’s policy decisions.

The Commission will also be issuing decisions on pick-and-pay (a la carte) programming and related issues in the coming days.

 

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Let’s Talk TV – Delayering 50 years of Regulation in “the Age of Abundance”

Team Dentons Wants You! (well, not you specifically, just one of the people reading this post)

The National Entertainment Group at Dentons Canada LLP is hiring a Business Affairs Coordinator (to be located in either the Toronto or Vancouver office). The Coordinator will work with the members of the entertainment law team in, among other responsibilities, drafting production contracts, preparing funding applications, and closing financing transactions. Among the requirements for the position are 5-7 years experience in the entertainment industry (with a concentration in film or television). Legal training as a lawyer, paralegal or law clerk is an asset, but is not required.

Further details about the position can be obtained by downloading this description of the opportunity: Business Affairs Coordinator. Qualified applicants should submit their cover letter and resume by email to resumes.toronto@dentons.com

Team Dentons Wants You! (well, not you specifically, just one of the people reading this post)

Ken Dhaliwal: The Zenith (Award) of His Career

October 2, 2014 marked an important day in the history of the Dentons Canada LLP entertainment law practice group: David Steinberg wore a suit and tie for the entire day, and he was not scheduled to attend either a funeral or bar mitzvah.

Later that day, we were thrilled to attend the Lexpert Zenith Awards ceremony, at which, among other luminaries, our own Ken Dhaliwal was feted for his achievements during the course of his entertainment law career.

The photo below, taken at the event, features all of the lawyers in the Toronto entertainment group, because none of us could bear to cede the spotlight to Ken for even a minute we wanted to show our support for our good friend and colleague. It was a complete coincidence that we are arranged, from left to right, in descending order of height.

Zenith Award

(L to R: Jim Russell, Bob Tarantino, Ken Dhaliwal, Jayme Alter, some random guy who stumbled into the photo David Steinberg)

 

Ken Dhaliwal: The Zenith (Award) of His Career

OBA EM&C: Creative Commons + Commercial Exploitation

More than a decade after the initial release of Creative Commons licenses, they remain widely used in a wide range of cultural activities – but are, perhaps surprisingly, only infrequently relied on by Canadian producers of commercial film, television and new media projects.

On May 7, 2013, the OBA Entertainment, Media & Communications Law Section presents a lunch session which will offer attendees a primer on the “what” and “how” of Creative Commons licenses, along with a critical discussion and assessment of why use of CC-licensed material has not enjoyed the “thumbs up” from the production community that many thought it would – and whether that should change. The session features panelists David Fewer (Director of the Samuelson-Glushko Canadian Internet Policy and Public Interest Clinic (CIPPIC)) and Tony Duarte (author of Canadian Film & Television Business & Legal Practice).

The session can be attended both in-person and via webcast – registration details are available at the OBA website.

OBA EM&C: Creative Commons + Commercial Exploitation

OBA EM&C: Luminary Lunch 2013

Just reconcile yourself to the fact that he’s been more productive than you: join the OBA’s Entertainment, Media & Communications Law Section for its annual “Luminary Lunch” with Canadian producer, broadcaster, media mogul, vineyard owner and philanthropist Michael MacMillan. In a wide ranging and in-depth conversation, the former Executive Chairman/CEO of Alliance Atlantis Communications and current CEO of Blue Ant Media, will provide insight into his roles as producer, media executive and broadcasting entrepreneur. Michael has had a front row seat in the growth and development of the film, television and broadcasting industry in Canada, and has expanded his endeavors to include co-founding and chairing Samara, a non-partisan charitable organization that works to improve political participation in Canada, as well as Toronto’s Open Roof Festival, a not-for-profit outdoor film and music series. In an informal lunchtime chat with host Stephen Zolf, Michael will discuss where he’s been, what he’s doing now, as well as share his observations on the media business, the challenges of the new digital environment and the prospects for the business of Canadian broadcasting.

The 2013 installment of the OBA’s EM&C Luminary Lunch will be taking place on Thursday, April 4 – registration details are here.

OBA EM&C: Luminary Lunch 2013