Ad-based approach to boosting drama gets lukewarm reception at CAB confab

A new advertising-based incentives program designed to boost the production of original Canadian TV drama is being criticized by some private broadcasters despite the fact that it lets them off the hook by not imposing expenditures (Broadcasting Public Notice 2004-93). The policy, released last week by CRTC chair Charles Dalfen at the Canadian Association of Broadcasters (CAB) convention, increases the number of advertising minutes that broadcasters can earn compared to the commission’s original proposal that was released in May (CCR, May 6/04). Despite the sweetened pot, some private broadcasters and producers complain about the complexity of the proposal, the fact that the CBC can also participate, uncertainty as to whether they will still be able to raise enough money to finance the genre, and doubts as to the availability of enough advertising to fill the extra time. "They (CRTC) have tried to create an environment whereby drama will be incentified. My first impression, though, is that it is going to be very complex. The public notice is very dense. There are a lot of rules and exceptions to the rules, and I think we are all going to have to hire a few people if we are going to opt into this program just to make it work," says Bill Mustos, senior VP of dramatic programming at CTV Inc. His comments were echoed by producer Linda Schuyler, president of Epitome Pictures and executive producer of Degrassi: The Next Generation. "In terms of the complexity of it, here’s my concern: I am always saying that if you can’t give us money then give us more time (to produce shows). The more time we have to get shows together, the better they are going to be," she says. "Already from a producer’s point of view, we are crunched. "This year, I had my show on the air before I even closed my production financing," she notes. "So if we have more complexities that the broadcasters have to get their heads around before they start picking up shows, my concern is that the creative is going to suffer…The goal for all of us is to streamline the system." But CRTC chair Charles Dalfen, in an interview with Canadian Communications Reports, states that the incentive-based policy isn’t as complex as it’s being made out to be. "We put out a news release that summarizes the decision. Look at the summary, you don’t have to hire lawyers to know what it means," he says. He points out that much of the 50-page public notice contains background information on the policy, and that the rules are straightforward. "I think part of it is that it is detailed because it goes through all of the positions of all of the parties, and tries to explain them. But I think when it comes right down to the producer or broadcaster, they will figure out that it isn’t that complex," he says. "I heard a lot of people in discussions (the day it was released) getting what it was all about. You have to appreciate that sometimes the way to simplicity is through details." Ad minutes increased The finalized policy actually increases the number of advertising minutes that broadcasters can earn over the CRTC’s original proposal for English-language television. The number of earned advertising minutes for 10-point, original drama receiving support from the Canadian Television Fund (CTF) and broadcast in peak time has been upped to a maximum of three minutes an hour from the originally proposed 2.5 minutes an hour. The advertising minutes for distinctly Canadian programming not receiving any CTF funding have been increased to up to 8 minutes from the originally proposed 6.5 minutes. The exact amount of additional advertising depends on such factors as the level of Canadian participation in the production, the budget required to produce the drama, the time of broadcast, and the source of funding. Further, if broadcasters increase their audience share for a Canadian TV drama by a pre-determined amount, they will be allowed to increase the total additional amount of advertising they broadcast by 25%. If broadcasters increase their spending on Canadian TV drama, they can also increase their additional ad minutes by another 25%. The final policy also changes the definition of original TV drama, allowing specialty channels to gain additional advertising minutes if they invest in a show even though it might air first on the conventional TV station also funding the production. "What that means is quite frequently an hourlong drama will be funded by an over-the-air broadcaster, and a specialty channel will come in and put money up front for a second window, and both will now qualify for the incentives," says CRTC director of English-language radio and TV policy Nick Ketchum. But within a station group, a broadcaster can only qualify for the extra minutes twice. If, for example, CHUM Ltd.’s over-the-air Citytv financed a TV drama, and so did its specialty channels MuchMusic and MuchMoreMusic, only two of the three channels would qualify for additional ad minutes. Under CRTC definitions, comedy shows, such as This Hour Has 22 Minutes and The Royal Canadian Air Farce, qualify as drama. Another change in the policy is that the biggest broadcasters – CTV, Global Television Network, and now CHUM with its acquisition of Craig Media – must have a base of 26 hours of CTF-funded programming that will not qualify for extra ad minutes. This stipulation doesn’t apply to the specialty TV networks. All non-CTF TV drama will immediately qualify for additional advertising minutes if the criteria are met. But the additional advertising minutes can only be earned for CTF-funded Canadian drama once 26 hours of it have already been aired. Broadcasters will get double benefit from airing non-CTF funded drama because not only will it qualify for extra ad minutes right away, but it can also be used to count toward the 26 hours. "The intent is to within reason encourage investment in new incremental Canadian drama that isn’t necessarily going through the CTF because the CTF has limited funding," states Ketchum. The broadcasters can choose which TV programs that they want to count for the 26 hours, and the commission fully expects them to pick the lower-budget drama, and use the higher-end shows to accumulate more commercial minutes. For example, Global is likely to use the low-budget Train 48, an ongoing series that is primarily ad-libbed based on a general scenario, to eat up the 26-hour baseline (CCR, June 20/03). Programs such as CTV’s Corner Gas don’t quality for the program because they were financed by the BCE-CTV benefits package. "Programming that is funded through benefits do not count in any way, shape or form because that’s an obligation that the broadcasters have already taken on because of a transfer of ownership," explains Ketchum. CBC qualifies CTV’s Mustos also complained that the public broadcaster, which has a primarily Canadian schedule, will earn a lot of additional ad minutes that it will likely use up during high-profile programming such as the Olympics or the Stanley Cup playoffs. "It would appear that the CBC will actually be entitled to take advantage of the advertising credits in the same way as private broadcasters," he notes. "I think we know that their schedule is virtually all-Canadian so they will achieve the 26 hours quickly enough and be able to accumulate a lot of ad credits, which they will apply to their sports programming, or even the American movies they are scheduling on Saturday nights. That seems odd to me in that it will actually serve to create more competition for the private broadcasters when it comes to the acquisition of sports and movie rights, and actually having more players eating away at the same advertising pie…There seemed to be a shift moving the CBC away from commercials and this seems to be actually push them right back into it." Dalfen, however, sees no reason why the CBC should not be allowed to participate in the incentives since they are financing a lot of Canadian programming. "All broadcasters should play by the same rules. Given that, I wouldn’t say that all CBC programming should be audience focused because that would leave out experimentation, minority tastes, and the CBC should, in fact, cater to that. But when it comes to mainstream popular television, the CBC does that too," says Dalfen. "You will always have the private broadcasters complaining about the CBC." During the comment phase, the CBC complained that the proposal wasn’t geared toward it as a public broadcaster, but Dalfen counters, "We heard from them, and they didn’t propose an alternative, and this policy does in a way apply to them." Raising financing difficult Some broadcasters and producers argue that since the advertising incentives apply to 10 out of 10 Canadian TV drama, it will make it difficult to raise needed outside financing for drama. "We will obviously go back to the drawing board to see how we can make this work, but it’s going to be extremely difficult to find a partner, whether it be in the U.S. or elsewhere in the world, to sign up for a 10 out of 10 Canadian production," says Mustos. He says that often on movies and mini-series financed by the CTV-BCE benefits package, the broadcaster was able to entice foreign partners to help with financing by including overseas actors. "We have always chosen to sprinkle in a star from another country to help make that financing possible," he says. "That’s why I’m going to be thinking my entire way back to Toronto, how am I going to get that 10 out of 10 production dollars?" Size of the ad pie The advertising community has complained about the proposal, stating that the extra ad minutes will create clutter (CCR, July 5/04). But at the same time, it has lent its support to a proposal by cablecos to sell commercial advertising in Canada on U.S. specialty channels such as A&E. In the latter process, the advertising industry complained that it is "difficult to purchase the necessary time that they need during the high demand periods." The ad demand should be there since most broadcasters are likely to use up their earned extra minutes of commercials during the most popular programming at the most popular times. Broadcasters can insert their extra ads into any programming, as long as they air no more than 14 minutes in any given hour. Yet, the broadcasters question whether there will be enough advertising dollars to fill those extra minutes. "I think the question about whether this will increase the advertising pie is a big unknown," says Alliance Atlantis Communications Inc. executive VP of programming Norm Bolen. "I think that if the advertising pie increases as a result of this additional inventory in the marketplace, it is a benefit to the whole industry. But I think that there is an open question about whether that will happen." U.S. programming currently has room for more ads than that the regulated 12 minutes of advertising per hour in Canada, with the difference being filled with public service announcements and promos for Canadian shows. Dalfen is not concerned that there will be less time in popular U.S. programming to promote Canadian programming. "It will depend on the programming. Some have more advertising breaks than others. In any case, it doesn’t appear likely that all the extra minutes (available in Canada) will be used up," he points out. McQueen suggested incentives Advertising-based incentives were proposed by former broadcast veteran Trina McQueen in a report she wrote at the request of the CRTC in May 2003. Her report recommended that the CRTC allow an extra minute of advertising for each original hour and one repeat, of 10 out of 10 drama carried. "This is my recommendation. The two major things that I recommended in that report were an audience strategy, and two, incentives. So I feel pretty good," she tells CCR. "But in the great Canadian tradition, everyone will find something to complain about it. Even I could find something to complain about it. But when you have a whole bunch of different interests, they all can’t be satisfied 100%. I think that the CRTC has done a good job in balancing and making sure that everyone comes out a bit of a winner, but no one is scooping the pot." She acknowledges that smaller players, such as CHUM, have argued that since the amount of advertising dollars are finite, the policy could result in a redistribution of commercial dollars away from CHUM to Global and CTV, which due to their size would earn more from the additional ad sales (CCR, July 5/04). "I think that there are some broadcasters who are worried that the big guys – the Globals and the CTVs – will have the advantage. And I think they are underestimating themselves," McQueen notes. "I have great faith that CHUM with its new stations, and its incredibly visionary new management will be able to take great advantage of this opportunity."

Ad-based approach to boosting drama gets lukewarm reception at CAB confab

Broadcast | December 6, 2004

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