Self-administered benefits funds a new normal for broadcasters, CMPA warns

OTTAWA—The Canadian Media Production Association (CMPA) says it is concerned about an emerging trend in which broadcasters are moving away from making contributions to independent, third-party benefits funds. Instead, they are directing programming benefits into their own “self-administered” funds. In 2009, Rogers Communications Inc. submitted an application to the CRTC seeking to amend the tangible benefits arising from its acquisition, in 2006, of the Biography Channel from Shaw Communications Inc. and A&E Canada for $5 million. In a broadcasting proceeding at the commission, parties are now commenting on Rogers' application. In a July 19 comment submitted with the CRTC, the CMPA said it takes issue with Rogers’ proposal to direct $500,000 worth of programming benefits—arising from its acquisition of the Biography Channel—into a “self-directed benefits” fund to be called the Biography Programming Initiative for spending on high-quality Canadian documentary programming. The CMPA, formerly the Canadian Film and Television Production Association, said Rogers’ proposal is part of a larger trend in which major broadcasters are trying to exercise greater control over the distribution of “tangible benefits,” money that companies pay to support Canadian performers and producers when they acquire a broadcasting assets. “The tangible benefits policy furthers the diversity of voices in the Canadian broadcasting system by requiring that a majority of television benefits flow to third parties, such as independent producers. As such, the policy has become the ‘lifeblood’ for Canadian programming and the independent production sector,” the CMPA wrote in its comment to the commission. “However, this is diminishing in an environment where self-directed benefits have become the norm in television benefits packages, as opposed to contributing the money to a third-party, independent fund such as the Rogers Documentary Fund or an endowment.” The Rogers Documentary Fund is a funding body for documentary producers administered by a not-for-profit corporation and governed by an independent board. Broadcasters are moving towards self-administered benefits so that they can focus on a specific genre or program format and select funding processes and partners, the CMPA wrote, and increased control by broadcasters means independent producers seeing fewer benefits. Self-directed funds, the CMPA wrote, give broadcasters more leverage over producers that want to access benefits through terms of licensing, particularly when Rogers does not have trade agreements with the CMPA or independent producers. In its application, Rogers argued that its proposed Biography Programming Initiative would enhance the channel’s schedule with new “biography-related” series and “personality docu-soaps.” Rogers said the fund would provide quality Canadian programming consistent with the Biography Channel’s nature of service and biographical format. But the CMPA questioned whether Biography Channel benefits should be funding “personality docu-soaps” when public benefits traditionally fund “under-represented” programming like documentaries. The CMPA suggested that personality docu-soaps may not be eligible for funding under the Rogers Documentary Fund. In a reply comment filed with the CRTC, dated July 23, Rogers said the CMPA is off-base. “The CFTPA has provided no evidence to support its allegation that using a self-administered fund for tangible benefits would provide with an undue degree of control that might somehow limit the ability of independent producers to reach acceptable licensing agreements,” Rogers wrote. Rogers said it will encourage independent producers to make proposals to the fund and that it is in the company’s interest to work with producers on reasonable licensing terms. “ll of the funds that we contribute to the Biography Programming Initiative will go to support the development and production of high-quality Canadian documentary production by third party independent producers,” Rogers wrote. Rogers added that the commission has allowed broadcasters to direct tangible benefits into self-administered production funds over the past 10 years, pointing to previous transactions such as Rogers’ acquisition of the CHUM television stations in 2007 or the transfer of control of CTV Inc. to BCE Inc. in 2000 (CTV has since become a private media company no longer controlled by BCE). Rogers also referred to the commission rules, which do not exclude self-administered funds but state that benefits must be “incremental,” or directed to projects and initiatives additional to the transaction; that they flow to third parties such as independent producers; that broadcasters do not charge any funding administration fees; and that finances are reported annually. Controversy over Rogers’ proposed self-administered fund is arising as players also step forward to question Shaw’s proposed tangible benefits package as part of its acquisition of Canwest Global Communication’s broadcasting assets. Shaw says it will spend millions of dollars on benefits, but critics note that much of it is self-administered. “In terms of where Shaw is directing the benefits, from our first glance it appears that too much is going to benefit Shaw directly and not enough is going to the creation of new, scripted content,” Stephen Waddell, national executive director of ACTRA, said in an email statement to The Wire Report. “‘Self-directed’ funds are by nature, ‘self-interested’ funds,” Waddell said. “Tangible benefits are a public policy mechanism meant to serve the broadcasting system as a whole, and are not intended for the licensee to meet their regulatory obligations.” As part of its benefits package, Shaw has proposed $24 million for initiatives to develop scripted programs; $18 million for new media content to complement domestic programming; and $43 million for “new morning newscasts” in money-losing Canwest TV markets. Michael Hennessy, senior vice-president of government and regulatory affairs at Telus Corp., a competitor of Shaw, also questioned Shaw’s programming spending, noting that it is not going to third parties. In an email to The Wire Report on Wednesday, Hennessy said the separation of benefits into independent funds is the best way to ensure that benefits money is “incremental,” or spent on Canadian programming over and above the conditions in the broadcaster’s licence. Shaw could not be reached for comment by deadline Wednesday. sdoyle@thewirerport.ca

Self-administered benefits funds a new normal for broadcasters, CMPA warns

Broadcast | July 28, 2010

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