Broadcasters spending more on individual Cancon projects, but producing less

Canadian broadcasters are taking a “quality over quantity” approach to producing Canadian content in an effort to compete with American programming, industry experts say. “We're trying to have a product that will go get the audience that's watching the neighbour,” Richard J. Paradis, an instructor at the Université de Montréal's communications department and president of consulting firm Groupe CIC, said in an interview. “In almost all categories, there are less hours of content, but the average spending per show is higher.” On Jan. 14, the Canadian Media Production Association (CMPA) released its annual report profiling the screen-based production industry in Canada. The report found broadcasters are producing less content, but spending more on each production. In 2009-2010, the total volume of Canadian television production decreased 3.3 per cent, but all English-language television genres saw their average per-hour budgets increase, the report said. This was despite an overall reduction in spending. The fiction genre registered an average budget of $1.5 million per hour, while documentaries reached a 10-year high of $359,000 per hour. Children's and youth and variety and performing arts budgets also reached 10-year highs. Martha Fusca, a broadcasting expert and president and CEO of Stornoway Communications, said in an interview that broadcasters are spending more to produce more quality content. “We're living in an increasingly competitive environment, particularly in Canada, where we have an enormous influx of foreign content, especially American,” she said. But Fusca added that, overall, Canadians are producing less Canadian content and the deficiency may hurt broadcasters that are seeking to improve their online presence outside the country. “We should be incredibly concerned about the voice that we have within our own country considering that there are so many voices, particularly American voices,” she said. “When there's less of that on television, there's even less on the Internet, and it means that you have an even smaller voice internationally.” Despite bigger budgets, the CMPA report said that, in 2009-2010, Canadian television production dropped $69 million, or 3.4 per cent, to just under $2 billion due to reduced levels of English-language documentary programming. The sector's export value decreased by $54 million to $192 million. The report also said Canadian broadcasters are spending more to acquire content rather than producing it. Spending on independent Canadian production increased 10 per cent to $761 million in 2009-2010. But in-house production was down $55 million, or 4.7 per cent, due to lower spending by conventional broadcasters on news and sports programming. Overall, conventional in-house spending dropped $76 million, or 10.6 per cent. Fusca said the drop in in-house spending is a function of the economy's struggles in 2009, as well as the sale of broadcasting assets in 2010. “If you're planning to sell a company, why produce more programming that may impact your bottom line? Your bottom line looks a lot better, obviously, if you're not spending the money on programming,” she said. Fusca said Canadian content production numbers may drop further in the coming years as the CRTC plans to reduce its exhibition requirements from 60 per cent of the broadcast week to 55 per cent. “If broadcasters are not incentivized, and by that I mean regulated, to produce Canadian content, the trend has indicated over a number of years that they won't do it,” she said. “It'll be interesting to see what's going to happen to independent production and Canadian content in general. I think it's going to go down.” Paradis said broadcasters may be spending less on production because they are receiving less funding through the Canada Media Fund (CMF) and federal and provincial tax credits. “It becomes more interesting for broadcasters to buy content that costs them 20 per cent of what they'd be paying if they had to produce it, they can't benefit from tax credits and the CMF,” he said. In 2009, the CMF changed the way it distributes funding to encourage more interactive than traditional media projects. Fusca noted that changes in the CMF's structure may have affected independent broadcasters and their ability to fund productions. “Stornoway's envelope, for example, went down significantly from the previous year. That meant we had less money with which to produce independent production,” she said. The CMPA report said 15 per cent of funding for Canadian television, or $307 million, came from the CMF in 2009-2010. In 2008-2009 the fund contributed $275 million. Paradis said some broadcasters may be tempted to allocate less funding for content in part because of the CMF. “It's as if broadcasters say, 'There are programs created by the government, there are tax credits. Why would we put money on production when they can be financed by a third-party?'” he said. The CMPA report indicated that 30 per cent of the funding for Canadian television production came from financing from Canadian broadcasters, with 18 per cent coming from private broadcasters. But funding from licence fees from private groups has consistently dropped every year since 2005, from $458 million in that year to $364 million in 2009-2010. Fusca said the drop in funding stems from a general drop in revenue for the broadcasting industry. With lower revenues, broadcasters are contributing less to content creation. “The broadcasters, for years, have argued that the advertising pie is not growing. In fact, they're losing some advertising to other platforms. Therefore, the money that you have for production is actually going to go down as well,” she said. Fusca said that regulatory changes have had an “enormous” impact on broadcasters' operations over the past few years. “When you don't know from one moment to the next how you're going to be packaged ... or if you are moved from to one channel to another channel, you lose subscribers. That has a rather significant impact on your bottom line,” she said. The CMPA report said expenditures were highest in the specialty television market, with $508 million spent on programming in 2009. Pay television and private conventional expenditures were $77 million and $176 million, respectively. Spending was for the most part in line with revenues for the sectors, with specialty drawing in $2.409, pay television $696 million, and conventional $1,971 million. Fusca said conventional stations will maintain an important position in the broadcasting industry in the coming years thanks to the blockbuster series they produce. But Paradis said the growing popularity of specialty stations may come into play at the CRTC's upcoming hearing on the group-based licensing renewals. Paradis said most specialty services are asking for a reduction in Canadian content requirements. “If the CRTC says yes or no, that we'll see. But if the CRTC says yes, it's going to bring down the numbers,” he said. The CMPA's report was created in collaboration with the Association des producteurs de films et de télévision du Québec and Heritage Canada. kfournier@thewirereport.ca

Broadcasters spending more on individual Cancon projects, but producing less

Broadcast | January 21, 2011

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