Changes ahead for ‘use-it-or-lose-it’ as terms of trade expires

While online discussion forums are rife with debate — and more often, complaints — about why Canadians can’t access popular American television shows legally online, Canadian content producers are navigating how to ensure their work continues to be seen on digital platforms. “In a world where Canadians are increasingly in control of what they watch, how and when they want, there is increasing consumer pressure to have unrestricted access to any program, at any time, and on any platform of their choosing,” said a briefing note for Heritage Canada deputy minister Graham Flack. The partially redacted May note, obtained by The Wire Report under Access to Information legislation, was meant to update Flack on “information and next steps on the idea of ‘use-it-or-lose-it’ rules from a copyright, film and broadcasting policy perspective.” Independent producers can have use-it-or-lose-it provisions either negotiated for or embedded in contracts with Canadian broadcasters, which stipulate that if certain broadcast rights aren’t exploited within an established time frame, the rights revert back to the producer, who can then sell them elsewhere. “They vary from agreement to agreement, but essentially use-it-or-lose-it provisions help ensure that producers’ shows are seen by Canadian audiences,” Erin Finlay, CMPA’s chief legal officer, said in a phone interview. “So use-it-or-lose-it, or other terms of trade that are entered into between producers and broadcasters, help to ensure that the best Canadian shows are made accessible and available.” Use-it-or-lose-it rules were a part of the terms of trade agreement between the Canadian Media Producers Association (CMPA) and BCE Inc., Rogers Communications Inc. and Corus Entertainment Inc., which expires Sept. 1. That agreement was signed in 2011 following a CRTC directive for the two sides to come to a deal. But 2015’s Let’s Talk TV decision removed the requirement for broadcasters to remain bound to those agreements, saying they could apply for removal as of 2016. Challenges to the decision in the Appeals Court and to the federal cabinet were unsuccessful, and in the latest round of licence renewals for large English-language ownership groups, the CRTC approved applications from Bell, Rogers and Corus “for all television stations and discretionary services, to delete the condition of licence requiring adherence to a terms of trade agreement with the Canadian Media Producers Association.” While independent producers could always negotiate use-it-or-lose-it provisions with broadcasters, the agreement set out a minimum standard, Finlay said. “Use-it-or-lose-it can apply to just the broadcast of a show, it could split up different rights, different revenue rights, different ways of monetizing the rights. They can be vary from show to show, negotiation to negotiation,” she said, adding that the terms of trade agreement eased some of that discussion “because it became a standard term of all broadcast licence agreements.” Under the agreement, that standard allowed for 12 months for exploitation of rights that were “transaction based (eg. on a per episode or discrete program basis) non-linear on-demand exhibition on all platforms, where the consumer secures temporary or rental access to the content, as opposed to a permanent copy;” electronic-sell-through or download-to-own rights; original digital content; and in-flight and DVD, home video rights before they reverted back to the independent producer. As noted in its submission last year to Heritage Minister Mélanie Joly’s review of Canadian content in a digital world, the CMPA has reached out to the private broadcasters to “seek a renewed partnership” in the absence of the former terms of trade agreement, “so as to best position both producers and broadcasters to share in the national and international success of shows that they partner on together.” In a follow-up email, Finlay said “to date, the private broadcasters have not taken CMPA up on its offer to renegotiate terms of trade.” As the briefing note points out, “audiovisual rights and licensing are highly complex, and issues quickly become interrelated.” For example, it highlights that “once a distributor has purchased the rights to a program for a specific territory and platform (e.g.: rights to broadcast in Canada), he/she makes business decisions about how to best make a profit from the rights, including the decision not to make the program available,” adding, in a footnote, that this could stem from a program not being profitable or “the program may compete with other programs the distributor owns.” It added: “This can create situations where programs are not available in Canada, or not available online.” And while that may create angst for those who want to watch international content online, Canadian producers wanting eyes in Canada have — in some cases — more of a leg to stand on. In addition to individual negotiations with broadcasters, there is also a hard-and-fast rule for TV projects funded by the Canadian Media Fund (CMF), which has a list of rights, outside of traditional broadcast and other eligible licences, that the producer can retain after 12 months of non use. These include free and paid internet broadcast or distribution, theatrical distribution, digital rental, subscription video on demand (SVOD), and DVD or Blu-ray distribution. The concept of use-it-or-lose-it has been a part of the CMF’s guidelines, in some form, for at least 15 years, Stéphane Cardin, CMF’s vice-president of industry and public affairs, said in a phone interview, well predating the CMPA’s terms of trade agreement. “And really it’s, in our view, become more and more relevant in more recent years because our interest at CMF is the content that we support be viewed by as many different people as possible,” Cardin said. “And obviously people are watching the content now, even if it is television content, not just during the original broadcast, but on catch up and otherwise after that on video on demand services and online.” The Heritage note pointed out that during the consultation process for the minster’s review of Canadian content in a digital world, “concerns were raised by producers that broadcasters and film distributors were not making full use of the rights licensed to them, by not fully monetizing productions. On the other hand, broadcasters claimed that that the rights resting with producers deter them from exploiting the commercial value of television programs to their full potential.” But while use-it-or-lose-it provisions are something that producers would typically like to see included in every contract, the CMPA isn’t advocating for them to be enshrined or prescribed in any official government policy, Finlay said. “It’s not necessarily appropriate that it would be regulated,” she said, because of the complexity of the negotiations. “Producers and broadcasters enter into a partnership arrangement and they hopefully position themselves to monetize the content the best way that they can together and individually. And so that’s going to depend who is best placed to sell, to market, to make shows available to Canadian audiences and to international audiences.” Cardin also acknowledged the need to find the right producer-broadcaster balance. “Broadcasters as well now are investing significantly in shows and they want to not only air them if they have a conventional channel and on their specialty channels and on their catch-up sites and on their SVOD sites, if they have some,” Cardin said. “So obviously they’re interested in… being able to exploit the project on as many platforms as possible. So it’s a delicate balance to find what is, I guess, perhaps best handled by the broadcaster and then what other rights should be exploited by the independent producer.” — With reporting by Charelle Evelyn at cevelyn@thewirereport.ca and editing by Anja Karadeglija at akarad@thewirereport.ca

Changes ahead for ‘use-it-or-lose-it’ as terms of trade expires

Broadcast | August 25, 2017

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Changes ahead for ‘use-it-or-lose-it’ as terms of trade expires

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