Canadian Television Fund – Remarks for Sylvain Lafrance, Executive Vice-President of French Services, and Richard Stursberg, Executive Vice-President of English Services, before the CRTC

February 4, 2008

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Introduction

Good afternoon Madame Chair, Commissioners and Canadian Radio-television and Telecommunications Commission (CRTC) staff. My name is Sylvain Lafrance, and I am the Executive Vice-President of CBC/Radio-Canada’s French Services. I am accompanied today by three colleagues from CBC/Radio-Canada. To my right is Richard Stursberg, Executive Vice-President of the Corporation’s English Services. Previously, Richard spent four years as the Chair of the Canadian Television Fund (from 1998 to 2001) and later served as the Executive Director of Telefilm Canada. To his right is Marcela Kadanka, Senior Director, English Television, Arts and Entertainment Programming and CBC/Radio-Canada’s representative on the Canadian Television Fund’s Board of Directors. And to my left is Marie-AndrĂ©e Poliquin, Director of Operations, Financing and Business Affairs, French Television.

We have participated in the Commission’s “fact-finding and consultation process” and have addressed a number of issues with regard to the Canadian Television Fund (CTF) Task Force’s recommendations in our July 2007 written comments. Today we would like to focus on two key questions:

1) Does the CRTC Task Force’s recommendation to split the Fund serve the public interest?

2) What changes to the existing structure of the CTF would best contribute to objectives related to the production and broadcasting of Canadian programming?

Before I begin, I would like to raise an initial, fundamental question: Why are we here today?

Shaw and VidĂ©otron, two Broadcasting Distribution Undertakings (BDUs) that have done very well for themselves in the current regulatory environment, stopped making their monthly contributions and have waged a very public battle against the CTF and its effectiveness in delivering programs to Canadians – through Shaw’s numerous newspaper ads and Quebecor’s proposal to create a self-serving production fund. It is interesting to note that M. Jim Shaw, the main instigator of the so-called CTF crisis, has decided not to appear.

This totally negative vision of the CTF is not shared by other members of the television industry. The Canadian cultural community appreciates the CTF and recognises its enormous contribution to developing high-quality production in Canada. We believe that the current process should yield recommendations on how to make the Fund even better. Not rip it apart. 

I will now address our first point.

1. Does the Task Force’s recommendation to split the Fund serve the public interest?

As we identified in our written comments, splitting the Fund into private and public sector funding streams is not in the public interest. We plan to address the following three points:

  • First, BDU contributions are public funds.
  • Second, we need to set the facts straight about CTF-funded programming.
  • Third, we will demonstrate that guaranteeing CBC/Radio-Canada’s access to the CTF builds audiences for Canadian shows and ensures that there is a broad diversity of programming within the system.

BDU Contributions Are Public Funds

Let’s start with the nub of the issue. Shaw and VidĂ©otron seem to believe that by virtue of having to contribute to the CTF, they should be able to dictate how the money should be spent, and that it should be spent in a way that benefits them. This is simply not the case.

Compulsory BDU contributions to the CTF are public funds. This money is used to fulfil a recognised public policy objective; it is administered in accordance with Government policy and is subject to continuing government oversight.

Some distributors have also voiced other concerns, outside of the CRTC’s process, about the legality of these contributions. Based on numerous media reports and full page ads which I am sure you have seen, Shaw and VidĂ©otron have suggested that the compulsory CTF contributions may be an illegal tax. Most recently, Shaw, in its December 2007 CRTC filing requesting to appear at this hearing, stated that the BDUs’ contributions to support the CTF are indeed an illegal tax, but provided no details.

We disagree. To implement the wide-ranging policy objectives of the Broadcasting Act, the Commission has been entrusted with very broad regulation-making powers, as well as the power to subject licensees to the conditions that it deems appropriate. The introduction of the BDU contribution to support Canadian programming is clearly within the Commission’s mandate and authorised under the Act.

We have also obtained a legal opinion from McCarthy TĂ©trault which concludes that the mandatory contributions to the CTF that are imposed by the BDU Regulations are a valid regulatory charge. We have already filed this legal opinion in the context of the BDU regulatory framework review and would be pleased to place it on the public record of this proceeding.

To summarise, it is clear that 1) the CRTC has the legal authority to require BDUs to contribute to the CTF; and 2) these BDU contributions are public funds intended to fulfil public policy objectives, namely the creation of Canadian programming.

Given that BDU contributions are public funds – as are, of course, the amounts provided by Canadian Heritage

  • there are no grounds for making a distinction between them nor for splitting up the CTF.

Richard will now highlight a few facts about programming funded by the CTF.

[Richard]

The Facts on CTF-funded Programming 
One misconception about the CTF is that it has not been very effective in delivering popular programming to Canadians and that, somehow, splitting the fund in two will contribute to increasing the popularity of Canadian programming.

I would like to address the effectiveness of the CTF first. The CTF, as it is currently structured, using combined BDU and Government funds, has been very successful in creating popular Canadian programming for Canadians.

According to BBM and Nielsen research, of the top 100 most popular English-Canadian drama and comedy programs aired over the last 10 years, over two-thirds have been funded by the CTF. In French Canada, the numbers are even better. In that market, over 80 per cent of the top 100 most popular Canadian drama and comedy programs in the last 10 years have been funded by the CTF. This is an admirable record demonstrating the level of effectiveness of the CTF in financing popular Canadian programs.

This overall effectiveness of the CTF has, in large part, resulted from the Fund’s ability to blend financial contributions from BDUs and from Government into a single and efficient funding source, and to distribute those contributions to eligible independent television productions, according to established common objectives and guidelines.

If it is decided that a public policy objective of the Fund should be to try to increase the popularity of funded programs beyond current levels, we believe that the most effective means to do that would be to adjust the objectives and guidelines that determine how the current combined CTF contributions are distributed. There is no need to split the Fund to achieve this objective.

And on the topic of popular programming, I would like to emphasise that there is no magic bullet for predicting audience success. Some shows, such as CBC Television’s Little Mosque on the Prairie and TĂ©lĂ©vision de Radio-Canada’s Minuit le soir, are ratings winners, and some are not. This is equally true in the US, where the top four networks collectively spend over $10 billion on programming a year, yet even with those resources, they cancel 62 per cent of all of their new shows within the first 11 episodes.

[Sylvain]

Now lets talk about the French market.

Right now, the French-language television industry does not have a market share problem: it has had enormous success attracting viewers. We feel it is largely thanks to the CTF that Québec dramas, their writers and producers have achieved such outstanding recognition, even beyond our borders.

The vitality, quality and originality of our programs are increasingly recognised in France, which has sought to imitate them or acquire them for broadcast, as mentioned in an article in last Saturday’s La Presse.

The Fund already recognises this distinction between the two language markets and puts less weight on audience criteria in the French market, where audiences are robust. The challenge in the French market, where ownership is already highly concentrated in the hands of a few broadcasters, is to maintain both diversity across programming genres and opportunities for the independent production sector. If it were decided that the CTF had to put greater emphasis on audience criteria in the future, diversity of content in the French market would suffer from this decision.

Splitting the Fund into private and public streams would increase administrative costs and decrease the amount of money available for investment in Canadian programming. These changes would not be good for the system.

CBC/Radio-Canada’s Access to the Fund Builds Audiences for Canadian Programming and Provides a Diversity of Choices

Another misconception is that the Task Force’s recommendations will have no impact on CBC/Radio-Canada, whose envelope is governed by the Contribution Agreement between the CTF and the Government. This is untrue.

CBC Television is the only national English-language broadcaster that fills its best time slots with Canadian programs. This includes shows such as Little Mosque on the Prairie, the series The Border, and the series Sophie, based on TĂ©lĂ©vision de Radio-Canada’s Sophie Paquin. This partly explains why CBC Television airs 9 of the 10 most popular Canadian programs in under-represented categories. One of these 10 runs on CTV, while Global has none.

In French markets, TĂ©lĂ©vision de Radio-Canada leverages CTF funding to ensure that a diversity of innovative programming choices is available to viewers, in a wide variety of styles and settings. TĂ©lĂ©vision de Radio-Canada is the only French-language conventional broadcaster that broadcasts every genre of programming supported by the CTF, including drama series, documentaries, innovative performing arts programs, and children’s series.

Many of the programs currently enjoying success well beyond our borders, could not have been produced had strict market forces been the sole consideration.

I think it is useful to recall why the Department of Canadian Heritage dedicated 37 per cent of all combined CTF funds to independent productions earmarked to air on CBC/Radio-Canada in the first place. This guarantee was established during a time when the CTF’s emphasis on audience was increasing. The Government determined that the national public broadcaster, driven by mandate considerations which are broader than maximising audiences, should not face a decreasing share of CTF funding.

If CBC/Radio-Canada’s access to CTF funding were reduced, Canadians would have fewer opportunities to see Canadian programs at times when they are watching television in the greatest numbers and would have fewer opportunities to watch a wide variety of shows produced from across Canada. We fail to see how that would serve the public interest.

[Richard]

2. What changes to the existing structure of the CTF would best contribute to objectives related to the production of Canadian programming?

And that brings us to our final point. I would like to focus on how to ensure that the Fund’s resources continue to be managed in the best interests of all Canadians – and not the interests of its private contributors. To be precise, I am referring now to the remainder of the combined funds. The CTF continually adjusts and improves its funding criteria. If Government and the CTF Board want to increase the popularity of CTF-funded programming, the most effective way would be to make adjustments within CTF’s existing framework through the guidelines and the criteria for the distribution of funds.

And the CTF has already taken steps to better support the process. For example, it has recognised the wisdom of piloting series and supporting more episodes for successful series.

We believe that CTF will continue to build on these kinds of ideas. If increased popularity is sought, for example, in Canadian English-language drama, CTF can prioritise its objectives for that specific genre in favour of audience growth, and place less emphasis on volume, program diversity and other public policy objectives.

Using the Broadcaster Performance Envelope adjustment factors, the CTF could increase the weight of audience, and decrease others. It could also define and measure audience for a specific genre in a way that acknowledges and supports television hits.

Finally, in order to achieve the greatest audience impact, we believe that CBC/Radio-Canada should be permitted to compete for some of this funding. Why? CBC/Radio-Canada is already one of the most important broadcasters in terms of delivering audiences to Canadian programming. Therefore, allowing us to compete for these funds would achieve the greatest impact on audiences. We would be pleased to provide you with additional details on how this could work.

We have been talking about our experience with the CTF as a broadcaster. I would like to spend a few minutes talking about my experience as a former Chairman of the Fund.

When I became the Chair, the CTF was in a period of transition. When I left, it was in a period of transition. It is still in a period of transition.

The CTF is not, and has never been, static or rigid in its approach to supporting Canadian programming. The CTF’s greatest strength has always been its adaptability. It has evolved and changed with a changing industry and I expect it will continue to do so.

When the dual administrative structure, which was a legacy of the marriage of the old Cable Production Fund with Telefilm’s Broadcast Fund, became too cumbersome, the structure was streamlined and one administration was put in place. When concerns were expressed over the transparency of the Fund, tough conflict of interest guidelines were introduced and independent Directors appointed to the Board. When the CTF wanted to make the Fund more responsive to the market, the broadcaster envelope system was introduced. And similarly, changes have been made to make the Fund more Canadian, more transparent, more market-driven, and better governed.

No funding system is perfect, but as a former Chairman I give the CTF high marks for sticking to its goal, which is the creation of distinctively Canadian programming. In that, the CTF has been a great success. I also give it high marks for doing what most organisations find very difficult to do, and that is to adapt and evolve when it is necessary to do so.

And that brings me back to the beginning of our presentation. Why was the CTF Task Force struck in the first place? Because Shaw and Vidéotron want to dismantle the CTF for their own private interests.

That is not a good reason to split the Fund. Splitting the fund will not create more Canadian hits. It will result in fewer resources available to create Canadian programming since administrative costs will increase.

We believe that the efforts to improve the Fund are best accomplished within the existing framework. The CTF has demonstrated that not only can it adapt to a changing market – but it remains the best vehicle to promote Canadian programming. This afternoon, we have set out some proposals to increase the popularity of CTF-funded programming for your consideration.

Thank you for giving us the opportunity to present these comments. We would be happy to answer any questions you may have.

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