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Baloney Meter: Big TV groups say regs won't mean cuts to CanCon spending

Aug 24, 2017

Source: National Post

OTTAWA — “We have a proven track record of exceeding our spending requirements on Canadian programming and, specifically, drama and documentary programming not because we have to, but because it makes good business sense to do so in a global media environment. There is nothing to suggest that will change going forward.”

Joint statement from Rogers, Bell and Corus, issued Aug. 2, 2017

This month the federal government asked Canada’s broadcast regulator to take a second look at decisions it issued in May that could allow some TV service providers to cut the amount they spend on so-called programs of national interest, or PNI, and French-language content.

The decisions had been supported by creative groups and others who favour stronger requirements for Canada’s TV broadcast sector to produce more original Canadian content.

While they have not formally responded, Canada’s three major broadcasting groups had argued earlier against raising the amounts they are mandated to spend on PNI, suggesting competitive industry pressures would be enough to get them to spend more than the minimums imposed by regulators.

But is that actually the case? Can Canadians expect the broadcasters to spend more than required into the future?

Spoiler alert: The Canadian Press Baloney Meter is a dispassionate examination of political statements culminating in a ranking of accuracy on a scale of “no baloney” to “full of baloney” (complete methodology below).

This one earns a rating of “a little baloney.” Here’s why.

THE FACTS

In May, the Canadian Radio-television and Telecommunications Commission reduced the minimum amount some broadcast groups will be required to spend on PNI, which include Canadian-made dramas, documentaries, comedies and awards shows.

The CRTC ruled that, as part of their five-year licence renewals, Corus Entertainment Inc., Bell Media and Rogers Media would each be required to spend five per cent of revenues on PNI. Until the decision, it was estimated spending on PNI-designated programming by the big broadcasters had reached more than 10 per cent of revenues.

The decisions prompted a lobbying blitz by 19 creative groups and unions representing actors, directors, screenwriters and producers, who warned that the change would result in a dramatic drop in the production of Canadian content. They estimated the potential cuts to investments in distinctive, original content could amount to $200 million next year, and more than $900 million over five years, resulting in a $1.1-billion drop in Canada’s GDP, based on an independent analysis they commissioned last year.

“These decisions will lead to significant job losses and reduced economic output across the country,” the creator groups wrote to Heritage Minister Joly last month, arguing that they appeared to run counter to the government’s stated goal of promoting and supporting Canadian culture.

On Aug. 14, the federal cabinet ordered the CRTC to reconsider its group licence-renewal decisions for large television broadcasters.

Joly, whose department is nearing the end of a major review of the country’s cultural policy which could ultimately result in a shift in how the government supports the creation of Canadian content, said her department wanted to achieve the right balance of investment in content and in the ability of the broadcasters to compete.

But the big three broadcast groups warned that sending the licensing decisions back to the CRTC for reconsideration would create more uncertainty for them at a time when they are already struggling to maintain audiences. And, they added, they are already spending more than what was required of them under their current licence commitments.

Bell saw its annual conventional TV revenues drop to $711.8 million last year from $836.6 million in 2011, according to figures provided to the CRTC by the company. Corus Entertainment, which acquired Shaw Media’s TV properties including Global TV at the start of 2016, saw its revenues from conventional TV fall by about $150 million over the same period while Rogers suffered a decline of about $100 million.

Over five years, according to annual reports filed to the regulator, the broadcasters have either increased, or increased and then decreased their spending on eligible Canadian content. Rogers increased its PNI spending to $13.2 million from $7.6 million in the 2012 broadcast year. Corus reported PNI expenditures of $67.4 million as of the end of August 2016. That was an increase from the $39.8 million it reported spending in 2012, although the amount was lower than a peak of $92.4 million reported in 2014. Bell reported PNI spending of $70.47 million in 2012 and a spike to $175.3 million the following year before gradually sliding each year to hit $131.16 million in 2016.

WHAT THE EXPERTS SAY

The issue of whether Canada’s big three TV groups will spend more, or less, producing home-grown content — regardless of what’s mandated by the CRTC — is at the heart of the debate.

The creator groups opposed the original licensing decisions, arguing they would allow the TV giants to cut spending if they’re not mandated to spend more.

Media policy consultant Kelly Lynne Ashton calls that a real possibility, although she adds it’s too early to tell for sure.

“There is a very real risk that the decision is not likely to make any improvements in spending on Canadian programming and may actually allow the broadcasters to spend less on independently produced drama, documentaries and children’s programming,” she wrote in a blog for the TV, Eh website.

University of Ottawa professor Michael Geist, who has publicly defended the regulator’s decisions, said that might be true, “in an older, largely closed broadcast world.

“The philosophy of the CRTC decisions is one that suggests we’re not in that old world anymore,” said Geist, who argues the TV giants will, in fact, have to spend much more on original content if they hope to survive in an environment where U.S. content that was once a cheap way to fill the airwaves is now being streamed directly to Canadian consumers.

U.S. network CBS Corp. announced earlier this month that it would expand its CBS All Access digital streaming service into Canada sometime next year.

Back in 2007, before the recession and at a time when some network TV executives were only beginning to realize their business models were falling apart, the country’s private broadcasters reported buying 4.7 per cent more foreign-produced shows than in the previous year while reducing spending on Canadian programming by 1.2 per cent.

But a lot has changed since then. Canada’s big TV players, alongside newspapers and other broadcasters, have seen revenues decline over the past decade, in particular as media industry money — along with viewers — has shifted to digital streaming services such as YouTube and Netflix.

THE VERDICT

Their most recent track record of spending on PNI versus revenues, and the views of experts on the need to produce high-quality, original content in order to survive, indicates the first part of the broadcasters’ statement is accurate. However, some of the broadcasters have made cuts to their Canadian content budgets in years when their revenues held stable. And, predicting what will happen in Canada’s TV industry has become a guessing game in recent years as the media giants adjust to the disruptive forces of an ever-changing digital world. For these reason, the statement by the big three broadcaster groups ranks as “a little baloney.”

METHODOLOGY

The Baloney Meter is a project of The Canadian Press that examines the level of accuracy in statements made by news makers. Each claim is researched and assigned a rating based on the following scale:

No baloney — the statement is completely accurate

A little baloney — the statement is mostly accurate but more information is required

Some baloney — the statement is partly accurate but important details are missing

A lot of baloney — the statement is mostly inaccurate but contains elements of truth

Full of baloney — the statement is completely inaccurate

SOURCES:

Open letter from Bell Media president Randy Lennox, Corus Entertainment EVP and COO Barbara Williams and Rogers Media president Rick Brace.

Interview with Michael Geist, Canada Research Chair in Internet and E-commerce Law at the University of Ottawa, Faculty of Law, Aug. 18, 2017.

CRTC Aggregate Annual Returns Disclosure documents from Canada’s television broadcasters: http://crtc.gc.ca/eng/industr/ann.htm

Annual/Monthly Reports Filed by Broadcasting Industry Players: http://www.crtc.gc.ca/eng/BCASTING/ann–rep/annualrp.htm

July 24, 2017, letter to Heritage Minister Melanie Joly from the Writers Guild of Canada on behalf of creator groups: http://www.wgc.ca/files/Open%20Letter%20to%20Minister%20Joly%20July% http://www

Kelly Lynne Ashton blog: http://www.tv-eh.com/author/kelly-lynne-ashton/

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