Radio / Television News

BANFF 2017: Why Canadian broadcasters “need more control over the rights game”

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THE ANNUAL CANADIAN MEDIA LEADERS panel at the 2017 Banff World Media Festival pivoted from the future of production, development, and broadcast screen-based content to the onslaught of streaming opportunities commanding the increased attention of domestic advertisers and viewers.

Those leaders included: Rick Brace, president of Rogers Media; Randy Lennox, president, Bell Media; John Brunton, chair and CEO of Insight Productions; Sally Catto, general manager, programming, CBC; and Barbara Williams, EVP and COO, Corus Entertainment.

Running throughout the discussion was a strong sentiment that non-Canadian OTT services should be paying their fair share of domestic taxes and other tithings for the privilege of distribution in Canada.

In my view, Barbara Williams ably led the charge on this theme, although she did recognize that in certain circumstances Netflix has been an important partner, citing Travelers as an example.

Indeed, Williams raised the stakes by inferring that even U.S. linear networks such as NBC, Fox, ABC, and CBS should be subject to more restrained distribution in Canada. She was firm that "we need more control over the rights game" and that the original "major disruption to our broadcasting system was when we allowed full U.S. Channels to be distributed in Canada".

Resources her company pours "into Mary Kills People are more than the license fees for NCIS… we're doing the best we can with American channels still on our territory,” she added.

Wow, I'm now past my fourth decade listening to Canadians denounce American channels!

She also batted away concerns about CPE (Canadian programming expenditures) and PNI (programs of national interest) expenditures, stating that with the group licensing decision the 30% CPE will actually translate into an overall increase in Cancon for Corus and "spending a lot more money on Canadian content in the next few years.” (although much of that will go to more cooking, home improvement and other reality fare.)

As for PNI, "Shaw has always been at 5%… Corus had a higher PNI due to kids programming… but with the removal of genre protection, 5% makes more sense and isn't unreasonable,” she said,

Also, Williams made the good point that while lifestyle programming about gardening in Canada might not be PNI, it is uniquely Canadian content and not something easily replicated in Arizona and that this "helps keep Canadian broadcasting alive… (and contributes) a distinctiveness that Canadian advertisers will support".

She also recalibrated linear TV's challenge to provide targeted metrics comparable to digital. "Corus is far along the path to target TV audiences much like digital… buyers are not rushing away from smart, targeted linear advertising… (which is often) way better than some of our digital competitors… we have aggressive technology work happening,” explained Williams.

“None of us have lost out to Netflix in the acquisition of first-run, prime time content,” – Barbara Williams, Corus Entertainment

And in a moment of pride she added that Canada "has always had American giants in our TV space, but none of us have lost out to Netflix in the acquisition of first-run, prime time content.”

But rights were her thing, it seemed, adding "CBS is fighting with Sony on rights ownership of SWAT… this is becoming a scale game… (we need to do something because) there's going to be a cliff instead of a slide… right now we need ten feet in ten camps… that's what keeps us up at night".

In terms of observations, it's hard to imagine that simultaneous substitution will be around in the long term given the massive changes afoot; that terms of trade seem problematic; and that Canadian producers may soon be left to negotiate a "reasonable position" on projects… but not much more.

Rogers Media’s Rick Brace offered that he still believes in television and that those tricky “millennials are watching up to 17 hours a week.” Yes, we needed to keep developing our digital fronts "in earnest", but overall he was confident in the future of Canadian TV.

He was also the first to raise the safety concern. According to Brace, advertisers are actively seeking “safe havens” where they can know for certain their ads are placed against inoffensive, (and regulated) video content and not left to the vagaries of the Google AdWords algorithm, where their ads might pop up on unsavory web sites.

Finding your ad on an online porn site is not what most folks want by way of brand association and Rogers is “developing analytics to assure non-offensive affinity and complementarity… and it's working, more advertisers are coming back to conventional TV,” claimed Brace.

Sally Catto added that "60% of Canadian media time is spent on digital, including OTT"; and that the CBC has experienced a 37% increase in viewership of its online content. She referred to over 450 new scripted programs available in North America in the last year, such as the CBC and Netflix production Alias Grace, and that getting those onto as many platforms as possible was an essential business.

Catto also noted that $600 million of ad revenue, in Canada, between 2014-17 has migrated from linear to digital platforms (this figure has been corrected from an earlier version of this story). The CBC's investment in content is up 48% over the last four years, and in exchange for that outlay on Canadian fare the broadcaster increasingly expects “a piece of the backend… and the goal of a sustainable business.”

In fact, the striking thing here is not that the public broadcaster asserted ownership of produced content, but that virtually everyone on the panel did as well without even a murmur of disagreement in a Banff audience populated by independent producers.

Randy Lennox acknowledged that Bell Media had four productions going with Netflix; but that the real elephant in the room was Amazon Prime – perhaps followed closely by the likes of Google and Facebook.

With Netflix at over 5.4 million Canadian subscribers (some estimates say that number is closer to 6 million) and Amazon Prime (where video is included along with perks like free delivery) already at 2.8 million, Lennox warned that "we're looking at maybe five powerful U.S. OTTs here in the next year or so.”

He also noted that the Perform OTT Group is busy grabbing sports rights in Europe, and North America is very likely next.

Lennox was also clear about "looking for the best talent" without regard to CPE or PNI percentages, "but because we want to do it!"

None of this is easy, though.

CraveTV has 1.5 million subscribers and competes with Netflix, which has a US$6.5 billion content budget… "even Facebook has 56 scripts in development now" said Lennox.

Plus, like Corus, Bell Media has about an overall equal spend on non-Canadian and domestic content.

John Brunton, from his producer perspective, was frustrated that dealing with American OTTs meant having virtually "no control or input on day of broadcast commitments or scheduling, which makes effective marketing impossible.” Nor do OTTs offer anything in the way of ratings or viewership statistics.

“Maybe the CBC can even be a powerful global Canadian OTT.” – John Brunton, Insight Productions

That said, “there's an army of OTTs that are going to fly across our borders” and, in his opinion, “only the CBC can challenge them because it owns its rights… maybe the CBC can even be a powerful global Canadian OTT.”

Brunton made the case that Canadians need to become “aggressive exporters” (something, it’s worth noting, both the CRTC chairman and Heritage Minister have publicly hoped for, too).

He put a finer point on it by asserting that "my colleagues on this panel won't exist unless they partner internationally… because renting American content in the long run is a fool's game… we live beside a beast whose content will pour over our border like a tidal wave… (and we're already) trying to pull rabbits out of our ass every day just to keep up.”

Despite the mixed mammalian and metaphorical imagery, Brunton made it clear he's "gambled all in" and now one-third of his company's resources are going into digital with such projects as Youngster – a new "safe platform" for millennial parents highly allergic to misinformation on the web.

Once again, the future is safety – very Canadian – and it's probably a little bit about leverage too.

That leverage appears to be heading full bore digital despite the courageous counter claims. While it might be fun to contemplate, there is precious little likelihood that private Canadian media companies will address their existential dread by joining forces and agreeing to ownership percentages on a single OTT juggernaut to take on the U.S. armada (as astute Cartt.ca readers will know, this has already been attempted and fell apart).

And in the Trump era, options like geo-blocking of American content would likely morph into the mass suicide of Canadian cultural industries.

Stay tuned, as we say.

Bill Roberts is a long-time Canadian TV executive who is also a freelance writer, radio personality and town councilor. He is in Banff for Cartt.ca to cover the Banff World Media Festival.