By Doug Barrett, adjunct professor in the Arts, Media & Entertainment MBA program at the Schulich School of Business
This is the third piece examining the current debate on the definition of Canadian content.
In the first I examined the different legal foundations of the Canadian Audio-Visual Certification Office (CAVCO) system and the CRTC system
In the second I argued that the CRTC should require CAVCO certification for all programs benefiting from “public purpose” money available because of CRTC regulation or other subsidies.
In this piece I look at the appropriate role of the CRTC content certification system given that it does not and will not deliver access to the Canadian Content Tax Credit offered under the Income Tax Act.
There are four obvious continuing functions for CRTC certification.
The first function would be to automatically issue a C number to programs that have received a CAVCO certification. This would permit broadcasters and streamers to log their Canadian programs with the CRTC.
The second would be to certify programs in categories that are ineligible for CAVCO certification. These include news, sports, game shows, award shows, reality television and pornography. Yes, there is a fair bit of certified Canadian pornography.
A third function would be to determine the time credit available for airing dubbed programming, and to determine if a program qualifies for the 150% time-credit available for Canadian drama.
A fourth function relates to the certification of what are called Co-ventures. These are defined as international co-productions with countries (almost always the US) that don’t have official co-production treaties with Canada. Co-ventures do not qualify for the CAVCO Canadian content tax credit, or any subsidy funding that requires CAVCO certification. If a streamer wanted to use this structure, it could own copyright, just as with the regular CRTC certification. But the rules provide that the Canadian producer is responsible for raising 50 per cent of the production financing and must retain at least 50 per cent of any profits. It remains to be seen whether this will be an attractive option to streamers going forward.
All the above functions are all status quo activities. So far, so good.
There is another possible function which arises because in addition to requiring streamers to make an overall financial contribution to various Canadian funds, the CRTC will likely require each of them to directly support Canadian program production like Canadian broadcasters are currently required to do.
Where streamers bear 100 per cent of the production costs of programs that technically qualify as Canadian under CRTC rules, and forego access to the CAVCO driven tax credit, and any support from Canadian Funds and other subsidies there is an argument that they are entitled to control the program’s copyright and world-wide distribution rights.
Is this appropriate? I think there is a case to be made. The streamers reason that if they pay the whole cost of a production, they should be able to own it. I accept this, but if they do own a production, they should not have access for that program to the Canada Media Fund (CMF), to any of the Canadian Independent Production Funds (CIPFs), to any new fund certified by the CRTC, to the subsidies of any provincial funding agency or to the Canadian content tax credit. As I argued in my previous piece, any programs so supported should all be CAVCO certified and Canadian owned and controlled.
If this approach were acknowledged, the foreign streamers would effectively have a two-track option to making their required programming contribution to the Canadian system. In track one, they could work with a Canadian producer in the traditional manner. Canadians would own the production and finance the program using the subsidy and regulatory system. The streamer would act as a distributor and acquire appropriate territorial rights. In track two, the streamer could opt to have no access to the subsidy system, would cover all the production costs and be able to own copyright. Track one, relies on CAVCO certification; track two, CRTC certification, pretty much on a status quo basis.
This approach would reflect the provision of the Online Streaming Act that seems to create a double standard between requiring Canadian broadcasters to make “maximum use” of Canadian resources while foreign undertakings are only required to make the “greatest practicable use.”
In my previous piece I suggested that two possible amendments be considered to the Income Tax Regulations governing the CAVCO certification system: raising the minimum Canadian points requirement from 6 to 8 points and ensuring that both the writer and director be Canadian rather than the current rule that only one of the two must be Canadian. Using the same logic, I would also suggest that matching changes be considered for the CRTC certification system, at least for programs that are not Co-ventures.
Subject to these suggested modifications, and a regulatory requirement that all projects benefiting from public purpose money use CAVCO certification, the existing two certification systems would seem to work just fine as they currently are.
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