THE RECENT CRTC DECISION to reset broadcaster minimum spending requirements on programs of national interest (PNI) to a lowest-common-denominator level of 5% (see here for more) dealt a blow that the Canadian television industry is still reeling from. In the aftermath, the Writers Guild of Canada (WGC) filed a petition to Cabinet seeking to set aside or refer back the decision.
There was very little in the decision that provided a rationale as to why PNI minimums were so summarily slashed, making a letter that former CRTC Chair Jean-Pierre Blais sent to Hedy Fry, the Chair of the Standing Committee on Canadian Heritage, all the more interesting. In that letter, dated May 26, Blais defended the CRTC’s decision. Because comments in the letter are typical of those who support lower PNI requirements, it’s worth unpacking several of them to see if they actually hold any water. Let’s go step by step (the passages are all italicized). Early on in the letter, Blais says:
“As a result of [the CRTC’s 2017 licence renewal] decisions, the large groups will spend close to $5.6 billion to create all types of Canadian programming between 2017 and 2022. This includes spending on programs of national interest (PNI) such as drama and documentaries, as well as spending on local and national news programming.”
Firstly, Blais can’t know what broadcasters will spend because CRTC regulatory requirements function as a percentage of revenue, and Blais can’t know what broadcasters’ revenues will be next year, let alone in 2022. Blais and the CRTC appear to have relied on broadcasters’ revenue and/or programming expense projections to reach these estimates. But, for one thing, these are estimates, not certainties, so saying broadcasters “will” spend “X” on Canadian programming is highly misleading and speculative. Corus EVP and COO Barbara Williams acknowledged during the public hearing the impossibility of predicting the future broadcasting environment when she said, “there is not a world any more where you can set a five-year strategy and say, ‘I know in five years we're going to be here, so we'll march along a path and execute on that.’ We're lucky if we know where we think this world is in six months.”
For another thing, we’ve seen broadcasters estimate their revenues and Canadian programming expenditures (CPE) in the past, and their track record for accuracy is not good. Actual combined Bell Media and Shaw Media designated group revenue and CPE were $1.2 billion and $237.8 million, respectively, lower between 2012 and 2016 than what these groups projected they would be during the first group licence renewal proceeding in 2010. Those are big differences. That Jean-Pierre Blais would blithely repeat the predictions of broadcasters whose prognostic faculties have been so faulty in the past is troubling.
Secondly, Blais is confusing the issue by emphasizing CPE requirements rather than PNI. Canadian programming expenditures refers to spending on Canadian programming in all genres, including news, sports, and lifestyle/reality programming — PNI refers to a subset of CPE for particular genres such as drama and documentary. For years, the CRTC has consistently held that PNI genres require specific, targeted support. It’s why PNI exists as a concept at all. The WGC — along with the CMPA, DGC, and ACTRA — are upset about PNI reductions. Faced with criticism on PNI, Blais pivots to CPE. Why? Because it’s a bigger number, and because CPE percentages weren’t reduced like PNI was. But it’s a misdirection, and Corus’ Williams did the same thing in an interview with The Globe and Mail. That both the former CRTC Chair and a major broadcaster use the same misleading argument is disappointing, to say the least.
“Until now, PNI requirements varied across the broadcast groups. Some had a 5% requirement while others were different. In our decisions, we formalized our long-standing view – which dates back to our original 2010 Group-based approach to the licensing of private television services – that a minimum of 5% of gross revenues to support PNI is required, particularly for the English-language television broadcast groups.”
This is misleading in the extreme, because it suggests that 5% for PNI had long been the CRTC’s standard, which was merely “formalized” this year. Let’s look at what actually happened — and bear with us here, because we have to wade through some regulatory-speak to get where we’re going.
In 2010, the CRTC looked at broadcaster spending on Cancon, including PNI, by English-language broadcasters and determined that the system which had been in place up to then wasn’t working. It decided to “eliminate the current exhibition requirement for priority programming and replace it with an expenditure requirement that will apply to categories of programs that the Commission considers to be of national interest and that, in its view, require continued regulatory support.” Here’s how the CRTC decided to set spending levels on the then-newly created category of PNI [emphasis added]:
“The Commission does not, at this time, collect separate expenditure information for category 2(b) [long-form documentary] programs. Consequently, it is not possible to evaluate licensees' past expenditures in this category. Analyzing past expenditures for drama (category 7) only, the Commission has determined that group expenditures of at least 5% of gross revenues over the licence term is appropriate. The large groups will be required to file, as part of their renewal applications, their historical spending on long-form documentaries and award show programming. Based upon its analysis of these past expenditures, the Commission will establish, at licence renewal, a base level spending requirement for programs of national interest and determine whether any increases over the licence term may be necessary.”
And that’s what it did. As such, it’s pretty clear that the CRTC in 2010 didn’t come up with 5% arbitrarily. The CRTC wanted to set minimums based on historical spending, and 5% was just the minimum starting point used because they had insufficient data at the time. By 2011, the CRTC did have the necessary data, and that’s why different groups wound up with different — and sometimes higher — PNI requirements. Because they had different historical spending levels. The CRTC consistently followed that approach at every opportunity since 2010, and it was exactly that approach that the WGC and others asked to continue. Why? Because the intent in 2010 was to increase spending on Canadian programming from those historical levels. The long-standing view of the CRTC had been to grow Cancon, not to set it at a minimum, arbitrary level. Jean-Pierre Blais' CRTC has reversed that policy, not continued it. To suggest that 5% PNI has been a CRTC standard since 2010 is simply untrue.
“By setting a floor on PNI expenditures, we are ensuring that this type of programming will continue to be well-represented in the Canadian system, while preserving the flexibility of broadcasters to invest in other types of Canadian programs to meet the needs and interests of their audiences.”
There was a “floor” on PNI before this year’s decisions…and it was significantly higher, as a percentage of broadcaster revenues, than it will be for the next licence term that starts on September 1 if the PNI decisions aren’t changed. How is that being “well-represented” in the Canadian system? Why is spending below historical levels — already in the single-digits, percentage-wise, for the new composition of the broadcast groups —appropriate? Blais is, and has been, silent on this question.
“Of course, the various groups may decide to spend more, and in our decisions we have encouraged them to do so. In fact, over the course of their current licence terms, the large groups spent more than their minimum requirements, particularly on PNI, as this type of programming is relevant and matters to Canadians. So while the CRTC continues to recognize that it is important to maintain certain regulatory support for PNI, broadcasters who are competing for Canadian viewers will very likely ensure that this programming continues to be supported beyond the floor that we have established. The projections filed on the record by the various broadcasters as a part of our proceeding confirm this.”
Setting aside that Blais is again relying on broadcasters’ projections, which have a documented history of being wrong, there’s the simple fact that revenue and/or programming expense projections do not, and cannot, “confirm” that broadcasters will “very likely” spend more than the regulatory floor on PNI. Projections are just projections; they certainly do not ensure future spending levels.
“In setting these requirements, and consistent with our statutory mandate under section 5(2) of the Broadcasting Act, we had to keep in mind that Canada's communications environment is changing. While it was important to maintain overall expenditures and help ensure a strong and diverse Canadian production sector as a result, the CRTC has remained mindful of the rapidly changing technological and business environment in which Canada's broadcasters now operate, as well as the regulatory obligations placed on these broadcasters.”
As the WGC has argued in its petition to Cabinet, the CRTC’s regulatory objectives under section 5 of the Act are subservient to the cultural policy objectives under section 3, and not the other way around. But more importantly, vague references to “changing technological and business environments” don’t get you to 5% PNI. As we repeated in our submissions to the CRTC ad nauseum, a percentage-based regulatory model automatically adapts to rising or falling broadcaster revenues. And no evidence was provided that the traditional broadcasting system as a whole is untenable. Pointing to a changing environment to justify bad policy decisions is a dodge, pure and simple.
Bottom line: Both the 2010 group-based policy and the 2015 'Let’s Talk TV' decisions introduced a number of significant regulatory benefits for private, English-language Canadian broadcasters, with expenditure requirements being the last regulatory bastion for Canadian programming. Between 2011 and 2017, the composition of the broadcasting groups changed, and so group PNI requirements needed to be recalculated. Instead, we got a lowest-common-denominator approach to PNI that lowered the floor. This was a bad decision.
The deadline for any decision regarding the WGC’s and other industry appeals to Cabinet is August 13, 2017. We sincerely hope that Cabinet will see fit to send the decision back to the CRTC, because the future of Canadian programming really shouldn’t be determined by such poor reasoning and faulty logic.
Maureen Parker is executive director of the Writers Guild of Canada.
