OTTAWA – CRTC chair Konrad von Finckenstein said Monday that Bell Media is taking a “one step forward and two steps backward” approach to its Canadian content commitments during the first day of the group-based licence renewal hearings.
While the chair lauded Bell and the other broadcasters for finalizing a terms of trade agreement with the Canadian Media Production Association (CMPA) after years of badgering from the production community, he criticized the media giant for what he sees as a step back when it comes to the company’s Canadian programming expenditure (CPE) and programs of national interest (PNI) proposals.
“When you look at what you’ve done in terms of CPE and PNI it seems to me that you’ve taken every flexibility we’ve given you like no priority programming, reduced exhibition requirement – but then when it comes to what is really the heart of our regulatory function to make sure that you produce Canadian content, you’re nickel and diming us. There’s no other way to describe it,” von Finckenstein said.
“We gave you the quid which was reduced exhibition and no priority programming… You’ve taken advantage of all that, but I don’t see that you’ve given me anything on the other side.”
Kevin Crull, president of Bell Media, said the pro quo is delivered in the company’s submission. (An earlier version of this story quoted the wrong Bell Media executive in this spot. Cartt.ca regrets the error.)
“We had to increase our baseline spending on PNI. [It] will be increased to meet the 30% minimum that the Commission has outlined,” he responded. “I submit to you we will demonstrate that we spent less than that in our baseline period over the last six years and so as a matter of fact the pro quo for us is increasing.”
Crull added that while the company tries to achieve a balance in terms of Canadian program spending, the PNI portion of CPE is usually associated with programs that are the most financially challenged. “When we have breakthrough opportunities, our PNI will at times bounce into the 6% – 7% range, but historically our PNI also as a percent of revenue has averaged just over 5% and we think of that as a floor to give us the flexibility to never go below, but when opportunities present themselves to go above,” he said.
The goal of the hearing, noted Crull, was to ensure the substantial flow of funds to the independent producers for PNI and going above the 5% level may actually be detrimental to the system.
“We actually believe the capacity of the system to…produce high-quality work will be strained should it go any further. So we think the vitality and the viability of independent production community producing programs of national interest is in great shape over the licence term,” he added.
With respect to CPE and PNI spending, the CRTC has decided to hold separate in-camera sessions with each of the large broadcasters to gain a better financial understanding of changes to the calculation of CPE. The Commission will provide an explanation, respecting the confidentiality of the numbers presented in-camera, to the hearings’ parties.
Commissioner Rita Cugini delved into the details of licence renewals of Bell’s specialty services, focusing first on MuchMusic and MuchMoreMusic. She wondered why the request to increase non-music-related programming should be granted.
Rick Brace, president of specialty channels and CTV production, noted that the company is trying to evolve the channel as its target audience evolves. He noted that MuchMusic used to be the location where viewers would see the debut of new music videos, but that‘s no longer the case with the emergence of VEVO, an online music video service launched as a joint venture from the big four major music labels (Ed Note Update: and also one which CTV has forged a business relationship with, providing Canadian content and selling Canadian ads).
The dilemma the service find itself stems from the fact that 70% of its audience is going elsewhere to consume music videos yet 50% of its programming has to be music videos, according to Brace. So the company wants to leverage the $5 million investment it made at its Queen St. and John St. location in downtown Toronto to let bands perform as well as produce more shows like Disband (now called Discovered) to make up 85% of its programming with the remaining 15% dedicated to programming aimed at the young adult audience.
Brook Peters, director of programming at Much/MTV Group, noted that the company is looking to the independent production community to aid in program development. “A great example would be a new young adult scripted series in the vein of our number one rated Canadian series Degrassi, but in this case it may not have a direct music relation. However it will speak to the experience of being a young adult in Canada today,” he said.
Bell Media was also quizzed on proposed changes to its Alberta educational channel ACCESS. The company says that using TV for educational purposes has outlived its purpose and therefore wants the ability to add more non-education oriented programming.
“I’ve been looking at your web site here and the only thing I can find in terms of what you do with education is the fact that the cheerleaders in Hellcats go to college. There’s nothing else there from a practical basis,“ said Commissioner Peter Menzies. “Shouldn’t we just be having a grown up conversation here in talking about what sort of licence this really should be?”
Kevin Goldstein, VP of regulatory affairs at Bell Media, replied that the company is only trying to renew the licence. “It is currently licensed as an educational satellite to cable undertaking and the rules that apply to that are established on a case specific basis. That’s all we can do as part of this process,” he said.
During the company’s opening remarks, Bell also insisted that the Commission has to take into account the new operating environment, particularly as Netflix and other over-the-top (OTT) video providers gain considerable traction. In less than a year, the online programming distributor has attracted close to one million customers in Canada.
“This massive scale and [advantageous] cost structure allows Netflix to outbid Canadian broadcasters for exclusive Canadian program rights – online and on television,” added Crull. “We’re willing and able to compete for viewers, provided our key competitors, regulated and unregulated alike, are subject to the same rules. The problem lies with the fact that OTT competitors can offer massive libraries of first-run programming, but have none of the regulatory obligations that Canadian broadcasters and BDUs have, and make no financial contribution to the Canadian broadcasting system.”
