CRTC hearings on C-11 begin Monday: here’s what to expect

Graphic illustration from cultural advocacy group Friends

November 17, 2023

On Monday the CRTC begins three weeks of public hearings on the key points of supporting Canadian content as Bill C-11 brings online platforms into the regulatory circle for the first time.

As typically happens, Parliament paints broadcasting legislation with the broad brushes of principle and ambiguity and then hands off the half-finished canvas to the CRTC. Having also received the Heritage Minister’s somewhat inscrutable policy preferences through last week’s Policy Direction, the CRTC is now tasked with completing the regulatory portrait.

It’s the first of three rounds of Commission hearings over the next year. The popular interest in C-11 normally creates its own cold fusion of energetic news reporting, so for those who will be following the proceeding here’s a basic primer of what is at stake in this first go around at the Commission.

The main task of the Commission’s “Step 1” hearings is to establish a “initial basic contribution” (IBC) to Canadian content to be levied on all broadcasting entities, especially the online streamers, but also licensed Canadian broadcasters, cable companies, and even social media platforms such as YouTube.

The Commission’s proposed IBC —“proposed” as in it’s not decided yet but it’s going to happen anyway— is a cash-only contribution to Canada’s various media funds that subsidize “Canadian” programs.

At the moment, only Canadian cable (and satellite) companies make such cash contributions, pegged since the 1990s at a robust five per cent of their annual revenues (the cable industry’s gross profit margin was 11.2% in 2021-22). 

The lion’s share of the $390M in annual cable cash goes to the Canada Media Fund and a short list of bespoke Certified Production Funds (CIPF). After the CMF money is matched by the federal government, the CMF and CIPF cash becomes ten per cent of the financing for Canadian television shows, especially high-cost dramas and documentaries.

As for Canadian broadcasters —major networks as well as “indie” programmers like APTN, Wildbrain or OutTV— they don’t pay into media funds. Instead, they make their contributions to Canadian content in kind, not in cash, by programming Canadian shows, profitable or not. The usual in-kind programming contribution requires these broadcasters to spend about 30% of their revenues on Canadian shows that they either make in-house or commission from Canadian video producers. The Commission calls it Canadian Programming Expenditures (CPE).

(Radio operators also contribute cash, on a much smaller scale, to musician development media funds FACTOR and MusicAction).

As yet, the foreign streamers don’t contribute to Canadian content, neither in cash to media funds nor in kind within their own programming offerings. That’s about to change with Bill C-11.

The Commission wants to move quickly to get streamer cash into the broadcasting system to make up for the cable companies’ declining contributions to media funds, essentially reinflating the tires on the funding of Canadian programming. 

So the question is not if the Commission will establish an IBC, but what the tariff will be and whether any broadcasting entities will be exempted. 

Some of the regulatory filings submitted to the Commission in advance of the hearings don’t signal a harmonious atmosphere over the next three weeks. The large Canadian media companies are cranky and they have proposed that the US streamers pay in cash at a tariff set at twenty per cent of their annual revenues. That’s a non-starter, and they know it.

The streamers are not cranky, but they are arrogant. In an act of collaborative defiance, the Californian cartel of the Motion Pictures Association of America, Netflix, Apple, Amazon, and Disney —also Spotify on the music side of the streaming ledger— oppose any cash contributions to Canadian media funds and have refused to name a price they would pay. In other words, a tariff set at zero. That’s also a non-starter, and they know it.

The IBC will be the number one focus of these upcoming “Step 1” hearings. 

But it won’t be the Commission’s exclusive focus. Later this year in Step 2, the Commission will look at Canadian programming obligations beyond the IBC. Those will be the Canadian Programming Expenditures, the “in kind” programming of Canadian content. Also in Step 2, the Commission will set expectations of “discoverability,” meaning the priority and promotion given to Canadian programming. Finally, the Commission will review the definition of a Canadian program, a perennially contentious set of criteria determining what Canadian programming is eligible for subsidies from the CMF and government tax credits and also what programming expenditures count towards fulfilling CPE obligations.

All of these Step 1 and Step 2 issues weave together into an overall broadcasting policy for Canadian content. So the Commission is expecting Step 2 considerations of Canadian Programming Expenditures, discoverability and Canadian programs to bleed into the Step 1 debate over the IBC over the next three weeks.

Beyond the tariff-setting for the IBC, expect to hear a lot about to whom the media fund cash ultimately flows.

The CMF and CIPFs currently subsidize Canadian television producers to make shows that they license for broadcasting to Canadian networks and indie channels. As well, there is a tiny $19M Independent Local News Fund that bankrolls local news, but only at 18 independent stations not owned by the CBC or the Canadian news networks.

The list of worthy recipients is going to proliferate, the only question is how far.

The Indigenous Screen Office is staking out its claim as a new media fund, making the pitch to be its own CMF for funding Indigenous video content. A similar request for music development has been submitted by a little known group, the Indigenous Music Office. 

The Heritage Minister has asked the Commission to consider a more comprehensive local news fund, available to some or all of the 70 local stations operated by the CBC and private TV networks.

Another candidate for a possible media fund is what you might call “the public service channels,” or what the Minister has called programming “of exceptional importance.” That might include programming that is licensed by the Aboriginal Peoples Television Network, Accessible Media, the Weather Network, the gay and lesbian-focussed OutTV or the multi-ethnic channel OMNI. The Black Screen Office has just been recognized by the Commission as a CIPF, so that will also be part of the funding discussion too.

Despite their refusal to name a price for the IBC tariff, the American streamers are talking up the creation of bespoke media funds owned and operated by each streamer as a way of sending cash to, for example, Indigenous producers who would sell their programs directly back to their Hollywood patron: a Netflix Production Fund or a Disney Production Fund is what they have in mind. 

That’s enough of a primer to get you started. The Commission’s official notice of consultation will take you a layer deeper. More to come over the next three weeks. 

***

If you would like regular notifications of future posts from MediaPolicy.ca you can follow this site by signing up under the Follow button in the bottom right corner of the home page; 

or e-mail howard.law@bell.net to be added to the weekly update; 

or follow @howardalaw on Twitter.