Content exporters ask consulting panel for CMF envelope they can access, match

A trade association for Canadian-based television and content distribution companies is seeking new federal incentives it says would lead to increasing up-front distributor investments into Canadian productions and boosting exports. The proposals include tweaking tax credit eligibility for distributors, allowing distributors to access Canadian Media Fund program funding, and creating a new $100 million fund to increase the size of distribution advances. Plus it wants a new overall Canadian content export strategy. That’s according to its consultation submission to the expert panel that’s examining how to modernize Canada’s broadcast and telecom laws. The Canadian Association of Content Exporters (CACE) proposed the series of policy measures to deal with foreign-based competition, ballooning Canadian production costs and drops in financing from broadcast license fees -- along with getting most bang for their buck on content exports. The CACE formed in 2016 and is made up of members that include 9 Story Media Group Inc., Blue Ant Media Inc., Cineflix Multimedia Inc., Corus Entertainment Inc., DHX Media Ltd., and Entertainment One Ltd., and others. Its submission warns that “current policy measures and support programs have not adapted to new global and domestic market realities,” and broadcast industry consolidation and turbulence has led to fewer commissions for Canadian producers and less funding. “Production budgets have risen significantly in recent years, and challenges faced by Canadian broadcasters have made it difficult for their licence fees to meet these increased costs,” it said. “Producers are thus increasingly looking to international markets to make pre-sales that will enable them to finance their shows.” The association says new funding measures it’s proposing would encourage Canadian producers to work with Canadian distributors at earlier stages in production, fund more content and “stem the current leakage of public investment” that’s benefitting foreign studios and over-the-top players. It recommended to the panel allowing “established” Canadian distributors access to a proposed new CMF funding envelope -- public funds companies would then have to match. It noted currently only investments from broadcasters can trigger access to the fund. “We suggest the use of a Canadian broadcast fees as the only eligible trigger for Canadian Media Fund funding is an outdated regulatory mechanism, given the variety of online platforms that presently exist,” it said. The key term in the submission appears to be ‘matching funds.’ The association also pitched a $100 million distribution advance “top-up fund” that would help Canadian companies “win bids on premium Canadian content against large, vertically integrated foreign competitors" like Comcast Corp.’s NBC, Sony Corp. and ITV PLC. It notes those companies all have broadcast channels with large wallets that can pay out bigger advances. Distribution advances are upfront payments that fund the start of a project and allow the distributor to license the rights. Under the proposed fund, Ottawa would match advances Canadian distributors make to fund Canadian productions. The submission argues such a fund would increase the amount of leverage Canadian companies have in negotiating distribution deals, including with online over-the-top streaming services such as Netflix Inc. and Amazon.com, Inc. “By working with Canadian-based global distribution companies, producers are able to avoid the easy temptation of selling directly to foreign online platforms such as Netflix and Amazon or foreign international conglomerates such as NBC Universal, Sony, and ITV who take worldwide rights in all media for what amounts to a cost-plus deal that returns little or no value beyond this initial sale to Canadians,” it said. The association argues that fund could form a “cornerstone” in developing a national television and digital content export strategy -- something it is also calling for, echoing a recommendation from the Canadian Media Producers Association’s 2017 report called Exporting Canadian Television Globally. The third policy it’s proposing would somewhat relax the eligibility criteria for the Canadian Film or Video Production Tax Credit, called the CAVCO point system, by adding another point to it. That would specifically count for productions where the producer “contracted with a Canadian-based global distribution company so as to grant the worldwide rights, exclusive of pre-sales, to exploit the production in all media, prior to the commencement of principal photography.” It acknowledges that modifying the points system would be controversial, so it came up with two alternative proposals for bonus programs that could expand the tax credit. The broadcasting and telecommunications legislative review panel has said it plans to make public all of the submissions from various groups containing their long-term lobbying asks, but only once it issues a report on its consultations mid-summer. The Wire Report obtained the list of stakeholders who made formal written submissions to the consultations and published it last Friday. That list shows very few foreign over-the-top streaming players sent any kind of written documentation into the consultations, with notable absences from Amazon, The Walt Disney Company, Comcast and Apple Inc. — With reporting by Kyle Duggan at kduggan@thewirereport.ca and editing by Anja Karadeglija at akarad@thewirereport.ca

Content exporters ask consulting panel for CMF envelope they can access, match

News | March 12, 2019

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Content exporters ask consulting panel for CMF envelope they can access, match

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