Call it a blue-sky meeting for the tv business in Canada, those three days earlier this month when the Canadian Association of Broadcasters, Global, Baton, wic, chum and the cftpa trundled to Hull, Que. to discuss their respective realities with the crtc.

Although the Nov. 5-7 hearing was originally struck to debate national networks in Canada, the darling of the proceeding was Canadian drama. The conversation ran the gamut from national net benchmarks to definitions of primetime, but the axis of the debate was clearly ‘What we have the least of,’ says Alliance Communications ceo Robert Lantos.

‘Fiction in primetime at home.’

Despite talk of ‘partnership’ and ‘strategic alliances,’ the national network hearing crystallized existing tensions between independent producers and broadcasters.

The former are preoccupied with leveraging two years of expansion and consolidation in the private broadcasting sector into commensurate support for Canadian drama. The broadcaster’s take is most aptly summed up by one exchange between chum executive vp and coo Fred Sherratt and crtc vice-chair telecommunications David Colville.

After the Friends of Canadian Broadcasting provided a program chart comparing the primetime schedules of cbc, ctv and Global and used red to shade the Canadian programming, the catchall for the commission became how to ‘get more red’ onto the chart. chum, appearing late, hadn’t seen it and wasn’t familiar with the hyperbole. ‘I don’t know what you mean by red,’ said Sherratt at the chum appearance.

‘I hope it isn’t all our blood.’

Payback time

Not to put too fine a point on it, but it’s payback time according to the independent production sector.

Changes within the private broadcasting system over the last few years should benefit not only the station groups but also the system as a whole, says cftpa president Elizabeth McDonald.

‘There is no doubt that we expect some of the financial benefits of this consolidation to come back in terms of more spending on Canadian programs.’

The sentiment isn’t particularly popular in the broadcasting ranks.

‘Some parties seem to think [national network licensing] is a way of tapping untapped resources,’ says Peter Miller, senior vp and general counsel for the cab. ‘There are none.’

Ditto WIC Television president and cab television chair Jim Macdonald. ‘The very belief that there is ‘more’ to extract, given competitive realities and the diminishing market share of conventional broadcasters and networks, is astounding.’

Making the point that the cab appears defensive, new crtc vice-chair Charles Belanger says the commission isn’t looking to play Mafia.

‘We are trying to explore alternate ways not to extol or extract, because we’re not in that business, but to find insight into what’s required to get the system moving.’

It doesn’t mean, however, that the regulator isn’t entertaining the proposition that consolidation and expanded reach for Global, Baton, wic and chum should add up to increased commitments.

The assumption is that there are efficiencies to be gained by bigger groups and that those stronger broadcasters would be better able to address the underrepresented programming categories, said Colville to the Global team.

CanWest Systems president Jim Sward says he doesn’t expect to have commitments reduced. ‘But I don’t want you to leave here thinking you can get more.

‘Consolidation has come at a cost. Acquisition transactions were additional costs. The reality as we know it is that conventional television stations play a dominant role in the sector but it is a diminishing dominant role. It’s going to shrink.’

Speaking to slimmer margins on American programming, increased competition, and audience fragmentation, Macdonald says the private broadcaster’s reality needs to be considered.

‘The ability of broadcasters is driven by one thing called profit. Profit is in decline 13%. We’re not whining about it, but we need to be clear about what we see on the horizon.’

Show me the drama

What the cftpa sees on its horizon is the opportunity to redress the imbalance between foreign and domestic drama programs on the mainstream nets. Primetime drama and comedy are the ‘flagship magnets’ which attract the largest audiences around the world, says Lantos.

‘The difference between Canada and the rest of the world is that in Canada the greatest gap between imported programming and domestic programming exists precisely in the area of primetime fiction to the detriment of the domestic component. For all intents and purposes our broadcast landscape remains today the most colonized of the major industrial nations and it is in our cultural, industrial and national interest to change that.’

According to the cftpa, there’s room to grow the Canadian drama percentage of primetime. Each of the three nets has 21 hours a week with which to work. Lantos suggests a short-term goal of 25% of those hours for Canadian programming in the underserved genres, rising over time to 50% ‘so we can say we have a real original Canadian broadcasting system.’

Also focused on specifics is the Directors Guild of Canada, which is pushing for a 7% baseline commitment to the underserved categories (which could extend beyond drama, music and variety to include long-form documentary, says McCarthy Tetrault’s Peter Grant, acting counsel for the dgc). The increase to 7% from 5% would translate into two more hours per week of Canadian drama, based on an average budget of $1 million per hour.

Licence fees in aggregate should be increasing but they’re declining, says Grant, who points out that there are ‘major structural incentives’ for the broadcasters to fill their Cancon quotas with news, sports and programs that come cheaper than drama.

‘The only reason you have those four hours [of original drama in primetime] is because ctv and Global are required to by licence.

‘There’s no magic in a particular number, but 7% is certainly attainable in English Canada. Applicants in Montreal, Alberta and Vancouver all had higher percentages on the table. I believe the Craigs had 12% in Alberta.’

Broadcasters seek Cancon `flexibility’

For their part, the broadcasters are challenging the fundamentals of the commission’s long-held ‘drama in primetime’ directive. In play are everything from the definition of primetime (6 -12 p.m. for the broadcasters vs. 8-11 p.m. for the drama producers), the ability to include promotions dollars in the Canadian expenditure tally, and the definition of ‘underserved’ program genres. All are being negotiated under the header of allowing the broadcasters increased ‘flexibility’ in meeting Canadian content obligations.

Global president Kevin Shea makes the point (albeit a little more gently than Sherratt, who accused Lantos of ‘hawking his wares’ and ‘asking the commission to help sell his product’) that the producers making a pitch for more drama, are those who produce drama product.

‘Mr. Lantos and Mr. MacMillan [Atlantis ceo Michael MacMillan] came to you to talk about drama, which is fine. That’s the business they’re in. We’re in the broadcasting business all day and things have changed. We all remember when children’s programming was an underserved program category. Now we have more children’s channels than we’ve ever had before. Is it still an underrepresented category of programming? There are opportunities across the schedule for a variety of programs including kids, docs, drama, even game shows.’

In the minutia of scheduling, maximizing Canadian programs may require a more creative approach than slotting them in primetime, says Macdonald.

‘In other words, fish where the fish are. Pitting our best against the u.s. best may not be the best of all possible solutions.’

But the cftpa urged the commission to resist the request to relax the primetime criterion for drama.

‘Hiding from the competition by ducking the most watched time periods is not the way to build bigger domestic audiences and demand for Canadian programming,’ says Lantos. ‘It is not the way of the future. It is tantamount to surrender. If the broadcasters find the business of putting a modest amount of Canadian programming in primetime too onerous, I would be delighted to buy their business.’

crtc chair Francoise Bertrand expressed her own consternation with the flexibility argument.

‘I’m concerned when you say the profitability on Canadian programming is bad but you want increased flexibility. I’m not sure how we could have less regulation, less constraint, and have the system take care of itself.

‘You’re looking at the bottom line. We’re looking at a balance between social, cultural and economic objectives.’

Broadcasters and

producer equity rights

Throughout the hearing, the means by which to drive more money into the system was a parallel preoccupation. Although the broadcasters are running hell-bent for leather away from a national network definition which smacks of another layer of regulation and increased commitments, Douglas Newell, a partner with ad agency Harrison, Young, Pesonen & Newell, told the commission that the ‘creation’ of a third national network would increase the advertising pie by some $30 million.

Other ideas came from wic’s vp corporate affairs Grant Buchanan. ‘Revoke the teleshopping order, extend simulcast, fee for carriage, stamp out piracy, get the u.s. specialties to leave some money on the table, make us must-carry, give us specialty licences, change the foreign investment regulations, lower your fees. In part, [the broadcaster’s] position comes because we’re not sure of how much is coming our way from this shopping list, so we’re unsure of what to bring forward.’

In the context of the drama discussion, the most popular proposal for increasing the broadcaster’s margin on Canadian programming was the pitch to become ‘equity partners’ in the production, although the dynamics depend on who you talk to.

As per Great North Productions’ Andy Thomson, producers would welcome increased equity participation from the broadcasters, ‘as long as that equity investment didn’t come at the expense of licence fees.’

Generally that’s not the case, Lantos adds.

‘It’s never been a problem that we have turned down an offer from a broadcaster over and above a licence fee. Generally the discussion is here’s the licence fee now what more do we get and there’s no additional money put on the table. The point is that their licence fee will trigger the funds. Producers are already carrying a large portion of the risk. We’re not in the business of selling airtime in Canada.’

Sward says obviously the producers would like to have as many minority shareholders as possible, but ‘it’s not necessarily a deal that you and I would take. There’s a big difference between a broadcaster becoming a producer and a broadcaster becoming an equity shareholder.

‘The big profit is in the distribution company. Your best deal is to get into the same kind of business. To take a minority position in a production – there are probably better uses for your money.’

Even if equity participation grew in popularity, problems remain with the approach, says Grant. One has to guard against self-dealing. ‘You could get to the question of whether I’m choosing it because I think it’s a great program which could be meaningful for my audience or I’m choosing it because I own it.’

If the amount of attention paid to limited funding access is any indication, the broadcasting lobby to relax the rules which tie its hands in terms of production, distribution and access to funds will be high on the agenda come the spring hearings on Canadian content.

‘Why is the contribution from the independent production community enshrined in the Broadcasting Act? We didn’t have publicly owned independent production companies with broadcasting licences at that time. The relationship between the broadcaster and the independent production company should reflect the reality of today,’ says Macdonald.

Citytv president Moses Znaimer says the lines between producer, broadcaster and distributor have blurred while key components of the policy framework remain ‘entrenched in old-world labels.’

‘How else to explain the unbending policies of Telefilm Canada which actively serve to discourage players such as ourselves who have the desire and the talent to branch out into new genres of production such as drama.’

So now what?

* If there is agreement that Global, Baton and wic are national networks by virtue of their reach (Baton is the only broadcaster to put a benchmark on the table of 70% penetration), then the question of how to proceed with licensing the networks needs to be addressed.

Global is suggesting that each come to their next licence hearing with a plan for the whole system which incorporates the various licence conditions of the affiliate stations. However, some don’t have renewals scheduled until after the year 2000

* In its submission, Baton has tabled a study which compares the revenue, Canadian program expenditures, and profit before interest and taxes of Baton and Global. It is suggesting the commission take the same information from all the players, add to it the hours of local reflection and contribution to categories 7,8, and 9, and publish it annually in a common format

* With the producers advocating giving the broadcasters licences to fill all holes in their respective systems that inhibit their ability to maximize national distribution, refiled applications coming from chum for Vancouver and from Global for Vancouver Island aren’t unlikely.

* In the ‘going’ category, Global’s investment in Traders could be headed for the high-jump again. Sward told the commission it looked like Global wouldn’t renew it next year, although vp Canadian production Loren Mawhinney jumped in to make the point that a firm decision has yet to be made.

The commission will submit a report based on the hearing to the government in February or early March. The drama dialogue will continue in the spring with hearings on Canadian content.