Canadian broadcasters are starkly divided about the CRTC’s proposed advertising incentives to kick start the woebegone genre of English-language drama – with CTV and Global in position for windfalls and CHUM recommending that the bonuses die on the vine.

In May, the regulator unveiled and called for comments on a series of advertising-based incentives that would reward Canadian broadcasters with additional high-priced ad time for commissioning original Canadian drama, spending more on production and for attracting audiences. The initiatives were designed to offset the financing challenges faced by Canadian producers and improve the domestic production business model for Canadian broadcasters.

The problem for CHUM is that the incentives favor the station groups that air the most-watched programs – such as Survivor, American Idol and CSI – and generate the highest ad revenue. Also, because the hit shows are U.S.-based, they have two or more extra minutes of ad time than the 12 minutes the CRTC permits for domestic shows. Currently, that extra time on U.S. shows is filled in Canada with non-revenue-generating station promotions, news updates and public service announcements.

‘We think there is undue emphasis on advertising-based incentives,’ says Peter Miller, VP of planning at CHUM. ‘They benefit CTV and Global to the detriment of virtually every other conventional and specialty player. If [the CRTC] proceeds with the ad-based incentives, we want them strongly restricted. We’d rather they not go ahead at all.’

The bonus ad time could be worth at least $80,000 per minute to the broadcaster (or $2.6 million per season of a CTF-supported, 13 x 60 Canadian drama). That extra funding, when applied to the cash flow of the Canadian drama, could put the broadcaster in a profit position for the program.

According to Miller, CHUM could lose between $5 million and $10 million per year in advertising diverted from CHUM to the added premium ad time on the hit shows carried by CTV and Global.

Tom Curzon, VP corporate communications at CTV, declined to comment, deferring to the Canadian Association of Broadcasters.

In its submission, the CAB highlights the broadcaster discord by saying the private broadcaster members could not come to a consensus about the ad-time bonuses.

Instead, the CAB (and, specifically, CHUM) is in favor of maintaining the 150% time bonuses currently given to broadcasters airing 10-out-of-10 Canadian drama. That credit is applied to the broadcasters’ Canadian-content requirements that make up part of their licence obligations. The CAB is suggesting, too, a new 125% bonus for Canadian drama that rates as low as 6/10 on the content scale.

The CAB questions how effective the ad-time incentives would be relative to the existing program requirements.

‘At the end of the day, conventional broadcasters must provide 1,092 hours of Canadian content in prime time each year and 416 hours of priority programs in peak viewing times each year,’ says its submission. ‘It would be very difficult to reach these levels if a broadcaster was to isolate their Canadian drama programs [as the CRTC suggests].’

The 150% time credit has been very successful for the specialty channels, notes the CAB, in capturing 52% of the viewing of Canadian drama.

The association, among its other suggestions, also recommends allowing Canadian broadcasters to count equity investment in Canadian programs as part of their Canadian programming expenses, reconsidering a proposal in Trina McQueen’s drama report that qualifies Canadian-made afternoon soap operas and late-night drama aired after midnight for the 150% time credit, giving time credits to entertainment programs that promote a Canadian star system, and exploring the implementation of non-simultaneous substitution to free up the Canadian television schedules.

The Coalition of Canadian Audio-visual Unions, in its submission, makes clear it prefers a return to greater regulation that dictates broadcaster spending on original Canadian drama as a condition of licence.

‘The 1999 television policy let private broadcasters off the hook regarding time and content requirements,’ says Stephen Waddell, national executive director at ACTRA and spokesperson for the CCAU. ‘We have to go back to that [era of regulation].’

That said, the CCAU is not opposed to incentives in concept and, in fact, supports the ad-based incentives in principle with refinements. ‘The incentive program is useful, but is not the panacea,’ says Waddell.

Key among the CCAU’s recommendations is raising the budget threshold for high-cost drama to $1 million (from $800,000) per episode to reflect the actual marketplace. Likewise, the cost of bonus-qualifying children’s drama should be a minimum $750,000 per hour and low-cost drama should have a floor of $250,000 per hour.

The CCAU is opposed to programs rating anything less than 10/10 content points or programs aired out of primetime (excluding children’s drama) qualifying for any bonuses.

The CCAU wants the proposed spending increase on Canadian programs accelerated so that broadcasters are spending 6% of revenue (compared to 4% currently) within three years, not five, and would prefer a target of 7% of revenues.

For its part, the CFTPA also generally supports the ad-based incentives, with refinements.

In its roster of 21 recommendations related to the CRTC’s proposed drama incentives, the producers association says the bonuses should apply only to original drama not already being done by the broadcasters to ensure that the incentives grow drama production. The CFTPA also wants program expenditures (as a function of revenues) boosted to 7% or 8% in five years and program budget thresholds increased to up to $1.2 million per drama hour.

‘Incentives are great but they are not enough,’ says CFTPA president and CEO Guy Mayson. ‘We need expenditure requirements from the commission to ensure a real commitment to Canadian drama.

‘Even broadcasters themselves are disagreeing with one another over certain points,’ adds Mayson. ‘The key is for all of us to hash out our various points of view and find a solution to get more homegrown dramas on our TV screens. Broadcasters want to make money airing shows and producers want to make money making Canadian shows. And I would say we all want to see our interests, our country and our talent on air.’