The CRTC Wades In

WHERE YOU END UP depends on where you start.

That's the most important thing to remember as you parse the decisions released yesterday by the CRTC.  The decision on Consumer impact is a hoot too.  We're going to have a lot of angry Canadians, quietly seething in their quiet, seething Canadian way.

Time to buy the entire nation a mouth guard, methinks.

The brief they had to consider was simply massive -- revisit the entire framework of the Canadian broadcast system & figure out how the business needs of the various players should be balanced. 

Ignore people who talk about "market-based" this or that, because that's a canard.  Like a lot of industries in Canada, broadcasting has always been very managed and protected.  There's always been a thumb on the scale in one way or another.  The problem is that the last time the CRTC changed the weight of the thumb, the domestic TV industry kind of died. Whoops.

A lot of other things have happened in the 11 years since the CRTC shuffled the deck.  The rise of the Internet offered a whole new way to distribute programming -- much (not all) of it illegally.  Cable's power rose, as did the number of specialty channels, who profited from two revenue streams -- traditional advertising and subscriber fees -- carved out dimes & nickels on your cable bill tha flow back to the companies that own them.

Broadcasting used to be a great gig in this country -- a "license to print money," they called it.  That's largely because of the CRTC.  The CRTC had rules in place that allowed Canadian networks to substitute American signals with their own so long as they showed the same program at the same time. This simultaneous substitution -- "simsub" -- was very profitable, and also locked Canadian private networks into the same kind of mindset you see from a zombie computer during a phishing attack; freed from the need to think or create, they became addicted to going south twice a year, buying whatever U.S. product they could, and showing it at the same time.

The problem is that while all this was going on there were warning shots on the horizon that presaged big changes coming.  The U.S. networks they bought all their product from started to see that their future as middlemen was tenuous -- and so they got more into owning and developing the product that they showed.  Time was, 70 or 80 percent of the shows you saw on U.S. Tv came from independent studios like Warner Brothers.  Now that's down to about 20-25%.   Add in the internet, streaming, cable channels' growing audience base, and the shrinking relevance of the advertising model, and there were all sorts of canaries in the coal mine.

But for the most part, the Canadian private nets were blissfully unaware of this. They'd outbid each other for shows -- sometimes even paying to put a show on the shelf so that a rival wouldn't get it.

So the economic tsunami that hit in 2008 hit the Canadian networks way worse than their U.S. counterparts.  They'd gotten used to being easy middlemen. They didn't bother to care about having anything new and different of their own -- viewing homegrown programming as a "tax" and an afterthought.

Over the same period, Cable became far more profitable and powerful. First there were all those cell phones that they were overcharging you for. Then there's the internet pipe that threatens that Broadcast model, and all the VOD and sweet sweet Porn money that comes with it...

Twice before, hearings at the CRTC were consumed by the fight between Cablers (called BDU's -- broadcast distribution units) and Networks. Networks wanted fees for their signals like specialty channels get.  Cable said 'hell no.'   The same fight happened in the USA by the way, but there the channels had a much stronger argument -- local news was a strong profit centre at most stations, and each of the networks had a passel of shows that millions of people like to watch.   In Canada, the nets had to invent the whole "Save Local TV" thing to paper over the fact that a) they'd pretty much dismantled anything local over the last two decades and b) they didn't really have much to offer beyond the same U.S. shows that Canadians got from the U.S. network feeds already on their cable dials.   By not diversifying, or reading the signs that a model was going away, these nets were fast becoming the first victim of that model.

At the same time, Cable co's like Rogers & Shaw got nice and fat, first by having protected monopolies in certain regions, and then by being protected from foreign ownership.

But this fight -- "give us fees"  vs. "stick it" -- never got anywhere. Both industries acted like Children and refused to come to a deal.

That's past as prologue.

Back to where you end up depending on where you start --


Employees at CTV got a terse email last week informing them that the "decision on Value For Signal was expected Monday."  This is pretty funny, in a gallows way, because it shows that although the decision was much wider in scope than that, and encompassed much more -- that's the only thing that they cared about.  When the decision came down -- essentially, the CRTC punted on this point, referring it to the Federal Court and telling the two sides to negotiate a fee, which has really worked well so far -- most of the broadcasters reported the news like their little part of it was the only thing that happened that day.    If you're actually, really worried about local TV, and continued vibrant reportage -- that should worry you a bit.  One of the most disturbing things through this whole period has been watching how the Broadcasters had no compunction blurring advocacy and editorial.  The idea of "journalistic independence" does not apply.  It's the biggest growing trend in Canadian broadcasting -- and it's actually pretty terrifying. But I think I'll wait for my friend Howard to examine that part of it and do it justice.  Oop. Look. Them retired folk are fast & crafty -- he's already up with his take.

The Cable companies, too, kind of got handed a bag of flaming poo yesterday.   They face the prospect of angry customers getting mad at them not just because their cable bills are going up, but because now they're going to have to figure out a way to block out broadcast signals on the U.S. nets if the nets show a show at a time other than when the Canadian rights holder wants to show it.  Simsub has been transparent for the viewer, mostly -- that's why the CRTC only gets complaints every year when people realize they can't see the Superbowl commercials.  Just wait.  Now you're going to have blue screens of death all over the dial.  An audience who is moving to a "TV Everywhere" model is going to see more restrictions placed on how and when they can watch -- restrictions that go against what they've had for 40 years.   The audience reaction to this is going to be ugly.  If Rogers wasn't Rogers and didn't so totally suck, I'd almost feel sorry for them.

As for Canadian Creatives?  Well.  That's a more complicated stew.  First, I think it bears repeating that one of the problems in the past has always been that the Canadian nets have never really wanted to make Canadian programs. That's why they came up with photocopies of Entertainment Tonight when the rules allowed them to do that.  That's why they ran cheap, low quality crap like Train 48 that nobody watched or cared about.  That's why they used to whip CanCon shows around the schedules, promote it poorly, and throw it on Saturday night at 10.    Corner Gas became inconvenient, as did little cable successes like Trailer Park Boys, because they seemed to suggest that maybe there was a market for homegrown -- just as there is in every other Western country in the world.  (Western country? Geez, check out "Nollywood" sometime.) 

There's stuff in the decision that shows that the CRTC is at least trying to incentivize spending on domestic stuff.  There's a push for 5% of revenues to be spent on a very narrowly designated set of programs -- drama, kids, documentaries -- and it looks like cheap and cheezy magazine shows won't qualify.   There's a closed loophole where nets won't be able to count money they get from the Canadian Media Fund as part of THEIR contribution -- so they'd have to spend more.   There's also something in there the Broadcasters wanted -- some of the money they spend can be on stuff they produce in-house.  Get off the teat of that U.S. programming, they say.  Diversify, at least a bit.

But there are a lot of potential pitfalls too.  A reduction in CanCon levels.  Removal of spending requirements for Specialty channels (instead, each "ownership group" ie: Canwest, CTV -- will have their revenues & homegrown spend calculated across all their properties.)

Seeing as the nets in the past have done everything they can to get around rules, and use every loophole, the worry is that there's a whole lot here to find ins and outs.  Maybe the problem was too complicated to solve, but the solution as proposed is byzantine.  So though ACTRA was confident enough to come out and blast it right away.  (God love them emotional actors!) the WGC posted a more cautious, "Ummmm..." response on their site.   There's a lot to parse here.

And one of the worst parts of it is that there's now another one-year push as people figure out the rules.  Hearings will happen next year.  Which means that no changes will be concrete til 2012.  Which means that by that time the Domestic TV industry will have endured about 5 years of complete violent uncertainty.  I don't know if there's anybody who can hang on that long.  I'm in Florida right now, and four people in the last two days have emailed me Real Estate listings in Southern California.

Ha ha.

Where you end up on this depends on where you start.  What about the observers, then?  Well, a generation of viewers who have felt entitled to getting any program when they want it, where they want it, on the screen they want it, are probably going to shrug and keep doing what they're doing.

Banks who have been tougher about gap financing Producers trying to make TV product, I don't imagine are going to get much looser.  It's not a confidence-building decision for them.

Anyone who's been sick of the "Save Local TV" "TV Tax" B.S. is likely to get a whole lot sicker. Goodbye "Old Spice, I'm on a Horse" guy, we hardly knew ye.

And then there's professional observers like John Doyle  at the good grey Globe & Mail.  He writes a pretty on-target analysis of his own about the decision.  But you can see ample evidence in the article of where he starts, too.  It's seemingly from a place of real fatigue.

Part of Doyle's schtick has always been as a bit of a crankypants and occasional scold.   That's been cut with a true & trenchant insight into the good of our homegrown TV -- what we do well, what we don't.  If you read his book A Great Feast of Light, where he started becomes ever more clear -- an Irish immigrant for whom TV was both a window and an escape. There's no question that his love of the medium comes from a deep and honest place.

But in the last year he's also curdled.  You can see it in the way he takes a swipe at "creatives" (his quotes) every time they come up.   Example from the latest article:

At the same time, it has to examine the interests of the unions and guild representing actors, writers, directors and producers of Canadian programming, those groups who like to call themselves “the creatives.” The cable and broadcasting bosses don’t have a monopoly on egotism, believe me. The Canadian TV racket is shark-infested waters, and somebody has to regulate.

Can someone please send this man a cookiegram?

You can see it in the way he returns to certain subjects over & over like a monomania -- the position of women in the TV racket (most of what he writes here I agree with, but it's like every third column now,) and a certain fealty to certain voices that have led to a few weird reviews that seem to be going out of the way to not say something bad.  Surface praise, dark waters underneath -- followed by a review that just goes completely over-the-top.

I have sympathy for this.  I stopped writing about shows here that I didn't enjoy because of one too many weird and whiney emails.  So I try to do the positive sell now when I like it, and go by the golden rule of not saying anything at all when I don't. But then again, I'm also directly engaged in the same biz.  I expect what I write here -- even when it's critical -- to be read through the filter of an insider's view, not a dispassionate critic's.

I guess Canadian TV will eventually drive you insane.  There's no way around it.

Doyle's second book, about soccer, "The World Is a Ball," drops in a few weeks, just in time for World Cup Fever.  He's an excellent writer & I hope it's a real hit, because I think he's looking for a way out of the TV writing ghetto. And really, who can blame him?

The thing is -- I don't want to chicken little here -- but I think we should probably all follow his lead a bit.  Got a book in ya? How's that knitting?  I hear Green Roofs are a big grower.

Not saying it's the end of anything.  But not saying it's not. Welcome to the age of uncertainty.  Try to look natural.  Smoke'em if you got 'em.

EDIT: 6:20 p.m.  Bill Brioux covers a part that I left out -- the effect on the CBC.  Personally, I think CBC was wrong to join in actively in the carriage fees debate just because politically it makes it so easy for the anti-CBC wingnuts to accuse it of "double dipping" -- Boy, those guys get a whole lot of fucking complaining for their 37 bucks a year, don't they? -- but he stresses too that the most devastating aspect of this is the "hurry up and wait"-ism of the slow, slow, slow bureaucracy at work:

by dithering on a CBC decision, he will end up punishing the people who write, produce, act and everything else associated with Canadian television at the one network that actually makes Canadian television. CBC--hit as hard as the other guys in advertising revenue during the deep recession--admitted they were short some $60 million a year ago when they started cutting back on show orders. CBC president and CEO Hubert Lacroix said yesterday that "one thing is clear: this will force us to cut programs and services, and our ability to fulfil our mandate has been compromised."...

The CRTC decision has probably doomed one or more of these shows and will likely mean shorter seasons for some of the others. While they were busy finding a way for Canadian cable and satellite subscribers to pay for CTV and Rogers' Olympic party, found money that bails out a decade of reckless, unchecked spending on U.S. imports, the CRTC burns the one guy with a schedule full of Canadian shows. Von Finckensten may have honestly thought he was protecting the CBC, but he really is punishing the network and anyone in the business of doing the one thing the CRTC was supposed to protect--making Canadian television.