GATINEAU – When Corus Entertainment asked the CRTC to amend its conditions of licence so the big broadcaster could delay some Canadian programming expenditures (CPEs) due to unforeseen increases in its revenues, few expected the company to receive much sympathy within the broadcasting industry.
After reviewing most of the interventions it has become clear that they have no sympathy from industry players.
For example, The Writers Guild of Canada (WGC) challenges Corus’ arguments, saying the company “argues that this ‘dramatic’ spike in its CPE requirements will leave it in a more vulnerable financial position for two reasons. Firstly, it would lead to ‘sub-optimal programming decisions’. Corus argues that it cannot increase budgets for existing programming in a way that improves its quality, and that any new programming would be ‘rushed and of lower quality’, leading to ‘an over-supply of single-season shows’ and a ‘glut of programming’, that are ‘unlikely [to be] green-lit for subsequent seasons’,” reminds its submission to the Commission.
The WGC particularly takes issue with the notion that an approximate 7% increase in spending by Corus would result in a “glut” of programming, either domestically or internationally. “This is frankly absurd,” says the WGC. “The significant growth of content services over the past decade or so, both on traditional platforms and online, is a testament to the voracious appetite of the market, both at home and abroad, for audiovisual content. Canadian television services alone spent a total of $4.1 billion on programming expenditures in 2017, of which $23 million represents just 0.56%. Even carving out English programming from that, the percentage is still vanishingly small.
“And Corus mentions the export potential of this programming at least twice, so the ‘glut’ it refers to must include the international market, which is worth hundreds of billions of dollars. Suffice it to say, that an additional $23 million investment by Corus in 2020, representing perhaps a few hundredths of one percent of total spending—if that—does not risk flooding the world with a glut of programming.”
The Canadian Media Producers Association said in its response to the CRTC it “appreciates that Corus may have various business priorities it wishes to pursue, it cannot defer its CPE, PNI, and independently-produced programming requirements in favour of achieving other priorities. Specifically, Corus is requesting to defer its policy obligations under the Broadcasting Act to contribute to the creation and presentation of Canadian programming in favour of its own business decisions to make additional payments on debt,” argues the CMPA.
The Directors Guild of Canada, for its part, argues “we believe that the situation described by Corus is caused by treating the CPE requirement as a ceiling rather a floor. If Corus CPE spending had been slightly higher than the required annual calculated CPE requirement, we can suppose that this situation would not have arisen and caused a perceived obstacle for Corus achieving its strategic priorities.”
“They are problems of Corus’s own making, and of those who ultimately control Corus.” – Writers Guild of Canada
“ACTRA (Alliance of Canadian Cinema, Television and Radio Artists) recognizes this is a challenging time for the industry and broadcasters need some flexibility. However, it must not come at the expense of achieving the objectives of the Broadcasting Act and Canadians’ ability to see high-quality, distinctive entertainment programming on their televisions and other screens,” added the actors’ union
As WGC also wrote: “to the extent that corporate debt and ‘pure-play’ status are problems for Corus, they are problems of Corus’s own making, and of those who ultimately control Corus.”
To the pure-play argument, both Bell and Rogers Media (they call themselves the Interveners in a submission) pipe in on Corus’ notion that operations are different for it as compared to the other two big private broadcasters which are attached to much larger corporate entities. “We disagree with Corus’ assertion that the Interveners could rely on their related telecommunications or broadcasting distribution undertaking businesses to finance or absorb any losses that may occur under a normal operating environment. The Interveners operate and must manage the financial obligations of their respective media divisions separately from the other divisions within their parent companies.”
The Interveners as well as Blue Ant and Québecor argue revenue volatility is something which affects all broadcasters and therefore the remedy Corus is suggesting could be applied to all broadcasters.
On that, Québecor offers interesting numbers: On discretionary channels between 2014 and 2018, revenues increased 2% while expenditures increased 7%, while net profits before tax decreased by 38%, yet CPE are calculated from the amount of revenues not profit, so more flexibility is required, for everyone.
The Corus reply
In its lengthy reply to the interventions, Corus reiterates its main points:
It says the respondents dramatically underestimate the scale of the challenge. Yet, “fundamentally, Corus seeks additional timing flexibility, nothing more. No spending reductions will result. No risk will be passed on. No agenda is at work,” it said in the response.
“Corus’ proposed amendments would result in no spending reductions on Canadian programming over the next three years. They would merely permit us to defer an additional 1.5 percent of our previous year’s broadcasting revenue (an additional 5 percent of Corus’ annual CPE obligation of 30 percent of prior’s year revenue) for two years.
“Our proposal aligns with Commission practises and represents modest short-term relief for a Canadian broadcaster in a uniquely challenging, time-sensitive position. This position was driven by swift, dramatic, unexpected fluctuations in our revenues, and a production cycle that does not enable content greenlit today to be placed on air and amortized tomorrow,” Corus concludes.
One statement from Corus caught our attention: “We agree with the interveners that there is no shortage of good ideas and projects ready to be made. But we are looking for great ideas not just good ones. It would never be in Corus’ interest to refrain from commissioning a great idea, and the CRTC should rest assured that if a great project were on the shelf we would commission it.”
