Lawyers, lobbyists, artists and various stakeholders are all gearing up for the Trudeau government’s ambitious plan to redraft the laws and policies that govern the country’s $48-billion cultural industries.
Most people found out about the sheer breadth of Ottawa’s strategy when Heritage Minister Mélanie Joly said in The Globe and Mail on April 23 that the system is “broken” and “everything is on the table” in the bid to fix it.
As soon as she announced plans for broad consultations, to be carried out in two phases this year, all major companies and groups involved in the business started to ready their pitches to the government.
“I’d say every regulatory, telecommunications and broadcast lawyer in the country has a small smirk on their face right now,” said Raja Khanna, CEO of television and digital for Blue Ant Media. “It’s going to be a generational impact.”
Valerie Creighton, president and CEO of the Canada Media Fund, said she hopes the industry – famous for infighting and entrenched positions – will look at the big picture as it moves to reshape itself.
“I think we’ve got to put aside a lot of the friction and difficulties that we’re starting to see crack this industry with that downward market pressure,” she said. “We have to put the collective interest ahead of self-interest. And that means every one of us.”
Over all, Ms. Joly has won praise for her assessment of the current situation and her willingness to reshape a complex industry that is known as much for its inertia as its technological advances. Still, there are some pessimists who fear that the government is setting itself up for failure by taking on too much.
“It’s very hard to boil the ocean,” said Ken Engelhart, a communications lawyer and the former senior vice-president of regulatory affairs at Rogers Communications Inc. “It’s easier to tackle one tiny problem and try and solve it.”
The Globe and Mail spoke to more than a dozen experts, both independent and affiliated with various sectors of the industry, to gauge what’s at stake for some of the biggest players in the industry, and the major issues the government now has to tackle.
Canadian content, or Cancon, has long been a divisive concept. At its best, it should be vital to reflecting a country and culture by telling its stories. At its worst, it can be seen as parochial, protected and in low demand.
By putting Cancon in the title of its review, Canadian Heritage has made it clear it sees this as a sector worthy of support. Ms. Joly even said that increasing the international audience for Canadian creations is one of her top priorities. Still, the government is signalling the complex array of carrots and sticks currently used to promote Cancon aren’t working as they should.
Many creators have been fed and supported by existing regulations, and if they are to receive more effective support, one major question looms: Who pays? English-language dramas, which have been the flagship content for rival services like Netflix, remain a difficult and expensive proposition for private broadcasters in a market Canada’s size. In considering this question, government will look to be friendly to consumers.
“You have people who think from a consumer perspective and they just want cheaper cable; you’ve got people that think about it from a culture perspective, and there’s nothing that we shouldn’t do in this space; and then you’ve got a lot of Canadians somewhere in the middle,” said broadcasting consultant Peter Miller.
Canada is keen to keep its best talent and to develop a system of stars, but in doing so, stakeholders will have to confront the difficult question of what is Canadian enough to qualify as Cancon.
“The industry is a mile wide and an inch deep. You’ve got a Canadian gaffer, great, but is that really Canadian content?” asked regulatory lawyer Lawson Hunter.
If there is one body that should feel as if it has a target on its back, it’s the Canadian Radio-television and Telecommunications Commission.
Created in 1968, the once all-powerful regulatory body has looked out of its depth recently as it tried to tame Canadian and international media giants into submission. The CRTC had previously decided to keep a hands-off approach to the distribution of content on the Internet and mobile devices, and the courts ruled it had no authority over Internet services providers (ISPs), which some argue should be subject to levies to increase support for Cancon.
A source said officials at the CRTC were taken by surprise when Ms. Joly made her announcement, saying the Internet had created a “vacuum” in Canada’s regulatory system.
Mr. Hunter, a former high-ranking federal bureaucrat and executive at Bell Canada, said years of technological development have made the CRTC “less relevant.”
“They really can’t bring about the changes needed, because that’s not their job,” he said.
Ottawa’s “federal cultural policy toolkit” was mostly designed during the analog age of the past century and hasn’t adapted to new realities.
“The Broadcasting Act gives the CRTC a huge amount of scope, but in a way, it doesn't give them a lot of direction,” said Mr. Engelhart, the communications lawyer. “What do you do about the Internet? The Act gives you no guidance.”
Still, both Mr. Hunter and law professor Michael Geist said that as rules and laws are modernized, there will always be a need for a communications regulator – maybe in the form of a revamped CRTC. Prof. Geist says that body’s priority should be to ensure that media giants fiercely compete for the consumers’ dollars “on as level a playing field as possible.
“You want to let the Internet do its thing and you want the regulator to ensure that people don’t mess with it,” said Prof. Geist.
Broadcasters, creators and distributors
Stakeholders in TV, radio and news won’t agree on many issues raised in the consultation, but one common concern may be access to the Canadian market by online players and what obligations that should entail.
The elephant in the hearing room may once again be the effect that Netflix is having in Canada – so much so that some industry insiders fear the question of a so-called “Netflix tax” could hijack the conversation. Netflix is estimated to draw hundreds of millions of dollars in revenue each year from nearly five million Canadian subscribers, and some will continue insisting it should have to put some funds back into Canadian content, as domestic broadcasters do.
With the government apparently focused on creators and consumers, broadcasters and distributors may fear their concerns could be pushed to the margins.
Underpinning any such changes are less publicly combustible issues that are no less important. For example, with no fewer than eight legislative acts up for discussion, “there will be some pressure to see if we can’t bring the [Telecommunications] Act and the Broadcasting Act together into a single piece of legislation,” said Peter Grant, a communications law expert at McCarthy Tétrault.
Amid a conversation about making Canadian content more globally relevant, creators will be preoccupied with “our ability to develop and retain talent and keep them in the country,” Mr. Khanna of Blue Ant said.
“The technology is putting those jobs at risk, and that is what we have to grapple with,” Mr. Hunter said.
And a news industry that has watched its business model upended by the shift to digital platforms will come to the table with an interest in such issues as tax credits and foreign ownership. Some players might push to have the tax deductibility of online advertising with U.S. giants such as Google and Facebook curbed to encourage ad dollars to remain in Canada.
Even before Ms. Joly announced the government’s sweeping review, a big shift was under way at the CBC. The latest federal budget pumps $150-million in extra annual funding into the public broadcaster, in support of its shift to a digital-first mentality.
In return for the cash infusion, the CBC must forge a five-year “accountability plan” with government, but it’s not yet clear – even to those in the CBC’s senior ranks – how that process will dovetail with the wider policy overhaul. Ms. Joly has also been tasked with reviewing the process for CBC board appointments.
At the same time, CBC president Hubert Lacroix hasn’t committed to reversing any of the 1,500 or so job cuts the CBC planned, and its expansion to new communities will be through leaner digital-only bureaus.
“Of course jobs aren’t an end in themselves. … But it’s people who make programs,” said Ian Morrison, spokesman for the advocacy group Friends of Canadian Broadcasting. “There is a tendency among some people – I would include Minister Joly – to use the word digital in a reverential tone.”
A spokesperson for the CBC said it welcomes the new review, and that “the need for a broad consultation with Canadians and the industry on the digital shift is something we have been discussing for years.” One source said the public broadcaster’s leaders are sanguine about the coming review.
But some say they think the government may see the public broadcaster as an instrument to achieve some of its Canadian content goals in a way that may not jibe with private broadcasters’ pursuit of profit.
The Conservatives found out the hard way in the 2008 election that cultural policy swings votes in Quebec. At the time, the party of Stephen Harper was on the wrong side of relatively minor cuts to cultural programs, which were widely seen as an affront in the province and hurt the Conservatives at the ballot box.
“There is a unique dynamic in Quebec,” said James Moore, a former Conservative MP from B.C. and a former Heritage Minister. “Arts and culture there are so close to the sense of fabric, the sense of identity, the sense of protecting cultural identity in a continent of other languages.”
Quebec has its own star system and a unique brand of television programs, but also a cultural industry that is heavily dependent on subsidies from all three levels of government. A recent tightening of federal tax credits for some television productions was met with widespread condemnation, and the Liberals will have to be careful about moving on any front that hurts Quebec’s cultural industries.
“In a sense, we benefit from some level of protection, because we are francophones, but that is a paradox, given that we are simultaneously a minority in this English-language universe,” said journalism professor Alain Saulnier, a former top news executive at the CBC’s French-language network, Radio-Canada.
He argued that in the expanding digital universe, a key issue for the government will be using the CBC’s services to provide easy access to Canadian – and Quebec – content.
“We have to find a way to be discovered in this universe that we don’t control,” he said of Quebec content creators. “Public broadcasters must defend us against the creation of the homogenized culture that is offered by the Netflix and Googles of this world.”
Ms. Joly is from Montreal, and the Liberals hold 40 of 78 seats in Quebec. Unless the Liberals want to suffer the same fate as the Conservatives in 2008, they will face pressure to satisfy Quebec’s thirst for some kind of accommodation for its cultural specificities.
Canada Media Fund
Launched in 2010 as an amalgamation of existing funds, the Canada Media Fund (CMF) may have been a harbinger of things to come for the cultural industries, requiring applicants to submit projects designed for multiple platforms, not just television.
“There was a hue and cry across the country in those days about how stupid this all was,” said Ms. Creighton of the CMF, who admits even she once argued that was “a bit like saying every book in the country should be made into a feature film.”
The rule proved prescient, however. The CMF disbursed more than $370-million to support 1,400 Canadian TV and digital projects in 2015-2016, triggering $1.4-billion in production activity. Yet there are more ideas than there is money to develop them, and part of the CMF’s funding is tied to the financial health of cable and satellite TV distributors, which are under pressure as some viewers switch to online alternatives.
Some of the CMF’s eligibility rules are still seen as too restrictive to respond to industry changes, such as those for funding web series.
“It could be easier, with the CMF, to make programming for an international audience,” Mr. Engelhart said, referring to co-productions and shoots outside Canada.
Ms. Creighton also wants more flexibility but stresses the challenge of striking a balance. The current regime judges proposals’ eligibility on a points system based on factors such as whether key creative personnel are Canadian.
“There’s always a fear that if you open up the point-system requirements, we’ll be flooded by requests for talent to be part of the structure that’s not Canadian, and it will start to dilute and really threaten the entire system,” she said.
The Copyright Act
One of the big problems with the Internet has always been piracy, as movies, songs and most cultural products can be easily copied and shared freely and illegally, leaving content creators high and dry.
A number of players in the industry are encouraged by the fact the government has explicitly put the Copyright Act among the legislation up for review. A common refrain is that better protection will make it easier for creators to get paid for their work.
“This is especially significant in light of the potential for global distribution in today’s digital age when small, large and mobile screens have all become the norm for consuming media,” said Elliott Anderson, a spokesman for the performers’ union ACTRA.
However, Prof. Geist said a 2012 review of the Copyright Act has already provided a number of additional protections for content creators. He added the Act is already up for a mandatory parliamentary review in 2017, and that it is more likely that any changes would flow from that process.
In any event, Prof. Geist said the fact artists are underpaid by iTunes or Spotify, for example, will not be fixed by a review of Canada’s cultural policy.
“That’s a market issue, it’s not a legal issue,” the copyright expert said.
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