Vancouver’s beleaguered independent film and television producers are optimistic that their fortunes could soon change for the better as a new framework for deals with Canadian broadcasters goes into full effect this month.
The framework, kick-started by the Canadian Radio-television and Telecommunications Commission (CRTC), gives producers a standard set of rights to their productions when negotiating with broadcasters.
Producers previously had to secure whatever rights they could each time they negotiated with broadcasters.
“I think it’s huge,” said Rob Bromley, owner and partner at Vancouver-based production company Force Four Entertainment. “It sets us up for a long time to come.”
The Canada Media Production Association (CMPA), representing independent producers, hammered out the terms of trade agreement this spring with private broadcasters Astral Media Inc. (TSX: ACM.A, ACM.B), Corus Entertainment Inc. (TSX: CJR.B), BCE Inc. (TSX: BCE) subsidiary Bell Media, CTV, Rogers Communications Inc. (TSX: RCI.B) and Shaw Communications Inc.’s (TSX: SJR.B) television division, Shaw Media.
The deal has been phased in since June 1 and took full effect August 1.
The CMPA is now in talks with the Canadian Broadcasting Corp. for a similar deal. Its deadline is set for June 2012.
In Vancouver on a recent tour to explain the agreement to independent producers across Canada, CMPA president and CEO Norm Bolen told Business in Vancouver that the CMPA has been lobbying for a terms of trade deal for nearly a decade.
A similar deal in the United Kingdom helped revitalize the production sector in that country.
“But we got nowhere because the broadcasters just ragged the puck.”
In the last decade, Bolen said vertical integration of broadcasters has reduced market options for producers, which has left them with less negotiating leverage and worse deals.
He added that the situation has degenerated dramatically for producers since he headed up programming for the former Alliance Atlantis Communications Inc. and launched the History Television channel in 1997.
“[Producers] would give me the show for three years, they would give me a limited number of plays and I would get it for one channel only: History Television.”
Bolen noted that after the licence term expired, the producer could sell it to another broadcaster for an additional few years and then other broadcasters after that.
Vertical integration, he said, eliminated the multiple-window marketplace and the revenue that represented.
“Now, the broadcaster says, ‘I want your program, but I actually want a seven- or eight- or 10- or 12-year licence for the same fee; I want unlimited plays and I want the right to play that on all of my channels – 30, if I want to, until I’m tired of that program – and then I also want the right to sublicense it to a competing company until they exhaust it.’”
Bolen said broadcasters have also increasingly been taking international rights and requiring producers to direct their tax credits into financing productions. That left producers with nothing to capitalize their businesses.
They key change came about a year ago, when the CRTC directed broadcasters to negotiate a terms of trade deal with the CMPA or face having one imposed on them.
With negotiations wrapped up, Bolen said key gains for producers include:•limited licence terms to allow a multiple-window market to redevelop;
- 25% of tax credits stay with producers to fund their businesses; and
- international rights stay exclusively with producers to allow them to develop further revenue streams abroad.
Bromley and Alexandra Raffe, head of production at Thunderbird Films Inc., said the agreement will help create more sustainable businesses for local producers.
“It enables us to take a little more control of the destiny of our own projects, especially in terms of ancillary and international rights,” Raffe wrote in an email.
“It means we will not have to dig into our margins to subsidize production quite so often.”
Bromley added that the agreement will provide planning clarity and predictability for producers – particularly around issues such as rights, which he said can provide a significant revenue source through international sales.
Bromley noted that Force Four’s successful TV show Cupcake Girls has sold into more than 90 countries, providing “significant money” for the company to capitalize its business.
“The main thing terms of trade does is it allows us to build a business,” Bromley said.
Hughes Mousseau, director of corporate communications for Astral Media, said the new deal would “bring heightened clarity and rigour to future negotiations and partnerships. … [It] will further strengthen the Canadian production sector and ensure that opportunities are fully realized to everyone’s benefit.”