Netflix drawing criticism from TV industry

[flavoie]

How much did Astral receive in funding from that same fund in the same year ?

[flavoie]

Actually, that's not the real question. They have not contributed 170M to that Media Fund. They have invested this much into their Canadian operations.

How much did they contribute to this Media Fund, and how much did they receive from other divisions from this same Fund ? They will not mention these numbers.

Netflix contributes the same way to this Canadian Content concept by licensing rights the same way Astral does in their movie channels. Except Astral put more money out producing their own shows, but those benefit from this Media Fund.

[Classof83]

I think Netflix should be held accountable for the same Canadian content standards as CTV and Global... that is, 0.0001 percent of their programming lineup.

[PokerFace]

Hmm. Very sneaky. Astral, etc., can fund its Canadian programming from Independent producers, the Canadian Media Fund (up to one third, pre 2004), etc., and then tell us how wonderful they are. This looks more like a money-making scheme, than a burden on its bottom line.

All the broadcasters can put a certain percentage of the funding they receive into Canadian programming and then make it seem like everything came from their own pockets. They have so many "charitable" organizations created to give away money to help fund Canadian productions, that it's impossible to figure out where all the money is coming from. What percentage comes from the pockets of Astral, Rogers and the gang, and what percentage comes from all the funding that they get. Very clever.

If Netflix is also required to help fund Canadian productions, it should at least be able to get all of its money back, just like Astral and the gang probably are (in fact, I'd be shocked if they don't make even more money out of this nonsensical shell game).

I'm not sure if I'd call CanCon a money laundering scheme, but whatever is going on, it doesn't look like it's on the level. You can take perhaps 2 million from one fund, 1 million from another, get Independent producers to fund a large portion of your own productions, and then you in turn give them cash back from the various "charitable" media funds (that they qualify for) that you created to make your organization look like it's saving our Canadian culture. It appears to be a Can con job.

http://www.friends.ca/news-item/7867
[Canadian Television Fund Increases Program Funding for 2009-2010]


http://www.actionplan.gc.ca/initiati...itiativeID=132

Through Canada's Economic Action Plan, the federal government is providing in 2009-10 and 2010-11 the Canadian Television Fund (CTF) with funding of $200 million and the Canada New Media Fund (CNMF) with funding of $28.6 million, with $14.3 million annually thereafter. In addition, the government will continue to invest $20.4 million a year for this initiative, bringing the government's total two-year investment to $269.4 million. This investment in the broadcasting and interactive digital media sector is contributing to the strength of the Canadian economy and supporting job creation.

The Canada Media Fund (CMF) combines the CTF and the CNMF. It will allow Canadian viewers better access to Canadian programming on multiple media platforms.

----

http://www.academy.ca/events/audio/C...CCTToronto.pdf

CANADA MEDIA FUND Programs:

Experimental Stream $27M

Convergent Stream $324M

Development Program $13M

French Regional Development and Pre-development (sub-program) $250K

Performance Envelope Program $277M

Regional French Incentive (sub-program) $1M

Northern Production Incentive (sub-program) $500K

English Production Incentive $10M

English POV Program $3.5M

Francophone Minority Program $10.1M

Aboriginal Program $6M

Versioning $1.5M

Diverse Languages Program $1M

ROI Incentive n/a

Broadcasters are limited in the amount of their performance envelope that they are permitted to commit on affiliated and in-house programming:

7.5% of their documentary performance envelope
15% of their performance envelopes in all other genres
Similar approach for selective programs.

-----------------

http://en.wikipedia.org/wiki/Canadian_Television_Fund

On July 20, 2007, Keith Mahar, a former manager at broadcaster CHUM Limited, submitted a report to the CRTC, entitled Profiteering in the Name of Culture, respecting the Canadian Television Fund. The submission recommends a judicial review of alleged CRTC corruption related to the Fund which he contends has unjustly enriched cable companies. As per Mr. Mahar, Canadian Radio-television and Telecommunications Commission (CRTC) regulations, cable and satellite television distributors in Canada are required to contribute 5% of their revenue to the fund, which the companies can pass on to their customers in the form of inflated rates service. Since such consumer costs are embedded in their fees for service, consumers are subject to pay the 5% levy plus P.S.T. and G.S.T. on the cost of the company subsidy program. A copy of the submission is posted on the CRTC public file. On February 7, 2008, Mahar issued a press release covered by Reuters which was critical of Prime Minister Stephen Harper for his alleged failure to act on information respecting related activities by the CRTC and corporations in the affair.

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http://www.astral.com/assets/c5f312c...DA_Q2_2011.pdf

The Television group’s operating expenses increased by $7.1 million or 9% during the second quarter of Fiscal 2011 and by $11.4 million or 7% during the six-month period (excluding the favourable impact of the non-recurring Part II licence fees accrual reversal of $3.2 million in the first quarter of Fiscal 2010). This is mainly due to higher programming costs which vary according to the number of subscribers and to Canadian content (Cancon) spending requirements which are calculated as a percentage of the prior year’s revenues. These costs have risen mainly as a result of the higher number of subscribers and related revenues generated by the Company’s pay networks, as well as increased programming spending requirements for both pay and specialty networks.

[ScaryBob]

Astral could avoid many of these costs by simply starting their own OTT service similar to Netflix or iTunes. They could also license their content to Netflix. That would also be a source of added revenue. As long as Canadian broadcasters use the CRTC as a crutch, they will be subject to costly CRTC regulations and dependent on consumer subsidies to be profitable.

I see the Canadian Television Fund as little more than a failing Ponzi scheme. The initial promise of high quality Canadian cultural content is seldom realized while mediocre programming dependent on consumer financed cultural welfare is common. Then there is the undue enrichment of Canadian broadcasters and CRTC hangers on at consumer expense. There is more high quality programming produced in Canada by privately funded (US) production companies than by the CTF, yet the CRTC continues to pump billions of dollars into the corrupt and failing CTF scheme. It's time to return program funding to the correct source. That is private sources such as Canadian broadcasters and film distributors.

[woodsie]

Great post Bob. Well said.

[57]

Originally Posted by ScaryBob

Astral ...could also license their content to Netflix...

I would think that most of their product is licensed from the studios and that Astral would have no sub-license rights.

[ScaryBob]

I agree. However, there is a fair amount of content that is owned by Astral and other Canadian broadcasters. That content is often streamed, either for free or tied to a subscription to the service through a BDU. There is no reason why that content could not be streamed through an OTT service similar to Netflix, Boxee or Hulu.

Then there is the offshore content that is not streamed due to it being blocked by Canadian broadcasters that own exclusive Canadian rights. They may not be able to sub-license it but could negotiate for streaming rights through their own OTT service.

[PokerFace]

Apparently, according to two anonymous insiders, Netflix Canada and other online services will NOT be regulated by the CRTC.

If this turns out to be fact, it still doesn't mean that the underground organization known simply as CMM (Canadian Media Mafia) will not seek other means to rid itself of the Netflix invasion into Canada. Trust no one.

http://www.bloomberg.com/news/2011-0...in-canada.html

Netflix Inc. (NFLX) won’t face regulation in Canada after the country’s broadcast agency rejected calls from BCE Inc. (BCE) and other cable providers that argued the Internet-based movie company has a competitive advantage, two people familiar with the matter said.

The Canadian Radio-television and Telecommunications Commission will announce next week it won’t undertake a formal review of Netflix and other online providers, the two people said, on condition they not be identified because the decision hasn’t been made public.

The Gatineau, Quebec-based regulator held consultations on whether Internet-based movie distributors should fund Canadian broadcast content and face other regulations that cable and satellite distributors such as Rogers Communications Inc. (RCI/B) must meet. Denis Carmel, a spokesman for the commission, said the CRTC doesn’t comment on speculation.

Netflix, based in Los Gatos, California, has been at the center of disputes with cable and satellite companies in Canada since it began offering unlimited movie downloads for C$7.99 ($7.67) a month last year. The service has signed up 10 percent of the broadband households in Canada, a feat that took six years in the U.S., Ted Sarandos, chief content officer, said at a Sept. 14 conference.

[hugh]

If true, then its a sad day.

For the reasons, I articulated here and several subsequent posts, I believe the government should apply its rules fairly to all competitors.

Netflix and Astral are competitors and should be subject to the same business rules.

Whether folks hate Bell or Astral or Rogers is irrelevant to this discussion. It's one of fairness. The same rules should apply to all business's and competitors in this country.

If the government forced Harvey's or Swiss Chalet (Canadian owned companies) to hire more staff, add extra washrooms, provide more parking spaces, and serve certain Canadian foods but did not require the same of MacDonalds (an American company) doing business in this country, would we consider that fair?

[Francois Caron]

Netflix is entirely owned and operated outside of Canadian jurisdiction. They don't have to abide by any laws or regulations. Once they have an official business presence in Canada, THEN the Canadian government can go after them.

But considering how the Canadian government has behaved in this matter, I wouldn't be surprised if Netflix NEVER sets foot in this country.

[NeilN]

Originally Posted by hugh

If true, then its a sad day.

For the reasons, I articulated here and several subsequent posts, I believe the government should apply its rules fairly to all competitors.

Okay, so Internet radio stations available in Canada need to play 35% Cancon?

[cambo]

They don't have to abide by any laws or regulations.

Completely agree. The CRTC has absolutely no jurisdiction in this space. Netflix isn't a Canadian licensed "broadcaster", same with YouTube, Vimeo or any other online video service. Attempting to make them broadcasters when they have no Canadian based presence is plain silly. This is the internet. Would this mean that YouTube must enforce 35% CanCon before they can offer any video to Canadians? Google would tell you where to go pretty quick.

They are not subject to Canadian laws in any way- as it should be. If the CRTC attempted to regulate a business outside of Canada, there's no way it would hold up in court.

The CRTC finally gets this. Canadian broadcast law doesn't apply in this space. This is the new world.

[classicsat]

No, but stations made to serve the Canadian market should, and those that operate from Canada probably should also.

[NeilN]

All for-pay music services (e.g., Rdio) are made to serve the Canadian market as they have to observe regional restrictions.