CRTC SUBMISSION

To Whom It May Concern:

Thank you for the opportunity to submit comments regarding the CRTC Task Force report on the Canadian Television Fund.

Many of us working within the Canadian TV industry welcomed your announcement of this long overdue and much needed re-assessment of the Fund’s administration and its ultimate goals.

That said, I must express my own disappointment that the Commission chose to follow a review process conducted out of public view and without the participation of directly affected stakeholders such as the artistic community of writers, directors and actors working in the industry, as well as the group who’s interests the Commission is specifically obliged and mandated to protect – the owner of the public airwaves – the Audience - the Canadian public.

Compounding this oversight, which has clearly skewed the Task Force Report, the recommendations do not include a single piece of supporting evidence justifying their inclusion.

Further abusing any semblance of a democratic process, the Commission has rejected utilizing these recommendations as the basis for a full public hearing to openly assess the Fund and allow dissenting opinions or other options to be heard. Instead, the Commission has chosen to proscribe a very short 30 day window for interested Canadians to respond – in writing.

This appears to contradict the clear promise made by Commission Chair Konrad von Finckenstein that the regulator “…should be guided by the following four principles: transparency, fairness, predictability, and timeliness."

Okay, I’ll give you points for timeliness. But your actions belie any acceptable definition of transparency and fairness.

Perhaps I should also congratulate you on predictability, for the CRTC continues its long tradition of protecting the corporate interests of Canadian production entities and broadcast networks over the needs of all others affected by your policies and rulings.

You also continue a tradition of basing policy and regulatory rulings on non-existent myths of a struggling industry shackled by an abundance of second rate Canadian talent.

In 1999, the Commission dealt a body blow to the indigenous Canadian television industry in allowing Canadian Broadcasters to meet their content quotas with cheaply produced reality and information style programming. In the ensuing 8 years, the once vibrant and growing production of Canadian drama and comedy has been reduced to 10% of its former output.

Thousands of Canadian jobs were lost. Thousands of Canadian artists were forced to leave the country in order to continue their careers. And Millions of dollars that might have been earned by the domestic distribution and foreign export of a unique and definable Canadian cultural product never materialized.

It would now seem that in considering the implementation of a split Fund that would make more Canadian tax dollars available to foreign artists under an 8/10 content rule, the Commission intends to further reduce the opportunities for Canadians to participate in what remains of their own industry and additionally reduce the exposure of what is Canadian to audiences at home and abroad.

The downward spiral of Canadian television drama was immediately clear to former CRTC Chair Charles Dalphen who, in a speech delivered on November 6th, 2002 to the members of ACTRA said:

"I believe we have a common goal: a healthy and distinctive Canadian broadcasting system that makes the fullest use of all the great creative talent that we have in this country. And let me emphasize that I do mean all the talent."

But rather than listen to Canadian artists, the CRTC of that time chose to side with Broadcasters crying poverty and the need for assistance in finding an audience.

I beg you not to continue this Broadcast centric view of what will create a vibrant and healthy Canadian television industry. For if you continue on the path you have been following for most of the last decade; if you do not begin to listen to others, there will be no need for a CRTC in another 8 years, because there won’t be an industry in need of regulation.

Allow me to address the myths on which you have based your regulatory policies…

CANADIAN WRITERS AND DIRECTORS AND ACTORS AREN’T GOOD ENOUGH

In the late 1980’s, Paramount Pictures of Los Angeles planted a production in Toronto entitled “Friday the 13th”. While its content might be beneath the interest of those who achieve the status of CRTC Commissioners, it had a vast worldwide audience during its three season original run of 74 episodes. It remains in very profitable distribution twenty years later.

I (a Canadian) was head writer of the series and additionally in charge of hiring the other writers we used.

To meet Canadian content regulations of the time, a 50/50 rule was followed during the first season. That meant that 50% of the episodes were written by Canadians and 50% by Americans. The same percentages applied to directors. Two of our three lead actors were Canadian and the majority of guest artists were American.

By the second season, 75% of the scripts were written by Canadians and the percentages of Canadian directors and guest artists were increasing.

By the conclusion of the third season, the vast majority of all our writers, directors and actors were Canadian. That was a conscious corporate decision made by Paramount Pictures, not as a way of furthering Canadian culture or to save money, but to make greater profits because the quality of the product provided by Canadian artists equaled or exceeded the product delivered by the available pool of American talent.

As a result of their expose on this series, a large number of Canadian writers, directors and actors entered into development deals for new programming from American networks and producers or launched successful international careers.

In the early 1990’s, I served as head writer and producer of the CBS television series “Top Cops” – once again, a series I doubt would draw the viewing interest of any member of the CRTC. But for four seasons and 96 episodes, it remained one of the most popular programs on CBS. At times it achieved as much as a 26 share – meaning one quarter of the available audience, an audience equaling the entire Canadian population of the time, was watching that series.

“Top Cops” was American in content. But 100% of the writers, directors and actors used on the series were Canadian. The series has been distributed in hundreds of countries and remains popular in Canada today.

So popular, in fact, that the CanWest system has broadcast it on several of their specialty channels, 8 times a week for three full seasons.

As a result of their expose on this series, a large number of Canadian writers, directors and actors entered into development deals for new programming from American networks and producers or launched successful international careers.

At this moment, three of the most popular programs in the USA and Canada, “House”, “Bones” and “ER” are show run (written and produced) by Canadians. Canadian writers and actors once employed by Canadian series now make up a significant percentage of all American prime time programming. Yet, according to our networks and production entities, they aren’t quite good enough to work in their own country.

The Commission might be interested in contacting some of these internationally recognized Canadian artists, now working elsewhere, to find out how often they are approached by Canadian networks and production entities to create Canadian programming. You will be surprised at how seldom that occurs.

How did my own career fare as a result of the above mentioned titles? Over the last 20 years, I’ve had dozens of development deals that resulted in successful and profitable programming from American studios and networks. I’ve worked on programming produced in Europe and Australia.

How many development deals have I been offered in Canada? One.

Of further interest to this discussion is that this single deal received CTF financing and was cancelled at the absolute last stage of development. And it was cancelled because the Canadian network executive in charge did not feel that Canadian actors could be found who were “good enough”.

Because of the diversity built into the script, that meant this particular network executive felt they could not find two black Canadian actors who were “good enough”, one Asian actor who was “good enough”, one South Asian actor who was “good enough”, one Hispanic actor “good enough” or one actor over the age of 50 who was “good enough”.

Shortly after this cancellation, one of the actors we’d attached to the project was offered a continuing role on the popular American series “24”.

If the CRTC intends to favor the 8/10 rule change, work opportunities for Canadian artists will decrease, as will the opportunities for the thousands of future artists currently studying film and television arts in Canadian Universities, Community Colleges and film schools.

If these people have no future, why are we training them? And why are Canadian taxpayers paying the freight for those costs as well as subsidizing production that will fund the graduates of foreign film schools instead of their own children?

What we are dealing with here is not a lack of marketable talent, but a failure of the entrepreneurial ability of Corporate Canadians to develop, finance and market this talent to the world.

Which brings us to the second myth…

CANADIAN PRODUCTION ENTITIES AND NETWORKS NEED TAXPAYER SUPPORT

While Canadian Broadcasters continue to cry poor and request additional assistance from Canadian taxpayers to produce programming “nobody watches”, their own numbers contradict this position.

From Statscan July 4, 2007

Ad revenue for the whole Canadian TV industry rose 7.6% to $3.3 billion, while subscription revenues jumped 11.3% to $1.6 billion.

Specialty television made $447.8 million in profits before interest and taxes, slightly less than the $449.2 million they earned in 2005. However, the segment's 22.2% profit margin was the second best recorded in 10 years.

Private conventional television broadcasters reported revenues of $2.2 billion in 2006, which is unchanged from the previous year. This segment still ranked first in terms of revenues, but the gap between it and the specialty television segment has closed. Advertising sales accounted for almost 92% of private conventional television revenues.

On the other hand, specialty television revenues increased 11.2% to just over $2 billion. This segment's advertising revenues jumped 14.7% to $900 million, while its subscription revenues totaled $1.1 billion, 8.9% more than in the previous year, say the Statscan numbers.

The pay television segment, however, had the strongest growth in 2006, with revenues climbing 17.7% to $482.3 million. This is largely due to the growing popularity of video-on-demand and pay-per-view. Revenues from those services soared 41% to $157.4 million in 2006. For a fifth consecutive year, the pay television segment had the best profit margin of the industry, generating for its owners more than 25 cents in profits before interest and taxes for every dollar of revenue.

After falling 5.2% in 2005, revenues for the public and non-profit television segment (CBC, TVO, et al) rose 15.6% in 2006 to $1.4 billion. The resumption of activities in the National Hockey League had a positive effect on advertising revenues, which climbed 44.2% to $351.1 million.

Okay, so Canadian Broadcasters are doing well, but they’d like to do better. Who wouldn’t? But it would seem clear given this and the recent Billion dollar mergers involving CTV/CHUM and CanWest/Alliance that Canadian taxpayers don’t really need to be on the hook to support 8/10 programming, if the broadcasters want to pursue that production model.

And perhaps its time to take a hard look at what our Country’s production entities are actually earning as well.

A number of years ago, I was involved in a dispute over the reporting of distribution earnings and audit procedures with a Canadian production entity. In pursuing additional sources of information, we attempted to access reports submitted by the producer to Telefilm Canada.

Because Telefilm is a Crown corporation, much of that information remains confidential and is not accessible by anyone questioning the financial reports they are receiving from Canadian production companies.

Were the Writers Guild of Canada, the Directors Guild of Canada or our performers’ Guild, ACTRA, allowed to discuss the concept of whether 8/10 programming will actually benefit Canadian producers in an open hearing on justifying such a rule change, you would learn that there is a very long history of these Guilds questioning the financial reporting and audits provided to them.

As the forensic accountants in my own case commented in assessing the material in question, “Where are the Government agencies here? How are they accepting these numbers as accurate?”

Perhaps we're not getting the same numbers...

During a libel trial between plaintiff Sullivan Entertainment Group and the original rights holders of the “Anne of Green Gables” franchise, assessed in favor of the defendants by Ontario Superior Court Justice J. MacFarland on January 19, 2004, this issue was of paramount importance.

As reported by the Globe and Mail during the trial:

“On Friday, the court heard testimony that Sullivan Entertainment used two systems of accounting: One for Telefilm Canada and other equity investors in its television productions “Anne of green Gables” and “Anne of Green Gables: The Sequel”, and another for the Montgomery heirs. The first shows profits, the second losses…”

Motion picture and television accounting and the business practices defined by the terms “industry standards” have long caused great contention and litigation within the industry.

As recently as this week, Writers Guild of America negotiator John Bowman stated the following in his opening remarks to negotiations between the Guild and the American Motion Picture Producers and Television Producers.

“First of all, I want to congratulate our corporate partners at CBS, Time Warner, News Corp., Disney, Viacom, and NBC-Universal on what appears to be another great year for entertainment revenues and profits. Box office is up, and broadcasters are getting ad rate increases across the board, driven largely by digital content created by many of the people in this room. We are all of us very fortunate to be working in an industry that is thriving. It is thriving not only because of the content created by members of the DGA, SAG, AFTRA, and the WGA, but also because the CEOs of these companies are proving to be extremely adept at finding ways to monetize the Internet and other new technologies.

There is a real disconnect, however, between what the companies are reporting to Wall Street and what they’re saying to the talent community. Investors are hearing about the changing landscape in entertainment and exciting new markets to exploit. In contrast, the AMPTP communicates nothing but problems to the Writers Guild. Problems like-and this was mentioned by AMPTP at a recent press conference-ad skipping, even though NBC Universal had just announced a one billion dollar DVR deal. And while WGA member revenues have not kept pace with industry growth-we are a line item that is definitely under control-the companies balk at giving us a fair and reasonable share of the industry’s success.”

If the CRTC wishes to support 8/10 content, you must provide proof that those who would benefit can supply documented figures that they are financially hampered by 10/10 content; figures which can be substantiated by an independent and unbiased source who has access to those numbers, such as Telefilm Canada.

In closing, let me say that there are a myriad of other options which might do more than watering down the 8/10 rule to create a successful Canadian television industry. There are hundreds of creative artists who, through their own experiences in creating successful Canadian drama could be supplying the Commission with their knowledge, expertise and “creativity”.

Yet we are consistently ignored and marginalized by the CRTC. No matter how often we’ve been right in the past, we are either not included or dismissed in the next discussion, while the industry on which we depend for employment continues to dissolve around us.

In speaking to the 2007 Broadcast Invitation Summit on June 26, CRTC , Chairman von Finckenstein stated:

“I think this is just the right time for us to convene here at this first Broadcasting Summit. And I’m very pleased when I look around and see that all the 'RIGHT' people are here.”

Mr. Chairman, the creative community of the country was not there, nor were representatives of your mandated constituency -- the public.

Okay, so we’re the “WRONG” people.

But you’ve been listening to the “right” people for a very long time and Canadians are no longer telling their stories to either themselves or the rest of the world.

Please do proceed with a revamp of the CTF, but please make sure that all Canadian voices are heard in the process and that they are all required to provide evidence for their claims.

Yours truly,

Jim Henshaw