Saturday, November 07, 2009

How To Make Friends and Influence People

buy american

So, it’s Saturday and I’m reading the morning paper – happy to be at the end of a week where it became clearer that not much is going to happen in the Canadian television business until this whole “carriage fees” issue gets settled and the Canadian Media Fund issues its new guidelines for funding programming here.

So – like April.

We’re basically in tread water mode until April.

Oh, there’ll still be some stuff getting made. And we’ve now got no excuse for not working on that script we’ve been meaning to write if we had time. But until everybody in broadcasting knows:

A) how much of somebody else’s money they have to spend

and

B) how many Americans they can have showrunning or writing or starring in or directing their “Canadian” shows

…nobody is committing to anything major.

For the next 6 months, the only people getting a regular pay check in the Canadian TV business will be the bureaucrats who oversee our operations. Why the government has to keep paying them when there is little or nothing to oversee is an argument for another day.

However, getting back to that morning paper. I found a story that not only offered a solution to our problems but might also help out tens of thousands of our fellow Canadians facing imminent unemployment.

The illustration above, comes from a story in the National Post, available free here and for $2 on your newsstand – most of which either goes to bankruptcy lawyers or Goldman-Sachs. So, if you could help them out by buying the hard copy, that might save a couple of jobs too.

The gist of this story is that the $787 Billion American stimulus bill signed into law by President Obama this summer is literally killing a lot of Canadian companies.

Across the USA, products marked “Made in Canada” are banned from import and use in projects using that stimulus money. Even if they’re the only version of the product available and especially if they’ve already been part of the work already done. To qualify for the cash to finish these projects, some cities and states are cancelling orders and even being forced to rip out the Canadian goods they’ve already installed.

The “Buy American” rule in the Stimulus package was a well meaning but not well considered one. Yes, it guaranteed that US Tax dollars were spent creating American jobs – except where companies like Goldman-Sachs, who got us into this mess, used it to pay off people in their foreign subsidiaries – but it also transferred the suffering both offshore and to American companies that had previously been managing to somehow keep the lights on.

One Canadian company, for example, is laying off workers because it can no longer sell into the US. But the American companies that once supplied it with raw materials are also laying off workers because the Canadian company is no longer buying.

Now, Canada could retaliate with its own “Buy Canadian” policy, but that would likely just make things worse.

Unless…

Unless we could find a way of hurting the Americans just enough to make them rethink their policies, while not hurting ourselves that much in return.

Now what industry that we both share could do that?

Show Business.

Right now, Canadian TV networks spend $700 million purchasing American programming. Virtually all of that programming is already available to us from the American networks delivered by Canadian cable and satellite. What if Canadian networks were told they couldn’t spend that money anymore?

That’s $700 Million pulled out of the US economy in the click of a remote button.

Would the American Industry retaliate – maybe.

But total sales of Canadian programming to US networks is a fraction of our spend. And a lot of it goes to US nets who are selling little into this country in the first place and really need the low priced programming we supply.

We might not get hurt at all.

And how badly would we feel any damage if even a small percentage of that $700 million was invested in new Canadian programming to fill up the now gaping holes in the Canadian networks Prime Time schedules?

The domestic production industry likely wouldn’t suffer. It might actually see a job creating boom in new production.

Would advertisers pull their sponsorship from Canadian networks?

Not likely. There are already rules prohibiting them from buying ads on cross border stations and they still need to get the message out about the goods and services their clients offer.

Would Canadian networks suffer?

Absolutely not.

Haven’t they been telling us for weeks how important local TV is to them and how it must be saved?

Here’s their chance to finally save Local as well as compete head to head with American networks instead of just rebroadcasting the same old shows. Here’s their golden opportunity to build future revenue streams through a library of original programming they’ll be able to sell on DVD and iTunes and market to countries with less stringent trade rules than the US.

And if Canadians have so warmly embraced “Flashpoint”, “Battle of the Blades”, “Corner Gas”, “Trailer Park Boys”, and countless clones of American reality shows – why wouldn’t they just as warmly embrace more of the same?

Meanwhile, let’s add a surcharge on American films coming into the country or even on movie tickets if the film is American. Practically every other country in the world has done that without worrying about choppers of Marines massing on their borders. We almost did it a couple of times

Will it reduce the number of people going to see American movies in Canadian theatres? Of course not.

Will it cause studios to pull their films from distribution here?

Are you nuts? Have you seen how much money they make in non-domestic markets that already ding them on every imported film or for a few cents on every ticket dollar – or both?

And in the world of theatre and concerts – are the promoters not going to be willing to pay a little more to get those money machines over the border? Are the people regularly paying $100 or more to see “Jersey Boys” and “U2” going to flinch at another buck or two that’s then rerouted to support Canadian theatres and bands?

Nope.

Suddenly, by limiting our “trade war” to just one small industry, we’ve potentially created a job boom here.

And how does that help the Canadians who now make sewer pipes and industrial pumps who are losing theirs?

Well, a little bit might get spent on some infrastructure projects here. But more importantly, you don’t take almost a Billion dollars out of Hollywood without somebody picking up the phone to call the guy whose campaign they helped to finance.

And then the guy who needs to get re-elected puts down his basketball and calls his Canadian counterpart and says, “What’re you doing to me?”

And then the Canadian guy makes sure his hair’s in place and answers, “What’re you doing to me?”

And then they figure something out.

And then Canadian companies start selling their pipe and pumps to California and California companies get to bid on projects here.

And maybe that means that us guys in Canadian Show Business who won this little skirmish don’t get to keep all we’ve gained and Global gets “House” back and CTV has some cop show with initials for a title every other night.

But us show biz types would still be far better off than we are now.

And some of those people whose jobs we helped save might have realized we’re their neighbors and work for a living just like them and they might decide to sample what we have to offer instead of the same old stuff.

Couldn’t that work?

toronto_039_large

8 comments:

DMc said...

That's just...diabolical.

Ivan could be a patriot!

petertypingfaster said...

Interesting idea, but what about the Canadian service production industry? Seems to me that if Canadian broadcasters pulled their $700M television buy, the natural way to retaliate would be for the US conglomerates to pull the shows that they were shooting in Canada and move them to North Carolina (or whatever). A lot of states are now offering tax credits competitive to those offered in Canada, and with the Canadian dollar hovering almost at par the budgetary impacts wouldn't be huge.

I know service production doesn't do a hell of a lot for Canadian creatives, but right now it's pretty much the only thing keeping the Vancouver industry afloat. And the total amount of money infused into the Canadian economy by foreign service production far surpasses the $700M we'd save. I think the plan you outline above would be great for us writers and directors, but I worry about what it would mean for all the below the line crew.

Dwight Williams said...

It's just evil enough to succeed.

I like it.

jimhenshaw said...

Petertypingfaster,

Vancouver production wouldn't lose a dime. If anything it would skyrocket with all the new programming the Canadian nets would need. And this time, all those grips and camera people would get to work with all the writers and actors and directors they can only hope to someday work with now.

California is already threatening penalties for runaway production, so much so that Disney just announced a new studio far from the high cost of shooting in LA.

And the tax credits for some US States are already better than what we offer.

Those developments and a 95 cent dollar mean industrial production may soon be a thing of the past anyway -- and once BC's Olympic bill comes due, you guys may not be able to offering any incentives.

Canadian production is the future, baby! There's no other viable alternative.

deborah Nathan said...

You should do stand-up. Funny, funny idea. Worhy of "The Mouse that Roared". I think we should all et behind this idea and promote it, seriously, to all our MPs. Stop talking about "telling our stories" and put forward something concrete that would make them sit up and take notice. I'm writing my MP now.

Anonymous said...

Jim, reminds me of this piece I wrote a couple of years ago:

Charge premium prices for U.S. nets
By Barry Kiefl



For 50 years, Canadian cable TV systems have imported distant U.S. TV network stations (ABC, CBS, NBC and Fox) into Canadian TV markets. The notion of importing U.S. networks was brought about by a set of policy considerations that did not foresee how the Canadian TV system would evolve.

In the late 50’s and early 60’s, there seemed to be nothing wrong with doing it, since most Canadians had access to only CBC and CTV. Most households got cable to get the American networks -- they were never considered ‘free’, like local Canadian stations. In our household, circa 1965, it was a real bonus to have access to ABC’s Monday Night Football, which back then CBC or CTV wouldn’t think of carrying. Today, Canadian broadcasters or sports networks carry most of the NFL or, if you choose, you can pay about $150 annually to your cable or satellite company to get every game.

In the U.S., a cable subscriber or DTH subscriber is not allowed access to distant network signals. But in Canada one can have up to three out-of-market CBS, NBC, ABC or Fox stations, all of which duplicate much of the programming of local Canadian stations, a practice that the FCC and Congress made unlawful in the U.S. Approximately 11% of all English TV viewing in Canada went to U.S. broadcast network stations in 2006 (after taking simultaneous substitution into account).

Following is a proposal regarding the importation of U.S. network stations via cable/DTH that could fix a major problem in the broadcasting system.

What matters most to private broadcasters is money, and there is not enough of it at present in the system, largely because we import U.S. network stations by the dozens, which drain away audiences and revenue and encourage Canadian networks to simulcast with the U.S. networks. The surest way to increase system revenue would be for cable and satellite companies to charge premium prices for access to U.S. network stations. If a cable/satellite subscriber wants unfettered access to CBS, NBC, ABC and/or Fox, let them have it, but they should pay a substantial fee for each U.S. channel, the revenues from which would help fund Canadian programming and improve the earnings of Canadian BDUs and broadcasters.

At present, BDUs charge subscribers $1/mo to have access to the second set of U.S. network stations. My proposal would be to charge a special fee for accessing all over-the-air U.S. network stations. BDUs would charge up to $5 each for CBS, NBC, ABC and Fox, and would retain a percentage of the fee. At the price level of, say, $5 per channel, it is likely that about 1 in 3 English cable/DTH households would opt to buy the full slate of all four U.S. network stations, at a total of 20/month. However, even this modest takeup rate would generate approximately $700 million annually in fees. (Market research to determine take-up rates needs to be done.)

Anonymous said...

Continued...

If subscribers chose not to pay premium prices for access to U.S. networks, their subscription fees would be the same as today but they would have access only to Canadian channels, plus U.S. specialty channels (perhaps in this scenario more U.S. specialty channels should be authorized for carriage, also at premium prices). This would significantly reduce the competition Canadian broadcasters face from imported stations that, were it not for an accident of history and a lack of policy foresight, have no right to be distributed in Canada.

If fees for U.S. network stations were substantial enough, it would serve to reduce competition for audiences from U.S. networks and make program substitution, a burden for both broadcasters and BDUs, unnecessary,. Canadian channels would face much less competition, have larger audiences and more ad revenue.

There would be some audience lost to the remaining U.S. stations, which would no longer be substituted by cable/DTH companies, but this audience would be more than offset by increases in the audience to all other programming on Canadian stations. I estimate that removing U.S. network stations from the channel line-up in 2 out of 3 cable/DTH homes would result in a 5-6% net increase in audiences to Canadian stations, which would translate into increased ad revenues of approximately $150 million annually for Canadian broadcasters and specialty channels. In effect, market forces would create a so-called greener space for Canadian channels. The ideal time to introduce the new fee structure is 2009, when U.S. stations are scheduled to switch off their analog transmitters and go digital.

One result would be that Canadian channels would have more incentive to air a higher percentage of Cancon than at present, and to schedule it at better times. Some of the money generated by charging for U.S. network stations would go into a program fund to cover the costs of Canadian programs, thus Canadian networks would be able to air higher quality Canadian drama series, with larger promotion and marketing budgets. Some money would flow directly to Canadian broadcasters to off-set any losses from lost simulcasting.

Over-the-air U.S. broadcasters probably wouldn't put up too much resistance, since most of them derive only small benefits from their Canadian audience. Consumers wouldn’t react nearly as negatively as they would have in the 1960’s, 70’s or 80’s, since today they have access to many more channels and virtually all the programming on the imported U.S. stations is now available on local and distant Canadian stations. One BDU recently introduced a new $5 monthly fee “to offset increasing operational and programming costs” and yet I can’t recall a single news item mentioning it, or a consumer backlash.

This proposal has the potential to both simplify the television and BDU regulations and fix a problem that has existed for decades.

Toronto real estate agent said...

Oh, that "Made in Canada" tattoo looks very painful. Very patriotic, though. And just a short note about the hard copies and online versions of paper. I ALWAYS like the hard copies so much better. It's easier to concentrate on the printed text, isn't it?

Elli