ARCHIVED -  Public Notice CRTC 1997-27

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Public Notice

Ottawa, 11 March 1997
Public Notice CRTC 1997-27
(a)  Contributions by Broadcasting Distribution Undertakings to an Independently-Administered Production Fund
In Public Notice CRTC 1996-69 dated 17 May 1996, the Commission initiated a public process calling for comments on a number of policy proposals related to the creation of a new regulatory framework for broadcasting distribution undertakings, including proposals that would require contributions by distributors to the creation and presentation of Canadian programming, including a specified level of financial contributions to an independently-administered production fund.
An oral public hearing concerning the various policy proposals contained in Public Notice CRTC 1996-69 was conducted in October 1996.
In Notice of Public Hearing CRTC 1996-11, which announced that hearing, the Commission stated that issues related to the manner in which the monies contributed to the production fund should be administered were outside the scope of the proceeding initiated by Public Notice CRTC 1996-69.
In Public Notice CRTC 1997-25 entitled New Regulatory Framework for Broadcasting Distribution Undertakings, issued today, the Commission has announced its intention to require all Class 1 and Class 2 terrestrial distribution undertakings, as well as all Direct-to-Home (DTH) satellite distribution undertakings, to contribute a minimum of 5% of gross annual revenues derived from broadcasting activities to the creation and presentation of Canadian programming.
Under the formula proposed by the Commission, the apportionment of this amount between local expression and a contribution to an independently-administered production fund would vary among distributors. The Commission did not make any determination in Public Notice CRTC 1997-25 regarding the specific fund or funds to which programming contributions should be directed.
(b) The Cable Production Fund
In Public Notice CRTC 1993-74 entitled Structural Public Hearing, the Commission announced the creation of a new production fund that would provide approximately $300 million over 5 years for the production of new Canadian programming.
In Public Notice CRTC 1994-10 entitled The Production Fund, the Commission indicated "that the main focus of the production fund should be on facilitating the broadcasting of high quality Canadian programs in under-represented categories in peak viewing periods." To that end, the Commission developed a set of criteria that programs would be required to meet in order to be eligible for support from the fund. One criterion was the requirement that a program fall within one of the categories of drama, music, dance and variety, children's programming and documentary programs.
The Cable Production Fund (CPF) began receiving money from cable distributors in January 1995. From 1 September 1995 to 31 August 1996, 186 new projects received support representing a total CPF contribution of $34.8 million. These approved projects also represented total budgets of more than $320 million and translated into 1,200 hours of high-quality, Canadian primetime television programming.
(c)  Transfer of the Oversight of the Cable Production Fund
On 9 September 1996, the Minister of Canadian Heritage announced the creation of the Canada Television and Cable Production Fund (CTCPF). The CTCPF incorporated the CPF and Telefilm's Broadcast Fund, and was supplemented by new government funding amounting to $250 million over a three-year period.
In a letter to the Commission dated 22 November 1996, the CTCPF explained that the Department of Canadian Heritage had proposed to oversee the new government funding in addition to the funding contributions made by participating cable television licensees. In its letter, the CTCPF submitted that the new monies had created a need to reassess the relationship between the CTCPF and the Commission, and requested that the Commission approve the proposal to transfer oversight of the fund to the Department of Canadian Heritage. Subsequently, in Public Notice CRTC 1996-159, the Commission announced its endorsement of this proposal.
In response to Public Notice CRTC 1996-69, the Commission received written comments from a number of parties proposing different approaches to the administration of contributions to production funds.
Cable distributors and other parties were of the opinion that the CPF, as it was then named, would be the most suitable body to administer distributors' contributions because the CPF, from the time it commenced operation, has made a significant contribution to the creation of Canadian programming. According to these parties, contributions to a single fund would also help to reduce overhead costs, thereby maximizing the resources available for the support of high-quality, Canadian primetime television programming.
Potential new distributors, on the other hand, suggested that they be permitted to direct their contributions to an existing independently-administered fund of their choice or to create new funds that could be associated with their activities.
Some parties considered the CPF to be too restrictive in its specifications concerning the program genres that qualify for funding, and suggested that it would not provide significant support for multimedia projects. Aboriginal broadcasters raised concerns that they would not have easy access to funding from the CPF. Parties from the production industry, and from British Columbia in particular, expressed concern that the CPF would not have the necessary flexibility to offer significant support for regionally-produced programs.
Subsequent to the issuance of Public Notice CRTC 1996-159, a number of parties raised similar concerns with respect to the CTCPF. For example, some potential distributors who are not associated with the cable industry indicated that the CTCPF is too closely associated with that industry. These parties reiterated the desire to create new funds that would be associated with their own services.
Having considered the views expressed, the Commission is of the opinion that the administration of distributors' contributions by a single fund would reduce overhead expenses and would maximize the impact of that fund on the Canadian film and television industries. Accordingly, the Commission proposes to require that all contributions by broadcasting distribution undertakings to an independently-administered production fund pursuant to the framework set out in Public Notice CRTC 1997-25 be directed to the CTCPF.
The Commission is of the view that the CTCPF will have the necessary flexibility to adjust to the new regulatory framework for distribution undertakings set out in Public Notice CRTC 1997-25. In particular, the Commission is confident that the CTCPF, in recognition of the contributions to be received from distributors other than cable, will have the flexibility to develop funding criteria that will permit a wider variety of programs to have access to funding, and to allocate funds regionally to all parts of the country. In this regard, the Commission notes the ability of the CTCPF to seek representation from a variety of sectors and to increase the size of its board of directors accordingly.
The Commission seeks comments on its proposal to require that all contributions by broadcasting distribution undertakings to an independently-administered production fund be directed to the CTCPF. Comments must be submitted to the Secretary General, CRTC, Ottawa, K1A 0N2 by Friday, 25 April 1997. While receipt of submissions will not be acknowledged, all submissions will be considered by the Commission and will form part of the public record of the proceeding.
Allan J. Darling
Secretary General

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