In order to more fully understand the role and importance of production funding
support in the creation of distinctively Canadian television production, CAB
developed a detailed analysis of the current funding situation, the role it plays as a
source of support for Canadian production and its limitations.
Based on that analysis, we can conclude that:
• Without radical restucturing, the existing structure of production funding
support in Canada can only help create the equivalent of one major
dramatic series per broadcast group in the private television sector.
• In the absence of additional funding support, increased industry support
alone cannot deliver a substantial increase in the volume of distinctively
Canadian drama production in the system. Delivering one more hour/week
of Canadian drama for each major broadcast group would cost an additional
Expectations of what private conventional broadcasters can accomplish,
particularly in distinctively Canadian drama, are severely constrained by the
realities of the current funding situation. There is a gap between expectations to
create a large volume of Canadian entertainment programming that can compete in
peak time and funding available to support that volume. Addressing that gap will
require industry and policy makers to put in place a set of interrelated policy and
regulatory measures that encourage and reward greater risk taking in this area.
The Existing Funding Structure Has its Limits
There are two models of production financing in Canada:
1. Domestic-Model: productions created primarily for the Canadian
marketplace; export potential is related to its domestic success; almost all of
the creative and financing elements of production come from Canada;
requires a significant level of funding support.
2. International-Model: productions created primarily for the U.S. market;
many of the creative elements are Canadian but the majority of the
financing comes from the U.S. market; these productions may take
advantage of some tax credit support but there is no CTF-funding support
available to these type of projects
The table below details the composition of the average budget for each form of
production. In the case of domestic or indigenous production, the single largest
and most important source of financing is fund support from the Canadian
Television Fund (CTF), federal and provincial government tax credits and other
private and public sector funds which represents over 50% of the budget. With
respect to international or industrial production, the most important financing
source is the U.S. distribution advance that comprises the majority of the budget at
A Comparison of the Composition of Financing in Domestic vs. Export-
Oriented Canadian Productions: 1997-98
Producer Investment 1%
Tax Credit + Other Gov't
Source: “Domestic Production” based on Canadian Television Fund: Licence Fee Program for 1997-98;
“International Production” based on a sample of productions provided to CAB by its members.
The amount of distinctively Canadian entertainment programs that can be created
is directly linked to the availability of funding support and the CTF because it is
the single most important source of support at $200 million.
However, CTF support is divided amongst many competing priorities and the
amount of funding support available to productions on private conventional
television represents only 26% of total funding. Less than 10% or $18 million of
CTF funding support is available to Canadian drama production on private
conventional English TV and only 6% or $12 million is available for Canadian
drama productions on private conventional French TV (see chart below).
Distribution of CTF Support (1996-97):
Consolidated Reporting for EIP and LFP
$15M Feature $182M TV $2M $1M
Film Production Production Development Aboriginal
$128M English $54M French
$62M CBC $65M Private $28M SRC $26M Private
$38M $28M $14M $12M
Conventional Spec/Pay/Educ. Conventional Spec/Pay/Educ.
$18M Drama $20M Var/doc/ $12M Drama $1M Var/doc/
• 13 projects • 14 projects
• 74 hours • 221 hours
Source: Canadian Television Fund; note - consolidated reporting on EIP and LFP is not yet available for
As a result, there is only enough CTF funding to support one major drama series-
equivalent per private conventional broadcast group1:
- $30 million divided by six major broadcast groups (CTV, CanWest,
CHUM, WIC, TVA Group and TQS) = $5 million per group of CTF
funding support on average
- $5 million in CTF funding delivers approximately 1 drama series equivalent
($1 million per hour per episode x 22 episodes = $22 million in total
budgets; $5 million in CTF support represents almost 25% of total budgets
which is within the typical range of CTF support on drama projects)
In the absence of additional funding, CTF’s capacity to support production next
year and beyond will be diminished considerably:
• The estimated budget for TV Production by CTF in 1999-2000 is $150
million down from $180 million (CTF through its Licence Fee Program
overspent $30 million last year (1998-99) to deal with the Spring crisis )
• CTF’s future is uncertain. The Government’s $100 million in funding
support ends after 2001. No guarantees are in place to ensure that the $100
million in support is ongoing after 2001.
The CBC’s 50% share of the CTF places an enormous constraint on what the other
broadcast sectors can accomplish since the remaining 50% is divided up between
educational, private conventional, specialty and pay-TV, with a growing
proportion of fund support shifting from conventional to specialty. CTF funding
decisions result in approximately 25-30% flowing to private conventional TV and
20% to specialty and pay TV and about 5% to educational TV projects out of the
50% left over after CBC’s 50% envelop.
Private conventional broadcasters capture 50% of total viewing to all Canadian
entertainment programming (source: Neilsen, 2+, 24 hours, 1996-97) but can count
on only 30% of CTF’s TV Production support, while CBC has less than 30% of
the viewership to all Canadian entertainment programming but has a guaranteed
CTF envelop of 50%. There is a need to rebalance CTF support so that there is
greater equity among the various broadcast sectors.
A ‘drama series equivalent’ is used to illustrate how much production support is potentially
available to each broadcast group recognizing that some broadcast groups place a greater
emphasis on MOWs or documentaries, than on drama series.
Increased Broadcaster Support Alone Can’t Fill the Gap
Producers have urged that broadcasters increase per project licence fees to support
a doubling in the volume of Canadian entertainment programming in peak time
(private English conventional broadcasters currently exhibit 5 hours/week, on
average, of Canadian entertainment programming - category 7, 8 & 9; CFTPA is
proposing that level be increased to 10 hours/week from 7-11pm). Producer
groups have suggested that increased spending by broadcasters alone would create
Increased broadcaster spending alone can’t deliver more hours of distinctively
• The CTF and private funds are fully utilized; as a result, there would be a
33% of budget financing hole that would have to be filled in order to
deliver more hours of distinctively Canadian programming.
• To generate more hours, broadcasters would have to more than double per
project spending to fill the gap normally filled by the funds (broadcaster
participation at 22% of budget + 33% normally provided by funds,
including CTF = 55% of budget assuming other financing sources,
including tax credits continue)
• It would cost private conventional broadcasters an additional $50 million to
generate just one more hour per week per station group of distinctively
Canadian drama programming (55% of budget @ $1 million/hr x 4 major
English-language station groups x 22 episodes)
• Even if broadcaster licence fees, expressed as a per cent of total budget,
were to increase from their current average of 22% to 30%, as suggested by
some, CTF would, theoretically, be able to reduce the level of its per
project participation by a corresponding amount (8%) and the amount
“saved” could be directed to new production. This approach would yield
the equivalent in value of only 1.2 new drama series in the entire system
(8% of $182 million in CTF TV Production support = $15 million @ $1
million per hour per episode x 22 episodes @ 55% of budget)
Increased per project spending would only exacerbate the unprofitability for
English broadcasters of Canadian programming. Current (1997) margins (on a
fully allocated basis) on all Canadian programs in private English television are
-46% overall and -115% for Canadian drama (source: CAB, June, 1998).
The Challenge is to Improve the Quality and Competitiveness of Canadian
The challenge for the system is making the programming we have in the system
competitive so that it is watched.
However, Canadians continue to see a difference in quality between Canadian and
• Most Canadians believe the U.S. produces the best television drama series,
the best talk shows and the best movies (CRTC’s CROP survey, pg. 25).
• English Canadians believe by a factor of 3 to 1 that US programs have
better production values (CTV’s Compass Survey, p. 4).
As a result, Canadian entertainment programs are still, generally, not competitive
with U.S. entertainment programs in English Canada - Canadian entertainment
programs, such as Cold Squad, Wind at My Back and Traders generate ratings
(average audience as a percentage of the population) of about half (2-3) that of
average U.S. entertainment programs (4-6) (see table below).
Ratings Comparison of Selected U.S. and Canadian Programs
1997-98 Broadcast Year Average:
Toronto Market (DMA 2+), Nielsen Meters
X Files 9.2
Party of Five 6
Beverly Hills 90210 5.9
60 Minutes 5.5
NYPD Blue 5
Cold Squad 3.3
Outer Limits 3.2
Wind at My Back 2.2
In order to change the equation, we need to look at what the ‘demand’ and the
‘supply’ equations are in the system.
On the ‘demand’ side - more viewers generates higher revenues which contributes
to program quality which generates more viewers.
On the ‘supply’ side:
• more viewers requires better quality programs;
• better quality programs requires more investment in production values and
• more investment requires greater prospect of a financial return; and
• prospect of financial returns requires new incentives to make it happen.
Illustration of the Demand Equation for Canadian Entertainment
Better Quality Increased
Illustration of the Supply Equation for Canadian Entertainment
Financial Return Investment/