Canada: Government Reviews ´Canadian Content´ in Film and Television Sector

In March 2002 the Federal Department of Canadian Heritage released a discussion paper entitled "Canadian Content and the 21st Century" regarding the definition of ‘Canadian-content’ film and television productions.

‘Canadian content’ refers to the various tests of so-called ‘Canadianess’ used by government agencies (among others) to determine eligibility for various domestic film and television financing initiatives. Essentially, a film or television production that has a certain level of Canadian content will qualify for government benefits such as direct government funding and refundable tax credits, and will be deemed to satisfy domestic broadcast quotas.

The traditional definition of ‘Canadian content’ has been in place for almost 30 years and is based on:

• the production company’s Canadian ownership;
• the Canadian nationality of the producer and key creative personnel (each of whom is allocated points for his or her Canadian status); and
• the minimum expenditure requirements for services paid to Canadians or incurred in Canada.

However, the traditional definition has been continually amended as new government initiatives have been introduced by different federal agencies over the years, resulting in varying definitions for different purposes.

The discussion paper was developed as a step towards initiating a public dialogue on the proper definition of ‘Canadian content’. The paper places the issue in a global context and:

• provides a brief retrospective of the government’s milestones in the development of Canadian content and an overview of the different definitions;
• poses a number of questions regarding the proper definition of ‘Canadian content’;
• invites submissions on the topic from all interested Canadians; and
• sets a timescale for the consultation process.

According to the discussion paper, the time has come to reassess the definition of ‘Canadian content’ in light of the fact that the domestic film and television production and broadcast industries have changed considerably over the past three decades. A definition must be agreed on which satisfies domestic cultural policies while taking into account the realities of global trends such as trade liberalization, convergence, technological developments and industry consolidation.

The discussion paper notes that many countries struggle to determine what makes a film or television production ‘domestic’, and briefly reviews the different approaches taken by France, the United Kingdom, the Netherlands and Norway. It contrasts these approaches with that adopted by the Canadian government over the years, which it describes as trying "to find the optimal balance between the cultural goals of creating film and television productions that reflect Canadian subjects and perspectives with the commercial trend to work with foreign co-producers and to engage foreign performers".

The numerous governmental financial support programmes for the domestic film industry are reviewed, as are the corresponding definitions of ‘Canadian content’ employed for eligibility criteria, including:

• the Canadian Film or Video Production Tax Credit Programme, introduced in 1995 and administered by the Canadian Audio-Visual Certification Office (CAVCO), which provides for a refundable tax credit of up to 12% of an eligible production’s budget. Its definition of ‘Canadian content’ is the traditional test most widely adopted by other programmes and requires (i) a Canadian-controlled production company, (ii) a Canadian producer, (iii) six out of 10 points (based on key creative personnel qualifying as Canadian citizens or permanent residents) and (iv) minimum expenditure tests regarding payments to Canadians for services and post-production spending in Canada;
• the Canada Feature Film Fund, which was created in 2000 and supports Canadian-produced feature films that score at least eight out of 10 points in the CAVCO points system. Priority is granted to projects with significant Canadian creative elements, including Canadian stories, themes, talent and technicians;
• the Canadian Television Fund, a government and cable/satellite industry partnership created in 1996, which finances the creation and broadcast of high-quality, culturally significant Canadian television programmes and requires (i) 10 out of 10 points in the CAVCO points system, (ii) the underlying rights to be developed and owned by Canadians, (iii) the filming of the project and its setting to be primarily in Canada. In addition, the fund favours projects which "speak to Canadians about, and reflect, Canadian themes and subject matter";
• the International Treaty Co-Production Network, which is administered by Telefilm Canada pursuant to Canada’s bilateral co-production treaties with 57 countries around the world, pursuant to which certified co-productions qualify as ‘national products’ in Canada (and applicable foreign jurisdictions) and are eligible for many Canadian financial benefits. Canadian eligibility not based on the CAVCO points system but on criteria set out in each film and television treaty and the guidelines developed by Telefilm Canada; and
• ‘Canadian programmes’ as certified by the Canadian Radio, Television and Telecommunications Commission. These include television programmes that pass the CAVCO test as well as programmes that are ineligible for CAVCO certification but meet criteria established by the commission (eg, sports programmes, talk shows, news programmes, video clips and co-ventures between Canadians and Americans and other foreigners).

The discussion paper reviews the differences between the various definitions of ‘Canadian content’ and identifies that the following criteria are most commonly in use:

• the Canadian nationality of the production company, producer and key creative personnel;
• quantum and location of production and post-production service expenditures;
• copyright and rights ownership by Canadians and "meaningful development" of the project by the Canadian producer;
• control of distribution rights in Canada and internationally, and entitlement to a share in the net profits derived from foreign sales;
• Canadian themes and subject matter; and
• production setting.

The discussion paper poses a series of questions intended to stimulate debate on the issue of the most appropriate definition of ‘Canadian content’, including the following:

• How should a revised Canadian content system establish an appropriate balance between Canada’s cultural and industrial imperatives?
• Are all key creative positions under the traditional CAVCO points scale still sufficient, appropriate and relevant, and is proper weight accorded to each position?
• Should the minimum point system requirements (ie, six out of 10 points under the CAVCO scale) be increased?
• Is Canadian residency imperative, or is Canadian citizenship sufficient for producer and key creative positions?
• Should international treaty co-productions continue to qualify as 100% Canadian content?
• Who should assess a production’s eligibility in terms of Canadian content and should the assessment process be centralized? and
• Should there be a mechanism to appeal decisions about Canadian content?

The questions posed by the discussion paper will assist the Department of Canadian Heritage in developing specific policy and initiative changes and establishing priorities for action in Canadian content film and television support. The government invites submissions and comments from all interested Canadians on the issues raised by the discussion paper.

Written submissions must be received by May 31 2002 in an electronic format that is adaptable for use on the Internet. Submissions should be sent by post or fax to the following address:

Canadian Content Review
c/o Director of Film and Video
Department of Canadian Heritage
15 Eddy Street
6th Floor
Hull
Quebec K1A 0M5
Canada
Telephone: +1 819 997 5857
Fax: +1 819 997 5709

In addition, submissions may be emailed to: canadiancontent@pch.gc.ca.

All submissions will be posted on the website of the Film, Video and Sound Recording Branch of the Department of Canadian Heritage at www.canadianheritage.gc.ca.