BIG DATA + HUMAN TOUCH - canadian retransmission collective
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C A N A D IA N R ETRANSMISSION COL L ECTIVE
BIE N N IA L REPO RT 2017-2018
BIG DATA
+
HUMAN TOUCH
“Canadian retransmission rights were established 30 years ago. Since then, CRC teamwork –
along with efficient systems, quality data, and good governance – has translated to more than
$300 million for our affiliates.” Carol Cooper, President & Chief Executive Officer
I T PAYS T O BE LO N G
CANADI AN RE T R A N S M I S S I O N C O LLE C T I V E
The CRC Origin Story
Since 1990, Canadian law required
those benefiting financially from re-
transmitting audiovisual works
to compensate the owners of those
works. Satellite, cable, and other re-
transmitters began to pay for the
“retransmission right” created as
part of Canadian copyright reform
and the Canada-United States
Free Trade Agreement (FTA).
The CRC was founded by the indus-
try associations that went
on to become the Canadian Media
Producers Association (CMPA).
Our mission is to collect royalties
$314 MILLION
for the retransmission of “distant
signals” in Canada and distribute
these royalties to our rightsholders –
film and television producers from
IN ROYALTIES
across Canada and around the
world.
OVER 30 YEARS
1 COVER
Carol Cooper
President & Chief
Executive Officer
Retransmission of distant signals
occurs when a satellite, cable,
or other telecommunications com-
pany picks up over-the-air broadcast
signals and retransmits them to its
+
OPPOSITE
Menka Domotor
Manager, Accounting
own subscribers who
live outside the normal reach
of those broadcast signals. These
companies are required to compen-
EXCEPTIONAL
sate rightsholders for the use of
their programs in these retransmit-
ted broadcast signals. RESULTS
“Quality data – supported by sophisticated software tools and processes – are at the heart of
our work. Each year, we identify, track, verify, and process hundreds of thousands of data points.”
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We use customized software & a range of databases to collect,
calculate, and distribute maximum royalties to our affiliates.
• 8.2k rightsholders Affiliate Database Affiliate Relations • Identify rightsholders
• 35 countries • Signed since 1990: 8,200 rightsholder affiliates • Identify, locate, educate, & sign-up rightsholders & their programs
• 890k programs in 35 countries as CRC affiliates
• Signed new affiliates in 2017 & 2018: 284 & 190 • Obtain registration of programs from affiliates
• Processed since 1990: 890k programs registered IDENTIFY • Import or enter affiliate data into RDS & update annually
by CRC affiliates
• Annually: Broadcast Database Program Research & Owner Assignment • Track broadcast signals
- 190 broadcast signals • Track 190 over-the-air signals 24/7/365 annually • Import into RDS broadcast program data for each signal & programs aired
- 2.4M broadcasts (Canada, US, France) • Determine which programs fall under CRC’s scope
- 110k unique programs • Work with 1.7 million broadcast hours annually • Determine which programs are registered by CRC affiliates
- 2.4 million broadcasts for all rightsholders/ TRACK • Research ownership of programs not registered with CRC
830k for CRC affiliates
- 110k unique programs for all rightsholders/
50k CRC affiliates
• 2,300 retransmitters Retransmitter Database Royalty Collection & Determining Relative Weight of Programs • Verify retransmissions
• Work annually with 2,300 Canadian retransmitters • Import retransmitters into RDS & update annually
“We chose ‘big data + • $296M total collected +
(small, medium, & large) • Import signals carried into RDS for each retransmitter
& royalty collection
$18M retroactively due =
human touch’ as our $314M from retransmitters • Map all broadcast signals offered by each retransmitter
VERIFY
• Import subscribers (by signal & retransmitter) into RDS
• Quantify Canadian subscribers to each signal • Collect & verify royalties from retransmitters
theme for this biennial be- • Process retransmitters’ reports & payments monthly/annually
monthly/annually
cause it sums up
what’s required to deliver
royalties – and value – • $270M total distributed Royalty Distribution System (RDS) Database Confirmation of Program Ownership & Attribution of Royalties • Calculate royalty
• 8% cost-to-royalty ratio • Calculate royalties using RDS for each program & • Obtain confirmation from affiliates of right to receive payments by program
to our affiliates year each affiliate: royalties by program
after year: $300+ million - Programs are weighted prorata against all others
- Weighting is based on duration and distant sub-
• Post publicly programs without substantiated claim
(“orphans”)
in 30 years.” scribers reached
CALCULATE
• Seek resolution of conflicts where programs have multiple
• Distributed $270 million total since 1990, $29 million owner claims
during 2017 & 2018 • Calculate royalty pool for a year: royalties plus interest
Carol Cooper • Maintain low cost-to-royalty ratio: historically 8% minus operating costs
President & Chief (7.5% in 2017 & 2018) • Export royalty payments from RDS to accounting system
Executive Officer
& release funds
• 30 years of royalties Payment Database Royalty Distribution – Transparent, Fair, Ongoing • Distribute royalty
• Not-for-profit service 30 Years of Royalties to Affiliates by Region: • Ensure maximum royalties distributed in minimum time payments by affiliate
• International distribution • Australia/New Zealand $1.4M to affiliates
• Canada $148.4M • Provide detailed reporting to affiliates to accompany
• Europe $6.3M each payment
• United Kingdom $16.3M DISTRIBUTE • Enhance custom software systems to ensure accuracy
• United States $97.2M & efficiency
• The rest of the world $0.4M • Ensure fair & equitable distribution policies
• Total (1990-2018) $270M • Evaluate landscape to protect retransmission rights &
affiliate interests
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Numbers
Certified Tariff 2014-2018:
Quality data inform everything we Allocation As in previous years, a
do. Hundreds of thousands of data comprehensive viewing study was QUANTUM ALLOCATION ROYALTIES
points are identified, tracked, veri- used to determine each collective’s
fied, and processed so that we can share of total royalties. This time, Rate per CRC’s Share 100% Share CRC’s Share
deliver results for our affiliates. FWS – representing major league subscriber per of all Canadian (CA$ millions) (CA$ millions)
month (CA$) royalties (%)
sports – conducted the study. As
This complex and exacting process a result of this analysis (and the 2014 $1.06 14.85% $119 $18
begins with the tariff. The distant extensive work the CRC and others
television signal retransmission tar- did to participate in the study and 2015 $1.14 14.85% $126 $19
iff is the law in Canada (established ensure the study data was represen-
2016 $1.17 16.10% $126 $20
under the Canadian Copyright Act), tative), the CRC’s share increased
and governs both retransmitters from 14.85% to 16.1% (in effect 2017 $1.17 16.10% $123 $20
and rightsholders. As a condition from January 1, 2016).
of this regime, the tariff – that is, 2018 $1.17 16.10% $121 $19
the royalties the CRC can collect
from retransmitters – is set by the Royalties Total Royalties $615 $96
2014-2018
Copyright Board of Canada. This The quantum and allocation
per Certified Tariff
time, the tariff process was excep- changes noted above have resulted
tionally long (5+ years) and in record increases for the CRC: $18 million Interim Tariff 2014-2018:
complex. It included litigating the $18 million more in royalties due
case to increase royalties, and par- retroactively to our affiliates – 8% in in retroactive
ticipating in a study to determine 2014, 16% in 2015, and 29% for royalties + 2014 $0.98 14.85% $110 $16
the CRC’s share of these revenues. 2016-2018. (See CRC Share in
There were two major advances. table on page 4 for details.) And
Building on 2015 $0.98 14.85% $108 $16
3 with the 2014-2018 tariff certified, our success 2016 $0.98 14.85% $106 $16 4
Quantum The CRC worked with work has begun on the next tariff,
2017 $0.98 14.85% $103 $15
Canada’s eight other sanctioned 2019-2023. There will be no inter-
2014-2018 Tariff
retransmission collectives to prepare ruption in the flow of royalties to our 2018 $0.98 14.85% $102 $15
Certified August 3, 2019
a joint case to increase royalties for affiliates, because an interim tariff
rightsholders. Informed by expert beginning in 2019 was set by the Total Royalties $529 $78
industry and economic analyses, Copyright Board. This ensures that 2014-2018
the collectives presented extensive the CRC can collect at the increased per Interim Tariff
Royalty increases – in both
oral and written evidence to the quantum ($1.17 per subscriber)
the tariff rates and the CRC Total Increase $86 $18
Copyright Board in support of our and increased allocation (16.1%)
share – surpass gains made in Royalties
case, and in response to the retrans- beginning in 2019.
in 2009-2013: $18 million 2014-2018
mitters’ presentation. The Copyright
more for our affiliates over Certified vs.
Board ultimately certified substan- Interim Tariff
the five years beginning in
tial increases for 2014-2018, up Due from Retransmitters
In millions 2014 – on top of $78 million
from 98 cents per subscriber per
already collected.
month in 2013 to $1.17 by the end 1990-2018 (collected) $296
of the five years (see Quantum notes 2014-2018 (retroactive) $18
in table on page 4). An interim tariff 1990-2018 (total) $314
(98 cents) ensured there was no
interruption in collection and distri- Distributed to CRC Affiliates
In millions
bution of royalties to our affiliates
throughout this period. 1990-2018 $270
2017-2018 $29
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People
Data without context is just noise. Technology
Expertise and insight are required Two customized systems – one for
to turn it into useful, actionable royalty distribution (RDS) and one
information. The CRC team has for corporate accounting – ensure
demonstrated this essential human accuracy and efficiency as the
touch by consistently delivering CRC tracks and processes the data
value for our affiliates. required to maximize royalty pay-
ments to our affiliates. Upgrades
and enhancements to both systems
Team were introduced in the last two
An expert, experienced, loyal team years.
makes all the difference. The CRC
team includes our Board of New accounting software The essen-
Directors and advisors – all are tial first step toward electronic
respected professionals and many of payments and other digital benefits
them work in the Canadian film and for our affiliates, this software was
television industry. In-house, just six acquired, customized, tested, and
people – four of them full time – are successfully implemented.
responsible for our daily operations.
Experience is their common denomi- New web portal An enhanced
nator – their length of service aver-
ages 17 years. In this two-year
RDS will facilitate the electronic
exchange of documents and infor-
30 YEARS OF SERVICE
+
period, there were several notable mation, allow affiliates to register
developments among this highly- programs and claim royalties online,
5 OPPOSITE valued team. Patricia Turner has and more. The portal will be intro-
Vanda Macura been with us for nearly 30 years duced in stages, beginning in 2020.
Special Projects
(as Manager, Affiliate Relations). In
2018, Pat scaled back to one day
per week but continues to share her
extensive knowledge and experience
with her understudy, Grace Lo. After
eight years, Sharon Hicks moved on
AN EXCEPTIONAL TEAM
and our newest recruit, Charlene
Hsiung, stepped into the Assistant
Manager, Accounting role.
(The CRC’s Board of Directors is on page 12.)
“From day one we said we would ensure maximum royalties in minimum time. The right systems
and policies are essential, but it’s the team that really makes the difference.”
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Foundation
The foundation we created many Affiliates
years ago serves the CRC – and our The affiliates we represent are a
affiliates – well. It ensures that we diverse group of film and television
can deliver on our mandate in the producers from across Canada and
most productive, transparent, and around the world that have the right
cost-effective manner. to collect retransmission royalties.
CRC affiliates include independent
Canadian program producers, pro-
Policies ducers of programs shown on Public
The CRC’s Board of Directors had Broadcasting Service (PBS), and
the foresight to create principles, Réseau Outre-Mer 1ère (RFO), edu-
policies, and practices to govern fair cational TV producers in Canada
and equitable royalty distribution, (except Télé-Québec), all foreign
guide the daily work of the organiza- producers and broadcasters outside
tion, and allow us to be both respon- North America, and producers of
sive and proactive. The CRC is a music videos used in Canadian
not-for-profit organization. Cost
effectiveness is integral to our work,
and we have consistently operated
at a cost-to-revenue ratio of below
programs. The CRC represents
U.S. programs only when they are
retransmitted on a PBS station or
RFO.
8,200 RIGHTSHOLDERS
8%. In both 2017 and 2018, oper-
ating expenses were just 7.5% of
IN 35 COUNTRIES
+
revenue. Eligibility
Who’s eligible to become an affiliate
7 OPPOSITE and collect retransmission royalties
Charlene Hsiung Distribution from the CRC? All of these criteria
Assistant Manager,
Accounting
The CRC distributes royalties must apply:
according to clearly-defined policies • They own the copyright in a pro-
and procedures. Our royalty distribu-
tion formula is supply-based, taking
into account the actual number of
hours of programming and the num-
gram, or the owner has granted
them the right to collect royalties.
• Their rights apply to Canada, and
their program has been transmit-
COST EFFECTIVE,
ber of subscribers to whom the
programs have been retransmitted.
Royalties are distributed one year in
arrears, and all reserves are released
ted on a retransmitted signal.
• They haven’t given away their right
to collect retransmission royalties
(such as through a broadcast
TRANSPARENT
within three years of the year of licence agreement).
retransmission.
The royalty pool for each year is
based on audited figures and
includes royalties plus interest
minus costs of operation.
(For more on how royalties are collected and
distributed, see fold-out on Front Cover. For
more on our policies and procedures, see
https://www.crc-scrc.ca/english/howmuch.html)
“The foundation we created in 1989 was designed to meet the needs of our affiliates. For instance,
we have consistently operated at a cost-to-revenue ratio below 8%. In each of 2017 and 2018,
it was just 7.5%.”
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Next
The industry in which we operate is Government
in a state of disruption. In response, The legislative framework under-
the CRC explores every opportunity pinning the Canadian audiovisual
to ensure that the retransmission industry has been undergoing exten-
regime is protected. sive review – including public
consultation and hearings.
Viewing • Copyright Board Reform
Changes in viewing habits are All stakeholders will benefit from a
always on our radar because sub- more focused and efficient process
scribers to traditional broadcast at Canada’s Copyright Board.
television trigger retransmission Consultations and efforts to mod-
royalties. In contrast, subscribers to ernize the Board continued from
Internet-based platforms (such as those noted in our 2015-2016
Netflix) do not. And, despite head- biennial. In 2017, the CRC took
lines that suggest otherwise, while part in a public consultation initi-
these new sources have become
popular with Canadians, traditional
television services retain the lead.
ated by the federal government
and recommended a number of
strategies to reduce delays in the
tariff-setting process. Our recom-
95% OF CANADIANS
In 2017, 95% of Canadians
watched traditional television and
mendations included tightening
deadlines, simplifying procedures,
WATCH TRADITIONAL TV
+
just 61% of us chose Internet-based and clarifying Board mandate and
services (but only 9% of us did so criteria for rate-setting. Reform
9 OPPOSITE exclusively). Canadians over 18 won’t happen overnight, but the
Grace Lo watched an average of 30.4 hours major issues have been identified
Assistant Manager,
Affiliate Relations
of television each week – with tradi- and additional resources commit-
tional TV attracting 89% of viewers, ted by the federal government.
ABSENT
Pat Turner
Manager,
Affiliate Relations
while Internet-based received just
11%. (Source for figures below.)
In short, media coverage doesn’t
CRC will remain a leader in
pushing for efficiencies at the
Copyright Board to ensure tariffs
get certified more swiftly.
PROTECTING RIGHTS
always tell the full story: Canadians
continue to value traditional broad-
cast services, which means that
retransmission royalties will con-
tinue well into the future.
Source: Communications Monitoring Report
2018 ISSN: 2290-7866, published by the
Canadian Radio-television and
Telecommunications Commission (CRTC)
“Extensive and multiple federal legislative reviews of the audiovisual industry were launched.
The CRC worked to ensure the future of the retransmission regime – and protect those rights
and royalties for copyright holders.”
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Next (continued)
• Copyright Act Review • Canadian Broadcasting
A five-year review – mandated by and Telecommunications
section 92 of the Canadian Copy- Legislative Review
right Act – was launched in In 2018, the government launched
December 2017. Concurrent a review to ensure that Canada’s
with this, the federal government legislation framework keeps up
launched a study to consider with industry and technological
Stephen Ellis Eric Birnberg John Vandervelde Reynolds Mastin
remuneration and rights manage- changes. The review will examine CHAIR VICE CHAIR TREASURER SECRETARY
ment models for artists and cre- a range of issues, including tele- Executive Committee Executive Committee Finance Committee Canadian Media
ative industries in March 2018. communications and content Finance Committee Finance Committee InterMedia Producers Association
RocketFuel Media Inc. High Park Entertainment Finance Corp. President & Chief
The CRC’s submissions in both creation in the digital age, net President Inc./Behind the Scenes Managing Director Executive Officer
processes encourage broader dis- neutrality, and cultural diversity. Services Inc.
Principal
tribution of audiovisual programs, The panel’s final report is due in
but only if creators receive their January 2020.
fair share of the economic value
of that expanded distribution. • United States-Mexico-Canada
The existing retransmission royalty Agreement (USMCA)
regime attempts to balance the Retransmission rights were created
interests of each stakeholder: as part of copyright reform and the
viewers, retransmitters, broad- Canada-United States Free Trade
casters, and creators. With this Agreement (the predecessor to
balance in mind, our view is that NAFTA), so the CRC closely moni- Marla Boltman Tom de Lange Erin Finlay
the retransmission regime should tored negotiations for the new Halfire Entertainment Association for the Executive Committee
be updated to ensure its continued USMCA. The final agreement has Senior Vice President, International Collective Finance Committee
Business & Legal Management of Stohn Hay Cafazzo
11 application to newer – and future – not been ratified, but as it stands CRC Board Affairs and Operations Audiovisual Works Dembroski Richmond LLP 12
broadcast technologies. in the fall of 2019, there are no Managing Director Partner
plans to alter the retransmission
of Directors
In spring 2019, the two federal regime in any way. Elected at the Annual
government departments, charged General Meeting,
with these reviews, tabled their January 17, 2019
reports with numerous recommen-
dations. As of fall 2019, both
the timing of the government’s
response and the outcome are
uncertain.
• Program distribution Claude Joli-Coeur Gregory Kane, Q.C. Mark Le Blanc
The Canadian Radio-television and Executive Committee Executive Committee The Ontario Educational
Finance Committee Finance Committee Communications Authority
Telecommunications Commission National Film Board Dentons Canada LLP General Counsel
(CRTC) was asked by the Canadian of Canada Counsel
Government Film
government to examine the future Commissioner and
of program distribution in Canada Chairperson
and how to support a vibrant
domestic market in a competitive
global economy. As part of this,
the CRTC will examine the role
and effectiveness of the regulatory
approach to streaming audiovisual
programs online (which – unlike
traditional broadcasting – does not
trigger retransmission royalties).
The CRC anticipates proceedings Scott Griffin Hélène Messier Stephen Stohn
Public Broadcasting Association Québécoise Skystone Media Inc.
in 2020. Service de la Production President
Assistant General Médiatique
Counsel President & Chief
Executive Officer
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Annual Meeting
DE SIGN Chris Oliver, Decisive Moment Incorporated W RIT IN G Julia Moulden STAF F P O R T R A I T S Paul Orenstein P R I NT I NG Vis-A-Vis Graphics Inc.
The Annual General Meeting was held January 17, 2019
at 12:00 noon. at the offices of McCarthy Tétrault LLP,
Toronto, Canada
General Counsel
McCarthy Tétrault LLP
Toronto Dominion Bank Tower
66 Wellington Street West, Suite 5300
Toronto, Ontario
Canada M5K 1E6
Auditors
KPMG LLP Chartered Accountants
Vaughan Metropolitan Centre
100 New Park Place, Suite 1400
Vaughan, Ontario L4K 0J3
Principal Banker
Royal Bank of Canada
Corporate Banking Centre
2 Bloor Street East, 3rd Floor
Toronto, Ontario
Canada M4W 1A8
CRC’s Head Office
15 74 The Esplanade
Toronto, Ontario
Canada M5E 1A9
T (416) 304-0290
F (416) 304-0496
E info@crc-scrc.ca
W www.crc-scrc.ca
Founding Member
Canadian Media Producers Association
This Biennial Report was printed and published in January 2020. It was printed
on Environmentally Friendly; Acid Free; Elemental Chlorine Free; FSC Certified
stock containing 30% Post-Consumer Waste.
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