Telefilm fund may yet be delayed as parties dispute broadcaster eligibility rules

Industry leaders are quietly warning of further delays to the release of the reworked Telefilm Canada multimedia fund as new eligibility requirements are disputed. While they are generally praising radical changes in the fund to reflect industry demands and the points raised by a third-party auditor’s report on the fund’s performance, they say there is a risk its launch could be further delayed by a fight over eligibility requirements which apparently allow greater participation by big broadcasters. As previously reported, the fund will now be administered as loans recoupable on revenue, bringing it closer in line with the equity instrument demanded both by industry players and recommended by Ernst & Young. There are widespread concerns, however, that the fund guidelines have been liberalized to include greater participation by big broadcasters such as Bell Globemedia and Alliance Atlantis Communications – apparently in violation of the fund’s objective to help small and medium-sized enterprises. Details were sketchy at press time, and the new guidelines have only been released to selected parties. The Canadian Film and Television Production Association (CFTPA), however, has already submitted a private letter on the matter to Telefilm officials. CFTPA executive staff declined an invitation to comment on the issue. It’s unclear, therefore, how the guidelines have been changed in favour of larger broadcasters. Previous guidelines stated that: "priority will be given to small and medium-sized companies which are defined as follows: the applicant company and its affiliated companies must have fewer than 250 full-time or equivalent employees and less than $12 million in annual sales. "To foster continued innovation in multimedia, partnerships between not-for-profit centres of expertise and commercial multimedia producers in the development of new multimedia technologies will be permitted. Also, Telefilm may allow public broadcasters, public agencies or public institutions (such as museums) to be partners in a proposed project." While those rules didn’t specifically exclude a Bell Globemedia from applying directly to the fund, it’s unlikely the current brouhaha would arise unless some fundamental change has been made. Wholesale changes are likely given the reworking that has taken place with the fund, including the move closer to equity versus loan financing. Changes to affect old and new recipientsCanadian NEW MEDIA has obtained several documents under the Access to Information Act, including Ernst & Young’s Review of the Multimedia Fund – the First Two Years, which was written in March, and the department’s response. The documents outline several changes to the fund. As summarized by Canadian Heritage, the review found seven important criticisms of the fund’s previous structure: the repayable contribution-based approach is seen to be an impediment to obtain further financing, and a change to equity investments was recommended; measures need to be adopted to ensure a smooth transition to new repayment requirements for current fund recipients; CanCon objectives need to be clarified; the fund’s objective of providing access to more diverse and visible Canadian cultural content should be more clearly stated and monitored in the evaluation of projects; any significant increase in the high-risk envelope should be made in conjunction with a clarification of the fund’s objectives with respect to Canadian cultural content; to prevent the distinction between project stages from eroding, changes should be made to the way funding is provided to current project stages; and increasing the funding amounts isn’t recommended since project budgets haven’t expanded significantly since the fund was first established. In response, Canadian Heritage has committed to: change the fund to equity investments, which the Treasury Board of Canada has already approved; apply revised repayment rules to all current agreements; reconfirm the fund’s cultural priority and ensure that support is provided to projects that demonstrate significant Canadian creative elements…; change existing contribution agreements in an as-yet-unspecified way to provide for guidelines that clearly identify the fund’s objectives, including of providing access to more diverse and visible Canadian cultural content online; not increase the contribution to the high-risk envelope since it’s anticipated the change to an equity investment will reduce the fund’s risk; address in as-yet-unspecified way the streamlining of the process to account for the erosion of the distinction between project stages; and not increase the funding available as the fund concentrates on development of content for the Internet as opposed to CD-ROMs. Exact details won’t be available until the fund’s revised guidelines are made public. As the auditors note, a high-default rate and industry criticism led to the proposed changes after a consultation period last winter that included several industry leaders and fund recipients (CNM, November 1/00 and Feb. 21/00).

Telefilm fund may yet be delayed as parties dispute broadcaster eligibility rules

News | 11/02/2001 5:00 am EST

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