Omnia recommends sweeping changes to mandate, guidelines of Telefilm fund

An as-yet unreleased report by consulting firm Omnia Communications Inc., obtained by Canadian NEW MEDIA, makes a sweeping series of recommendations to improve the Telefilm Canada Canada New Media Fund, including dropping controversial cultural requirements and diverting the distribution funding envelope to other purposes, while bolstering the pool with greater resources and a clear mandate to support commercial products. The report, Making New Media Work For Canadians, was completed in February 2003, and its findings were discussed at a closed-door meeting of the fund’s advisory committee on June 3 in Toronto. Initial reaction to the report has been positive, though at least one prominent new media lobby group, the Alliance numériQC, has made calls for further changes. The recommendation to eliminate requirements for Canadian content elements and the distribution envelope is likely to prove uncontentious among industry members who have long railed against those components. But another recommendation to lower the amounts earmarked for small- and medium-sized companies could create a re-hash of the late 2001 battle that pitted the Canadian Film and Television Production Association (CFTPA) - and its influential new media committee co-chairs Roma Khanna of SNAP Media and Stephen Comeau of Collideascope Digital Productions - against fund officials. The report, which first became public knowledge in late 2002 (CNM, Dec. 20/02) builds on a March 2002 report, also led by Omnia, and a March 2001 Ernst & Young report (CNM, Nov. 15/01) that have each successively sought to move the fund in directions that would best help the still-struggling industry. This latest Omnia report is one of the most complete yet and is the first to attack head-on many of the presumptions behind the fund’s guidelines. For example, the report’s authors argue that Telefilm should drop the qualifier "cultural" from the guidelines and replace it with a new mission statement defining the fund’s purpose as "creation of new media products for public consumption and to increase the profile and presence of Canadian new media content on the Internet." Making New Media Work also hammers home the fund’s commercial nature, recommending an explicit injunction against participation by non-commercial projects. The report also recommends the elimination from the guidelines of any prohibition against streaming media products - an increasingly large component of many recent high-profile products. Overall, says new media analyst Sam Punnett, "it’s filled with common sense. It addresses a number of things that, in a perfect world, I’d like to see done." The cultural requirements have been a long-time bugbear of Punnett’s, and he welcomes the proposed change, even if it would really only legitimize a de facto practice by Telefilm officials. "Practically, it hasn’t been a real problem but they did need to formalize it into a statement of purpose. There’s a bunch of Heritage bumph in the guidelines that you could misinterpret to think that it was about igloos and hockey sticks." Few will disagree, but a suggestion to reduce the SME envelope from 75% of the fund to 50% could be the precursor to a new battle over the fund’s direction. The change, the report’s authors argue, should be made to create greater scale and audiences for Canadian new media projects. " right policy is to nurture smaller companies with young talent and great ideas but few resources, while encouraging larger companies that have the capital, the brands and the audiences to give independent talent the boost it requires." In conjunction with reducing the SME envelope by one-third, though, the report recommends that a revenue test for defining SMEs - currently those with a top line no greater than $25 million - be replaced with an independence test that would be worked out at a later date. The authors also recommend putting some money aside specifically for in-house new media projects by large companies such as broadcasters and others, as well as testing company-focused vs. project-focused support. During a previous round of consultations over fund guidelines, the CFTPA wrote to Telefilm in October 2001 that, "Given the limited funds available within the Fund and the need to stimulate the vibrancy of the sector, it only seems logical to target public funding access to those production entities who are not able to cross-collateralize production costs against significant revenues from other sources. We would absolutely agree with the need to encourage partnerships with broadcasting and other distribution entities to ensure maximum distribution of fund projects, but actual access to production and sectoral support funding should be limited to independent producers." The Alliance numériQC, the only large lobby to comment publicly to date, says that significant representation in the report by large companies and major distributors may "have had an impact on some of the recommendations." One of the key reasons the report’s authors heard why SME-produced content doesn’t yet have the scale and audience of large enterprise products is because small players are unable to keep up with the daily content demands of portals and other aggregators. Says the Alliance: "In a logical flow where companies must provide specialized or general portals with content on a daily basis, small companies are obviously not able to keep up with the demand. However, we believe that they can play a complementary role if they are called upon to provide content or products with a certain amount of longevity. The model developed in the television sector is a good example where large networks provide daily and general information whereas private producers collaborate on dramatic, documentary and fictional productions etc." In a controversial request, the Alliance has also responded to the Omnia report by asking Telefilm to include games in the program. Arguing that games are an important cultural and industrial sector of new media, the Alliance writes: "We believe that the games industry represents a good example of where the Canada New Media Fund could support such aspects as the development of prototypes and technologies or, then again, improving market awareness." Industry watchers will likely be cheered by one of the report’s recommendations - that the fund’s total allotment be increased to $36 million starting in the 2004-2005 fiscal year. But, observers note, the fund is just one part of the overall Canadian Culture Online Program, which is under pressure from multiple groups with their own agenda. Punnett expresses a common cynicism about the report’s findings. "It’s one thing to recommend. It’s another thing to take responsibility and do something. If you do something, you’ve got to take responsibility. So, the path of least resistance is to do nothing." However, Ernst & Young recommendations in 2001 to overhaul the fund, moving it from a loans-based fund to a more equity-like recoupable loans-based, were followed in short order to the delight of industry-watchers. Telefilm Canada is currently in consultations with Canadian Heritage about the future of the fund as it approaches the end of its current mandate, and is also re-thinking its guidelines to bring the initiative more in line with industry wishes. Canadian NEW MEDIA will continue to seek reaction on the Omnia report from key industry stakeholders in future issues, currently difficult as many are in Alberta for the Banff Television Festival.

Omnia recommends sweeping changes to mandate, guidelines of Telefilm fund

Broadcast | June 13, 2003

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