TELUS fund under fire for conditions attached to e-learning loans

One of Canada’s leading multimedia shops says the $5-million Canada-TELUS New Media Learning Fund is plagued by onerous conditions that finally convinced the company to stop pursuing financing it was promised by the fund. Last January, marblemedia was announced by the TELUS Foundation as one of several winners of education-related recoupable loans, in this case for up to $200,000 (CNM, Feb. 7/03). But marblemedia head Mark Bishop says the company recently broke off contract negotiations when the two entities couldn’t agree on terms related to copyright ownership. Had the company accepted TELUS’ terms, Bishop says, the company wouldn’t have been able to pursue financing from other sources for a second season of its winning Deafplanet.com project. Difficulties negotiating a mutually acceptable contract were exacerbated, Bishop says, by changes in management as the original TELUS fund executive director Robert Dubberly was replaced by Ray Moschuk in December, who in turn was recently replaced by Andrea Goertz. Bishop says he wants it known that the fund needs to be improved to better suit the needs of the new media industry and to work hand-in-hand with other funds such as the Bell Broadcast and New Media Fund and the Telefilm Canada Canada New Media Fund. Bishop says the crux of the problem is that TELUS’ contract would have forced him to hand over a proportional level of copyright in the DeafPlanet.com project until the loan was repaid. Unlike the Telefilm fund, which doesn’t use copyright as loan collateral, the TELUS condition would have left marblemedia unable to pursue second-season financing from other large funds and would have possibly kept it from being eligible for some tax credits. The company has also expressed concerns that interest on the recoupable loans would begin mounting from the time a winner first uses any of the money - an unsuitable provision, it says, for an industry in need of as much financial help as it can get. Bishop says the National Bank of Canada stepped in during production with bridge financing while negotiations with TELUS were ongoing and he praises the patience with which other partners treated the situation. A new funder has been found to replace the cash the company gave up when it broke off talks with TELUS. But, he says, the process has left a bitter taste in the company’s mouth since it took months of fruitless negotiation and the replacement financing from National Bank has come with a financial price. "It is unfortunate that Telus would create a set of rules which fundamentally go against the spirit and nature of the new media content creation industry. Telus isn’t a new player in the disbursement of funds for content creation. It’s frustrating though that they’ve chosen to create a fund which fulfills its mandate, but restricts the opportunity for co-financier agreements, which are crucial to building a sustainable business model." Not every company that has won funding from the TELUS fund is as frustrated, though. Celia Clark of Digital Frog Productions says the company received its funding in timely fashion, though she had to overcome her own objections to strict conditions attached to the loan that would have put her business in peril should she have defaulted. For his part, Dan Fill, VP of new media at DECODE Entertainment, says he also received funding without major hassles, though he confesses to not knowing the full details of the contract that the company’s lawyers negotiated. He says some elements of the original contract were unusual in the new media industry, and expresses a hope that an ongoing dialog with other funding bodies will bring the program in line with other new media initiatives. Andrea Goertz, executive director of the TELUS fund, makes no apologies for the strict conditions attached to a contract within the funding initiative. She says TELUS has a responsibility to be diligent in recovering monies loaned so that other companies can benefit from the program. She adds that the terms TELUS asks companies to agree to are superior to private or commercial lending practices. Stressing that the fund is intended to help further the new media industry and that the sector has been in a state of constant flux, she says fund officials might take a look at the controversial collateral terms should they decide the issue warrants a change to its standard contract. But, she warns, the contract will be applied consistently across the spectrum of funding winners. She notes that besides the 30 or so winning projects announced early this year, TELUS will likely be announcing a handful more within the next month or so.

TELUS fund under fire for conditions attached to e-learning loans

Broadcast | November 7, 2003

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