The Terms [Of Trade] They Are A-Changin' (?)

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Barely two years after the ink dried on the Terms of Trade Agreement entered into between Canada's five largest broadcasters and independent television producers, Canadian broadcasters have signaled that they want to renegotiate the Agreement with Canadian television producers. The first volley has been fired by Rogers: at a recent industry conference, Rogers Media President Keith Pelley argued that the ongoing structural change in the industry necessitates opening up the Agreement . Citing the ever-fragmenting universe of channels and platforms and the underlying challenging economics of acquiring and airing Canadian programing, Rogers is seeking, among other concessions, to re-open the Agreement to incorporate more revenue sharing with producers , including permitting broadcasters to share revenues earned by producers from multi-platform and international exploitation.

Rogers' position was not well received by the Canadian production community . Michael Hennessy, the President of the Canadian Media Production Association, noted that, in exchange for a flat licence fee, broadcasters already receive the right to play shows as many times as they want, on whichever platforms they want (including TV, online, mobile devices, Netflix/OTT services, etc.) for a five year term. At the same time, producers have the opportunity to earn further revenues from other avenues of exploitation, including selling their shows internationally.

However, under the current Agreement, broadcasters have the ability to access a whole host of additional revenue streams including from an international sale if they agree to offer a "super-license fee" to a producer. The super-license fee entitles the broadcaster to enter into negotiations for a share of profit participation in a number of areas of exploitation which are otherwise exclusively reserved to the producer (for a comprehensive and thorough review of this provision as well as an clause-by-clause analysis of the entire Terms of Trade Agreement, I refer you to the series of posts written by my partner Bob Tarantino; the analysis of the "super-license fee" (and the related posts) can be found here). 

Rogers' CityTV services are up for licence renewal in 2014; you can expect the terms of trade to be among the topics discussed at that proceeding. We may also see it raised as early as the May 6th CRTC hearing in Montreal where the CRTC will consider Bell's second try at acquiring effective control of Astral.