US TV + Canadian ads = $$$$

The Tournament is a mockumentary about hockey on the CBC. It’s sponsored by Kia, and part of the deal is that a few of the characters on the show work at the fictional Ryckman Kia dealership. Another part of the deal was putting “mock ads” like the one above on the cbc.ca website.

In marketing circles, this has been considered a successful arrangement, at least for KIA, and there will be more of them at the CBC:

Marketers should have much to look forward to, however, with networks promising more innovative promotional vehicles. At the CBC, for example, Richard Stursberg, EVP of English Television, says plans are in the works to expand partnerships for promotions, much like the successful pairing of KIA and The Tournament, as well as the marriage between Lise Watier Cosmetics and Fashion File. “We’re making our promotions less cookie-cutter and much more tailored to the individual project.”

As a public broadcaster, I personally think it’s disdainful of our audience to take their tax dollars, make them watch 12 minutes of ads every hour, and then put ads into the programs themselves and make them watch those, too. It reeks of a scam, a sleazy way to circumvent the limits the CRTC has imposed to the amount of advertising we can put on TV.

Yet as odious as the practice is, it might be the saviour of Canadian TV.

Because the truth is that in the 21st century, true Canadian programming is a money-losing proposition, and homegrown, Canadian drama and comedy is dying. To save it, the CRTC’s solution is to allow more ads per hour. This doesn’t include product placement, or L’oreal-inspired vignettes.

Figure that it costs a production company between $1,000,000 to $2,500,000 to make an hour of Canadian drama. This is usually subsidized by the CTF, and now, through product placement deals.

The broadcaster pays a $300,000 licence fee to the production company to show it. The production company is then left to hustle the shortfall through foreign sales or whatever. The broadcaster can maybe make $90,000 in ad revenue from the broadcast, which leaves them in the hole over $200,000.

That’s showbiz.

Now simulcasting an American show is a different beast altogether – licence fees are $100,000 to $125,000 an hour, and can make up to $450,000 from ads. Not only that, but there are some protectionist policies in place that lock out American advertisers, and the CRTC has rigged the system so that it rewards a broadcaster for showing American TV with Canadian ads.

The privates aren’t stupid. And according to the CFTPA they are doing quite well:

These are EBITA numbers – margins on earnings before interest, taxes, deprecation and amortization. They measure profitability.

The privates are doing a lot better than the Canadian economy as a whole, and much, much better than the producers, the guys actually making Canadian shows. This chart is the result of cheap US TV powered by the American hype machine, supported by a little Canadian protectionism.

Next time Global or CTV whines about how unfair it is that the CBC gets tax dollars, ask them about this sweet deal they have going. If we had real competition they’d be paying their employees with ET Canada key chains.

Now, I ain’t saying they’re goldiggers, but they ain’t messing with no broke shows. And I don’t begrudge them that or their money.

But I said it before, and I’ll say it again: they got rich off the public airwaves, and they’re still getting rich. The CBC helped them, the government helped them, and the Canadian taxpayer helped them.

But 75 years later, it’s time to get a new deal. Rather than having the taxpayers subsidize the CBC, the fellows who made the most money off the public airwaves should.

So let them be coddled by the CRTC. Let them do ads and American TV, and we’ll only be too happy to do the real Canadian broadcasting.

Ad-free.

8 comments:

  1. Dwight
    Posted November 29, 2005 at 8:14 pm | # | Reply to this masterpiece

    AOL, as part of Time Warner, has more than enough respectability as it is. They don’t need CBC’s cachet, especially with the Royal Bank holding a stake in their Canadian subsidiary.

    I look forward to seeing CBC’s PR ops being brought back in-house. If this past year has proven one thing, it’s that the CBC’s frontline staff can do their own PR well enough to suit anyone’s needs.

  2. Ouimet
    Posted November 28, 2005 at 11:13 am | # | Reply to this masterpiece

    My understanding of the AOL deal is that they will be repurposing content already available on CBC.ca. So when I say “just current news” I mean clips from recent reports already available for free to anyone on CBC.ca.

    The public doesn’t lose anything, in my eyes. AOL gets some of our respectablility, and we get some of their eyeballs (which are considerable).

    Dwight, as for Archive Sales, this is just anopther step in the outsourcing movement. We’ve been selling this stuff through our in-house department for years. The only difference in this deal is that someone thinks that the BBC can make more money from it than our dept can.

    I don’t think anyone has decided on anything yet, and I haven’t seen any numbers, but considering it’s a two-person department that knows what it’s doing, outsourcing doesn’t strike me as a good idea.

    We outsourced the publicity dept, too, the fallout from which we have not recovered.

  3. Justin Beach
    Posted November 28, 2005 at 7:12 am | # | Reply to this masterpiece

    I do understand that – my point is that this material should be available, for free, to the people who paid for it in the first place, but it can’t be given away for free because it’s being sold to America Online. Canadians pay for it and then it is sold to America Online so it can be sold back to Canadians.

    I’m afraid I must disagree about it being a bad deal – at least for the viewers.

  4. Dwight
    Posted November 27, 2005 at 6:00 pm | # | Reply to this masterpiece

    Just current news?

    Well, I suppose that gets CBC’s foot in the door with people who otherwise would never know or care of the Corporation’s existence and works. I still consider it a mistake to farm out exploitation work on the archives to other companies. Hire them to train CBC’s people in the art of doing it in-house, as the RCMP apparently had Disney’s legal people teach them to do, yes. I was a tad annoyed at that in a nationalist/federalist way at first, but it seems to be working out for the medium haul…

  5. Ouimet
    Posted November 27, 2005 at 3:42 pm | # | Reply to this masterpiece

    Justin –
    The CBC has been providing content to AOL for years. The new deal just includes video, is all.

    And the deal is not as bad as it seems – it actually gets the CBC in front of millions of AOL users. Usually this is just current news, not archival material.

  6. Justin Beach
    Posted November 27, 2005 at 3:18 pm | # | Reply to this masterpiece

    “As a public broadcaster, I personally think it’s disdainful of our audience to take their tax dollars, make them watch 12 minutes of ads every hour, and then put ads into the programs themselves and make them watch those, too.”

    Don’t forget that after this, rather than just put the content out there for the people who paid for it (BBC style) they licence it to AOL (or that’s apparently the plan) so that if people want to see it again they have to pay yet again, except they have to pay a private company. I understand that the CBC is in a tight spot but managements current plans are reaching rediculous proportions – It’s like putting commercials in a DVD that you can’t skip over and then asking people who bought the DVD then asking them to pay again every time they want to watch the DVD, and still holding tight to the mantle of ‘public broadcaster’.

  7. A reader
    Posted November 25, 2005 at 10:27 am | # | Reply to this masterpiece

    Ouimet – Thanks for this. Your writings are provoking far more discussion than you realize, in places that would surprise you. Keep it up.

  8. Anonymous
    Posted November 24, 2005 at 8:18 pm | # | Reply to this masterpiece

    They have poster ads in the washrooms at CBC now.

    Nothing surprises me anymore….


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