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CTF's Gary Toth responds to producers

Open letter to the industry
This letter to the industry is meant to elaborate on certain aspects of the ranking results for productions that applied to the Canadian Television Fundçs Licence Fee Program in Spring 2002.

Impact of Demand on Ranking
Weçve once again seen an unprecedented demand on the Fund, with requests far surpassing the amounts we have available. New this year, and perhaps as significant as the volume of demand, is the high ranking-score èbreak pointî (the score of the last production for which there were funds) in many genres. Itçs clear that competition for funding has reached new heights when many envelopes had a break point of more than 50 points out of a total possible 59.

In the case of English-language drama, the break point was 55, and this despite committing more dollars than last year. Specifically, in spring 2001, the CTF committed $48.2 million in LFP funding to English-language dramas. This year, that amount was increased by $6.5 million to $54.7 million.

French-language drama saw similar results. This year, $28.2 million was committed to projects in this envelope, which is up $2.6 million from last yearçs $25.6 million in commitments.

We take these results to indicate a number of things. First, they demonstrate that broadcasters are paying top dollar licence fees for original programming. They also show that changes made by the CTF to ensure big budget dramas and MOWs are properly funded are having their intended impact.

The high ranking scores also point to the volume of productions that maximize their use of Canadian Elements, which underscores the cultural importance of the Fund. Finally, the good distribution of funds among Canadaçs regions and to production companies of various sizes demonstrates that our regional and SME incentives are proving effective. Unfortunately, the high level of oversubscription means that a large number of productions will not be funded from the Canadian Television Fundçs Licence Fee Program.

Clarifying èreservesî
In conversations with our clients, weçve heard thereçs a belief that the CTF has been withholding funds in èreserveî. This is false and needs to be clarified right away. First, letçs be clear about the term èreservesî. When we talk about reserves, weçre actually referring to money that the Licence Fee Program had committed to projects in previous years and that was subsequently freed up when a number of those commitments were withdrawn (typically because productions were unable to secure the balance of their financing within the allotted time period.) This money has not been held back by the Fund at all, but rather rolled forward into new program financing. Up to the end of the 2001-2002 fiscal year, a cumulative amount of $43.6 million had been freed up from productions that were unable to meet their financing criteria. At the start of this new fiscal year, that entire amount had been rolled into production financing for the year.

The CTF has used these funds to increase the LFP and EIP envelopes and to enable the LFP to finance all projects that were tied at the final ranking score in an envelope (rather than having to impose some kind of tie-breaker scenario). Money from withdrawn commitments has also been used to create the new funding initiatives announced in the 2002-2003 guidelines. These initiatives include increasing the LFPçs SME Bonus from 2% to 3%, creating the SME Distribution Program and increasing development and versioning assistance financing through the EIP.

Looking forward, the CTF has decided that, given the unprecedented level of demand at both the LFP and the EIP, money freed up from withdrawn commitments this year will be used in the current fiscal, rather than rolled over into next yearçs budget.

The first priority for any freed up money will be to help the Equity Investment Program meet a higher level of its demand. In all, the CTF will be transferring an additional $15 million to the EIP this year. Our intention with this transfer is to provide a balance of funding among the CTFçs two main Programs.

Clarifying Appeals
The Canadian Television Fund always strives to balance diligence in analysis, fairness to all applicants, transparency and timely decision making. Given the systems weçve put in place, we are extremely confident about the fairness and the accuracy of the funding decisions that we make at the outset.

Rather than institutionalizing an appeals process as part of the formal application system, we have dedicated our efforts to making sure that we are able to make the proper decisions up front.

That being said, we recognize that no system is ever perfect and, in order to be as fair as possible, we have always accepted to review our decisions when asked. The following is the process we follow in such situations.

When an appeal is made by a producer, the application is revisited and discussions are held between the producer and the CTFçs Managers and/or Directors of Program Delivery. The application is then brought forward to the Fundçs Internal Review Committee chaired by the Senior Vice President and consisting of other members of the senior management team, including the Directors of Program Delivery, Legal, Finance and the Manager of Review and Compliance. After careful consideration and detailed analysis, a group decision is made by the committee.

This process has been in place for several years at the LFP and it has served to the benefit of a number of producers in the past. The process is not only genuine and thorough, but also designed to ensure that any arguments put forward by producers are considered by the full committee. Determination as to whether the Fundçs initial decision should be changed is based exclusively on the face value of the application and the merit of the analysis.

The high level of oversubscription at the Fund, coupled with the fact that all LFP funds have now been committed, have created a misconception that project appeals are automatically refused. This is not true. If the Fund was incorrect in its initial assessment of an application, then we would, as we have always done in the past, have done what was necessary to finance that production.

Going Forward
Over the next few months, the Canadian Television Fund will be closely examining results of the demand and funding at both the Licence Fee Program and the Equity Investment Program. In consultation with our various industry partners, weçll look at the issues that arose this year in order to make adjustments and improvements to the Fundçs policies and processes.

As always, weçre looking forward to working in close partnership with all of our stakeholders to ensure that the Canadian Television Fund continues to best serve the needs of Canadaçs television industry.

Yours very truly,
Garry Toth
President and Chief Executive Officer
Canadian Television Fund

For more information on this, please contact:

Jane L. Thompson
Director of Communications
Canadian Film and Television Production Association

Tel: 613 233 1444 ext 227