Terms of Trade agreement: the CMF releases its position

In April 2011, the Canadian Media Production Association made an announcement that received a positive reception from the industry:  the CMPA had reached an agreement with several of the major private English-language broadcasters (i.e. Astral, Shaw Media, Rogers, Bell Media and Corus) to establish a standardized framework for licence negotiations between independent producers and the aforementioned broadcasting groups.

The Terms of Trade agreement  covers a number of key components relating to the relationship between independent producers and broadcasters when negotiating broadcast licence deals, including:

·     Editorial control of the production

·     Recommended steps in the evaluation of program proposals and their development

·     Basic licensing conditions

·     Broadcast licence terms (i.e. duration of licence)

·     Rights to be acquired in exchange for a fair market value licence fee

·     Broadcaster equity investments and recoupment

·     Deferral/investment of producer fees and overhead

·     Retention of production tax credits

·     A dispute resolution process for resolving disagreements over the interpretation and application of the agreement.

True milestone for the Canadian broadcasting industry, the TOT Agreement has been fully effective since August 1st, 2011.

On September 15, the Canada Media Fund released its position on the Terms of Trade Agreement as it translates into a series of changes to its guidelines.  These changes will be effective retroactively from the beginning of the current fiscal year – April 1st, 2011.

What are the key changes? (click here to read the complete media release)

  • Section 3.2.TV.5, which addresses the Eligible Licence Fee and Terms,  has been revisited to adapt the subsection such as separate valuation of “Other rights” and Licence Term, whereas other subsections remain unchanged despite the Terms of Trade agreement, such as broadcasting obligations (i.e., peak viewing hours and close-captioning); CMF Licence Fee threshold; minimum financing requirement from the broadcaster for DM components.
  • For a project falling under Terms of Trade, CRTC-licensed VOD can be used to meet the “2nd platform” requirement described in section 3.2(2) of Convergent Stream production Guidelines, notwithstanding the fact that the fees associated with the VOD rights are included within the “fair market value licence fee”/Eligible Licence Fee.
  • Tax Credits and Producers’ fees and Corporate overhead policies have all been reviewed to ensure that there will be no contradiction nor conflict with project eligibility rules governed by the TOT agreement;
  • CMF’s standard recoupment policy will remain the same, notwithstanding the TOT agreement.

To learn more about the TOT agreement:

You can read here an interview with John Barrack – COO and Chief Legal Officer and Reynolds Mastin – Counsel –  who have been instrumental in crafting and finalizing this historic agreement.

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