IIC 2009 ANNUAL CONFERECE – Session 7 Defining a New Economic Model for High Quality Content in the Communications World of 2015 Ken Engelhart Senior Vice President - Regulatory Rogers Communications Inc. Tuesday, October 27, 2009

CANADIAN HIGH QUALITY CONTENT In Canadian Regulatory environment: high-quality content = drama Regulatory instruments: CMF Priority Programming 150% time credit

In Canadian Regulatory environment:

high-quality content = drama

Regulatory instruments:

CMF

Priority Programming

150% time credit

WHY IS DRAMA A CULTURALLY IMPORTANT PRODUCT? Telling Canadian stories supports cultural objectives. Canadians like to watch drama. Drama is expensive to produce. High-quality US drama is available at reasonable cost = very profitable.

Telling Canadian stories supports cultural objectives.

Canadians like to watch drama.

Drama is expensive to produce.

High-quality US drama is available at reasonable cost = very profitable.

Does Drama Support Make Sense? I am not here to criticize any of these four propositions. My argument: Drama has such a poor economic return that subsidizing it is not a sustainable policy in English Canada. (French Language Canada drama is more popular and subsidizing drama may be a sustainable policy in Quebec.)

I am not here to criticize any of these four propositions.

My argument: Drama has such a poor economic return that subsidizing it is not a sustainable policy in English Canada.

(French Language Canada drama is more popular and subsidizing drama may be a sustainable policy in Quebec.)

MURDOCH MYSTERIES Popular Good audience Co-production with Britain

Popular

Good audience

Co-production with Britain

MURDOCH MYSTERIES - FINANCES $1.1 million per episode to produce = $14.5 million for 13 episodes $14.5 M _ 2.5 M Britain & International Sales $12.0 M _ 3.0 M CMF - 5.0 M Tax credits $4.0 M Cost to Rogers Ad Revenue (several airings) = $500 K in year one.

$1.1 million per episode to produce = $14.5 million for 13 episodes

$14.5 M

_ 2.5 M Britain & International Sales

$12.0 M

_ 3.0 M CMF

- 5.0 M Tax credits

$4.0 M Cost to Rogers

Ad Revenue (several airings) = $500 K in year one.

ENGLISH- LANGUAGE CANADIAN DRAMA Will always need a large subsidy Not an infant industry problem. Not a sustainable policy.

Will always need a large subsidy

Not an infant industry problem.

Not a sustainable policy.

POLICY RECOMMENDATIONS Let’s stop beating ourselves up on drama. Let’s be happy with Canadian news, sports, game shows, entertainment & lifestyle and reality programming. (13 hours of drama = 200 hours of news.) CMF should fund other types of shows. Commission should drop Priority Programming requirements.

Let’s stop beating ourselves up on drama.

Let’s be happy with Canadian news, sports, game shows, entertainment & lifestyle and reality programming. (13 hours of drama = 200 hours of news.)

CMF should fund other types of shows.

Commission should drop Priority Programming requirements.