The legal considerations of branded entertainment in Canada
Before engaging in branded entertainment, there are a few things you’re going to have to figure out. First, it is essential to know the difference between “advertising” and “entertainment.”
The line between the two may be blurring in some respects, and even legally it can often be hard to define, but the distinction can carry major consequences. Second (and related), you are also going to have to figure out if your show, even if produced in Canada, qualifies as Canadian content.
The branded advertainment content segment is booming. Think of Recipe To Riches, for example, where entrants compete for the opportunity to have their recipe selected by Loblaw to become a President’s Choice product. Projects like this are often the result of a complex partnership between advertisers, producers and broadcasters and come with additional legal and regulatory hurdles compared to other productions.
There are 10 million reasons to pay attention to definitions. Once something is deemed to be “advertising” (i.e. any message, the content of which is controlled by the advertiser with the intent to influence consumers’ choice, opinion or behaviour), it must adhere to all advertising laws, rules and regulations of general application. For example, advertising cannot be “false or misleading” and all implied or direct claims about a product must be substantiated by adequate and proper evidence. Failure to do so can result in significant penalties, including administrative monetary penalties up to $10 million.
Then there is the question of meeting Canadian content requirements with their related tax benefits. When it comes to branded content television, where brand messaging and products are heavily integrated into the design and structure of the programming, it becomes necessary for the applicable governmental and regulatory bodies to assess whether the “Canadian” criteria are satisfied.
If they decided the show is really one big commercial, it would be deemed to be ”advertising” and, therefore, be ineligible for Canadian production tax credits and/or a CRTC “C” number. Without such certification, a broadcaster cannot claim the program against the Canadian program exhibition requirements.
Both the federal and provincial governments offer a number of tax incentives to Canadian content productions to support the development of the Canadian film and television production industry.
For example, at the federal level, the Canadian Audio-Visual Certification Office (CAVCO), a branch of the department of Canadian Heritage and the Canada Revenue Agency administer the Canadian Film or Video Production Tax Credit program and the Film or Video Production Services Tax Credit program.
In Ontario, the Ontario Media Development Corporation (OMDC) administers the Ontario Film & Television Tax Credit and the Ontario Production Services Tax Credit. To be eligible for these benefits, the program must meet certain “Canadian” criteria similar to those established by the CRTC. Furthermore, the production must not fall under an excluded genre such as, you guessed it, “advertising.”
In making this decision, the authorities will exercise a significant amount of discretion and consider factors such as:
• How much control the brand exercises over the production and content of the program;
• The extent of any brand/product integration into the show;
• Whether the brand is providing financing to create the show;
• Who owns the distribution rights;
• Who came up with the concept; and
• How much brand advertising is integrated into (and outside of) the show itself.
Accordingly, advertisers will need to work closely with producers and broadcasters to strike a balance between allowing the producer complete control over the program messaging and content (including any branded components) and protecting the interests and investment of the brand.
The bottom line is that due to the unique legal and regulatory considerations outlined above, the branded content program cannot not be considered “advertising” without putting the entire program in jeopardy. This can be challenging as advertisers are, by nature, fierce protectors of brand image and are used to having complete control over the content and distribution of any consumer messaging.
Producers, on the other hand, will want to ensure that any branded elements (such as product integrations) are authentic to the story being told and do not interrupt the entertainment value of the program. At the end of the day, viewers will ultimately be turned off by something that looks, smells and feels like one big commercial.
Sara Perry is a lawyer with the national law firm of Heenan Blaikie LLP in the Marketing & Advertising and Entertainment groups.
