Alas, it was not to be

It would have been just one bad part of an overarching very silly policy. Exempting it from the policy regime I suppose makes the policy a bit more tractable. But it also makes it a lot less potentially funny.

New Zealand's government supports the creation of cultural content by paying for it through various grants. TV stations and streaming services can then run it, or not, as they want. 

Canada does things the dumber way. I'm sure they also have direct subsidies. But they also have Canadian Content regulations that prescribe the proportion of each day's broadcasting that must be Canadian content.

It was bad enough in the linear TV era. The ridiculousness of it all had the excellent SCTV pad out the extra couple of minutes of the Canadian version of the show (fewer ads than on the US side) with a very explicitly Canadian segment: the most over-the-top CanCon possible. Bob and Dough MacKenzie - the hosers.

The first segment including them had a lengthy scroll after the segment explaining how the segment meets official Canadian guidelines for what counts as Canadian content and was almost as funny as the MacKenzie brothers.

That was fifty years ago now - or thereabouts.

Times change. 

A decade ago, Canada decided that its regulatory reach extended to the entire internet if the internet could be viewed from Canada. If you wanted to stream to Canada, you'd have to meet CanCon rules. Quite how to make that work when people choose what they want to watch and plenty of potential platforms might not really care what Canada things about anything - well, they've been taking a while figuring out how to apply the principles. 

And they've finally decided that, despite or perhaps because of the uniquely Canadian content that might be created, to great hilarity, to meet the rules, the CanCon rules will not apply to pornography streamed in Canada. 

This has long been one of the more onerous demands of the CRTC, given the relative dearth of erotic media that would meet their terms as “Canadian content.”

Article content

Under the CRTC’s definition of the term, it’s not enough to have a Canadian performer or a Canadian setting.

Article content

Rather, it’s determined via an elaborate “points” system that, among other things, requires the producer and at least one of the lead performers to be able to prove Canadian citizenship.

Article content

At least three quarters of the financing must also come from “Canadians or Canadian companies.”

Article content

In extreme cases, this means that a video of a Canadian couple having sex in Canada and directed by another Canadian would not qualify as Canadian content if only 74 per cent of the financing was provably Canadian.

Whenever one despairs about policy in New Zealand, Canada and the UK provide superb reminders that the rest of the world generally remains even worse. 

Meanwhile, Australia's looking to impose Australian-content mandates on streaming services. 

The federal government has put laws requiring streaming services to produce Australian content back on the table after postponing them due to concerns about how they would interact with Australia's trade agreement with the United States.

The government has confirmed it will introduce legislation this week to mandate that any streaming services with more than 1 million Australian subscribers must produce Australian drama, children's, documentary, arts or educational programs.

I wonder whether there are enough subscribers to any single platform for Australia to run into Canada's difficulties here. It would be very funny if there were. 

Seamus and I were wrong

Back in 2012, Seamus Hogan and I were ...mildly sceptical... of proposals to build a giant convention centre in Christchurch.

Seamus wrote:

The convention centre: Eric has written on this, but I can't resist adding my voice. This is why the stadium doesn't upset me so much. The stupidity pales into insignificance compared to the silliness of building a purpose built facility from scratch that is able to host up to three conferences simultaneously. (Aside: from my limited experience with organising conferences, if you have choice over location and date, you choose somewhere where you will be the only conference operating at the time.) The conference centre should be small close to hotels and the performing arts centre so that larger affairs could spill out to those areas.

The bit I'd written on it, in a post titled "What am I missing?", was after one of our regular lunchtime chats in the econ department lunch room. So it owes a fair bit to that discussion with Seamus: 

The Press reports that the Christchurch Convention Centre was insured for $30m but that like-for-like replacement would cost $60m. Whatever external benefits come from holding conferences in town are mostly internalised by the local hotel and restaurant industry; solutions letting the convention centre build internalize those external benefits helps ensure an efficiently sized convention centre. Here's one way of doing it, conditional on Council wanting a convention centre.

1. Council buys options on a few appropriate sites around town.
2. Council gets in touch with the big hotels to tell them that Council's going to build a much smaller convention centre for $30 million, but that they want to site it so it can be linked by skywalks* to adjacent blocks if the hotels want to be linked to it. If the hospitality industry really wants a bigger convention centre, they can come back with a proposal where the hotels fund an expanded facility. But even with a smaller convention centre, they can still host big conventions by holding plenary sessions in the big convention centre facilities and having breakout sessions in the different connected hotels' conference rooms. 
3. Figure out the set of sites on which you have options that best suits the set of hotel partners. The hotels buy the options off Council for their parts of the build.
4. Exercise the options and get on with it. Make sure there's room on the site to put a few restaurants; put restaurant provision up to competitive bidding so that any rents from conventioneers get capitalized into the purchase price and help fund the place, internalizing the external benefit. 

Now I know what I was missing: the true chutzpah of Christchurch. 

Christchurch, I am in awe. 

We were totally right that the thing would be a white elephant that couldn't cover its costs. We were worried about them spending $60m on a new one; the one they got cost $475 million and lost $3.4 million last year. Its visitor numbers hare dropping too. 

But just look at this.

The ownership question is more tangled than it first appears.

An early, “in principle” version of the 2019 Global Settlement between Christchurch City Council and the Crown talked about the council being best placed to own Te Pae and provide strategic direction for the city’s venues.

But that language did not survive into the final agreement signed later that year.

So the city was cagey about being willing to take ownership while making sure that it didn't sign anything saying that it would. 

Good move that. Then:

The Te Pae clause now simply records that the convention centre would be delivered, and that “the parties may continue to engage on future ownership of Te Pae as appropriate”.

The Christchurch City Council said it had already looked hard at taking the asset on, and decided against it.

“After due diligence the council decided not to pursue ownership,” head of facilities and property Bruce Rendall said.

Infrastructure Minister Chris Bishop, one of the shareholding ministers in CID, said the Government was “open to proposals for Christchurch City Council ownership of Te Pae in the future”.

Emphasis added. I'm reminded of Bart Simpson announcing that he would resign, undefeated, from the world of video boxing. 

So. Option for the Crown at this point would be to threaten to mothball the thing rather than continue to subsidise it. I don't think they can force Council to own it. 

And Christchurch always has the option to offer to agree to take on ownership in exchange for concessions on other margins where central and local government negotiate about things. 

Even evil genius needs recognition. 

As a bit of fun, I asked my advisor to imagine it were a consultancy like Cameron Partners asked to prepare a report on the likely sale value of the thing if it were offered to market. 

As a going concern without ongoing subsidy, the Crown could expect to have to pay someone about $90 million to take it, assuming that the venue could be scrapped in 30 years for its land value. 

If instead the owner could demolish and put up something else instead (while paying break fees with the operator), the site might be worth $55 million.

Both $-90 million and $55 million are considerably less than the $352m asserted book value of the building, which is considerably less than the $475m build cost. 

A huge up-front and ongoing waste of course. But consider the evil genius here too. That's worth something. 

The conversation with my advisor is here, for those keen on that sort of thing. The opening snippet:

In straight commercial terms, Te Pae as a convention centre is not worth anything like its $360m book value to a private buyer. On realistic assumptions:

• Highest bid is likely to come from a “scrap + redevelopment” buyer, not a buyer keeping it as a convention centre.

• A plausible order‑of‑magnitude sale price for the site in that scenario is around NZ$50–70m net of demolition and contract break‑costs.

• As a going concern with no ongoing subsidy, the facility’s value to a private buyer is zero or negative (you’d effectively need to pay someone to take it).

• To get a positive price for Te Pae as a going concern, you’re looking at an ongoing subsidy of roughly NZ$8–10m per year over decades, assuming current trading patterns.