CBC and cre­ative groups push for in­ter­net and stream­ing tax

Calgary Herald - - FINANCIAL POST - EMILY JACK­SON

The Cana­dian Broad­cast­ing Cor­po­ra­tion, me­dia pro­duc­ers and ac­tors are once more call­ing for a tax on in­ter­net ser­vice providers and on­line stream­ing ser­vices such as Net­flix Inc. to fund Cana­dian con­tent de­spite the fed­eral gov­ern­ment’s in­sis­tence it will do no such thing.

In sub­mis­sions to the fed­eral broad­cast reg­u­la­tor, the CBC, the Cana­dian Me­dia Pro­duc­ers As­so­ci­a­tion and the Al­liance of Cana­dian Cinema, Tele­vi­sion and Ra­dio Artists ar­gued in­ter­net providers should con­trib­ute fi­nan­cially to the broad­cast­ing sys­tem given Cana­di­ans are in­creas­ingly ditch­ing cable pack­ages to watch video on­line. The CBC also ar­gued that in­ter­net providers should favour Cana­dian con­tent — a tac­tic that could un­der­mine net neu­tral­ity.

The sub­mis­sions are part of the Cana­dian Ra­dio-tele­vi­sion and Telecom­mu­ni­ca­tions Com­mis­sion’s con­sul­ta­tions on fu­ture pro­gram­ming dis­tri­bu­tion mod­els. Her­itage Min­is­ter Mélanie Joly or­dered it to re­port on po­ten­tial mod­els by June 2018.

Cana­di­ans may have as­sumed the is­sues of in­ter­net taxes and fu­ture con­tent con­sump­tion mod­els were closed with the Cre­ative Canada strat­egy, which Joly re­leased in Septem­ber af­ter more than a year of con­sul­ta­tions on how to sup­port Cana­dian con­tent in the dig­i­tal era.

But the strat­egy didn’t con­tain specifics on how Cana­dian con­tent will be funded. In­stead, Joly asked the CRTC to ham­mer out the de­tails.

Un­der ex­ist­ing leg­is­la­tion, broad­cast­ers must con­trib­ute a per­cent­age of rev­enue to fund Cana­dian pro­gram­ming. The funds have de­clined as TV rev­enues stag­nate. Net­flix and other video stream­ing ser­vices were ex­plic­itly ex­cluded from this regime with a dig­i­tal me­dia exemption in 1999.

Joly has re­peat­edly stated the gov­ern­ment will not tax in­ter­net ser­vice providers to fund con­tent, cit­ing the need for af­ford­able ac­cess. Nor does it plan to tax Net­flix.

Joly did, how­ever, sign a deal with Net­flix to in­vest $500 mil­lion in pro­duc­tion in Canada over the next five years. But Net­flix does not have to fol­low the same strict Cana­dian con­tent re­quire­ments as lo­cal broad­cast­ers.

Cre­ative groups want to get rid of dif­fer­ent treat­ment for on­line con­tent. Their sub­mis­sions called for leg­isla­tive change so in­ter­net providers and video stream­ing ser­vices must pay into the sys­tem out­lined by the Broad­cast­ing Act.

Frag­men­ta­tion in new me­dia has strained tra­di­tional busi­ness mod­els of ad­ver­tis­ing and sub­scrip­tions, CBC sub­mit­ted. At a min­i­mum, it said the new rules should re­quire stream­ing ser­vices, wire­less car­ri­ers and in­ter­net providers to con­trib­ute to Cana­dian con­tent like tra­di­tional cable and satel­lite play­ers.

“This is es­sen­tial to en­sure a level play­ing field among do­mes­tic play­ers and be­tween do­mes­tic and for­eign play­ers,” CBC wrote.

It also pro­posed reg­u­la­tions to re­quire ser­vice providers to en­hance the vis­i­bil­ity of Cana­dian pro­gram­ming, a pro­posal that could flout net neu­tral­ity prin­ci­ples that all con­tent should be treated equally. Fi­nally, it re­peated a call for ad­di­tional an­nual fund­ing of $400 mil­lion in or­der to go ad free.

ACTRA, which rep­re­sents 23,000 per­form­ers, said Canada’s film and TV in­dus­try is thriv­ing de­spite the chal­lenges. But it wants in­ter­net providers to con­trib­ute fi­nan­cially to Cana­dian con­tent. ACTRA also asked that on­line stream­ing ser­vices be re­quired to pay GST or HST (Que­bec is al­ready tak­ing steps to re­quire this) and con­trib­ute five per cent of their gross rev­enue to Cana­dian con­tent pro­duc­tion.

In its sub­mis­sion to the CRTC, Net­flix ar­gued that reg­u­lat­ing new me­dia like le­gacy broad­cast­ers won’t work. Con­tent quo­tas don’t make sense since con­sumers choose what they want to watch, and for­eign fi­nanc­ing is al­ready one of the top two sources of cash for English-lan­guage TV pro­duc­tion, it said.

GARETH CAT­TER­MOLE/GETTY IM­AGES FOR NET­FLIX

Some groups want video stream­ing ser­vices like Net­flix to help fund Cana­dian con­tent.

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