Broadcast bill targets streaming giants

As much as $ 830 million to help fund Canadian content

OT TAWA • New federal legislation announced Tuesday will force streaming giants to live by the same rules as over-the air broadcasters, potentially forcing them to pay more than $800 million into creating Canadian content.

Data the government collected shows Canadians are turning to streaming services in larger numbers and abandoning their cable subscriptions at the same time. Online services have seen their revenue increase 90 per cent over the last two years, while broadcast revenues have fallen roughly two per cent a year.

Heritage Minister Steven Guilbeault said the broadcasting act was outdated to the realities of broadcasting in Canada.

“One system for traditional broadcasters and a separate system for online broadcasters simply doesn’t work,” he said. “This outdated regulatory framework is not only unfair for our Canadian businesses. It threatens Canadian jobs. And it undermines our ability to tell our own Canadian story.”

The bill leaves the details of how streaming services such as Netflix, Amazon Prime, Spotify and Disney Plus will be required to pay for Canadian content to the CRTC and allows the regulatory body to work with the streaming companies individually.

Broadcast companies are currently required to have a set amount of their prime-time programming be Canadian content and have to pay into funds to create Canadian programming, but streaming giants currently aren’t subject to the same rules.

If the companies are asked to pay at the same level as broadcasters, the government estimates they could pay as much as $830 million by 2023. Guilbeault rejects the idea the services will pass those costs onto consumers and said it is about regulating investment that is already taking place.

“We're not asking these companies to do things that they're not already doing. They are investing in Canada. What we're doing is we're putting a regulatory framework on how those investments should be made.”

Netflix had little comment Tuesday, but said they are committed to working with the cultural industry in Canada.

“We all have a role to play in supporting the future of film and television created in Canada. We are reviewing the legislation and remain committed to being a good partner to Canada's creative community while also investing in local economies,” the company said.

In addition to the proposed financial changes, the government is also pledging to have the CRTC look at the current definitions of Canadian content and to do more to insure Indigenous and other cultural groups are better represented.

Many of the changes introduced Tuesday come directly from a panel chaired by telecommunications lawyer Janet Yale, which released a report on the industry in January.

A proposal from that report to have the CRTC regulate all websites, including news sites, was not included in the new act and the new legislation also won't apply to YouTube and Facebook where much of the content is uploaded by users rather than being generated by the company.

Yale's report also recommended taxes on the streaming giants and changes to the CBC, including having the broadcaster become advertising-free over a five-year period.

The government didn't move on either of those recommendations on Tuesday, but Guilbeault said they're still considering the options. On the possible tax changes, he pointed to the government's throne speech that promised the government would be “addressing corporate tax avoidance by digital giants.”

The advocacy group Friends of Canadian Broadcasting, said the government was letting the streaming companies off the hook. Executive director Daniel Bernhard said the bill isn't nearly tough enough and allows too much to happen behind closed doors.

“The government has given the CRTC the ability to make one-on-one deals with broadcasters like Netflix, so that they can go and negotiate in secret exactly how much they feel like contributing to the system,” he said. “It sounds like whatever Netflix lobbyists want to negotiate with unelected commissioners and each one will be different.”

The Liberals were heavily criticized in 2017 for a oneoff deal with Netflix that saw the company commit to spending $500 million over five years, while in exchange continuing to be exempt from taxes.

Bernhard said this new bill could make deals like that more commonplace. He said the CRTC had the power to regulate Netflix and other services before this bill, but was simply unwilling to take up the challenge.

He said he has little faith the bill will actually pass through the legislative process and that if the government wants to regulate streaming services it should just do it.

“This just seems like another delay tactic that's quite likely to die on the order paper when the next election comes around and will still be waiting,” he said. “We've been talking about this since 2013, and successive governments have capitulated to these big tech companies.”