A great deal – for Netflix

T The deal with Net ix that Heritage Minister Melanie Joly trotted out last week as the centerpiece of her “Creative Canada” policy may turn out well for those who want to watch more Canadian movies and TV shows, and for those who want to produce them.

Just how good it is will depend on how the half-billion dollars Net flix promises to spend on producing programs in Canada over the next five years is spent.

But before any of that happens one thing is already clear: it’s an excellent deal for Net ix itself.

For one thing, it removes any possibility that Ottawa might slap a tax on the giant streaming service to help fund Canadian content. Unwisely, the government had already taken that proposal off the table, reducing its leverage with Netflix. But content producers, rival broadcasters and even some Liberal MPs were still pushing for a levy.

In return, Net ix has pledged to spend at least $500 million over ve years on original productions in Canada. It will also open a “television production presence” in this country, its rst outside the United States.

That may well be the best deal Ottawa could get from a company that right now has almost no physical presence in Canada. And half a billion, even these days, is nothing to sneeze at. But the reality is that there’s a lot less here than meets the eye.

To begin with, the deal does not “level the playing field” between Netflix and traditional Canadian broadcasters, which are struggling with falling revenues and competition from streaming services.

As a condition of renewing their licenses this year from the CRTC, the broadcasters had to agree to spend 30 per cent of their revenues on original Canadian content. Net ix won’t say how much revenue it collects in Canada. But in June an independent consultant estimated the service has at least 5.2 million subscribers in Canada, and at roughly $10 per month per subscriber that quickly adds up to an awful lot of money.

The $100 million a year it has pledged to spend doesn’t come close to 30 per cent of revenue.

It’s also not clear how much of the $100 million will be new money, on top of what Net ix already spends in Canada. Much of the promised spending may be covered by just repackaging existing deals to assuage the government and disgruntled broadcasters.

The promised money is also a tiny sliver of what Net flix is laying out for original programming overall. The company has said it plans to spend a whopping $6 billion U.S. this year alone on developing content. The amount it has pledged to spend in this country each year amounts to just a tad more than 1.3 per cent of that.

So no one should get too carried away by the hefty headline gure in the Net ix announcement. e rest of Joly’s “Creative Canada” policy amounts to putting more money into some selected areas of media production, and kicking the can down the road on some thorny issues.

The government plans to put more of its own cash (amount unspecified) into the Canadian Media Fund, which helps to nance TV and digital productions, to make up for declining revenues from struggling cable and satellite providers. As they lose customers, their contribution to the fund declines, and Ottawa is just promising to keep the overall amount in the fund stable.

Aside from that, it promises to “refresh” the mandate of the CBC, review the Broadcasting Act, and steer clear of new taxes on the Internet or any big measures to aid the struggling news industry.

The policy has all the hallmarks of a government that wants to look active in culture without upsetting too many interests at once. But, like its deal with Net ix, there’s a significant gap between rhetoric and reality.