Netflix balks at proposed levy on streaming services

Streaming giant Netflix says Canada’s telecommunications regulator should recognize the role it already plays in helping fund the country’s broadcasting industry and reject calls to mandate an additional payment from the company.

But if the Canadian Radio-Telecommunications Commission (CRTC) does move ahead with requiring foreign streamers to contribute money to Canada’s content system, Netflix said that burden should be no more than two per cent of annual revenues, in line with other jurisdictions.

The company appeared Thursday at a hearing that is part of the CRTC’s public consultations in response to the Online Streaming Act, which received royal assent in April.

The legislation, formerly known as Bill C-11, is meant to update federal law to require digital platforms to contribute to and promote Canadian content. The watchdog is exploring whether to require streamers to make an initial contribution to help level the playing field for local companies, which are already required to support Canadian content.

Stephane Cardin, director of public policy for Netflix in Canada, told the commission the platform already makes direct investments in Canadian content through its funding of local productions, and an additional levy could “result in displacement of certain investments.”

“What we do currently spend on partnerships for the career advancement of Canadian creators is a significant commitment,” Cardin told panellists, adding that Netflix’s total spend across those deals exceeds $30 million.

“We spend more on this activity in Canada than in any other jurisdiction in the world and we have seen successful, meaningful impacts from these partnerships.”

Cardin said those initiatives support the professional development, training and mentorship of Canadian creators from ethnocultural and equity-seeking backgrounds.

He said Netflix, with a team of almost 800 people in Canada, has spent more than $5 billion on Canadian productions over the past five years.

“That’s money that’s going into the hands of Canadian creators, crews and local businesses,” he said.

Cardin urged the CRTC to maintain flexibility as it crafts rules for digital companies to support Canadian broadcasting, rather than obliging them to subsidize certain funds available for local players.

A mandate to act

Canada’s legacy media broadcasters have expressed support throughout the CRTC hearing, which is in its second week, for the regulator’s proposal to mandate an initial contribution from foreign streaming giants.

They argue such funds are needed, or even overdue, to help offset a financial crisis that has particularly touched their news divisions.

CRTC chairperson Vicky Eatrides said the commission acknowledges the Canadian investments being made by Netflix, but that Ottawa’s legislation gives the watchdog a mandate to act.

“We’ve heard from the traditional broadcasters who said that they are struggling and that we need more money in the system,” she said.

“We hear you on the investments. We’re trying to figure out how we can put in place the framework that we need to put in place.”

Some Canadian broadcasters have proposed the creation of a dedicated news fund, which would take some of the money to be collected from streamers and use it to offset recent revenue losses in their news media divisions.

Asked about the idea, Cardin said that should be a temporary measure if it is adopted, but he added Netflix does not believe Canadian law requires every actor in the broadcasting system to contribute to news.

“If you were to impose an initial base contribution, in our view, we should continue to play in our lane, in the types of programs that our members expect to see on Netflix,” he said.

He encouraged the regulator to “carefully consider the unintended consequences of imposing an unreasonable initial base contribution” as it proceeds with its consultation.

“Our experience working around the world has demonstrated to us that the countries with the least regulatory burden and the greatest stability to invest in content that will thrill our members are the most innovative entertainment markets,” Cardin said.