Yahoo News “You Pay to Play”: A Major Showdown Over Funding Streaming TV and Movies Is Underway in Canada
U.S. streaming giants were already in an uncomfortable position after Canada reined them in with first-time spending obligations to support the production of homegrown movies and TV series.
But as 2023 ends, the country’s TV and telecom regulator is at odds with American streamers over how much cash they are now obligated to fork over to subsidize local film, TV and music producers. During early December regulatory hearings in Gatineau, Quebec, top Canadian execs for Netflix, Apple Canada, Spotify and others bargained over setting a mandatory “initial base” contribution from U.S. digital giants to support local indie producers.
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Those talks got hung up over still more hearings and negotiations set for next year to agree on a new definition on what does and doesn’t count as Canadian film or TV programming, or “Canadian content,” to modernize the country’s broadcast laws for the digital age. That new agreement on what qualifies as Canadian stories will impact how the American streamers invest in local film, TV and audio product next year and beyond.
That regulatory backdrop also has Canada wanting Netflix, Amazon Prime and Disney+ to bring Canadian stories to the world by streaming them on expanding global platforms.
“It’s challenging for us at this time to be able to stipulate a (basic contribution) number because we need to understand how our current contributions will be treated and also have resolution on the next stage of the consultation regarding the definition of Canadian content,” Magda Grace, Head of Amazon Prime Video Canada, told the Canadian Radio-television and Telecommunications Commission hearings.
As things stand, rules around what constitutes as “Canadian content” that date back to the 1920s are vague and subject to endless interpretation, including by local broadcasters looking to meet their own regulatory obligations and on-screen quotas with American-style dramas and comedies.
For example, Disney streamed Turning Red, the Pixar Toronto-set drama about a Chinese-Canadian teen and MGM adapted The Handmaid’s Tale, a novel by Canada’s Margaret Atwood, for Hulu, but those projects didn’t count as “Canadian content” because they were financed by American players. In contrast, CBC’s Schitt’s Creek and Sort Of comedies and CTV’s Saving Hope medical drama are considered Canadian content because they were initially developed and produced in Canada before being picked up for the U.S. and other global markets.
Updating “Canadian content” rules for the digital age will see an industry that has long rewarded local investment and Canadians making key creative decisions relax its financing criteria to allow increasingly dominant American players to put a percentage of their Canadian subscriber and ad revenues back into local stories also produced for global viewing.
In turn, private Canadian broadcasters will no longer have to carry the regulatory burden of subsidizing homegrown media production solely on their shoulders.
The latest regulatory negotiations follow Canada earlier this year passing into law Bill C-11, which imposed first-time rules and obligations on American digital platforms operating locally. That marked another milestone in Canada’s slow motion march to modernize its TV industry, while offering a lifeline to local linear TV networks in decline due to cord-cutting and ad dollars shifting online.
Until a new definition of “Canadian content” is hammered out, especially as it applies to user-generated content on YouTube, TikTok and Facebook and a U.S. streamer’s local spending obligations, the American players have stressed during presentations to the CRTC they already invest in indie Canadian production and need flexibility to continue doing so.
Stephane Cardin, director of public policy for Netflix in Canada, told the Canadian regulator a maximum contribution of 2 percent of annual revenues by the video streaming giant, based on global trends, might be possible. But Cardin urged that Netflix in Canada be allowed to continue producing market-driven content, including with its investments in local Canadian productions.
“We we want to work with you, the Commission, on defining the rules for an overall contribution framework that will allow us to contribute to Canada in a way that makes sense for our business, for the thousands of Canadians involved in the creative ecosystem that we work with and, most importantly, for Canadian audiences,” he told the CRTC hearing.
U.S. players in Canada also want a quick decision from the CRTC on how they will be regulated north of the border so they can continue growing their local market presence. But that’s left the Canadian regulator to warn there will be no backroom deals with American players and it will be public and transparent as the interests of U.S. streamers are balanced with those of traditional local broadcasters insisting new money is required to help carry the cost of local content production.
Kevin Desjardins, president of the Canadian Association of Broadcasters, said that, before the CRTC, foreign streamers for a decade were allowed unfettered access to the Canadian market, which increasingly put local TV networks at a disadvantage.
“Foreign streamers use Canadian revenues to help them play in a global media sandbox. And yes, they do produce programming here in Canada for an abundance of good reasons that make great business sense for their company’s bottom line – but not necessarily in support of Canadian public policy objectives,” Desjardins said as he urged dollars from American streamers be steered towards producing local news and current affairs programming in particular.
Barb Williams, executive vp of English language services at the Canadian Broadcasting Corp. echoed that foreign streamers have done well with Canadian audiences by offering popular programming, but have an obligation to support new and diverse creative voices — a key mandate for her public broadcaster — when local private TV networks are increasingly hard-pressed to do so.
“And so we believe that if you’re going to come into this market, you pay to play. You got to pay a cover charge to come join this special club … At the bottom line, they are here to contribute to the system that they are benefiting from so dramatically,” Williams told the hearings.
Meanwhile, U.S. streamers continue to invest in local content as they slowly return to producing their own originals in Canada after the dual Hollywood strikes. Netflix has got behind an untitled indigenous Canadian comedy set in the Arctic, in partnership with the CBC and APTN north of the border.
And Amazon Prime Video is backing The Sticky, an English-language dramedy set in Quebec and about a real-life maple syrup heist. The producer credits are shared by Jason Blum’s Blumhouse Television, Jonathan Levine’s Megamix, Jamie Lee Curtis’ Comet Pictures and Canadian producer Sphere Media.
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