June 26, 2024
The CRTC’s June 4th “Phase One” ruling on streamer cash contributions to Canadian media funds says a lot of things, alas most of them drowned out by Netflix and the other video streamers’ protests about how unfair the $150 million levy on their Canadian broadcasting revenues is to them.
In the aftermath of the ruling, the Commission has quietly accepted lawyer submissions from all and sundry on the best legal drafting to cover off the general principles it articulated on June 4th.
Some of the issues are dry indeed, for example the exact payment schedule for the $150 million. The streamers want to delay their first contributions to media funds until November 2025, after the federal election, or even put them off further until the Commission confirms the definition of Canadian content.
Canadian broadcasters, guilds and the Friends of Canadian Media are advocating immediate monthly payments to the Canada Media Fund, Indigenous Screen Office, Black Screen Office and the Independent Local News Fund beginning September 2024. The dire financial state of Global News, now eligible for the Local News Fund, may compel the Commission to go with immediate payments.
Another issue is the technical argument made by the US Digital Media Association, Amazon, Spotify and Rogers that the Commission’s Phase One regulatory policy can only come into force following a formal and lengthy Canada Gazette public consultation, something the Commission did not do.
From a policy perspective, the stickiest issue the CRTC might consider in the next few weeks concerns the option it conferred upon the video streamers to claw back 1.5% of their 2% contributions to the Canada Media Fund (CMF). The CMF sponsors original Canadian drama, documentaries, children’s programming and variety & performing arts shows. The claw back is worth $45 million less in streamer cash contributions to the CMF which would otherwise be $60 million.
As it stands, the Commission gave the streamers’ the option to keep most of their CMF contributions if instead they “make and acquire” their own “certified Canadian content” with the money. On its face, this allows the streamers to “acquire” Canadian content by writing a cheque for re-runs of old Canadian shows, in any genre, and then bury them in their platform libraries.
The creator groups are alarmed by this. They make the case that this cannot possibly be the Commission’s intention if the $45 million rebate represents just a different tool for the streamers to achieve the same programming goals that the CMF supports.
The CMF only finances original, first-release programming in Canadian genres that need the subsidy (certainly not sitcom re-runs, sports or reality shows) and are produced by independent Canadian producers who must hire a “10/10” headcount of Canadian writers, actors, directors and so on.
As the Writers Guild put it:
“In this case, the Commission has proposed an “alternative” or “incentive” which does just that, resulting in vastly different outcomes depending on the alternative chosen. In the case of the CMF, funding goes to the production of new, original content, and does not result in the acquisition of preexisting “library” content that was produced some time ago. The Commission itself states above that the purpose of the incentive is, “To provide flexibility and to encourage online undertakings to produce Canadian content”. This objective is not advanced through the acquisition of “library”content.”
The MediaPolicy view: assuming the Commission is not in the business of devising fake regulatory requirements for the streamers, it may have genuinely screwed up by failing to specify that “original” programming is mandatory and may fix this in the final orders.
On the other hand it’s up for grabs as to what the Commissioners meant when they referred to “certified Canadian content.” That could mean either “CRTC certification” or the higher certification standards observed by the media fund for which the contributions are primarily intended, the CMF.
There’s a big difference.
Unlike the more demanding CMF rules that trigger additional subsidies to independent Canadian producers, the CRTC has historically been relaxed about certifying Canadian programs because in almost all cases Canadian producers have already met the higher CMF requirements before asking the CRTC to certify the same show for clearance to broadcast as Canadian content.
That may be why the CRTC has never bothered with more than “6/10” points; has not restricted spending genres (other than sports); and has never adopted the CMF rule that an independent Canadian producer retain 25-year ownership of the show’s intellectual property because, until now, it didn’t care if the long term profits of a hit show resided with a Canadian broadcaster or a Canadian producer. Now the Commission is regulating global streamers who book their profits outside of Canada, so circumstances are different.
Perhaps the Commission is being overly clever: it may be gifting the US streamers a regulatory break on this small sliver (1.5%) of Canadian content expenditures as a test of their good faith promises to make good Canadian shows with less of what the streamers regard as red tape. A pilot project, in effect.
Whether any of this is fair, not fair or fake, we won’t know until we get to the end of the Commission’s lengthy regulatory roadmap some time in 2026. That’s because the Commission’s heavy lifting is still to come. In the next two years the Commission is presumably going to order the streamers to dedicate a further, significant portion of their annual revenues to making Canadian shows, benchmarked against Canadian broadcasters spending an average of 29% of their revenues. The Commission also expects the streamers to make real efforts to give prominence to Canadian shows on their platforms as Canadian broadcasters do.
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