MediaPolicy.ca was able to shake off the holiday season lethargy and publish a long post on one of the few cultural trade disputes we have had with the Americans.
This one was the 1995 battle that broke out after the CRTC allowed the TV licence of an American music video station to expire and replaced it with a Canadian start-up.
The Clinton Administration threatened a half billion dollars in trade retaliation. You be the judge of whether Canada “capitulated” or responded pragmatically. Either way, it’s a valuable history lesson for followers of the debate over C-11 and C-18.
***
As media policy buffs you are probably up to date on the Competition Tribunal’s approval of the Rogers-Shaw merger and rejection of the Competition Bureau’s attempt to block it.
If not, the Globe, the Star and the Financial Post always do a good job reporting on it. The Tribunal decision itself is easier to read than you think; you can read the “bottom line” ruling or the full reasons.
To provide a condensed summary right here, the Tribunal ruled that the merger “is likely” (everything about competition law is about ‘what is likely’) to increase wireless competition in B.C. and Alberta rather than decrease it.
The Bureau is contesting the ruling and we will likely have the results from the Federal Court of Appeal by the end of January.
Most of the published criticism of the Tribunal decision is intensely partisan as anything pertaining to telecommunications regulation tends to be. Professor Jennifer Quaid offers a detached criticism of the ruling here.
***
It seems we can always count on the European Union to move the yardsticks on regulating American Big Tech.
The latest is a EU ruling that invalidates Facebook’s terms-of-service waiver of EU users’ rights to opt out of personally targeted advertising. The decision comes with a 390 million Euro fine for past transgressions. More importantly, the New York Times story predicts future compliance will shave five to seven per cent off of Facebook advertising revenues.
Big Tech companies prefer homogenous regulatory compliance (or none) across multiple jurisdictions. With US Congress mostly inactive, the Australian/Canadian news compensation legislation and European GDPR regulations are growing the compliance gap.
***
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On June 6, 1994 the CRTC decided not to renew the licence of an American specialty channel, Country Music Television.
Following its policy of fostering Canadian channels and Canadian programming, the Commission awarded the licence for the only country music video service on cable TV to the Calgary-based start-up New Country Network.
Within a year, the Commission’s decision was reputed to have brought Canada to the brink of a half-billion-dollar cultural trade war with the United States.
In the mid-1990s the licences of Canadian and American specialty channels on cable TV approached expiry and renewal. That triggered the CRTC’s well-known policy for licensing no more than one station, Canadian-owned, in each programming genre.
Not yet the 500-channel universe in 1994, the CRTC’s array of licensed specialty television services totalled 20 Canadian and 12 American channels. The US channels included A&E, CNN, CNBC, The Learning Channel, Black Entertainment Television, The Nashville Network, and Country Music Television.
The Commission’s policy was to encourage Canadian-owned channels offering both Canadian and foreign content, regardless of the availability of American programmers who dwarfed Canadian competitors but offered little or no Canadian content.
American programmers who jumped into the Canadian specialty TV market in the 1980s by grace of a CRTC licence knew they were renters, not owners.
One of them was the music video channel Country Music Television (CMT), a joint venture of US giant Westinghouse and Gaylord Entertainment. Gaylord also owned the ‘country lifestyle’ station, The Nashville Network (TNN).
CMT was big in the US market with 24 million subscribers. Its Canadian foothold was two million subscribers and a $1.2 million annual profit. The Nashville Network was more firmly established in Canada with four million subscribers (no Canadian programmer applied to displace TNN).
It was not complicated for a music video channel to launch with content licensed from major US record labels: the challenge was to produce the Canadian content sufficient to meet the CRTC’s expectation of at least thirty per cent Canadian artists. When the CRTC notified Westinghouse in 1993 that it was contemplating displacing CMT with a Canadian programmer, CMT was at one per cent Canadian content.
Five Canadian applicants queued up for CMT’s slot. Based on subscriber price and Canadian content commitments, the licence went to the “New Country Network” (NCN). The start-up was co-owned 60/40 by MacLean Hunter (about to be purchased by Rogers) and Rawlco Inc., the Saskatchewan radio broadcaster. Provided CMT was pushed out of the market, NCN was projected to reach six million Canadian households.
On June 6, 1994 as expected the Commission ruled against renewing CMT’s licence in three sentences:
The applicant [New Country Network] requested that the Commission delete Country Music Television (CMT), a U.S. service in a competitive format, from the Commission’s lists of eligible satellite services. [It] is the Commission’s policy that, where a Canadian service is licensed in a format competitive to that of an authorized non-Canadian satellite service, the authority for the cable carriage of the non-Canadian service could be terminated. Accordingly…the Commission has authorized cable licensees to continue to distribute CMT only until such time as The Country Network’s service first becomes available for distribution to affiliates.
Westinghouse didn’t take it well. Despite being informed when obtaining the licence in 1984 of CRTC policy on Canadian content, it characterized the loss of its publicly granted licence as confiscation of private property.
Inflaming matters, the CRTC had denied Westinghouse standing at the licence hearing because it found the pre-hearing written submissions to be adequate. Its lawyers called that a denial of natural justice and marched off to the Federal Court of Appeal. The court issued a denial on December 20, 1994 and leave to appeal was refused by the Supreme Court a month later.
On January 1, 1995 NCN launched on Canadian cable and CMT was removed.
***
Jean Chrétien’s Liberals had swept to power with a majority government on October 25, 1993.
That was the federal election in which Brian Mulroney’s Progressive Conservative government —lead by his successor as Prime Minister, Kim Campbell— crashed from a majority of 156 seats in Parliament to only two. Aside from bringing the Liberals back to power, the chief benefactors of the Tory implosion were the ascending Bloc Québécois and the Reform Party.
Eleven months later on September 12, 1994 the separatist Parti Québécois lead by Jacques Parizeau came to power in Québec on a promise to hold a referendum on sovereignty association. The very real prospect of a national divorce hung over the country for the next twelve months until on October 30, 1995 the breakup of Canada failed by a ‘Non’ vote of 50.58%. During those thirteen months, invoking cultural nationalism was at a premium in Parliamentary and public debate.
It was also a time for a surge in trade squabbles between Canada and the US, despite the fresh ink on the US-Canada-Mexico NAFTA that came into effect January 1, 1994. But as if to prove the negotiator’s aphorism that nobody ever stays bought, during the early months of 1995 trade complaints continued on both sides of the border. Canadian access to the US sugar market and the perennial issue of Canada’s agricultural supply management were sore points at the time.
Of course there was no prospect of the Liberal government ignoring cultural issues with the nationalist minded Bloc Québécois nipping at their heels in the House of Commons and a sovereignty referendum pending.
For starters, the Chrétien cabinet decided to override the CRTC’s deregulation of satellite distribution that green lit American satellite companies to distribute Canadian television channels. The Liberals’ decision to shut out the Americans and restrict Canadian broadcasting signals to Canadian-owned satellite companies would be announced June 14, 1995, in the middle of the CMT dispute.
The cultural pot was already well stirred. In early 1993 Time Warner had launched a ‘split-run’ Canadian edition of its popular Sports Illustrated magazine. It was a call to arms for the Canadian magazine industry and both the Conservative and Liberal governments paid close attention.
The backstory to the dispute was that in 1965 the federal government slapped an import ban on printed copies of American magazines that solicited Canadian advertising to prevent trade dumping across the border. Like all American cultural products, US magazines recouped their costs in their domestic market and sought to scoop up the Canadian market as a profit windfall of up to 80% of their cover price. That was accomplished by split-runs undercutting Canadian magazine publishers on prices charged to Canadian advertisers, hence the import ban to combat trade dumping.
But when digital technology allowed Time Warner to circumvent the ban by electronically transmitting pages across the border for printing in Toronto, the prospect of US magazines crushing the Canadian magazine industry became highly plausible.
On December 23, 1994 the federal government responded to Time Warner by announcing a profit-neutralizing 80% excise tax on American owned magazines published in Canada, to take effect in twelve months’ time.
The tax arguably discriminated against American goods under the General Agreement on Tariffs and Trade (GATT); ‘arguably’ because there was a dispute about whether Sports Illustrated’s American content was a ‘like product’ to content in Canadian magazines.
Eighteen months later in March 1996 Mickey Kantor, the US Trade Representative in Washington, would file a GATT complaint to the World Trade Organization which ultimately ruled against Canada in 1997.
***
The rumours of the 1995 trade war began with a pop gun blast from Westinghouse.
Days after CMT was expelled from Canadians cable TV on January 1, 1995, Westinghouse announced it was kicking Canadian country artists off CMT’s American channel. The amusing exception to the ban was that it did not apply to Canadians artists signed to the US record labels with whom CMT had binding contracts (and allowed the US Recording Industry Association to support CMT’s complaint).
More seriously, CMT spokespersons served notice they were enlisting US Trade Representative Kantor in their cause.
On December 23, 1994 Westinghouse had filed a trade petition with the Kantor’s office under section 301 of the US Trade Act, co-signed by other US channels operating in Canada, the Recording Industry Association, the National Cable TV Association, and Time Warner. The petition alleged violations of NAFTA chapters on national treatment, fair and equitable treatment, performance requirements, and improper expropriation.
Kantor’s job was to take the steps prescribed under section 301. On February 6th he wrote to Canada’s International Trade Minister Roy MacLaren. As it happened, MacLaren was a self-proclaimed “ardent free-trader” who later wrote in his memoirs that Canada’s cultural trade exemption was “not worth much.”
Kantor’s letter explained to MacLaren that the USTR was calling for public comment to be submitted in the next 30 days with a final decision on trade retaliation by June 21st. Importantly, Kantor asked MacLaren to review the CRTC policy that had expelled CMT from Canadian cable.
Kantor wrote a second letter to the US Federal Communications Commission (FCC) asking for assistance in applying trade sanctions against Canadian businesses operating in the US telecommunications and broadcasting industries.
Kantor’s FCC letter was almost certainly leaked. Media reports on both sides of the border over the next four months invariably cited a “hit list” that included blocking the deal between Canada’s Teleglobe and the US Optel Communications Group on submarine fibre cable; the linking of Telesat’s new Anik satellite to the US network; and CHUM’s Much Music TV broadcasts on the US DirecTV cable network. Reputedly the full hit list was worth $500 million (USD) —-one report put it at $750 million USD—- but no costing ever emerged.
Then Kantor went public, announcing that he was soliciting public comment from American companies on “the most appropriate response to Canada’s actions” and to assess what Canadian television assets the US might subject to retaliation.
“We consider the action taken against CMT to be a very serious matter,” he said. “The CRTC’s action amounts to the confiscation of CMT’s business efforts over the past ten years to serve the Canadian market.”
In case anyone missed the point, Kantor also referenced two other trade combustibles, the split-run excise tax and a simmering copyright dispute over a potential Canadian artists’ levy on blank CDs.
***
Mickey Kantor was a larger-than-life figure.
The 57-year-old Nashville lawyer was the ultimate Democrat insider and Clinton confidante who had quarterbacked the 1992 Presidential election campaign. Kantor’s flinty demeanor was such that the Japanese Trade Minister Ryutaro Hashimoto once described him as “scarier than my wife when I come home drunk.”
As Trade Representative for the world’s biggest economy, Kantor’s desk was piled high with files from around the globe. With NAFTA in the rear view mirror, and the worst of the split-run magazine dispute three years away, the Canada file might have been one of Kantor’s least demanding as revealed by a time line of his three years in the Trade job (already a member of cabinet, he was promoted to Secretary of Commerce in April 1996).
In a lengthy 2002 interview for an oral history project, Kantor recalled the ‘obnoxious’ protectionism of the French government in GATT negotiations (which ended in defeat for the American position on cultural products) and, to quote Kantor’s irritated description, “the issue of media and what they called the cultural exemption.”
Any recollections of Country Music Television did not make the cut.
***
If Kantor was going to play fair, his response to CMT’s petition should have been filed as a NAFTA complaint. That agreement came into effect on January 1, 1994 and renewed Canada’s ‘cultural exemption’ from trade liberalization signed off in our bilateral 1988 Free Trade Agreement with the US.
The cultural exemption meant that Canada did not violate trade rules if discriminating in favour of Canadian interests over American companies within carefully defined ‘cultural industries.’ The caveat was that the US could retaliate with countervailing trade measures ‘of equivalent commercial value’ either on its own cultural turf or in other trade sectors.
According to Canada’s leading communications lawyer Peter Grant, the Americans would have had difficulty making out a prima facie NAFTA complaint against pro-Canadian broadcasting laws, without Canada even having to invoke the cultural exemption. In 2005 Grant wrote:
‘Carefully analyzed, the [cultural exemption] clause permits US retaliation only for measures that otherwise would be inconsistent with the 1988 [Free Trade] agreement. Since Canada made no national commitment in the audiovisual services sector in the 1988 FTA, it is therefore free to introduce new measures affecting such services, including broadcasting, without triggering a right of retaliation.’
Whether or not Kantor disputed that analysis, he was not about to wait around for a trade arbitrator to sort it out. Under the notorious section 301 of US Trade Act 1974, Congress delegated its authority to the USTR to launch unilateral trade sanctions without filing or even alleging a NAFTA complaint. Section 301 has been described by one international trade expert as “a stick used to bludgeon the weak.”
In response to unilateral sanctions, Canada had the right to file its own NAFTA complaint and seek dispute resolution. But the crucial point was that NAFTA dispute resolution did not govern the equivalency of trade retaliation, reasonable or not (although this was remedied in Article 32.6 of the 2019 CUSMA trade deal).
These were the rules of engagement when Kantor began to ratchet up the pressure by setting June 21st as the presumptive deadline for announcing unilateral sanctions.
With Kantor engaged on its behalf, Westinghouse spokesperson Maury Lane played his hyperbolic role by telling a Canadian reporter in early February that “the CMT issue is worth perhaps $100 million…But this move by Kantor could cost the (the Canadian entertainment industry) multi-billions of dollars.”
Later, Westinghouse revised the $100 million loss figure downwards to $63 million (all figures USD), a fifty-fold multiple of CMT’s annual Canadian $1.2 million cash flow.
With the American industry baying for blood, Trade Minister MacLaren was eager to cool things down. Responding to Kantor’s February 6th announcement, MacLaren’s spokesperson Bruno Picard denied any trade violation but stated the two countries were far from retaliatory measures.
“There will be a lot of consultation and discussion before any such stage would be reached,” said Picard.
The next day the CMT controversy was raised by the Opposition in the House of Commons when MP Jan Brown button-holed Heritage Minister Michel Dupuy during Question Period. What followed was an exchange that will sound familiar to observers of the 2022 debate over Bill C-11:
Jan Brown (Calgary Southeast – Reform): Yesterday the United States government announced it was considering further retaliatory measures against the Canadian broadcast industry, placing our trading relationship with that country in jeopardy. The minister is moving down the dangerous path of cultural protectionism.
Does the Minister of Canadian Heritage not realize he is harming Canadian culture and Canadian artists by sanctioning the CRTC decision?
Michel Dupuy (Minister of Canadian Heritage): Mr. Speaker, the decision taken by the CRTC is precisely designed to protect Canadian artists and the Canadian cultural industry.
CMT, which is owned by The Nashville Network, was informed by the CRTC when it scheduled in Canada that if there was another channel opened by Canadians it would have to move out. There is no surprise there. The CRTC has taken its decision with full regard to the trade obligations entered into by Canada.
Brown: Mr. Speaker, that is a completely unacceptable answer in this day when technology is being over-ridden by outdated regulations which do not serve our Canadian artists. This is cultural exploitation at its extreme.
My supplementary question is for the same minister. Why is he putting up roadblocks for our very fine Canadian artists? Our cultural industries are among the best in the world. We need liberalization in order to compete more effectively instead of trying to restrict our artists from developing in the international economy.
Dupuy: Mr. Speaker, far from putting up roadblocks, we are opening an information and cultural highway for them with great success.
Two days later on February 9thWestinghouse’s Lane played his next card, this time with less hyperbole and more guile.
In an interview with the Globe and Mail, Lane revealed that following his radio debate with NCN’s Shaun Purdue they had discussed the possibility of a joint venture between CMT and NCN in Canada.
Lane said that CMT expected to be granted a minority ownership position in NCN for free: ‘don’t count on me paying for ground I’ve already paid for.’
Purdue had a suitably nationalist response: “The US probably controls 90 percent of the entertainment market in Canada. Our country is a tenth the size of the US. All Canadians are saying is, ‘For heaven’s sake give us a piece of our own backyard.’”
On February 20 MP Brown was on her feet again in Question Period, predicting a confrontation between the Prime Minister and US President at their upcoming meeting in Ottawa. She asked Trade Minister MacLaren about the potential for US trade retaliation, outside of the cultural sector, a threat the Americans had not made:
Brown: Mr. Speaker, despite those fine words the government is moving toward a policy of protectionism in the cultural industry. Cultural industries will be at the topof the American President’s agenda when he visits this week.
By closing our borders, the government has started a potential trade war with the United States. What form this retaliation will take will be announced by Mickey Kantor on March 6 [Ed. note: this was the deadline for public comment, not USTR action].
When the government meets with Mr. Clinton, will it announce what areas of Canadian trade it is willing to sacrifice to keep up this charade of cultural preservation?
MacLaren: Mr. Speaker, we are unwilling to sacrifice any area of Canadian trade. The member raises a question that will indeed be touched upon in my meetings with Mr. Kantor.
On that occasion we shall continue to assure him, as we have done in the past, that the Canadian measures to promote Canadian culture are entirely consistent with our international trade obligations.
(Emphasis Added)
The confrontation didn’t materialize.
Far from it, the televised Joint Press Conference at the conclusion of the leaders’ meeting on February 23-24 was a love-in, despite the fact that there were active trades file in culture, sugar, and agricultural supply management. According to news reports, the good vibe was deliberate.
Clinton and Chrétien both heralded their signature of the Open Skies Aviation Agreement and extolled the merits of global trade. Neither leader mentioned cultural flashpoints, nor were they asked questions on the topic. Chrétien praised “a great meeting” and said the parties were “working on problems and finding solutions.”
Of course the solution Kantor wanted on the culture file was a change in CRTC policy to protect the licences of other US stations operating in Canada. The Canadian government had the power under section 7(1) of the Broadcasting Act to give policy directions to the CRTC but section 7(2) prohibited those powers being applied directly to licensing decisions.
As if by divine providence, two years later the CRTC changed its policy and then shortly afterwards granted licence renewals to US channels TNN, CNN, CNBC, A&E, The Weather Channel, BET and a number of local superstations.
A news report from the Financial Post on March 21st appeared to reveal a gap between the two cabinet Ministers, MacLaren and Dupuy.
MacLaren had reassured Kantor in writing on March 7th that there were no pending licence renewals for American stations for the next twelve months and, more significantly, the Heritage Department was reviewing its entire TV policy over the next several months and the Canadian government “expects these reviews to cover the regulation of foreign specialty broadcast services.”
Confronted with the Trade Minister’s remarks about the activities of Canadian Heritage and the CRTC, Dupuy wisely replied “we have no intention to direct the CRTC on the question.”
As to whether his own Department was reviewing the issue, Dupuy was evasive but a Heritage official told the Post that foreign specialty channels “could” be reviewed by the Department or even the CRTC as part of its ongoing review of media Convergence.
***
The wind shifted sometime in March.
On March 23, 1995 Kantor spoke for an hour to the National Press Council in Washington D.C., giving an update on the major trade issues of the day with GATT, China, Mexico and Japan. The Clinton administration was on the defensive over trade, thanks to the controversy over the NAFTA deal with low-wage Mexico and an as yet unsuccessful effort to pry open the Japanese market in auto parts.
In such an extensive trade relationship, he said, there are going to be “annoyances” that are managed effectively, citing beer and timber disputes.
“And,” he added cryptically, “we are going to be able to resolve I think the cultural, the so called cultural issues successfully. We are deeply grateful to our Canadian counterparts for that.”
The issue ran on silent mode until just before the June 21st sanctions deadline.
On the morning of the 21st, the Globe and Mail reported that MacLaren and Kantor had discussed the CMT matter again on June 16th in Halifax at the G7 meeting.
In the same news report, the Globe cited “several sources” that Kantor regarded the $500 million figure as “overkill” and “not calibrated” to the loss suffered by CMT. The sources also said that retaliation would be restricted to Canadian cultural products and would not spill over into other sectors.
MacLaren was sending out signals too. In the same Globe report, the Minister’s spokesperson said “we can change the [CRTC] policy but we can’t go back and change a [licence] ruling.” This was the first reliable indication that the Canadian government was going to bend to the American position on future licence renewals.
Later that day New Country Network announced CMT as its minority partner holding a 20 per cent stake in NCN, the maximum foreign ownership permitted under CRTC rules. NCN would be rebranded as Country Music TV.
Westinghouse publicly withdrew its section 301 petition requesting sanctions.
Both Kantor and MacLaren expressed pleasure at the resolution.
Rawlco’s CEO Gordon Rawlinson was conciliatory, conceding publicly that Country Music TV was better branding than New Country Network. Any acrimony with Westinghouse was in the past: “they were just expressing how they felt,” he said. “They will be good partners.”
As for Kantor, he had one more thing to say: “This [CRTC] policy continues by its very existence to threaten the security of other US services currently authorized for distribution in Canada.” Yet he was not announcing sanctions which suggested that he had confidence the CRTC would change its rule about American stations.
Soon more details emerged in the Press and the post-mortem judgment began.
CMT’s equity share came out of Rogers’ ownership stake. Westinghouse was permitted to expand its position from 20 to 33 per cent if the anticipated increase to CRTC foreign ownership limits came to pass, which it did a year later.
No purchase price was announced and it was widely believed Westinghouse paid nothing. The more intriguing commercial arrangements for programming rights and profit distribution were not made public.
CMT President David Hall celebrated the agreement too: “This partnership will create a powerful country music channel.” The subscriber numbers confirmed that observation. Although CMT had been reduced to a minority licensee, it had tripled its viewership from 1.9 to 6 million Canadian households.
Keith Kelly, the National Director of the Canadian Conference of the Arts archly commented in the Globe and Mail “I have a very clear picture of Neville Chamberlain waving a piece of paper and saying ‘we have peace in our time.’”
Greg Quill, the Toronto Star entertainment columnist, called the deal “a capitulation.”
And that was without knowing about the forthcoming change in CRTC licensing policy.
Two days later on June 23, 1995 the Vice Chair of Rogers Phil Lind defended the deal with some significant commentary on Canadian broadcasting:
David Stewart-Patterson (CTV): Yeah. Now, you mentioned levering on the name in terms of the existing name that’s out there in the marketplace, but also the American name. I mean, does it turn Canada’s Country Music Channel into just another American branch plant?
Lind: No, of course not. The channel works very much like it works right now. It has the same management and the same kinds of programming, and everything works the same. But we gain a lot of their experience as well. The other thing we do of course is we assist Canadian country-music artists throughout the world in their quest to be known throughout the world because CMT in the US and CMT internationally has a huge following. And if we can assist Canadian country artists across the world, that’s terrific too.
CTV: Yeah, but I mean, as Rogers, you’re obviously in the middle of this whole convergence process too as technology allows phone companies and cable companies and satellites and so on to compete. Does all that technology really undermine the ability of a government to keep a culture, a country isolated?
Lind: Yes, it does. It means that you have to recognize the realities of what’s going on outside of Canada. But it doesn’t mean you have to abandon your basic principles.
CTV: Yeah, I mean, what are the basic principles that you think we can enforce these days?
Lind: You create strong Canadian entities but, at the same time, you try and make affiliations with international partners. That’s, I think, the essence of where it’s all going.
***
An analysis of the Country Music TV story begs questions about a vision of the Canadian broadcasting industry in its relationship with the juggernaut of the US export industry. Was it a story of capitulation on Canadian cultural sovereignty or a pragmatic recognition of, to use Phil Lind’s words, “the essence of where it’s all going?”
The more troubling question arises from the American threats of trade retaliation and the response of Canadian politicians.
On the US side, the dispute with a Canadian regulator over TV licences was probably a mid-level trade issue at best and not worth blowing up an otherwise positive cross-border relationship.
However the USTR cannot ignore powerful domestic stakeholders. That results in aggressive USTR trade practices thanks to the section 301 cudgel and the defects in enforcement of the NAFTA cultural exemption.
Nevertheless, Kantor seems to have chosen a modestly sized cudgel by limiting the trade retaliation to the cultural sector and, as far as anyone can tell, monetizing the hit list at far less than the “overkill” $500 million.
The more surprising behaviour was demonstrated by Canadian politicians who took credit for defending culture during trade negotiations in 1988 and 1994 and then flinched at the prospect of enforcing those hard-won rights to cultural sovereignty.
We know nothing about any cabinet debate between the free-trader MacLaren and Heritage Minister Dupuy. As for the Prime Minister’s inscrutable role, Chrétien’s shifting perspective on free-trade and the NAFTA agreement is a matter of public record.
As for Canadian opposition critics, they did what they do now: amplify the American threat and propose capitulation.
***
There are several epilogues to the story of Country Music Television.
The first is that the Westinghouse-NCN deal almost fell apart several months later before final signatures. We don’t know the details but Westinghouse claimed in January 1996 that “there remain some pretty large differences.” CMT accused the Canadians of bad faith and demanded “our reinstatement [by the CRTC] in the form of CMT Canada.”
Kantor set a new February 6th deadline for trade sanctions. That deadline was extended to March 7th when the parties signed off “hours before” Kantor was to announce sanctions.
Kantor took the occasion to reiterate the American narrative of “unjust expropriation” of commercial assets and remind the Canadian government that his eye remained firmly fixed upon the upcoming licence renewals for American channels.
The second epilogue was that most of the players in the CMT saga soon went their separate ways.
Perhaps reflecting their exhaustion with trade politics, both Rawlco and Rogers sold their interests in the new NCN/CMT to the Calgary-based Shaw Communications.
Gordon Rawlinson commented “we just felt it was time to get more focussed on radio,” Rawlco’s core business.
In early 1997 Westinghouse bought out Gaylord Entertainment’s interests in CMT and the Nashville Network and folded it into its CBS division where it eventually wound up in Viacom as a Paramount property.
Mickey Kantor became US Secretary of Commerce in April 1996.
Trade Minister Roy MacLaren left cabinet in January 1996 to assume the position of High Commissioner to the United Kingdom.
Heritage Minister Michel Dupuy was shuffled out of cabinet the same month and did not stand for re-election in 1997.
In 1997 the CRTC ruled that American channels would get their licence renewals provided the cable provider maintained a proportionality between Canadian and foreign programmers. This represented the Commission’s third liberalization of its rule on foreign programmers competing with Canadian channels since its strict 1984 policy of licence termination; its 1987 policy of discretionary termination; and its 1993 policy of ‘case by case’ consideration.
Sheila Copps became Minister of Canadian Heritage and inherited the split-run magazine file.
When the WTO struck down the Canadian excise tax in 1997, Copps responded with a workaround through changes to the Income Tax Act in Bill C-55. The USTR retaliated with section 301 steel tariffs hitting Copps’ hometown of Hamilton, Ontario.
But that is another MediaPolicy.ca story for another day.
***
A Postscript on sources:
Finding primary sources online for the “pre-Internet” era of 1995 is a challenge. Regrettably the 1996 Convergence Report issued by Heritage Canada is not available online and it may verify that Canadian reassurances were offered to Mickey Kantor about a change in licensing policy.
There are some good secondary sources on the story of CMT but you will need either a library or credit card.
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The federal Attorney-General’s office has raised the flag of surrender to the CBC’s appeal of the CRTC’s controversial censure of Radio-Canada for on-air references to the title of Pierre Vallières’ classic “N—— blancs d’ Amérique.”
The Radio-Canada hosts’ multiple quotations of mot d’n in the title, once in English and four times in French, were spoken during a consideration of ‘taboo topics,’ in particular the controversy of classroom references to the same book title by a Concordia University professor.
In its filing to the Federal Court of Appeal on behalf of the CRTC, the A-G has plead no contest and backed the dissenting Commissioners on all points. Back in July, MediaPolicy.ca reviewed the Commission majority and dissenting statements here and here.
There can be no doubt the majority Commissioners made a hash of it even though they had the opportunity to review the dissenting comments before publishing, criticisms that the A-G believes are dead on.
Of the many legal errors, perhaps the most puzzling was the majority’s failure to consider whether the offending speech violated the ‘Equitable Portrayal Code‘ that is a condition of licence for the CBC and all broadcasters. Article 10(c) of the Code gives broadcasters the opportunity to rebut the usual presumption that on-air racist vocabulary is a violation of licence:
9. Language and Terminology
Broadcasters shall be sensitive to, and avoid, the usage of derogatory or inappropriate language or terminology in references to individuals or groups based on race, national or ethnic origin, colour, religion, age, gender, sexual orientation, marital status or physical or mental disability.
…
b) It is understood that language and terminology evolve over time. Some language and terminology may be inappropriate when used with respect to identifiable groups on the basis of their race, national or ethnic origin, colour, religion, age, gender, sexual orientation, marital status or physical or mental disability. Broadcasters shall remain vigilant with respect to the evolving appropriateness or inappropriateness of particular words and phrases, keeping in mind prevailing community standards.
10. Contextual Considerations
Broadcasts may fairly include material that would otherwise appear to breach one of the foregoing provisions in the following contextual circumstances:
a) Legitimate artistic usage: Individuals who are themselves bigoted or intolerant may be part of a fictional or non-fictional program, provided that the program is not itself abusive or unduly discriminatory;
b) Comedic, humorous or satirical usage: Although the comedic, humorous or satirical intention or nature of programming is not an absolute defence with respect to the proscriptions of this Code, it is understood that some comedic, humorous or satirical content, although discriminatory or stereotypical, may be light and relatively inoffensive, rather than abusive or unduly discriminatory;
c) Intellectual treatment: Programming apparently for academic, artistic, humanitarian, journalistic, scientific or research purposes, or otherwise in the public interest, may be broadcast, provided that it: is not abusive or unduly discriminatory; does not incite contempt for, or severely ridicule, an enumerated group; and is not likely to incite or perpetuate hatred against an enumerated group.
The A-G did not take a stand on whether article 10(c) vindicated the CBC as the broadcaster had already complied with the CRTC’s order to apologize.
It’s up to the Federal Court to formally accept the A-G’s surrender. You can download the court file (en français) below. The A-G’s brief begins at page 84 of the PDF.
Last week Rupert Murdoch was ‘deposed’ in preparation for Fox News’ defence of a defamation lawsuit filed against it by Dominion Voting Systems (DVS) which was falsely accused by election deniers of having rigged the 2020 Presidential vote count.
This week Fox News personality Sean Hannity was grilled by DVS lawyers about hosting Trump lawyer Sidney Powell who made the false claims on his show.
Hannity claimed he ‘never believed for a minute’ Powell’s false claims even though he did not contradict or question her on their truthfulness. Hannity’s admission will no doubt be relied upon at trial by DVS as proof of Fox’s ‘actual malice,’ the knowing or reckless expression of defamatory statements.
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If and when the federal Liberals table an online safety bill we will no doubt benchmark the Canadian approach against similar efforts in the US, UK and the EU.
Another legislative tool is being considered in the US Senate, the Democrat-sponsored Platform Accountability and Transparency Act. It would require platforms to share data with independent researchers so that the public has a better view of whether the platforms are living up to their own speech codes.
One tidbit: Bitove is quoted as saying the Toronto Star is “approaching profitability.” That’s a long distance from Rivett’s public comments about the Star losing $1 million per week. It’s a good thing these folks aren’t a public company.
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The man who fired CTV news anchor Lisa LaFlamme seems to have landed on his feet upon return from a leave of absence. Former head of CTV News, Michael Melling becomes Bell Media’s VP of Shared Services. His interim replacement Richard Gray has been confirmed in the News job.
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Oh glorious time of the year when film critics deliver ‘best of’ lists.
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You can read MediaPolicy.ca’s summary of where the key amendments, adopted or rejected, landed in Bill C-18 the Online News Act. The prize inside is a PDF of the amended House Bill that will move on to the Senate in February.
Michael Geist posted on what I would describe as his memo to Senators on the 101 reasons why he hates Bill C-18 and how it’s a Canadian ‘shakedown’ of Big Tech. That moved me to post about a couple of those 101 points, the arguments made about ‘trade irritants’ and treaty obligations under CUSMA and the Berne Convention on copyright.
There’s a shakedown in there all right, just not the one Geist is claiming.
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There’s a good interview of CBC English TV’s Barb Williams in Hollywood Reporter by Etan Vlessing in which she talks about the programming pivot that CBC is making towards content relevant to Indigenous, Black and racialized communities.
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News Corp’s Rupert Murdoch is being deposed in preparation for the defamation trial brought against him by Dominion Voting Systems. The lawsuit arises because of Fox News’ inaccurate reporting on DVS —perhaps knowingly or recklessly— arising out of the 2020 US election and the ‘Stop the Steal’ movement.
Murdoch will be holding on for dear life to the US Supreme Court precedent of ‘NYT v. Sullivan’ which swaddles media and reporters in the ‘actual malice defence’ to libel claims. The Sullivan ruling has long been a target of right-wing activists and now they have a lock on the Supreme Court .
Quite a dilemma. Jennifer Rubin of the Washington Post has a column on this.
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Love and hate relationship with Twitter? The best media policy read of the week was last weekend in the New York Times, Ezra Klein’s thoughts on the platform. Profoundly insightful IMO.
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The trilateral CUSMA deal is announced in July 2018
December 16, 2022
In the finest tradition of Parliamentary politics, the Official Opposition’s approach to the Online Streaming Act Bill C-11 and the Online News Act Bill C-18 is not unlike a game of paintball. A lot of wasted paint with the occasional messy hit.
One of the touchés claimed by the Conservatives is the potential for ‘trade irritants’ between Canada and the United States to result from the two Liberal Internet bills.
The possibility of American trade retaliation grabbed news-cycle attention on December 2nd when International Trade Minister Mary Ng emerged from a meeting with US trade representative Katherine Tai and acknowledged American grumbling about C-11 and C-18.
Tai later claimed that “pending legislation in the Canadian Parliament …could impact digital streaming services and online news sharing and discriminate against U.S. businesses,” repeating verbatim her statement from the previous July.
You may have noticed the ‘could.’
By coincidence, Parliamentary committees reviewing C-11 and C-18 were in session that week, so the Conservatives were all over it. Never mind the Party campaigned in the 2021 federal election on supporting legislation very similar to both Bills. [See pages 153-155 of their platform].
Let’s begin with the obvious. Most trade irritants are not trade violations. They are complaints. Or threats to have complaints. Or whining. And they are driven by the politics of American companies coveting the market share of Canadian firms, in the US or in Canada.
American companies, like the world’s biggest media and tech companies domiciled in the vote-rich Blue state of California, expect President Biden to go to bat for them.
Despite the three free trade deals between our two nations since 1988, we’ve endured American whining, irritants, complaints and even the occasional tariff touching upon many sectors of the economy: dairy, auto, softwood lumber, potatoes, you name it.
Oh, and there were the steel and aluminum tariffs Donald Trump levied on the grounds that Canada’s access to the American steel and aluminum markets represented a threat to US national security, a meritless sanction deployed as a cudgel during the 2018 CUSMA talks and only rescinded after the deal was signed. Last week the World Trade Organization retrospectively ruled the tariffs illegal while the Biden Administration stoutly defended them.
You get the picture.
For the most part, our federal government has been good at not freaking out. Global Affairs Minister Chrystia Freeland was decidedly not freaked out by the Trump administration’s attempt to bully Canada during the CUSMA negotiations.
Beginning with the 1988 Free Trade Agreement, Canada’s refusal to be bullied included winning recognition of our ‘cultural sovereignty’ as a special case within bilateral trade rules.
In the last trade talks the exemption of ‘cultural industries’ was renewed in CUSMA. It’s not complicated. CUSMA provides that American media or tech companies doing business in the US should not be treated in a “less favourable” manner in competition with Canadian companies. If they are, Canada may still justify the discrimination in the name of defending our cultural industries and there’s no treaty violation.
But if we do, the US can respond with countervailing trade sanctions of equivalent commercial value, in any trade sector it chooses.
It’s worth a brief summary of how we got there, recounted by the University of Calgary’s Hugh Stephens in a July blog post. (There’s a longer discussion in Garry Neil’s ‘Canadian Culture in a Globalized World.’)
The Harper government actually gave away the key elements of the 1988 cultural exemption during multilateral negotiations for the Trans Pacific Partnership (TPP). Annex II of that trade deal would have made it a treaty violation for Canada to establish “discriminatory requirements on service suppliers or investors to make financial contributions for Canadian content development …[or] measures that restrict access to on-line foreign audio-visual content.”
It was the former scenario that was more likely to occur one day under a Bill like C-11 —-the prospect of compelling foreign streamers to contribute to the Canadian Media Fund (CMF) without getting access to its funds on the same footing as Canadian broadcasting undertakings.
But, when Donald Trump pulled out of TPP on the third day of his Presidency, the Trudeau government was able to recover some of the ground lost through bilateral side letters in the rebooted ‘Comprehensive and Progressive TPP’ (CTTPP) trade deal with the remaining participants, a year later.
As a matter of wise trade policy we avoid having to play our ace of spades, the cultural exemption, and instead try our best to keep on the right side of the ‘less favourable treatment’ line.
Ironically when we look at C-11 we find that in fact any discriminatory harm in C-11 flows north, not south.
The most blatant C-11 discrimination favours American media companies. It’s located in section 3(1)(f and f.1) which for the first time admits Hollywood studios as co-equals with Canadian media companies in making Canadian video content. That was the point of the Bill. But the surprise is that American companies are expressly excused from Canadian regulations on using Canadian actors, directors and writers:
3(1)(f) each Canadian broadcasting undertaking shall employ and make maximum use, and in no case less than predominant use, of Canadian creative and other human resources in the creation, production and presentation of programming, unless the nature of the service provided by the undertaking, such as specialized content or format or the use of languages other than French and English, renders that use impracticable, in which case the undertaking shall make the greatest practicable use of those resources;
(f.1) each foreign online undertaking shall make the greatest practicable use of Canadian creative and other human resources, and shall contribute in an equitable manner to strongly support the creation, production and presentation of Canadian programming, taking into account the linguistic duality of the market they serve;
There are two key points here.
First, the Americans have been accorded ‘equitable’ treatment with respect to supporting the creation of Canadian programming, whether it’s through financial contributions to the CMF or making their own Canadian movies. This non-discriminatory treatment satisfies the Americans’ key trade demand dating back to the abandoned TPP deal. If there is any fine tuning to be done, former CRTC Chair Konrad Von Finkenstein has offered advice to the Minister.
As for the employment of Canadian talent in making Canadian content, it will be up to the CRTC to measure how much less Canadian talent may be employed by the US studios when filming Hollywood versions of Canadian stories. But the text in section 3(1)(f.1)——“greatest practicable use” instead of “maximum” or “predominant”——makes it crystal clear it will be less.
Canadian Heritage officials don’t deny giving the the US studios a break on employing American instead of Canadian actors, writers and directors: Heritage officials acknowledged to Canadian Senators that Washington wanted it and even offered Senators the fatuous reasoning that Netflix and Disney deserve it because they ‘have a global business model.’
It’s unclear from the Parliamentary debates if the federal government also wrote section 3(1)(f.1) as a mandate to the CRTC to give Netflix and Disney what they insist upon: getting rid of the rule that intellectual property and re-sale rights in heavily subsidized Canadian video content must remain with Canadians. In fact to that end, sympathetic Conservative Senators backed two amendments requested by the US Motion Picture Association and one of them passed by a narrow majority.
That wasn’t the only cringing before the Americans.
Under C-11, the CRTC’s oversight of ‘section 9(1)(h)’ provisions governing the carriage and compensation of Canadian public service channels was stripped of all enforcement power, again because Washington didn’t want Amazon and other US online platforms to live up to the same regulatory obligations as Canadian cable companies. Heritage Minster Pablo Rodriguez admitted the American intervention to both Parliamentary committees. This is yet another case of discrimination in favour of American companies in C-11.
Maybe this page is too harsh on the federal government or too naive about the danger of trade conflict. But depending on your perspective, a government holding so many of the high poker cards in its hand is either very risk averse or needlessly intimidated.
Or ask this: why have Canadian trade negotiators made our cultural exemption a ‘dealbreaker’ in three historic trade deals, claiming political credit with the Canadian people for doing so, if not to use it when the chips are down?
A handful of Canadian commentators have alleged that Bills C-11 and C-18 constitute a ‘shakedown’ of Big Tech and Hollywood by a federal government pursuing an illegitimate transfer of wealth between American and Canadian companies.
The contrary is true. What is illegitimate is the American shakedown of Canadians’ solemnly ratified treaty rights to cultural sovereignty by concessions sought and obtained in Bill C-11.
The same ‘trade irritant’ trope has been mooted about the Online News Act C-18.
Trade Representative Tai’s allegation of Canadian discrimination against Facebook and Google is risible. That’s because C-18’s designation of ‘digital intermediaries’ would apply equally to similar Canadian platforms, if only one actually existed in defiance of the global monopolies in Search and Social. The University of Calgary’s Stephens has also written about this in depth.
Then there is the copyright issue in Bill C-18 sticking out like a sore thumb because the legislation includes a “greater certainty” clause stating:
S.24 For greater certainty, limitations and exceptions to copyright under the Copyright Act do not limit the scope of the bargaining process.
As a ‘greater certainty’ clause, the text clarifies the government’s interpretation of the federal Copyright Act as meaning that Facebook and Google cannot avail themselves of statutory ‘fair use’ exemptions to intellectual property rights to stymie bargaining over the value of news content made available on their platforms.
For the drafters of C-18 to claim section 24 clarifies rather than amends our existing copyright law is both true and false at the same time. Canadian copyright law is blurry when asked to draw a bright line between intellectual property and its flip side, ‘fair’ use without permission or compensation. That’s especially true for content posted to online platforms.
Indeed one Canadian expert has described the general principles in the Copyright Act purporting to draw the line between intellectual property and free use as ‘intentionally ambiguous.’ The point of section 24 in C-18 is to make it unambiguous in its application to Facebook and Google republishing ‘news content’ from ‘eligible news outlets.’
The fussing about C-18’s impact on copyright is understandable coming from folks like University of Ottawa law professor Michael Geist, a lifelong advocate of expanding fair use of copyrighted intellectual property, an expansion that the Supreme Court has favoured in principle but in a different context than C-18.
As for how other nations have parried the copyright and fair use issues, Australian legislators simply ignored them in drafting the News Media Mandatory Bargaining Code, the model for C-18.
European legislators were more direct in their 2019 Directive on Copyright, affirming news outlets’ copyright ownership of their content republished by search engines or social media platforms. That included republishing by hyperlinks only (which Australia and Canada have done as well).
The EU approach was embraced in 2021 by Canadian Conservative Senator Claude Carnighan in tabling Bill S-225 which died on the order table prior to the federal election. His Bill confirmed publishers’ copyright on content posted to Facebook, Google and even smaller platforms. On the face of the Bill, news content linked by hyperlinks was exempt but during debate the Senator backed away from that position.
When Erin O’Toole’s Conservatives addressed all of this in their 2021 election program, they appeared to take their cue from S-225 and positively referenced both the pro-copyright EU approach in France and the copyright-agnostic Australian model.
But back to Geist’s claim, he goes on to say that if C-18 deprives Facebook and Google of the ‘fair use’ defence against copyright infringement, then Canada ‘may’ ——note the careful choice of ‘may’—- be in violation of its international copyright obligations under the Berne Convention.
The Convention has no legal effect in Canada other than committing signatory nations to a ‘minimum standards’ approach when legislating their national copyright regimes. One of those standards is article 10(B) respecting the right to create news summaries without restriction by copyright.
The University of Calgary’s Stephens, a copyright expert, told Heritage MPs on September 27th that C-18 did not violate the Berne Convention and, in his blog post two days later, said a US complaint “would almost certainly fail.”
Even if Stephens was wrong —-and the United States as a self described ‘minimal’ signatory to the Convention has a plausible trade complaint against Canada—- presumably the Trump or Biden administrations would have filed against European and Australian signatories to the Convention when they legislated in 2019 and 2021.
They didn’t. And they haven’t.
So perhaps Geist’s ‘may’ was the right choice of words after all.
And perhaps we should take this lesson to heart: claims of trade violations are just claims, whether they are made by law professors, American trade representatives, or anyone else.
Unless the facts say the claims are more than the typical threats we get all of the time, Canadian legislators and commentators might stop repeating them and let the Americans make them instead.
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Amendments have been highlighted. It’s a cut and paste document so please contact me at howard.law@bell.net with any errors or omissions.
A few observations are in order as the Bill is prepared for Third Reading in the House in February.
The legislation was conceived by Heritage Minister Pablo Rodriguez as the Canadian version of the 2021 Australian News Media Bargaining Code, in spirit if not to the letter.
Following a lengthy investigation and report by the Australian competition commissioner Rod Sims, the ‘Australian model’ was designed as a remedy to Facebook and Google exploiting market power over news distribution to the detriment of news organizations that have little choice but to distribute on those platforms. The Australian Code was mostly agnostic about which news organizations participated or benefited from the mandatory bargaining scheme.
This philosophy of ‘competition policy first’ was reaffirmed in the Australian Finance Minister’s recent report that rejected ‘media policy’ considerations of which news organizations belonged in the Code, how much they should be paid, or indeed how much they need to survive. That’s best left to targeted government subsidies, said the report.
Canada’s Bill C-18 is founded on the same principles. Nonetheless the Minister injected a large dose of media policy into the Bill, which was magnified by further amendments during the Committee process, to meet political demands made by small news outlets or those considered voices of underrepresented communities. Indigenous outlets were a major focus of amendments.
What is important to remember is there is nothing in the Act which suggests that every news outlet can prove the value of its news content exceeds the distribution benefits it receives in return from Facebook or Google, driving a net compensation pay-out.
What’s more, nothing in the Act suggests news organizations are entitled to either a pro rata or equal payment. There will be as many views about the value (and volume) of news content as there are bargaining parties.
At least in theory.
In practice most if not all of the ‘news outlets’ that can meet the statutory definition should end up getting paid and in an amount comparable to similar news outlets. This is especially likely if they combine with other news outlets in a bargaining coalition that is authorized by the Bill and then reach agreements with the Californian platforms. That’s what happened in Australia.
There is always the default option for either party to go to arbitration which offers the opportunity to make a case on value exchange.
Here are some of the more significant changes to C-18:
Indigenous news outlets: NDP MP Peter Julian sponsored a series of amendments with all-party support. An Indigenous news outlet can be as small as a single owner/operator journalist who focusses on community issues and is mostly exempt from having to meet other journalism criteria in the Act. While the provisions in section 11(1)(a)(vii) of the Act can hypothetically result in an Indigenous news outlet being excluded from compensation, section 31(2.1)(b) appears to override this and guarantee a positive bargaining outcome.
The threshold requirement for a news outlet to employ two independent journalists was watered down to allow either journalist to be a proprietor or family member.
News organizations must demonstrate real news gathering activity. They must also belong to a legitimate Press Council or else adhere to a professional journalism code of conduct.
Attempts to make bargaining outcomes public —providing transparency and helping smaller news organizations benchmark their bargaining expectations—- failed. The government defended its use of the confidentiality carrot to entice Google and Facebook into reaching voluntary agreements, as they did in Australia. Some less ambitious transparency measures were added to the Bill.
An amendment lengthening the duration of a platform exemption (and therefore the length of any voluntary deal with news organizations) to five years offers some protection to news outlets. The downside is that any news start-ups during that five year period will be frozen out.
The government rethought section 51 of the Bill inviting the CRTC to second-guess the platforms’ news ranking algorithms. The amended Bill follows the Australian model by restricting the CRTC’s authority to self-dealing by the platforms or bargaining-related retaliation against news organizations.
Critiques of C-18 will continue. They boil down to this:
A rejection of the Australian Competition Commissioner’s findings that Facebook and Google exploit market power over the value exchange between them and news organizations or that mandatory bargaining with the availability of binding arbitration is required to correct that. This denial is the Facebook narrative. It also has Canadian supporters: Jen Gerson of The Line tersely called C-18 “a lie.”
Putting aside the argument over value exchange, other Canadian voices like Michael Geist and fellow members of the Internet Society oppose in principle most government regulation of the Internet. Those commentators are especially critical of removing the platforms’ copyright shield of fair use and legislating compensation for content made available through hyperlinks.
Others oppose government aid to media under any circumstances, whether it’s payments from Big Tech or government subsidies. They favour ‘creative destruction’ in which news organizations either find a market solution or fail, leaving their market share to other news organizations.
Some oppose any scheme that aids big news organizations —-to name a few: Postmedia, the Toronto Star, Bell Media CTV, Global News, Rogers City-TV, and Québecor— because they don’t like corporate media for a variety of reasons.
The Conservatives dip into most of these narratives. They are especially opposed to the CBC benefiting from the legislation, a position that dovetails with their ‘defund the CBC’ platform.
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Alberta Senator and former Edmonton Journal columnist Paula Simons navigated a key amendment to Bill C-11 through the Senate Transportation and Communications Committee.
December 10, 2022
It was a busy Ottawa week in Canadian media policy. Parliamentary committees wrapped up amendments to the Online Streaming Act C-11 in the Senate and the Online News Act C-18 in the House.
On C-11, Senators approved 25 out of 100 proposed amendments after logging 65 meeting hours and hearing from 135 witnesses, stretching from June to December.
The headline news is an amendment to the Bill’s controversial regulatory power over video and music “programs” uploaded to social media services like YouTube.
The rewrite of article 4.2(2) was authored by Alberta Senator Paula Simons and Québec’s Julie Miville-Dechêne. Former journalists, both were appointed to the Senate by Justin Trudeau and both joined the dominant Independent Senators Group made up of former Liberal senators who more often than not can be counted upon to support government bills.
Their keystone amendment was neither endorsed nor opposed by the official Government Representative in the Senate, Marc Gold. This suggests the two Senators were able to round up enough votes to overcome the wishes of the governing party. Senators skipped a roll call vote on the amendment. For now, the federal Liberals’ view of the amendment —-whether it will be adopted when C-11 returns to the House of Commons in the new year—- remains unclear.
Simons told Senators the amendment had been put together with input from YouTube, TikTok, and Québec music producers, all of whom have been quiet since the amendment passed.
The amendment restricts the CRTC’s regulatory authority over programs uploaded to social media platforms to content either posted by the platforms themselves (for example, YouTube’s proprietary music service); songs uploaded by music companies; or videos uploaded by licensed broadcasters or streaming services. That means CRTC regulation of user-generated content uploaded by YouTubers or anyone else would stay forever out of bounds.
Here’s the text describing how the CRTC could “scope in” certain programs to be subject to regulation:
4.2 (2) In making regulations under subsection (1), the Commission shall consider the following matters:
(a) the extent to which a program contains a sound recording that has been assigned a unique identifier under an international standards system;
(b) the fact that the program has been uploaded to an online undertaking that provides a social media service by the owner or the exclusive licensee of the copyright in the sound recording, or an agent of the owner;
(c) the fact that the program or a significant part of it has been broadcast by a broadcasting undertaking that
(i) is required to be carried on under a licence, or
(ii) is required to be registered with the Commission but does not provide a social media service.
No doubt, the amendment will be parsed for legal nuances or loopholes in the coming weeks.
An important caveat is that Senators did not vote down C-11’s obligations on broadcasting undertakings to promote Canadian videos and music, otherwise known as “discoverability.”
Nonetheless if the Simons/Miville-Dechêne amendment is accepted by the government, YouTuber fears of algorithmic “backfiring” or international retaliation will have been addressed.
What will happen when this amendment goes back to the House of Commons in the new year?
The political momentum behind C-11’s discoverability powers has been driven by the Québec music industry and like-minded cultural nationalists. That brings Bloc support for any changes to C-11 into the equation.
The leadership shown by the two Senators can only attract admiration. The symbolism of a compromise amendment brokered by an Albertan and a Québecoise is unmissable. But as intriguing as it is, the amendment could flicker out or it could serve as the template for a rethink by Heritage Minister Pablo Rodriguez.
As for other amendments, three weeks ago MediaPolicy.ca recommended six “must haves” to Senators.
Here is how they fared:
• No Internet Czars: Senators voted down section 7(7) of the Bill which expands the federal cabinet’s s.7(1) powers to give “policy direction” to the CRTC on subject matters listed in the CRTC’s general regulatory power in section 5(2). The new 7(7) power allows cabinet to write detailed terms and conditions for the activities of online undertakings, the very kind of authority that section 7(2) forbids to cabinet in the case of licensed broadcasters. Despite the government gamely defending 7(7) as legislative housekeeping, it is anything but.
• Cabinet appeals quashed. Senator René Cormier failed to sway a majority of Senators to mirror the existing s.28(1) rights of Canadians to petition federal cabinet over CRTC policy errors when licensing broadcasters for similar mistakes in regulating online undertakings (i.e. Netflix or Disney). The government wants rid of these troublesome appeals and minced no words on the topic. That is ironic since cabinet just approved one such appeal in the case of the CRTC’s hash-up of the CBC licencerenewal.
• Public Service Channels on foreign platforms. Senators turned down another Cormier amendment to extend existing CRTC powers compelling cable companies to carry and pay fairly for Canadian “9(1)(h)” public service channels to foreign online platforms operating in Canada, like Amazon Prime or PlutoTV. However Cormier had a back-up plan and it worked: Senators accepted his amendment authorizing the CRTC to replace the revenue that public service channels will lose with a levy on Canadian media companies, perhaps something analogous to the Canada Media Fund or the Independent Local News Fund. Government Senate Representative Marc Gold spoke in favour of the amendment.
• Not saving local news. No amendment was tabled to provide the CRTC with a more ambitious mandate to fund local news. (Regrettably MediaPolicy.ca is filing that one in the “told you so” folder).
• The Bill’s union-busting changes to the federal Status of the Artist Act were repealed with the endorsement of the Government.
• California or Canada? Lastly and certainly not least, Senators rejected an amendment to overturn the Bill’s section 3(1)(f.1) exemption of foreign online undertakings from domestic laws on hiring Canadian writers, directors and actors when making Canadian content.
Among other amendments that passed Committee, one surprise was the Conservatives’ narrowly approved motion to amend section 10 (1.1)which sets out, in general terms, the well known CRTC definition of Canadian content.
The amendment appears to water down the requirement that Canadian content be solely produced by Canadians retaining ownership of global distribution and other re-sale opportunities.
The Government Representative neither endorsed nor opposed the amendment. That will put the Canadian film production community on full alert.
One last point of interest on C-11: several amendments seeking to shoehorn changes to the CBC into the Bill were defeated (except for an amendment commanding the public broadcaster to exit its ‘Tandem’ advertorial business, which the government opposed). In speaking against them, Government Representatives promised that Heritage Minister Rodriguez intends to deliver on his Mandate Letter to review the CBC.
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In the “other place,” as Senators like to describe the House of Commons, MPs on the Heritage Committee finished clause-by-clause review of C-18.
Here are a few highlights:
• Bloc MP Martin Champoux won approval of a critical amendment to the definition of ‘eligible news business.’ Membership in a Press Council or adherence to an Editorial Code of Conduct will be mandatory.
• Conservatives are not accepting victory despite scoping in small publishers that employ no independent journalists, only proprietors and family members. The Tories were holding out for covering self-employed freelancers under the Bill which was not agreed by the other parties.
• Conservatives tried but failed to exclude the CBC from C-18’s bargaining scheme. This forms the basis of their political narrative that the Bill denies aid to small publishers (almost entirely untrue) in order to funnel compensation to CBC, Bell Media and Rogers (but omitting any reference to the right-leaning Postmedia and Québecor).
A series of motions from NDP MP Peter Julian designed to give small and independent news organizations access to the details of voluntary agreements reached between the platforms and other news organizations were defeated. The purpose of Julian’s amendments was to give these news organizations the ability to benchmark their bargaining expectations against other negotiated outcomes. The amendments were defeated without support from any of the other three parties.
• The Liberals scaled back the Bill’s ‘undue preference’ regulation of algorithmic news rankings which had drawn the ire of Google. The legislation is better for it.
An updated MediaPolicy.ca review of C-18 amendments is posted here.
Also, I posted a summary of the Australian Finance Minister’s report on the forerunner of Canada’s C-18, the News Media Bargaining Code, following its first 18 months of operation.
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The American equivalent of Bill C-18, the Journalism Competition and Preservation Act (JCPA) has stalled in US Congress.
The week had started off with speculation the legislation would be earmarked into the lame duck Congressional bill on defence spending. The Bill is sponsored by Democratic Senator Amy Klobuchar and has support (but also opposition) among Democrats and Republicans. Notably, Senate Minority Leader Mitch McConnell (R-Kentucky) backs it.
Adding to the drama, the New Zealand government announced its intention to follow Australia and Canada with a similar bill.
By the end of the week, the JCPA did not make it into the defence omnibus bill and its fate remains unclear.
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The Australian Finance Minister’s overdue anniversary review of the groundbreaking News Media Bargaining Code (NMBC) gives Canadians some welcome pointers on how to think about, improve or critique our Bill C-18, the “FaceGoogle” Online News Act.
The Report does two things well, the first being an evaluation of how well the Australian legislation was implemented. The other is that Finance Minister (‘Treasurer’ in Oz lingo) Jim Chalmers unapologetically backs the Code as an anti-oligopoly law and downplays using the Code as a tool for reshaping news journalism. Both points ought to be helpful to Heritage MPs who are mid-way through amending C-18.
The Treasurer neatly sums up the goal of the NMBC, also that of C-18:
The Code aims to address bargaining power imbalances to ensure that news businesses receive fair remuneration from digital platforms for the value generated from their content.
In broad terms, the Code therefore aims to ensure that digital platforms remunerate news businesses where they generate more value from news content than the business creating this content obtains from its distribution via the platform.
The practical lessons learnt by the Australians are limited by the ‘non-designation’ route chosen by Facebook, Google and 34 news businesses in favour of reaching voluntary agreements, reportedly valued at $190M. This meant the Australians had no opportunity to test the Code’s formal bargaining and arbitration scheme.
The Australian government’s decision to confer its blessing on the voluntary agreements, and so grant ‘non-designation’ status to Facebook (for three-year agreements) and Google (for five-year agreements), courted controversy because Facebook stiffed two reputable news organizations, the Special Broadcasting System (similar to our OMNI TV) and the investigative news site The Conversation. Additionally, radio stations were shut out although that hasn’t attracted much attention.
We don’t know what happened exactly. The two news outlets professed bewilderment. Google and Facebook said some Australian news businesses had unrealistic expectations. The Treasurer’s narrative suggests that after four months of bargaining Facebook ran out of money it was willing to spend on settlements and the two outlets fell victim to circumstances.
At least as far as Facebook was concerned, by the summer of 2021 the Treasurer was on the spot to decide whether, as Menlo Park surely hoped, it had done enough to meet the statutory test of non-designation by making ‘a significant contribution’ to Australian news journalism. The Treasurer at the time, Liberal Josh Frydenberg, said it had.
Despite the public outcry supporting the excluded news outlets and calling for the revocation of Facebook’s exemption from formal designation, nothing in this Report suggests the new Treasurer, Labour’s Chalmers, thinks any differently than his predecessor.
The very idea of Facebook or Google doing ‘just enough’ to avoid designation is what keeps CEOs of Canadian independent news businesses awake at night. The authors of C-18 have done a decent job of addressing that concern by writing in detailed criteria for the Canadian “exemption test” as well as putting the decision in the hands of the CRTC rather than federal cabinet. I am thinking especially of the legal text in section 11(1)(a)(vi) requiring deals with a diverse range of news outlets:
(vi)…. they involve a range of news outlets that reflect the diversity of the Canadian news marketplace, including diversity with respect to language, racialized groups, Indigenous communities, local news and business models;
Another implementation lesson from Australia impacts the Canadian debate over the scope of ‘eligible news business,’ in particular the line between legitimate news outlets and citizen-journalists or opinion sites run by political partisans.
In Australia, the Competition Commissioner turned away twelve of the 46 applicants for official status as news organizations (regrettably the Report only lists those who were approved). The Treasurer acknowledges in his Report that some applications were ‘opportunistic.’
On that point, an interesting feature of the Australian Code that Bill C-18 has not replicated is the NMBC’s requirement that an eligible news business brings in at least $150,000 (AUS) in annual revenue. That’s based on the plausible theory that no one can run a legitimate news business on anything less.
In Canada the drafters of C-18 chose instead to draw the line based on a number of arm’s length employed journalists (two) although that was watered down last week by Heritage MPs to include proprietor-journalists and employed family members.
The Treasurer’s Report also emphasized, anecdotally, that several news organizations went on a hiring binge adding more journalists with the settlement monies.
He dismissed any criticism that news organizations might spend those funds on paying down corporate debt on the grounds that less debt will increase the sustainability of those news organizations in the long run. It’s an interesting policy argument although its chances of mollifying Canadian critics of the debt-encumbered Postmedia receiving C-18 funds are zero. On the Kelvin scale.
The other major theme of the Report might be too policy-focused for some, but it perfectly anticipates the partisan politics over C-18 on Parliament Hill.
The Treasurer is impatient with criticism that the NMBC has not done more for small independent media outlets.
In his own words:
While some stakeholders raised concerns about the Code’s impact on competition and media diversity, the objective of the Code is to address bargaining power imbalances so as to ensure news businesses receive fair remuneration from digital platforms for the value their content generates. It is not designed to redistribute resources across the news sector or to guarantee that all news businesses receive funding. Other policy and funding tools are available to achieve these objectives.
Another way of putting it is that the NMBC exists to correct a market imperfection in news monetization caused by FaceGoogle’s oligopoly power over advertising and distribution to the mass audience in Search and Social Media.
As a competition remedy, the NMBC checks abuses of market power between platforms and news organizations, it does not subsidize news businesses, no matter how deserving. Any subsidies lay elsewhere in the realm of media policy. Chalmers’ Report includes a long list of government subsidies available to public broadcasters and small publications.
If this sounds anything like the Canadian government’s rationale for C-18, it’s no coincidence. But unlike the Australian NMBC which was supported by the major political parties, Canadian Conservatives do not support the Bill C-18. They seem to have found their wedge by championing one-journalist news outlets whose C-18 pot of gold they say is about to be pillaged by the CBC, Bell Media and Rogers (but not Postmedia, strangely enough).
Like the Australian Treasurer, our Heritage Minister Pablo Rodriguez hastens to point out his own list of federal subsidies keeping small Canadian publishers afloat that will continue to be available no matter which side of the eligibility line they fall under C-18.
But that’s not to say that C-18 is agnostic about which news organizations pry loose compensation from the Platforms. As noted above, the bill’s ‘exemption’ criteria requires Facebook and Google to make deals with a diverse range of news outlets.
Yet all of this parsing of C-18’s eligibility rules may be policy navel gazing.
C-18 favours a pragmatic approach to compensation, perhaps too much for some, by incentivizing Facebook and Google to decide which news organizations will find themselves in the ‘significant portion’ of outlets that get deals, and how rich those deals are, subject to the CRTC’s authority to approve the exemption.
The platforms will in turn wash their hands of unpleasant decisions by encouraging small outlets to join one of the bargaining coalitions authorized for news organizations under the Bill. The platforms will then negotiate a lump sum with each coalition and leave it to news organizations to divide the spoils among themselves.
If any news outlet gets the short end of the stick, and we can expect some will at least think they did, expect a CRTC hearing to sort it out.
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Journalist and Nobel Prize winner Maria Ressa appeared on Stephen Colbert’s Late Show on November 30th to describe the impact of Facebook’s content moderation failure on political violence and democracy in Philippines.
December 3, 2022
The UK government announced this week it is backing away from take-down orders against social media platforms in its proposed Online Safety Act for legal but harmful content and will rely on self-regulation by the platforms.
Canada is still waiting for its own Online Safety Bill. It seems likely we won’t see it until Bills C-11 and C-18 make greater progress through Parliament.
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Canada’s Online Streaming Act Bill C-11 made little progress during its two sessions this week in the Senate Transportation and Communications Committee. Senators are bogged down in section 3(1) of the Act which enumerates the goals of the national broadcasting policy, mostly in symbolic or general terms.
Ontario Senator Donna Dasko’s motion to make ‘audience’ satisfaction more explicit won government support (but not from Conservatives who preferred ‘consumers’) which means the House will accept the change.
New Brunswick Senator René Cormier also earned the government’s endorsement to reverse the House’s ill-advised change to the existing Act that puts broadcasters’ in-house production on the same level of priority as productions supplied to them by independent Canadian filmmakers. If not for Cormier’s amendment, C-11 would have put a big dent in the CRTC policy of supporting a viable Canadian TV production industry.
Cormier’s second motion was defeated by both government and Conservative senators. This was an attempt to undo C-11’s “two-tier” treatment of domestic and foreign film producers in section 3(1)(f-f.1). Expect to hear more about this issue, it isn’t going away.
In industry news relevant to C-11, two Canadian “FAST” (free, advertising-supported television) online platforms launched this week. CBC Explore and PlutoTV (a Corus/Paramount partnership) will offer a range of channels and programming without a paid subscription. Each will include their daily news shows, but other programming will be mostly non-premium entertainment and re-runs.
This new kind of platform has potential as a cord cutting option in tandem with premium streaming subscriptions. And for those of us who grew up watching bunny-eared over-the-air television, FAST may feel very Retro.
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As for Bill C-18, MediaPolicy posted that Heritage MPs need to carefully define the parameters of ‘eligible news business,’ with attention paid to the line drawn between small publishers and citizen journalists. I posted a second time suggesting MPs look at Rebel News as a test case of distinguishing between professional journalism and political actors.
When MPs met yesterday to grapple with section 27(1) defining an eligible news business, they agreed to qualify any news organization staffed by a minimum of two journalists including a proprietor and a family member.
MPs are poised to approve Bloc MP Martin Champoux’s much needed amendment requiring news organizations to either belong to a recognized Press Council or adhere to a bone fide editorial code.
Heritage MPs have moved through about two-thirds of C-18 amendments now and may be headed for completion with four sessions left before the seasonal break (although one of them is earmarked for the Hockey Canada file).
By coincidence, this week the Australian Finance Minister released its first anniversary reporton the implementation of its own FaceGoogle legislation, the forerunner of Bill C-18. Its report is less transparent than a similar report the CRTC will be required to publish annually after Bill C-18 passes.
But the headline on the Minister’s report was that the Australian government will allow Facebook to keep its three-year exemption from mandatory bargaining with news organizations even though its series of voluntary deals with news organizations excluded two important independent outlets.
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When the Heritage Committee meets Friday it will begin debate on amendments to Bill C-18’s section 27(1)(b). That is the definition of an ‘eligible news business’ that qualifies a journalism outlet for bargaining rights with Google and Facebook. MediaPolicy posted about this on Monday.
A test case of such a news organization would be Rebel News (there might be others, including those on the Left).
Rebel News got punted earlier this year from the federal Qualified Canadian Journalism Organization (QCJO) program for journalist wage subsidies. The Independent Advisory Board on Eligibility for Journalism Tax Measures decided that Rebel News no longer met the Revenue Canada directive on “original news” reporting.
That Revenue Canada ruling gives us some insight into what might (or not) occur under an unamended section 27(1)(b).
To refresh your detailed recollection of section 27 (reproduced at the bottom of this post), there are two ways for a news organization to qualify for bargaining rights under Bill C-18.
The door marked ‘section 27(1)(a)’ doesn’t specify any journalism criteria. Rather it rubber stamps the eligibility of any online news site (television is excluded) already granted “QCJO” status by Revenue Canada’s arm’s length Advisory Board. On Tuesday, Heritage MPs amended that section to include pre-qualification of CRTC licensed community TV stations.
The other door marked ‘section 27(1)(b)’ spells out the CRTC’s criteria for ‘eligible news business.’ It gives the CRTC interpretative guidance but is missing some of the harder rules of the QCJO program, namely a percentage of journalist time spent news gathering and a requirement for ‘original news content.’
When the aforementioned Advisory Board yanked Rebel News’ QCJO tags it focused on the lack of original news under section 248(1)(a)(v) of the Income Tax Act. Here is the relevant text in the denial letter:
[As required by section 248(1)(a)(v),] the Advisory Board found that Rebel News produces content which is of general interest, including coverage of democratic institutions and processes, and not primarily focussed on a particular topic. However, the Advisory Board’s assessment is that Rebel News does not provide original news content, on the basis that the content was found to be largely opinion-based and focused on the promotion of one particular perspective.
The term original news content is not specifically defined in the [Income Tax Act]. To assist with the interpretation of the term, and to ensure transparency, the Guidance on the income tax measures to support journalism (the Guidance) is published on Canada.ca. The Guidance explains:
2.27 The original news content of an organization generally refers to reports, features, investigations, profiles, interviews, analyses and commentaries that are:
…
(c) based on facts and multiple perspectives actively pursued, researched, analyzed and explained by a journalist for the organization;…
Further, section 2.36 of the Guidance provides:
2.36 Original news content should be based on journalistic processes and principles, which include:
…
(b) a consistent practice of providing rebuttal opportunity for those being criticized and presenting alternative perspectives, interpretations and analyses;…
The Advisory Board found numerous examples of curated content which is also not considered original news, and is contrary to sections 2.34 and 2.35 of the Guidance which state:
2.34. The rewriting, translation, reproduction or aggregation of news from external sources (including articles from news agencies, a current or previous issue of the same publication or any other publication) would not be considered original. Content produced in such a manner, by or for an organization, will factor into the determination of whether the organization is engaged in the production of original news content.
2.35. In addition, lightly edited reproductions of news content would not be considered original news content. For example, an article that repeats material from a news release with no evidence of further independent research and no additional facts, third party perspectives, or context, would not be considered original news content.
Our review of Rebel News’ application reached the same conclusions as that of the Advisory Board, namely, that Rebel News is not engaged int he production of original news content that meets the requirements of the Act.
Director General, Legislative Policy Directorate, Revenue Canada
For full appreciation of Revenue Canada’s Guidance document, the Director General’s letter might also have quoted section 2.33 which signals the primacy of news gathering over opinion giving:
2.33. The term original news content includes content for which research, writing, editing and formatting are conducted by and for the organization. Therefore, whether news content is original depends on the active involvement of a journalist in its creation. Original news content is produced through gathering facts and should show evidence of first-hand reporting, such as independent research, interviews, and fieldwork. For example, a news article or report about an event would be original if it is written or reported by a journalist and is based on first-hand knowledge that journalist gained by conducting independent research, attending or witnessing the event, or interviewing people who organized, attended, or witnessed the event.
In the end, the significance of Revenue Canada’s disqualification of Rebel News from the QCJO program is that its content lacked original news, especially:
Reporting based on facts and multiple perspectives actively pursued, researched, analyzed and explained.
Original news gathering, as opposed to reporting on reporting by others.
Giving space to alternative or rebuttal views, presumably in opinion writing.
Putting aside the incendiary reputation of Rebel News, what is instructive to Heritage MPs considering section 27(1)(b) on Friday is the journalistic standard of ‘original news’ as expressed by Revenue Canada in its Guidance document.
You won’t find the term ‘original news’ in section 27(1)(b), the portal for journalism companies to apply for official status as ‘eligible news businesses’ under Bill C-18.
You will find ‘original news’ under section 31 which is the opportunity for Facebook and Google to ask the CRTC to disqualify certain ‘news outlets’ operated by CRTC certified eligible news businesses —for example, a particular news title published by Torstar or Postmedia— if the news outlet’s content does not meet a number of tests, including original news reporting.
It’s an odd, backwards way to draft a statute. It contemplates the CRTC certifying a news business as eligible under section 27(1)(b), subject to Facebook or Google challenging a particular news outlet (which in the case of independent news organizations may be the same thing) as lacking original news content under section 31(2).
Something for MPs to chew on.
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