The CRTC announced last month that platforms such as Netflix, Spotify and Amazon Prime will have to contribute 5 per cent of their annual Canadian revenues to support broadcasting in this country.Lucy Nicholson/Reuters
Foreign streaming platforms – including Netflix, Amazon and Spotify – have launched Federal Court challenges to the way Ottawa’s Online Streaming Act, which will force them to inject millions of dollars into Canada’s broadcast sector, is being implemented by the regulator.
The challenges threaten to delay the implementation of the act, which would compel foreign streaming giants to pay about $200-million a year to support Canadian music, TV, film and radio.
The Motion Picture Association-Canada, which represents Netflix as well as Hollywood studios such as Paramount, Universal and Warner Bros. Discovery, this week launched dual legal challenges in Federal Court to decisions by the Canadian Radio-television and Telecommunications Commission, which is implementing the act.
The music streaming platforms Amazon, Apple and Spotify also filed legal challenges in Federal Court over the CRTC’s decision to compel them to make financial contributions in Canada under the act, also known as Bill C-11.
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The Motion Picture Association-Canada argues that the funding mechanism chosen by the CRTC could lead to the disclosure of sensitive, confidential financial information to Canadian broadcasters that its members compete with.
It is concerned that the CRTC would make its members contribute to the Canadian Association of Broadcasters (CAB), named with the CRTC in the court filings. It alleges this would enable CAB to calculate how much the foreign streamers make from broadcasting in Canada by doing the math on the amount of money studios contribute.
The CRTC announced last month that platforms such as Netflix, Spotify and Amazon Prime will have to contribute 5 per cent of their annual Canadian revenues to support broadcasting in this country.
Foreign streaming platforms that are not affiliated with a Canadian broadcaster and make at least $25-million or more of Canadian broadcasting revenue a year will have to pay out, under a regime that follows the passing of Bill C-11 last year.
The Motion Picture Association-Canada has also challenged a CRTC decision to make streaming platforms, including Netflix, contribute to local news in Canada. It says the CRTC has no authority to make them support local news here and that this was not envisaged when Bill C-11 was going through Parliament.
“The CRTC’s decision to require global entertainment streaming services to pay for local news is a discriminatory measure that goes far beyond what Parliament intended, exceeds the CRTC’s authority and contradicts the goal of creating a modern, flexible framework that recognizes the nature of the services global streamers provide,” Wendy Noss, president of the MPA-Canada, said in a statement to The Globe and Mail on Thursday.
“Our members’ streaming services do not produce local news, nor are they granted the significant legal privileges and protections enjoyed by Canadian broadcasters in exchange for the responsibility to provide local news.”
Graham Davies, president and CEO of the Digital Media Association, said three of its members – Amazon, Apple and Spotify – have filed legal challenges in Canada about contributions they would have to make under Bill C-11. The music streaming platforms have also raised concerns about having to contribute to a fund supporting local news in Canada.
“The contributions must be made to various government-mandated funds, such as local news production for the benefit of commercial radio stations, that have been pre-selected by the CRTC,” he said in a statement on Thursday. “The approach taken is backward-looking and bad public policy from the current government of Canada and fails to acknowledge streaming’s existing contributions to music production.”
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The Digital Media Association has warned previously that the act could lead to prices being driven up for consumers.
Foreign streaming platforms will have to contribute to a variety of funds, including those supporting the creation of Indigenous content and work by Black filmmakers and other Canadians from diverse backgrounds.
The Federal Court challenges do not involve payments by the movie and TV studios to these funds.
The MPA-Canada said it is concerned about studios having to pay into a Canadian local news fund administered by the Canadian Association of Broadcasters.
It says Bill C-11 requires foreign streaming services to contribute to Canadian broadcasting in a fair way appropriate to the nature of the service. This means studios that do not produce local news should not have to support its creation in Canada.
Kevin Desjardins, president of the Canadian Association of Broadcasters, said the CAB has historically received “confidential financial information from cable and satellite distributors and dealt with it appropriately and without issue. We have the ability and the integrity to do so going forward.”
The MPA-Canada’s lawsuit demonstrates the foreign streamers’ “avaricious approach to the Canadian market,” he added.
“As the foreign global streamers remain focused on sucking billions of Canadian dollars out of the Canadian-owned media system, the CAB remains focused on ensuring that we keep Canadian journalists in Canadian newsrooms,” he said.
He added that the CAB administers funds such as the Independent Local News Fund without fees.
Mirabella Salem, a spokesperson for the CRTC, said “the Online Streaming Act, which amended the Broadcasting Act, requires the CRTC to modernize the Canadian broadcasting framework.”
“As this particular matter is before the Federal Court of Appeal, it would be inappropriate for the CRTC to comment.”