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A fat little bunny named Max was frolicking across Canadian television screens this week, building sandcastles at the beach under the appreciative eye of his big sister, Ruby, both young rabbits blissfully unaware that they represent a Program of National Interest.

The term may sound quaintly overblown, especially when applied to the preschool cartoon Max and Ruby, but it includes several categories of TV shows that Canadian broadcasters are obliged to make under the terms of their licences. The thinking is that, left to their own devices, broadcasters will fill Canadian content requirements with cheap reality or talk shows, so they are required to spend a certain percentage of revenues in areas that are either very expensive (drama) or less profitable (long-form documentary and children's programming).

In May, the Canadian Radio-television and Telecommunications Commission told two broadcasters, Bell Media and Corus Entertainment, that they could cut their spending on these shows almost in half. This week, in a highly unusual move, Minister of Canadian Heritage Mélanie Joly told the CRTC to think again, sending the Bell and Corus licence renewal decisions back for reconsideration. The spending requirements that encourage shows as diverse as Corus's Max and Ruby and Bell's foul-mouthed comedy Letterkenny and high-profile crime drama Cardinal would remain intact.

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The decision grabbed attention because most such appeals to cabinet fail: By the government's own estimation, only eight CRTC decisions have been sent back since 1991. But under pressure from television creators across the country, Joly made an exception. As streaming services erode the broadcasting business model and render Canadian content regulations less effective, critics have accused the industry of fighting over who gets the best deck chair on the Titanic. But if Joly's move might have appeared like frantic backpedalling to some, her decision suggests the government thinks there are smarter ways to help Canadian programming compete than slicing at the regulations that created a Canadian television ecosystem in the first place.

Or does it?

It's a subject of some debate in Ottawa how cynically to view Joly's move to please the creative community, represented by groups such as the Directors Guild of Canada and the Canadian Media Producers Association, in the lead-up to a major announcement on cultural policy expected next month. The controversial licence renewals were the decision of a Stephen Harper appointee, CRTC chair Jean-Pierre Blais, who left his job in June, and so could be easily dismissed by the Liberal government.

Joly has now reset the clock on a major decision for Blais's replacement, the Liberal appointee Ian Scott, who starts the job in September.

The member from Ahuntsic-Cartierville had also gladdened the Quebec television industry by sending back the renewals for French-language broadcasters too: They had failed, to the fury of Quebec cultural groups, to specify that an "original" show had to be made originally in French, so dubbed English-Canadian content might be used to pad out the schedule.

Blais, frustrated with what he perceived to be the broadcasters' slowness to adapt to the world of Netflix and Amazon, had offered them carrots in the form of "flexibility" on their Canadian content requirements, in this case reducing the percentage of the PNI spend from 9 per cent for Bell and 8 per cent for Corus to the mere 5 per cent required of Rogers. (The differences were because of the different portfolios of each broadcasting group; Rogers's channels specialize in sports, local and multicultural programming so the broadcaster was asked to spend less.) And Blais had applied the goad too: In a farewell speech, he lectured broadcasters on 19th-century technology, comparing them with barge operators fitting their boats with steam engines even as the railways that would replace them were being built.

One thing that Blais and Joly could always agree on is the need for Canadian television to compete in a global market. Both want Canada to produce more top-quality shows for export and Blais seemed determined to hasten the withering away of Canadian content regulations with the idea that the best would simply rise to the top of the digital heap. But cutting the money that TV producers can get from broadcasters for their best work seems an odd way to encourage them.

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Max and Ruby is actually a good example of what Canadian television production can do well: The show, based on books by American children's writer Rosemary Wells, is produced in Canada by Nelvana, sold to U.S. broadcasters and also dubbed with different accents for the British market. Boosters of Canada's successful children's TV industry sometimes point out its soft power as it cheerfully exports values of diversity and tolerance.

But the expletive-laden Letterkenny, with its heavily ironic brand of Canadian comedy performed in plaid shirts and overalls by the satirical figures of Wayne and Daryl, is going to be a harder sell in international markets. Shows such as the crime drama Cardinal, distinctively Canadian by virtue of its Northern Ontario setting and plot surrounding the disappearance of an Indigenous girl, would seem to be the sweet spot: It has sold into Britain and several European countries and is seen on Hulu in the United States. That's great, but why should Canadians sacrifice the likes of Letterkenny just because foreigners may not get it?

With the obvious exception of the United States, industrialized countries subsidize their domestic television industries with various tax credits and regulations because their markets are not always large enough to guarantee national content. (This, by the way, is true in countries as large as Britain and Germany.)

The issue for Joly is not whether chipping away at this regulation or that subsidy will somehow help regulated Canadian broadcasters compete against unregulated American streaming services.

Instead, the answer lies in updating the regulations to include streaming; the European parliament has just passed rules allowing member states to require Netflix to ensure that 30 per cent of the catalogue it offers to European subscribers is European programming.

Meanwhile, Canada lags behind European jurisdictions in making simple changes to tax laws so that consumers would start, at the very least, paying HST on their Netflix bills.

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Netflix has to operate according to international law and already recognizes producers' territorial rights as it signs up content for different countries. It will always pump U.S. content across the invisible electronic border, but maybe it can also be enticed into Canada's so-called walled garden to frolic with Max and Ruby – and Wayne and Daryl.

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