You have to hand it to Janet Yale and her team of crackerjack lawyers and policy wonks: After years of bland talk and false starts from various functionaries, their thorough review of Canada’s broadcasting and telecommunications legislation is both brave and practical. If implemented, it would completely rewrite the Canadian content regime and bring foreign players to the table.
But first things first: No, the report of the Broadcasting and Telecommunications Legislative Review Panel released Wednesday does not recommend a “Netflix tax.” That is to say, since there is much confusion over that purposefully misleading term, they are not suggesting foreign streaming services pay a cultural levy that would direct a percentage of their Canadian revenue toward funds that underwrite Canadian programming.
However, the panel is recommending that the foreign services be required to collect the HST from their Canadian subscribers. (At long last.) And, more controversially, that they be made to spend a percentage of revenue on genuinely Canadian content: That’s stuff written, directed, performed and produced by Canadians; U.S. shows that happen to be shooting in Canada need not apply.
That’s the kind of requirement Canadian broadcasters such as CTV or Global already face as the Canadian Radio-television and Telecommunications Commission is increasingly replacing the rules about hours of Canadian shows on TV schedules with rules about spending. All the details, such as the level of that spending requirement, rules about how many key creative jobs would need to be held by Canadians and how prominently the shows would need to be featured on the service, would be determined by the CRTC.
Which, by the way, the panel would rename the Canadian Communications Commission. The proposals include a restructuring of how the sector is regulated, maintaining the licensing of Canadian broadcasters and cable companies but adding in the “registration” of the new digital players.
The panel divides all players, old and new, into three categories with corresponding obligations. There are curators such as CTV or Netflix, who would be required to spend a certain percentage of the revenue they raised in Canada on programming Canadian content – and ensuring it was discoverable.
On the other hand, aggregators such as a cable company or a news site such as Yahoo! News, and sharers such as Facebook or YouTube, would be subject to levies on their Canadian advertising revenue. (Worth adding here that only media content on the social-media sites is included, not personal content. The panel is not calling on the CRTC to start counting cat videos.) Meanwhile, the panel determines that internet service providers are merely conduits or connectors and would not be subject to any levy.
The panel also recommends that the CBC be weaned off advertising in the next five years, starting with its news programming, and enter into five-year contracts with government in exchange for stable funding. Its report also has lots to say about getting broadband access for all Canadians, protecting their privacy and ensuring the survival of Canadian news media.
But over in the world of Schitt’s Creek, Letterkenny and Anne with an E, the proposed regime raises questions. The first is whether the system would raise enough money to continue funding Canadian programming at current levels. Shows are currently funded by those levies on the old “BDUs” or broadcasting distribution undertakings – the cable and satellite companies. As the panel says in its 235-page report, those revenues are falling.
Many in the industry believe that the smartest solution is to switch the levy over to the area where the same companies are making their money, distributing internet service. The panel’s decision that a cable company is an aggregator, but an ISP is just a connector, sidesteps the politically difficult notion of an “internet tax.” But will the spending requirements and levies on the foreign players be enough to replace the old BDU cash?
Reports such as this one often languish on shelves, but government ministers have been giving broad hints that the Liberals are ready to regulate the foreign services. So if the government goes ahead with these bold recommendations, will the CRTC succeed in getting the notoriously unco-operative new media giants to come to the table?
Last week, Minister of Canadian Heritage Steven Guilbeault told them it was better to be at the table than on the menu, but previous examples are not encouraging. Google and Netflix simply refused to provide the CRTC with data during the Let’s Talk TV hearings back in 2014, while the spending commitment Netflix made to the government last year made no distinction between U.S. service production and genuine Canadian content. Pressed on this issue at a news conference on Wednesday, Ms. Yale and her colleagues pointed out that companies that wish to do business in Canada must abide by Canadian laws.
An old phrase from the analog era comes to mind: Stay tuned.
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