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Business Commentary Why Netflix is embracing Canadian culture without Cancon rules

A still image from the Canadian television series Frontier is shown in this undated handout image.

HO/The Canadian Press

Canadian Broadcasting Corp. president Catherine Tait has famously accused Netflix of cultural colonialism, darkly fingering foreign streaming services as enemies of homegrown content.

Strange then that the latest statistics on who spends what in Canada on film and TV production show that the real bogeyman may be a lot closer to home.

Foreign investors are winning the Canadian content, or Cancon, sweepstakes, at least when it comes to English-language television. Foreigners were the single largest source of funding for Canadian content in fiscal 2017-18, outspending the CBC and other public broadcasters, private broadcasters and the Canadian Media Fund, according to a report from the Canadian Media Producers Association. Foreign sources now account for 20 per cent of all spending on Canadian content, totalling nearly $400-million last year.

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The report defines Canadian content as films and television programs by Canadian production companies and broadcasters. Certification is granted by the federal government.

The numbers put the lie to the notion that Netflix and other foreign streaming services should be regulated into submission, as the CBC and others have long argued.

“It counters the claim that the only way to make people invest is to force them to do it,” said University of Ottawa law professor Michael Geist, an expert in e-commerce and internet law. “It’s clearly not the case.”

It turns out that Netflix, Amazon and Hulu are investing here willingly, without government edicts, special taxes or licence fees. They are spending more on Canadian content because it makes economic sense.

Foreign financing has made up for the entire decline in funding Canadian television content from Canadian sources over the past five years. It’s difficult to understand why anyone would blame Netflix for a dearth of Cancon, he added.

Netflix, which has about six million Canadian subscribers, likely also wants to get out in front of any regulation or special levies by playing the good guy in this drama. The company has committed to spending $500-million over five years.

Foreign money is flowing into Canadian content because there is talent here, good set locations and state-of-the art infrastructure. The cheaper Canadian dollar helps too.

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Prof. Geist points out that streaming services such as Netflix have created a new global market for TV shows, including ones made by the CBC. “People want to watch it,” he said.

The flow of money into production has produced a mini-boom in construction of Hollywood-style sound stages to meet growing demand for producing high-quality films and TV shows. New projects are planned for Ottawa and Markham, Ont. Halifax is also looking at building one.

Ms. Tait has been mostly unapologetic about her cultural imperialism comments, made at a TV industry conference in January. In interviews since, she has suggested her remarks were misinterpreted as a call to take Netflix away from Canadians.

“The promise of companies like Facebook or Google or Netflix or Amazon . . . is enormous, but we have already seen the unintended consequences,” Ms. Tait, a former TV production executive, explained to The Globe and Mail’s Simon Houpt in March. “I was really trying to wave the harbinger of possible concern, with respect to Canadian culture.”

At the same time, she held up the CBC as “one of the custodians of Canadian values.”

Ms. Tait is treading on dangerous ground. The record suggests the public broadcaster isn’t investing in those lofty ideals. If Netflix is a threat, the CBC should be spending more on Canadian TV shows, not less.

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The Liberal government restored $150-million a year in funding for the CBC after it took power in 2015. That has stabilized federal subsidies to the national broadcaster at $1.1-billion a year.

That extra money allows the CBC to make choices. But guess what? Taking on Netflix by producing more and better TV entertainment isn’t Ms. Tait’s main focus these days.

Instead, top of her list of priorities is what she calls “news and democracy,” including The National, the CBC’s thinly watched nightly TV news show. It’s also investing heavily in online news, where its free content competes directly with that of newspapers, including The Globe, which increasingly relies on subscriptions to survive.

So, yes, Netflix and other streaming services should be taxed as Canadian-based ones are. That means applying federal and provincial sales taxes equally to all streaming services, regardless of where they are based.

But the evidence doesn’t back up the case that extending the paternalistic Cancon regulatory model to foreign streaming services will do anything to save Canadian culture.

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