Joly’s cultural policy continues drawing mixed reaction

Various groups praised the promised investment in production and promotion included in the federal government's new cultural strategy, while opposition MPs criticized it in question period and financial analysts pointed out the new strategy won’t affect the declining traditional TV sector. Macquarie Capital Markets analyst Greg MacDonald said in a research note that the “major surprise is that the Minister signalled a change in policy implementation toward deal making with foreign content investors,” specifically a promise from Netflix Inc. to spend $500 million on creating content in Canada. It was the centrepiece of the strategy unveiled by Heritage Minister Mélanie Joly Thursday, which left off any regulatory and legislative changes for upcoming reviews, including of the Broadcasting Act, Telecommunications Act, and Copyright Act. “In our view, this will be seen as a negative by the Media industry as the dollar amount is lower than the formula-implied CanCon funding from Canadian broadcasters. We maintain that the broadcast model in Canada is in structural decline and judging from today's announcements is very unlikely to get a government lifeline,” MacDonald wrote. He also noted that change is yet to come, given the upcoming legislative reviews. “It is difficult to estimate the extent of potential mandate changes, but we suspect issues to be addressed include current funding formulas and merging the Acts,” he added. Desjardins Capital Markets analyst Maher Yaghi said in a Friday note that the policy unveiled by Joly won’t change any industry dynamics, and will continue a slow — one to two per cent annually — decline in TV subscribers. He added that “it is our view that content fragmentation would continue to exert pressure on TV viewership.” BCE Inc.’s Bell Media said in an emailed statement that it is asking for “a level playing field for all participants that ensures maximum benefits for Canadian viewers and creators. That includes an equitable tax regime and balanced approach to investment in Canadian content.” Joly declined to impose taxes or contribution requirements on foreign digital services Thursday, with government officials confirming that Netflix’ over-the-top (OTT) service will remain exempt from sales tax, despite the company’s plans to open up a production division in Canada. “With respect to Netflix, we note that their contribution would be a fraction of what Canadian companies like Bell Media are required to pay. Our total annual investment in Canadian content in 2017/18 is 9 times the average amount that Netflix would contribute yearly,” the statement added. Rogers Communications Inc. said in an emailed statement that it is “glad to see the commitment not to tax Internet services and the recognition of the importance of local news.” In question period, NDP MP Pierre-Luc Dusseault criticized the government for not requiring Netflix to invest in francophone content. “It’s not complicated. The Liberals are letting an American company decide our culture for the future. Do Quebec MPs on the other side agree with subcontracting the protection of our culture to Americans?” he asked in French, according to simultaneous translation. Sean Casey, parliamentary secretary to the heritage minister, responded that the government would “defend our artists,” citing promised government funding for the sector, including a promise to spend $125 million on an export strategy. “We believe in our artists and we are adapting the system to the digital era.” He later added, in response to a separate question, that the Netflix deal is a “huge, huge vote of confidence by a global player for the first time ever… It’s a vote of confidence in the strength of our Canadian creators.” The strategy drew praise from music publishers and rightsholders. Copyright collective Re:Sound Music Licensing Co. said in a press release Friday it was pleased “to see a creator-focused approach” to the upcoming Copyright Board review. “We look forward to working with Canadian Heritage to ensure right holders are supported for the content they create, and that artists are paid faster, with reduced costs for all parties involved in the process,” its said. The Canadian Music Publishers Association pointed to the $125 million the government has pledged towards an export strategy, with executive director Margaret McGuffin saying the money “will go a long way to help the small- and medium-sized businesses in the Canadian music publishing industry.” She also noted the organization was “pleased to hear the government’s support for the protection of creators’ intellectual property and fair compensation for those who help contribute to Canadian cultural content.” Katy Anderson, digital rights specialist with internet advocacy group OpenMedia, said in a statement the organization was “pleased to see the government firmly rule out new taxes that would make Internet access even more expensive, while emphasizing the importance of Net Neutrality at a time when the U.S. seems intent on undermining it.” She added OpenMedia plans to ensure, during the upcoming reviews, that “the Internet and users are central to the debate. The reviews must not be captured by legacy broadcasters and publishers who wish to protect their outdated business models at the expense of the open web.” Meanwhile, the union Unifor commended the funding promises, but said that the strategy does not go far enough. “We have to move a lot more quickly on long-term solutions for our news and entertainment industries as audiences and advertising dollars move to the Internet. France has done so, Canada should too," Unifor president Jerry Dias said in a Friday press release. Trade association Interactive Ontario said it “welcomes the federal government’s commitment to maintaining the Canada Media Fund, supporting creative startups through Creative Hubs and the rolling out of an Export Strategy Fund.” — With reporting by Anja Karadeglija at akarad@thewirereport.ca and editing by Ahmad Hathout at ahathout@thewirereport.ca

Joly’s cultural policy continues drawing mixed reaction

Broadcast | September 29, 2017

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Joly’s cultural policy continues drawing mixed reaction

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