Netflix disclosure ‘nothing to do with regulation,’ company says

Following the federal parties’ shared pursuit to further regulate foreign internet companies, Netflix Inc. has this week disclosed for the first time its Canadian figures over the past three years, but the company said the decision is unrelated to looming regulation. “Tax laws are set by Canada’s policymakers -- we respect those rules and will continue to,” a Netflix spokesperson said in response to a question about the timing of the new disclosure. Netflix collects provincial sales taxes in Quebec and Saskatchewan. Days before the October 21 federal election, following a campaign which included the major parties pledging to tax foreign internet companies in some way, Netflix announced in a third quarter shareholder letter that it would amend the way it reports its figures to regions -- including the U.S. and Canada -- instead of just the U.S. and international sections. U.S. Securities law requires a change in reporting to be accompanied by three years of historical data reflecting that change. While the new disclosure doesn’t explicitly list Canadian revenues and subscriber numbers -- it bundles Canadian numbers with the U.S. -- it is possible to get them by subtracting the bundled number with previous U.S. disclosure figures. That math yields that the company, by the end of the third quarter, had about 6.5 million Canadian subscribers -- an increase over last year -- and had generated about $780 million from the country since the beginning of this year. The U.S. makes up 90 per cent of its figures compared to Canada’s 10 per cent, the letter said. The new-look disclosure provides some insight into the goings-on of a company that has kept viewership, subscription and revenue figures for Canada under wraps, while also giving observers a comparative look into what the company makes versus how much it’s pledged to invest in the country. In September 2017, then-Heritage Minister Melanie Joly announced a deal that would see Netflix invest $500 million over five years to make content in Canada. “The revenue and earlier statements about meeting the $500 million commitment suggests that Netflix may be spending a comparable percentage to that required of Canadian broadcasters - though only if you believe that production produced in Canada should have the same value under regulation as Canadian production,” Kelly Lynne Ashton, an independent broadcast consultant, said in an email. According to a September Globe and Mail story, Netflix said it had exceeded spending on TV and film production in the country in just two years. The numbers show that Netflix had made revenues of $835 million in 2018, far less than the $1.6 billion the CRTC, using Ovum as the data source, noted in its recent Communications Monitoring Report. University of Ottawa law professor Michael Geist said in a blog post that the numbers show that Netflix has been a major spender in Canada and the newly-unveiled figures fly in the face of the need for regulation. CRTC spokeswoman Patricia Valladao said in an email that “we are pleased to see Netflix making more information publicly available” and pointed out that the CRTC used estimated revenues from the Ovum research firm in response to whether those numbers would be amended in the report. A written communication to Ovum was not returned. Ashton noted that the figures still don’t “address a number of the other aspects of the Liberal platform and Heritage and Industry mandate letters, namely to ensure that all content providers ‘offer meaningful levels of Canadian content in their catalogues, contribute to the creation of Canadian content in both Official Languages, promote this content and make it easily accessible on their platforms.’” Those mandate letters were released last week. The disclosure also comes a month after the streaming company modified its federal lobbyist registration to include discussions on “regulatory exemptions, legislation, regulation and/or policies affecting providers of content services via the Internet.” Facebook Inc. recently stepped up its lobby activity by modifying its registration to communicate with federal authorities about a “proposed digital services tax.” — With reporting by Ahmad Hathout at ahathout@thewirereport.ca and editing by Anja Karadeglija at akarad@thewirereport.ca

Netflix disclosure ‘nothing to do with regulation,’ company says

Broadcast | December 18, 2019

Unlock all the Canadian telecom, broadcasting and digital media news you need.

FREE TRIAL

SUBSCRIBE

Inside The Wire Report

Information

Hill Times Publishing

Get in Touch With Us

Netflix disclosure ‘nothing to do with regulation,’ company says

Broadcast | December 18, 2019

Unlock all the Canadian telecom, broadcasting and digital media news you need.

FREE TRIAL

SUBSCRIBE

Related Stories

CBC’s Tait says IP ownership has to remain front and centre of CanCon rules; Amazon disagrees

Streamers should be obliged to sell cable integration apps to small BDUs: CCSA

Netflix and MPA-Canada want C-11 to be flexible for global undertakings

C-11 will “hang over the system until Supreme Court has spoken” over jurisdiction: Palmer

Reuse & Permissions

Inside The Wire Report

Information

Hill Times Publishing

Get in Touch With Us