Digital platforms won’t fight or flee new regulations, Guilbeault says

Heritage Minister Steven Guilbeault isn’t concerned about potential political or industry opposition to the Broadcasting Act updates he tabled Tuesday, saying in an interview a “realistic timeline” for the new rules to be in place would be by the end of 2021. Guilbeault said he suspects that Bill C-10, which sets up the CRTC to impose Canadian content spending and discoverability rules on streaming services, will draw support from other parties in the House of Commons, given that both the Conservative and NDP critics argued that the legislation should be further-reaching. “From that perspective one would assume they would support us,” he noted. Guilbeault said he expects the bill could pass through the House and Senate and become legislation by early 2021. Once passed, the government plans to issue a policy direction to the CRTC to bring online platforms like Netflix Inc. and Spotify AB into the regulatory sphere within nine months. However, CRTC decisions can be appealed by parties who don’t agree with them in various ways, including through the courts — this process can then drag out implementation of new policies for years. Guilbeault said he isn’t worried about that happening in this case. “I think this is a really high profile issue. I’m not sure that these companies want to bear the public scrutiny of … trying to delay and delay the implementation of this,” he said. He added that “if we see that companies are trying to game the system, we have other tools at our disposal,” like issuing orders-in-council to the CRTC. Guilbeault said he couldn’t offer further detail about what will be in that policy direction to the CRTC beyond what was given to reporters in a presentation Tuesday. That presentation indicated that the CRTC would be instructed to revisit its definition of Canadian content, to assess which online broadcasters should be regulated, and to ensure those companies are “required to contribute appropriately.” Guilbeault also said he couldn’t state whether that policy direction will specify the level of financial contributions and CanCon requirements the government wants to see, or whether that will be left to the CRTC’s discretion. He did say that what “we expect in terms of level of effort is something comparable to what Canadian broadcasters are doing right now.” “The order-in-council is a cabinet decision. I can’t tell you what the cabinet decision will be. What I can tell you is that there is a tremendous level of support within cabinet for what we are doing.” He said the criticism that the new regulations could lead to services pulling out of the Canadian market or increasing their prices hadn’t been borne out in other regions that have implemented similar rules, such as the EU, which requires streaming services to fund European content. “If you look at what has happened over the last two years in Europe, they didn’t leave the European market,” he said. “I anticipate that more and more countries will start doing things like we’re doing,” he said. “I suppose it’s one thing to boycott one country.” But, he asked, “at what point does your business model not make any more sense because you keep cutting yourselves from market share around the world?” The new rules are being introduced as Canadian content is doing well by some measures: CBC/Radio-Canada comedy Schitt’s Creek swept the Emmys earlier this year and a number of other Canadian TV shows have been picked up by U.S. networks in recent months, including CTV’s Transplant and CBC’s The Coroner. Meanwhile, streaming platforms have been spending significant amounts of money in the Canadian market. But Guilbeault said he’s concerned about the voluntary nature of streaming services’ current investments. He noted that with only traditional players — who are seeing revenue losses — contributing to the regulated CanCon system, “we anticipate a loss in revenue for Canadian cultural content of about $1 billion between now and 2023 if we don’t do anything.” While streaming platforms do spend on productions in Canada, some of which may meet CanCon requirements, there is no clear picture of how much or where that money goes, said Guilbeault. The issue of service productions — content produced in Canada that wouldn’t be considered “Canadian” — has been flagged in the past, including by Janet Yale, who chaired the government panel that issued recommendations for updating the Broadcasting Act. “We have some sense of some of the shows that are being done, that are becoming popular, that are being sold internationally, but we don’t have a very clear picture. One of the purposes of the regulation is to ensure we have a good understanding of what is happening and then everybody knows what the rules are,” Guilbeault said. “I’m not saying that Netflix doesn’t invest at all in good Canadian shows ... I’m saying that the rules for Netflix or Amazon Prime or any other should be similar to what the rules are for Canadian broadcasters. There’s a question of money certainly but there’s an issue of fairness also.” Tuesday’s proposed update to the Broadcasting Act is only the first part of the Liberal government’s promised three-pronged approach to regulating online services. Other forthcoming measures include an extension to the sales tax, a promised corporate tax on some revenues of the biggest web giants and new rules requiring the likes of Alphabet Inc.’s Google and Facebook Inc. to compensate news outlets for linking to their content. Those upcoming pieces of legislation only deal with a fraction of the recommendations put forward in January by the Yale report. Guilbeault said the government chose to prioritize those issues, but would like to tackle more of those recommendations. “The Yale report is a wealth of knowledge and forward thinking in terms of looking at this. The way the team and I have tried to approach this is ‘OK, we’re a minority government, we don’t know how long we’re here for, so let’s go after the most pressing issues,” he said. “And then if we have more time, if we don’t fall next spring, I’ll just keep going. I’m just getting started.” — Reporting by Anja Karadeglija at akarad@thewirereport.ca and editing by Tim Forster at tforster@thewirereport.ca

Digital platforms won’t fight or flee new regulations, Guilbeault says

Broadcast | November 4, 2020

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Digital platforms won’t fight or flee new regulations, Guilbeault says

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