TV broadcasters denounce streamers’ appeals of CRTC’s broadcasting contribution decision

The Canadian Association of Broadcasters (CAB) denounced a wave of recent legal challenges filed by Apple Inc., Amazon.com, Inc., and the Motion Picture Association-Canada (MPA-Canada) against the CRTC’s decision requiring foreign streaming services to make financial contributions supporting the Canadian broadcasting sector. Set to come into effect in September, online streaming services generating over $25 million in annual Canadian revenues will have to allocate five per cent of those revenues to various production funds. The new policy, introduced under the Online Streaming Act, is expected to inject approximately $200 million into Canada’s broadcasting system each year. Streamers contested the decision in a series of filings to the Federal Court of Appeal. MPA-Canada’s challenge against funding news MPA-Canada – a trade association representing the Canadian arms of major international entertainment studios and distributors including Netflix Inc., Walt Disney Co., Paramount Global, Sony Corp.’s Crunchyroll, Comcast Corp.’s Universal and Warner Bros. Discovery, Inc. – was first to fight the decision on July 2. The group took issue with the specific requirement that part of the base contribution – 1.5 per cent – must go towards the Independent Local News Fund. “The CRTC’s decision to require global entertainment streaming services to pay for local news is a discriminatory measure that goes far beyond what Parliament intended, exceeds the CRTC’s authority, and contradicts the goal of creating a modern, flexible framework that recognizes the nature of the services global streamers provide,” argued MPA-Canada president Wendy Noss in a statement. “Our members' streaming services do not produce local news nor are they granted the significant legal privileges and protections enjoyed by Canadian broadcasters in exchange for the responsibility to provide local news.” The association explained that it supports the policy goals of the act and is not challenging the other requirements to contribute to production funds such as the Indigenous Screen Office, Black Screen Office, and Canada Media Fund. However, because MPA-Canada members have “no rational connection to the production of local news,” they argue that they should not be forced to subsidize it. The group also raised alarms over potential breaches of confidentiality, fearing that they will be forced to make sensitive financial data indirectly available to domestic competitors. As the local news fund is managed by the Canadian Association of Broadcasters, whose members both compete and partner with streaming services, MPA-Canada is worried that broadcasters will be able to deduce their financial information based on their contribution amounts. The streamers are calling on the CRTC to implement a system that would ensure this information remains confidential. Apple and Amazon against overall base contribution requirement After MPA-Canada’s submissions, Apple and Amazon followed with their own appeals. Unlike the other streamers, these two companies are taking aim at the base contribution requirement as a whole. Operators of both music and video streaming services, Apple and Amazon argue that the CRTC's decision to require foreign streaming services to make financial contributions in support of the country’s broadcasting sector is unreasonable and unjustified. Amazon accused the CRTC of being discriminatory by targeting foreign streamers and not domestic ones. It argues it is inequitable treatment that is not only beyond the commission’s authority, but also disregards existing contributions that foreign streamers have been making to the Canadian broadcasting system. The company also claims that the CRTC overstepped its jurisdiction by imposing contribution requirements through orders rather than through regulations, which deprived affected parties of procedural protections. Similarly, Apple’s objections focus on the CRTC’s alleged failure to follow due process and statutory conditions. The company argued that the regulator’s decision not only bypasses procedural protections, but also fails to provide a clear legal basis under the framework of the Broadcasting Act. Echoing previous arguments that considering a base contribution at this stage of the Online Streaming Act’s implementation is “premature,” Apple criticized the commission for not yet revising the definitions for Canadian and Indigenous content. “There are simply too many unknowns to reliably and fairly establish” base contributions at this stage of the CRTC’s implementation of the Online Streaming Act, said Apple. Along with the updated definition, the company called for improvements to non-Canadian services’ eligibility to draw on the funds they contribute to. Apple also emphasized that the decision did not adequately consider the unique business models and varying profitability of online streaming services, including music platforms, which differ significantly from traditional broadcasting operations. CAB fires back, accusing streamers of corporate greed “What is clear is that the foreign digital giants have no intention of playing by any rules despite their dominant position in the Canadian marketplace,” alleged Canadian Association of Broadcasters president Kevin Desjardins in a statement to The Wire Report. “They like to take Canadian dollars from subscribers and advertisers, and want to stick Canadian broadcasters with all of the obligations to support Canadian news and Canadian content.” Desjardins accused the streaming companies of attempting to shirk their responsibilities to the Canadian market despite benefiting significantly from it. The CAB was “deeply disappointed” in MPA-Canada’s appeal, he said, adding that the streamers' arguments against supporting Canadian news demonstrate their “avaricious approach to the Canadian market.” “We’re frustrated at what seems to be an amount of obtuseness and foot-dragging on the part of the foreign players and a lack of recognition of the amount of resources that they are taking out of Canada and what that means to important pieces like the support for Canadian newsrooms,” said Desjardins in an interview with The Wire Report. “Their contention that they don’t produce news so they shouldn’t have to support it is absurd,” he argued. “They draw billions of dollars out of the Canadian economy that could otherwise have been used to support Canadian newsrooms. So as people who benefit from being in the Canadian media space, they have a responsibility to support the entirety of the goals of the Broadcasting Act.” Spotify AB has additionally applied for judicial review of the CRTC’s decision. Sharing many of Apple’s arguments, Spotify claims the CRTC “erred in its failure to differentiate between audio and audio-visual online undertakings,” noting that most funds serve to finance content production, which the company does not do. “Such funds are not available to Spotify, which, with few exceptions, does not produce its own music,” the company said. “The CRTC’s failure to consider the availability of such funds to audio only foreign online undertakings is unreasonable.” – Reporting by Phalen Tynes-MacDonald at pcreed@thewirereport.ca This story was updated on July 8 to include Spotify’s legal challenge against the CRTC’s decision.

TV broadcasters denounce streamers’ appeals of CRTC’s broadcasting contribution decision

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By Phalen Tynes-MacDonald
| July 5, 2024

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TV broadcasters denounce streamers’ appeals of CRTC’s broadcasting contribution decision

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