Netflix pulling funding from Canadian arts programs due to Online Streaming Act

Netflix Inc. is pulling its financial support of programs in the Canadian film and TV sector due to the financial requirements placed upon it by the Online Streaming Act. A Netflix spokesperson told The Wire Report in an email that the company has invested more than $25 million in training and development programs in Canada since 2017, “empowering more than 1,200 Canadian creators,” with many of those individuals finding “notable success” in the film and TV industry. “Despite our longstanding commitment, the government has chosen not to acknowledge our substantial support for the Canadian film and TV sector,” the spokesperson said. “Consequently, we will be unable to continue funding many of the programs that have come to rely on our backing, as we are now required to allocate resources to meet the CRTC’s new investment mandates." Netflix’s decision was first reported by The Globe and Mail. Representatives of the Pacific Screenwriting Program, imagineNATIVE, and the Whistler Film Festival Society expressed to The Globe they are concerned for their programs. The new regulatory policy was issued under the Act, C-11, and requires foreign streamers generating over $25 million in annual Canadian revenues to allocate five percent of those revenues to various production funds. In their email to The Wire Report, the Netflix spokesperson pointed to the company’s testimony to the CRTC in late November. At the time, Netflix argued it had invested large amounts of money into Canada’s broadcasting sector and should not have to pay into contribution funds. Netflix director of public policy Stéphane Cardin said the company has spent $5 billion over the past five years on Canadian programming. That worked out to $2.7 million each day, he added. “We’re opposed to outcomes that would have us simply subsidize the existing framework while restricting our ability to continue to invest directly in Canadian stories,” Cardin asserted. “That’s why we believe that imposing a mandatory initial base contribution would be inconsistent with the principles of flexibility and adaptability.” During that same testimony, Netflix’s vice president of global public policy, Dean Garfield, said flexibility is key. “If you develop a system… that limits the areas or the funds to which those resources are directed, then in some respects you’re creating a zero sum game where you may have to move away from the relationships, partnerships that we built over time and we certainly don’t want to do that,” Garfield said. “Those relationships are not simply transactional; they’re actually real long‑term relationships that we’re building and we want to be able to sustain them.” In an emailed statement Wednesday afternoon, the CRTC said its new regulatory framework will be “flexible and take into consideration the different business models so that each broadcaster and online streaming service can contribute to Canadian and Indigenous content.” The regulator, which noted it received more than 360 submissions on the matter and held a three-week public hearing, said it will consult “widely” and work swiftly on building the framework. It also highlighted that contributions of online streaming services are expected to provide an estimated $200 million annually to the broadcasting system, and “help ensure that Canadians benefit from access to content that meets their diverse needs and interests.” The CRTC did not provide comment on The Wire Report’s question asking if the commission is concerned other companies with the obligation to contribute under C-11 would, like Netflix, consider pulling similar funding they might provide on their own. Netflix is one of seven members of the Motion Picture Association (MPA). It is not the only member of that group to retaliate against the Act. Amazon.com, Inc.’s Prime Video & Amazon MGM Studios will join the MPA as a member on Oct. 1, standing alongside Netflix, Walt Disney Co., Paramount Global, Sony Group Corp., Comcast Corp.’s Universal Studios, and Warner Bros. Discovery, Inc. The addition of Amazon to the group comes as both Amazon and MPA-Canada, the Canadian arm of the MPA, pursue legal challenges against the CRTC’s recent decision requiring foreign streaming services to make financial contributions supporting the Canadian broadcasting sector. Filed with the court in July, MPA-Canada is seeking an appeal of the commission’s requirement that part of the base contribution – 1.5 per cent – must go towards the Independent Local News Fund, which provides financial support to independent local news outlets that are not part of large-scale companies. Amazon takes issue with the base contribution requirement as a whole. The company accused the CRTC of being discriminatory by targeting foreign streamers and not domestic ones. It alleged the policy amounts to 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. Additionally, Apple Inc. and Spotify AB have filed separate challenges against the CRTC’s decision. - Reporting by Hannah Daley at hdaley@thewirereport.ca with files from Paul Park and Phalen Tynes-MacDonald

Netflix pulling funding from Canadian arts programs due to Online Streaming Act

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By Hannah Daley
| September 25, 2024

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