PKP proposes 20 per cent base contribution for foreign online platforms at CRTC hearings

The long-awaited hearing on how the CRTC should implement the Online Streaming Act, particularly if online streaming services should make a base financial contribution to support Canadian and Indigenous content, kicked off on Monday. Throughout the day, the commission heard from Canadian broadcasters, producers, funding agencies, and foreign streamers, who elaborated on their interventions and took questions from the regulator. The proceedings were overseen by a panel led by CRTC chair Vicky Eatrides and included vice-chairs Alicia Barin and Adam Scott, as well as commissioners Joanne Levy and Nirmala Naidoo. Quebecor Inc. was the first intervenor before the CRTC and saw CEO Pierre Karl Péladeau voicing concerns about online platforms ignoring any requirements placed on them. He renewed his calls for deregulation – a case he was making throughout the consultation process – arguing that it is the “one and only solution.” “It is the very existence of our cultural industries that is in danger,” he said, echoing a statement he gave to the council back in 2011, according to a translation. Péladeau pointed to the poor financial quarter and subsequent major layoffs announced by TVA Group earlier this month. He said the crisis Canadian broadcasters are facing is largely due to the burden of the “regulatory straightjacket” forced on them, limiting their ability to adapt and compete against foreign online streaming services. He noted that the platforms do not have to follow the same rules as traditional broadcasting distribution undertakings (BDUs), like mandatory financial contributions or CanCon production requirements. “We are convinced that, unfortunately, foreign online services will not comply with any mandatory contribution,” said Péladeau, doubting the CRTC’s capacity to rein them in. He pointed to Meta Platforms Inc. ongoing block of Canadian news following the passage of the Online News Act and threats from Alphabet Inc.’s Google that it might follow. “Globalization makes countries irrelevant,” he stated. Despite the potential for online platforms to ignore contribution requirements, Quebecor proposed an initial base contribution of 20 per cent for foreign online undertakings. Peggy Tabet, Quebecor’s VP of regulatory and environmental affairs, backed up Péladeau in his statements and was critical of Rogers Communications Inc.’s initial base contribution proposal of two per cent for foreign online undertakings. She said it is too low to make a difference and that Quebecor’s proposal will have a better impact. If foreign streamers are told to contribute to production funds, like the Canada Media Fund (CMF), Quebecor said they should not have any access to them. The purpose of such funds is to support Canadian businesses, Tabet argued, stating that traditional broadcasters have had to contribute for years and now it is the streamers’ turn. Quebecor also proposed an increase to the share of CMF funding that goes towards French-language productions, raising it from one-third to 40 per cent. It said that there is an imbalance between French and English original content productions that needs to be fixed. Representatives from the Canada Media Fund (CMF) were next up. Although they acknowledged the different role streamers play in the Canadian production ecosystem, the CMF suggested making the initial base contribution amount comparable to current contributions from traditional broadcasters, around five per cent. “Nothing is set in stone,” said CEO Valerie Creighton, addressing arguments against maintaining legacy media funds in the new framework. She said the CMF is able to adapt to the new framework and can help incentivize foreign streamers to contribute more to Canadian productions. Given recent changes to its authority to administer funding by the Department of Canadian Heritage, the CMF is considering expanding its funding triggers to include Canadian distributors. Creighton noted that this could possibly include the streamers if they fit the criteria. The Toronto International Film Festival (TIFF) and industry consortium FilmOntario made up a panel of intervenors. They emphasized the economic benefits that online streaming platforms have brought to the Canadian film industry and urged the CRTC to at least maintain funding levels for CanCon. The two organizations opposed Quebecor’s proposal to increase the funding for French-language productions, noting the negative impact it would have on current funding for productions in other languages. FilmOntario and TIFF agreed that certain content, particularly feature films, can exist on both online streaming platforms and traditional BDUs. They argued that feature films’ unique importance in the Canadian media landscape means that they should receive their own distinct funding. While the two did not have specific recommendations for the amount of contributions stakeholders should make, TIFF CEO Cameron Bailey encouraged the CRTC to consider festivals like TIFF as an avenue for the discoverability and showcasing requirements found in the government’s most recent policy direction. The Canadian Media Producers Association (CMPA) also proposed a base contribution of five per cent, stating that they would ensure production funds can maintain their role as sustainable financing options for Canadian programming, while recognizing the fact that there are additional ways for companies to contribute. They said that there is a “virtuous production cycle” between foreign and domestic players, noting the existing benefits that production revenues see from working with streaming platforms. Although there are other ways foreign companies are contributing to Canada’s production ecosystem, the CMPA highlighted the importance of production funds particularly when it comes to supporting Indigenous and equity-seeking communities. It suggested that from total fund contributions, a minimum of $50 million should be directed towards funds that support those communities, including the Indigenous Screen Office Fund, Canadian Independent Screen Fund, Black Screen Office Fund, Broadcasting Accessibility Fund, and the Broadcasting Participation Fund. Eighty per cent of the remaining funds should be directed towards the CMF, the association continued, with the final 20 per cent going towards other Certified Independent Production Funds (CIPFs). Any foreign online undertakings that contribute to those funds should be allowed to access and benefit from them, stated CMPA CEO Reynolds Mastin. He emphasized the economic and creative benefits that would stem from streaming services putting that funding towards independent Canadian producers. The Motion Picture Association-Canada (MPA), continued to reject the notion of mandatory initial contributions arguing that they already contribute to CanCon and are willing to discuss equitable alternatives with the regulator. The association represents Walt Disney Co., Netflix Inc. and Paramount Global, who attended the hearing, as well as Sony Group Corp., Comcast Corp.’s Universal, and Warner Bros. Discovery, Inc. “We urge the commission to reject calls to try and force square pegs into the round holes created many decades ago, and set aside dated ideas of how contribution models produce desired outcomes for Canada,” said MPA-Canada president Wendy Noss. The proposal around initial base contributions implies that there are not any existing ones, which is not true, they argued. The companies said that they are major investors in the economy, noting that global MPA-affiliated producers spent more than $7.5 billion in Canada last year. They said it is unrealistic to assume that the global business models of online streamers will contribute in the same way as traditional broadcasters and pointed to the differences between the two, including foreign streamers’ lack of access to Canadian production funds and the protections traditional BDUs have operating in an enclosed domestic market. They also reiterated their stance that this discussion is premature, considering the definitions of Canadian and Indigenous content are still undetermined. Setting interim regulations before everything is defined is also unprecedented, argued Disney’s representative David Fares. He referred to his time spent working with members of the European Union following the establishment of its Audiovisual Media Services Directive (AVMSD), and noted that no country required initial base contributions. According to the CRTC’s agenda, Tuesday’s proceeding will see appearances from BCE Inc., the National Film Board of Canada, the Association Québécoise de la Production Médiatique, ARRQ-GMMQ-SARTEC-UDA, the Directors Guild of Canada, media literacy non-profit MediaSmarts, and Google. – Reporting by Phalen Tynes-MacDonald at pcreed@thewirereport.ca and editing by Jenna Cocullo at jcocullo@thewirereport.ca

PKP proposes 20 per cent base contribution for foreign online platforms at CRTC hearings

News | November 21, 2023

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