By Ahmad Hathout
OTTAWA – Netflix floated the idea Thursday that the commission could tie any required foreign financial contribution to Canadian content funds to planned investments rather than previous year’s revenues to encourage spending in the country.
“Rather than tying the percentages to revenue [the commission could tie] them to expected expenditure or planned expenditure, and so every dollar you earn doesn’t necessarily translate into a trade-off between operating income or profit and contribution to the system,” said Dean Garfield, the streaming company’s vice president of public policy.
“It creates that incentive to actually invest and grow without worrying that, ‘oh as I grow, will I have to give a percentage of my growth away,’” Garfield continued. “So disconnecting it from revenues is something that’s being discussed in other places that maybe worth some consideration as well.”
The commission has heard parties pitch various percentages of previous year’s revenues that it could consider if it does move forward with a base financial contribution levied on foreign platforms, which is still opposed by Netflix and other foreign providers on the basis that it could harm their existing partnerships in Canada.
But if the CRTC does go ahead with a base contribution, Netflix said the commission should not exceed 2 per cent and should be wary of a zero-sum game if it narrows which funds to which those contributions should go. Garfield said the company does not want to have to lose the long-term partnerships it has in the country because of such limitations.
“It’s best to have a system that is coherent and works together and where there’s a high degree of flexibility,” he said.
Netflix got to the 2 per cent figure based on international goings-on, while Rogers arrived at 2 per cent from a study of direct financial contributions as a percentage of total revenue in the 2021 and 2022 broadcast years – which was 2.7 per cent. There have been suggestions that the base percentage be as high as 20 per cent.
The streaming giant also wants to ensure that it can get access to the funds in which it contributes as a matter of fairness, which has sprung up as a point of contention.
When challenged on the fact that some Canadian broadcasters not having access to funds in which they contribute, Netflix shot back and said those are in the minority.
“The contributions of BDUs that are part of vertically integrated groups make up the vast majority of the contributions to the CMF, while there is no set ratio for what each BDU puts in and their broadcast affiliates take out — that varies — there is always some level of access there and, as well, the vertically integrated companies do have access up to a maximum of 25 per cent through their broadcaster performance envelopes to affiliated and in-house production.”
Netflix also proposed that dollars the likes of itself spent as part of an investment requirement can count in the initial base contribution and vice-versa. Recall that in 2017, the streamer made a commitment with the federal government to plow $500 million into the country.
The suggestion would fit into Netflix’s philosophy and its overarching theme during Thursday’s testimony that the commission should be promoting investment in the country, not deterring it.
Screenshot of Stephane Cardin, director of public policy for Netflix in Canada.
