By Ahmad Hathout
An appeal application filed by the Canadian affiliate of an organization representing major foreign streaming giants that accuses the CRTC of baselessly forcing its members to contribute a portion of their Canadian revenues to news media should be tossed out because it was premature and the decision is a policy that cannot be challenged in court, according to the administrator of the fund that will handle the revenues.
The Canadian affiliate of the Motion Picture Association (MPA) – which includes Disney+, Netflix, Hayu, Paramount+, and PlutoTV – filed an application at the Federal Court of Appeal this summer requesting a hearing on the basis that it believes the CRTC lacks jurisdiction to force its members to contribute 1.5 per cent toward the Independent Local News Fund (ILNF) to which they say they have no part in creating and from which they derive no benefit.
But the Canadian Association of Broadcasters, which will administer the fund, said in response that the application should be denied just on the basis that the CRTC’s 1.5 per cent allocation was part of a larger base contribution determination that wasn’t actually made final at the time of the application. (The CRTC has since finalized the order on August 29.)
At the time of its proposed June order, the CRTC gave stakeholders 10 days to comment on whether the order – which forces from foreign streamers five per cent of their annual Canadian revenues toward several funds – accurately reflected the determinations made by the commission.
“The Policy merely signals an intention to implement its findings…for which the consultation process remains ongoing,” the CAB said as a first point in its response that came before the finalization of the order. “The CRTC has not – and cannot – make a binding ‘decision or order’ that is capable of being appealed at the present time, and the terms of any such decision or order are not settled.”
The MPA’s complaint that it is not “appropriate” and “equitable” to force such contribution to news media is not raising a question of law or jurisdiction but of policy, which is outside of the jurisdiction of the court, the CAB claims.
“Even if this Court has jurisdiction to hear the appeal, there is no arguable case that the CRTC lacks authority to make the Policy,” the CAB continued.
“The 2023 amendments to the Broadcasting Act very deliberately clothe the CRTC with wide powers to require that online streaming services make contributions to the ILNF,” it added. “They permit it to make ‘order[s] respecting expenditures to be made by a particular person carrying on a broadcasting undertaking’ (s. 11.1(2)), along with ‘orders imposing conditions on the carrying on of broadcasting undertakings’ (s. 9.1(1)).
“The Broadcasting Act is very clear that the broadcasting policy for Canada requires that programming provided by the Canadian broadcasting system should ‘include programs produced by Canadians that cover news and current events,’” it added.
“It is critical that the ongoing CRTC process not be disrupted by unmeritorious legal proceedings, and that the Applicant’s ILNF contributions begin flowing to local Canadian news programmers as quickly as possible,” it said.
Updates on other legal challenges to Online Streaming Act implementation
Since the CRTC started implementing parts of the Online Streaming Act – which brings streamers under the CRTC’s regulation to contribution to Canadian content – there have been legal challenges leveled against its administration.
Amazon, Apple, and Spotify have all filed separate challenges to the CRTC’s base contribution decision broadly, which have since been merged by the court. No decision has yet been made as to whether their leave to appeal requests will move forward.
In those applications, the streamers are arguing that various parts of the base contribution order are problematic, including that the commission was supposed to define “Canadian content” first; that it forces audio streamers to contribute the same percentage of revenues as audiovisual streamers; and that the CRTC did not consider existing contributions of these streamers.
The Attorney General of Canada, which represents the CRTC, argued in its responding memorandum filed last month that the applications are premature and unjustified for similar reasons given by the CAB: that the order in question was proposed at the time the applications were filed; and that the applicants don’t raise a question of law or jurisdiction.
“At present, there is no binding or final decision to be appealed to this Court,” the AG said in an application before the release of the CRTC’s final order. “In setting out a policy and an intention to make future orders consistent with that policy, the Commission’s proposed orders do not affect the Applicants’ rights. Indeed, the form and content of the proposed orders has yet to be finalized, making any determination of the Applicants’ challenges to them premature and speculative. Granting leave would be contrary to judicial economy as it would invite the chaotic and wasteful prospect of overlapping challenges.”
On the more nuanced points, the AG said the applicants’ points should be rejected because they allegedly mix fact and law. For example, the AG argued that Apple’s complaint that the CRTC didn’t adequately weigh the streamer’s contribution to the Canadian system is not a question of law, but merely a disagreement with the CRTC’s assessment and weighing of the evidence and policy objectives.
In response, music streamer Spotify said in a filing Tuesday that the premature argument is moot because the final order is now out. Critically, the August 29 decision simply codified the order in question, Spotify conveyed.
Earlier this summer, the Federal Court of Appeal granted leave to appeal for Google to argue that, in its overhaul of how it collects fees for its operations as part of the new Broadcasting Act, the CRTC did not include an explicit exemption for advertisements that are placed on user-generated content, which is supposed to be shielded from the law.
