OTTAWA – In a speech today at an Economic Club of Canada event, Minister of Canadian Heritage Melanie Joly officially unveiled the federal government’s long awaited digital content strategy. Dubbed 'Creative Canada', the plan has angered some and sated others and calls for increased investments to support both domestic production as well as the promotion of Canadian content abroad.
The release of the strategy comes a day after news leaked that the federal government had inked an agreement with Netflix that would see the online broadcaster and distributor invest a minimum of $500 million in Canadian productions over the next five years. As part of the agreement Netflix will create Netflix Canada, a TV and film production house.
Netflix will also invest $25 million in a “market development strategy for French-language content and production" – both within Quebec and in Francophone communities across Canada, the company continued.
While a welcomed announcement, the deal still raised some questions. As was previously reported in Cartt.ca, Netflix’s financial commitment is far less than the 30% Cancon requirement that other, regulated, Canadian broadcasters must spend. When asked to address this discrepancy after her speech, Joly dodged the answer.
“As you heard me in my speech, we believe our own domestic market is extremely important and is the launch pad. And in that context, the government decided to up its game to reinvest in the Canada Media Fund while there are less funds coming from our broadcasters. It used to be one-third, two-thirds and now we’re increasing our investment,” she said.
The amount being added by the federal government to the CMF for 2018 was not part of the announcement.
There were also questions raised about Netflix’s commitment to produce Canadian content. Joly insisted that based on Netflix’s strong track record for shows like Frontier, Anne and Alias Grace, that she’s confident Netflix will produce great Canadian content. The streamer, as an unregulated entity, does not have to account for its Cancon spend at all – let alone at the detailed levels Canadian broadcasters must.
"It becomes even more important to ensure that there is a diversity of voices – Canadian voices – on their platforms." – Melanie Joly
The federal government says it isn't singling out Netflix in its goal to ensure Canadian content is distributed on digital platforms. Joly noted in her speech that as these platforms become producers themselves, "it becomes even more important to ensure that there is a diversity of voices – Canadian voices – on their platforms."
She added that discussions have already started to bring them to the table.
Despite the lack clarity around the Netflix deal, the fact that more money is coming into the Canadian production ecosystem is good news, and a big part of that comes from the government’s plan to invest more money into the Canadian Media Fund (CMF).
“Writers, producer and directors have serious concerns about whether there will be a domestic market for their work, especially in the face of declining private-sector cable and satellite subscription revenues that contribute to the CMF,” said Joly, adding that the government is turning this around.
Beginning in 2018, the Feds will invest additional funds in the CMF to counter the decline in contributions. No figure was provided – nor will there be likely until the next federal budget.
The Liberals aren’t only increasing their financial support for the domestic market, they are going to give more funding towards the export of Canadian content, too. In addition to planning a federal cultural export trade mission, the government is investing $125 million over five years to support the country’s first Creative Export Strategy.
"That is blatantly unjust." – Pierre-Karl Peladeau
Despite the unveiling of the plan, there is still a lot of work to do before Canada has anything workable that addresses the ongoing, and rapid, digital transformation of the broadcasting industry. The Broadcasting Act and the Telecommunications Act are going to get reviewed. More details may be available later this fall, but the Feds got the CRTC moving on that file this week.
The Regulator will be tasked with reporting back to government on how it sees the broadcasting system evolving. In the media scrum, Joly noted the Commission will look at a number of elements. This includes determining how all players can participate in the system and what new potential business and distribution models may be.
There are many more elements to this strategy and many components that have yet to be determined. This should be considered an initial, maybe even tentative, first step in a vision for Canada’s cultural industries in a digital world.
Several industry heavyweights weighed in on the minister’s announcements today, with Bell, Corus and Rogers all noting how they each dramatically outspend Netflix in Canada in making Cancon (and that they should perhaps be celebrated for that more than it happens).
"We note that the Netflix contribution will be a fraction of what Canadian companies like Bell Media are required to pay. Our total annual investment in Canadian content in 2017/18 is nine times the average amount that Netflix would contribute yearly,” said a Bell Media spokesman.
“The industry is changing rapidly with new technologies, new international entrants and more to come. We’re asking for a level playing field for all participants that ensures maximum benefits for Canadian viewers and creators. That includes an equitable tax regime and balanced approach to investment in Canadian content."
Quebecor Media was perhaps the most vocal critic of Minister Joly. "We are dismayed by the Minister's repudiation of Canadian companies, which invest heavily to support the development of our culture, make a major contribution to our economy and are actively involved in their communities," said Pierre Karl Péladeau, president and CEO of Quebecor and former leader of the separatist Parti Quebecois.
"The Minister is endorsing a two-tier system," he continued. "On the one hand, there will be foreign platforms that will be able to engage in unfair competition by producing content without taxation and without being subject to Canada's regulatory framework, while receiving production tax credits. On the other, there will be Canadian distributors and broadcasters, which will be taxed and bound by strict and restrictive regulations. That is blatantly unjust."
It might also be suggested that the Trudeau government was taken to the cleaners when it agreed to exempt Netflix from taxation in exchange for an undertaking to spend $100 million on Canadian content for five years, given that Netflix had already promised to do just that in 2016. The amount in question is only 1% of Netflix's total budget. By comparison, TVA Group alone spends $300 million per year for just the Québec market, notes the company’s release. "This paltry agreement is an insult to the leading role of broadcasters, the largest contributors to Canada's audiovisual landscape," Péladeau added.
In its official response, the CBC – whose mandate will be reviewed according to Creative Canada (along with the CRTC’s) – is pleased with the direction. “CBC/Radio-Canada has the brand recognition, the digital reach and the creative talent that will ensure Canadian content prospers,” said CEO Hubert Lacroix. “We look forward to working together with all cultural organizations to strengthen culture for Canadians.”
Other groups, such as the CMF (which is getting more money), the Canadian Media Producers Association, Writers Guild of Canada and ACTRA, all expressed satisfaction with the Minister’s new direction.
“With new digital players continuing to enter our country, we believe an updated regulatory system is the ultimate path to ensuring the production of diverse Canadian content for decades to come,” said CMPA CEO Reynolds Mastin.
“We’re hopeful the announced review of the Broadcasting Act, along with the pending CRTC report on the broadcasting system evolution, will eventually get us there.”
