By Ahmad Hathout
One of the major contention points throughout the CRTC’s proceeding to bring online streamers under its ambit is now the subject of a judicial review application at the Federal Court of Appeal, as the Canadian affliate of the Motion Picture Association (MPA) hopes the court will hear its argument that foreign streamers shouldn’t have to contribute to a news fund from which its members derive no benefit.
As part of the implementation of the Online Streaming Act, the regulator issued a proposed order early last month that foreign streamers making $25 million or more must contribute five per cent of their annual Canadian revenues to the country’s broadcasting system, broken down into various funds, including 1.5 per cent toward the Independent Local News Fund (ILNF).
But the MPA said in a judicial review filing on Tuesday that there is no basis for forcing foreign streamers to contribute into a news fund from which they derive no benefit or have no part in creating.
The trade group, which represents the interests of major streaming services including Disney+, Netflix, Hayu, Paramount+, and PlutoTV, said in the filing that, “the determination to impose a local news funding obligation on foreign online undertakings ignores the Broadcasting Act requirements that foreign online undertakings ‘contribute in an equitable manner’ and ‘in a manner that is appropriate in consideration of the nature of the services provided by the undertaking.’”
Central to the MPA’s legal argument, based on the memorandum obtained by Cartt on Thursday, is the CRTC making the statement that the base contribution will “reflect the importance of independent broadcasting undertakings and the provision of news coverage” uner two subsections of section 3 of the Broadcasting Act.
But the MPA contends that section 3(1)(d)(iii.5) does not refer to news and section 3(1)(i)(ii.1) does not mention foreign online undertakings when it states that the Canadian broadcasting system “should include programs produced by Canadians that cover news and current events — from the local and regional to the national and international — and that reflect the viewpoints of Canadians, including the viewpoints of Indigenous persons and of Canadians from Black or other racialized communities and diverse ethnocultural backgrounds.”
“There is no connection between these policy objectives and the Decision’s news contribution requirement for foreign online undertakings,” the MPA said in its memorandum.
The CRTC has previously argued in other matters that it has administrative leeway when it comes to fulfilling its policy objectives.
“The CRTC’s decision to require global entertainment streaming services to pay for local news is a discriminatory measure that goes far beyond what Parliament intended, exceeds the CRTC’s authority, and contradicts the goal of creating a modern, flexible framework that recognizes the nature of the services global streamers provide,” Wendy Noss, president of the Motion Picture Association – Canada, said in a press release Thursday. “Our members’ streaming services do not produce local news nor are they granted the significant legal privileges and protections enjoyed by Canadian broadcasters in exchange for the responsibility to provide local news.”
During the base contribution hearing in November, representatives from some foreign streamers took issue with the idea that the CRTC should impose a foreign contribution toward a news fund based on the rationale that Canadian broadcasters pay into the ILNF without being beneficiaries of it. (The fund’s money goes to traditional private television stations not associated with the vertically integrated broadcasters.)
The MPA said in its judicial review application that this is simply “unsound reasoning.”
“Unlike foreign online undertakings, BDUs have a nexus to local news and local reflection programming because they provide mandatory distribution of local television channels that produce local news,” it said, referring to the Broadcasting Act’s 9.1(1)(h) must-carry rule.
Taken together, the MPA is arguing foreign streamers, contrary to the Broadcasting Act, would be treated inequitably as compared to Canadian online undertakings associated with large broadcasting groups, which are not subject to such contributions.
“It is a requirement to subsidize the news programming of other broadcasting undertakings that, unlike foreign online undertakings, have been licensed by the CRTC to provide such programming as a fundamental component of their licence to serve local communities,” the application continues.
The CRTC said the Canadian Association of Broadcasters (CAB) will manage a temporary news fund to handle foreign contributions, and has until Thursday to provide its plan. “In this plan, the CAB must demonstrate that it has the capacity to administer this fund, indicate the date it expects the fund to be operational, and provide details of the fund, including governance, eligibility criteria, accountability measures, reporting requirements, and the funding allocation method,” the regulator said in its decision.
The CRTC said this fund should be operational in the 2024-2025 broadcast year, which begins September 1.
The MPA added in its application that it is concerned with how the administrators of the funds will handle the sensitive financial information of the foreign streamers, despite the Broadcasting Act providing a mechanism for those streamers to designate information as confidential.
“These fund administrators may through a basic mathematical calculation determine, and potentially disclose to others, the annual Canadian broadcasting revenues of each of the Services,” the MPA’s application states. “The provision of such sensitive financial information to the CAB is particularly concerning and prejudicial since the CAB acts as a representative voice for private television broadcasters, which are both competitors to the Services’ streaming services, and content licensees of the Services or their affiliates.”
Confidentiality is not a new concern of the foreign streamers. Recall the famous episode in which former CRTC Chair Jean-Pierre Blais stormed off after getting into a heated confrontation with a Netflix representative about whether the streaming giant would provide the regulator with its subscriber data subject to the confidentiality rules.
The commission has over the years asked the streamers for their subscriber data. The CRTC is already requiring that foreign streamers above a certain revenue threshold register basic informaiton with the regulator as part of the implementation of the Online Streaming Act.
The MPA has previously said that forcing its members to make a base contribution would make it more difficult to continue and create new co-productions in Canada.
Otherwise, it said it supports the goals of the new law.
Screenshot via MPA-Canada
