Streaming Services Face Steep Hikes in Domestic Content Funding Obligations
The Canadian Radio-television and Telecommunications Commission (CRTC) issued a new decision requiring digital streaming giants to pay three times as much of their Canadian revenue to domestic content as before, as the United States continues to mark the Online Streaming Act as a trade irritant.
Digital streaming giants, including American companies like Netflix or Disney, were previously required to contribute five per cent. No money has been collected yet, however, as a number of streaming companies are fighting the decision in court.
Thursday’s decision by the CRTC sees that five per cent jump to 15 per cent.
The Online Streaming Act was the first major reform of the Broadcasting Act, and has been repeatedly noted as a trade irritant by the Trump administration. A Republican congressman introduced a bill looking to investigate whether it discriminates against or burdens American commerce in March.
“We’re not involved in trade negotiations… we are not in touch with the government about the status of trade negotiations. We’re applying Canadian law in Canada,” said Scott Shortliffe, CRTC vice-president of broadcasting.
“We believe that (the new requirements) will be respected by these companies, whether they choose to challenge them through any of the measures that are available in Canadian law, is of course totally up to them.”
Nearly a year ago, the Carney government cancelled the also contentious Digital Services Tax the day before the first payment from tech giants was due, after U.S. President Donald Trump announced he was ending trade talks with Canada because of it and threatened new tariffs.
Thursday’s move by the CRTC is part of a massive modernization of the Broadcasting Act and aims to build a $2-billion fund that supports Canadian and Indigenous content. The framework comes three years after the introduction of the Online Streaming Act.
The CRTC is also creating a new fund “to support services of exceptional importance,” which it defines as channels such as the Canadian Public Affairs Channel and The Weather Network that serve Canadians.
The spending requirements only apply to traditional and online broadcasters with revenues above $25 million, with an aim to reduce red tape and administrative burdens, according to the CRTC. The requirements also do not apply to music streaming services like Spotify.
There are several rules around how to spend the money.
“We’re not imposing a system-wide series of requirements now,” said Shortcliffe.
“We’re saying that we will work with each group, whether it is a domestic broadcast group or a streaming group, to say, how can you best fulfill these general principles, and that will be forthcoming.”
The CRTC could not say exactly when the new rules will be enforceable.
Major private traditional broadcasters, with $100M or more in annual revenues, have the most rules.
A minimum of 30 per cent must go to “enhanced partnerships,” which the CRTC defines as a project where a Canadian owns the majority of the content.
A minimum of 15 per cent must be spent on news programming, a guideline of two per cent to the “official language minority community” and, for French-language broadcasters, a minimum of 75 per cent to original first-run French-language programming. The CRTC says these funding rules can overlap.
For digital streamers, the same rules apply, except there are no news requirements, and a minimum of 30 per cent must go to French-language programming, half of which must be original first-run programming.
Medium-sized traditional broadcasters (who make between $25 and $100 million in revenue) have more flexibility on where to direct the funds.
Separately from the funding, the CRTC also wants to make it easier for consumers to find Canadian and Indigenous content through several measures.
This article was first reported by CTV News
