By Christopher Guly
OTTAWA – Netflix’s announcement last Thursday that it will open a Canadian office and, in the words Ted Sarandos (above), co-CEO and chief content officer, hire a “dedicated content executive to work directly with the Canadian creative community” is a “first good step,” federal NDP Leader Jagmeet Singh told Cartt.ca in an interview on Friday.
His concern, though, is the “cozy relationship” the federal government appears to have with major digital platforms, including Netflix.
Singh referred to the “secret deal” between the California-based company and Ottawa in 2017 in which then-Canadian Heritage Minister Mélanie Joly provided little detail on the agreement made under the Investment Canada Act (which requires no disclosure of such details) and reportedly worth at least $500 million over five years targeted to producing shows in Canada. Sarandos’ blog post says Netflix has actually spent $2.5 billion in Canada since 2017.
“They should be taxing the web giants,” Singh said of the Liberals. “If you make money in this country, you should pay taxes in this country – especially a company making record profits during this pandemic.”
Jagmeet Singh
He suggested Canada could follow the lead of France, which in 2019 instituted a 3% tax on the digital revenues Netflix earns in the country, something which may be copied here.
The amendments to the Broadcasting Act proposed in Bill C-10, which is currently before Parliament, deal with ensuring Canadian content, rather than directly taxing content providers.
Singh told Cartt.ca he would support any law or regulation that would impose a digital tax, but the NDP is considering amendments to C-10 that would allow the CRTC to make Netflix and other web giants pay what Singh described as their “fair share” in Canadian productions.
Daniel Bernhard, executive director of Friends of Canadian Broadcasting, is also critical of C-10 in its absence of obligating the CRTC to regulate companies like Netflix.
“C-10 is supposed to be the bill that would require Netflix to invest in Canadian content, and it doesn’t do that. It gives the CRTC options to impose regulation but doesn’t force any regulation,” he said. “If Netflix thinks that they can pull a little PR trick hiring one person to co-ordinate some of their production investments and make it seem like there’s no need for binding regulation, they’ve got another thing coming – Canadians aren’t that stupid.”
Cartt.ca requested an interview with Netflix and was referred to the Canadian Press interview with Sarandos in which he said the company plans to expand its presence in Canada – beyond its office, to be located in either Toronto or Vancouver – to include departments in marketing and publicity.
Sarandos also highlighted the “flexible nature” of C-10 and argued Netflix shouldn’t have to face the same spending requirements Canadian broadcasters face, noting that about 70% of their Cancon requirements are directed to news and sports, while Netflix spends “all of [its] programming dollars on filmed entertainment.”
But Bernhard believes Netflix, or any streaming service, should not be treated any differently from domestic broadcasters, and that C-10 should equip the CRTC with the necessary regulatory tools for Cancon spending based on “certain thresholds,” such as the number of users, hours of content or Canadian revenue.
“When a digital broadcaster passes any of those thresholds, the CRTC must impose obligations – and that still leaves the CRTC with a lot of discretion,” he explained, adding that the Commission imposes a sliding regulatory scale on cable companies and specialty services based on the volume of their subscribers.
Bernhard also pointed out Netflix’s production and distribution businesses are separate, and the U.S.-based company would still be classified in Canada as a “foreign digital broadcaster, despite the fact that they make shows here… Hiring a person to oversee those investments is in no way equivalent to having a legal obligation to make minimum investments in financing original Canadian content,” he said.
“The whole thing seems like it’s very carefully designed to allow Netflix to claim credit for productions they’re already doing, while trying desperately to avoid binding regulations.”
Last week’s blogpost (entitled “Making a new home in Canada”) and CP interview highlighted something that was not exactly new news. The rumour mills spin loudly when it comes to the mammoth that is Netflix and ever since this announcement exactly two years ago, that the streamer announced it was creating a Toronto production hub, gossip on Netflix Canada executive hires and a permanent office have cycled through the Canadian media business.
Plus, since its 2017 promise, Netflix has been increasingly engaged with the Canadian production industry, as well as government. According to the federal lobbyist registry, Netflix representatives have met with senior Heritage ministry officials and the CRTC nine times since January of 2020, including a November 18th meeting with Heritage Minister Steve Guilbeault.
The minister was unavailable for an interview, but his department issued a statement to Cartt.ca. “Canadian Heritage is aware of Netflix’s plans to grow their presence in Canada,” spokesperson Daniel Savoie said by email. “Canada is recognized globally for its high-quality creative content and talent as well as its infrastructure. Canada’s unique and diverse stories are sought out at home and around the world.”
With files from Greg O’Brien.
