Briefing call shows urgency, sticking points, for large players on broadcast changes
By Ahmad Hathout
OTTAWA – As major Canadian broadcasters fired off rote responses to media requests saying they are still reviewing proposed changes to the Broadcasting Act announced Tuesday, Cartt.ca has obtained early reactions to potential landmark amendments that could see the CRTC enforce foreign online contributions to the benefit of Canadian content.
On Tuesday, Heritage held separate technical briefings with reporters and industry about the proposed amendments under Bill C-10, with Cartt.ca obtaining audio of the latter. The comments and questions in that call suggest an industry in relief, if still cautious.
“These changes need to happen, and they probably needed to happen three years ago,” Bell Media vice-president of regulatory affairs Kevin Goldstein said on the call.
The proposed rules, which had already been contemplated by previous Heritage Minister Pablo Rodriguez, would position the CRTC to make a determination on the online services that must pay into the Canadian broadcasting system – the most obvious instance being a financial or other contribution to prop up Canadian content where previously they weren’t required of foreign or domestic streamers.
The legislation would theoretically capture entities that sell or commission licensed content online, such as YouTube TV, but would exclude user-generated posts on social media websites like the free ad-supported part of Google’s YouTube.
Canadian Heritage projects that new legislation could unlock, by 2023, a windfall of $830 million annually from online broadcasters.
Goldstein was asking about the timeline for when these new rules can be implemented, which Heritage said would be within nine months after the bill is passed by Parliament. A relatively short timeline that a government official on the call said ensured the CRTC has a “fair bit of work cut out for it,” providing the large degree of latitude given to the Regulator.
But in the event that it doesn’t move forward, Goldstein asked what the “backup plan” is, considering “there’s a lot of people in the industry who would be of the view that the CRTC probably could have done a lot of these things already.”
A Heritage official responded by saying that the government is focusing on its Plan A and any other avenue through the existing legislation would make it difficult to deal with the current regulatory environment.
The new rules would also do away with licences to broadcast for online players and move toward conditions of service – and thus potentially removing a set number of years that a traditional licensee would provide programming.
The Canadian Association of Broadcasters, whose members include Bell and Rogers, said during the call it is concerned removing those guaranteed operating years into the future would harm business plans and certainty. A government official, however, said the government would hope the CRTC takes that matter into consideration.
Two years ago the CRTC released a report, called Harnessing Change, which recommended the federal government bring foreign online platforms under the Broadcasting Act and thus force them to contribute “equitably” – be it financial or otherwise.
And earlier this year, the panel appointed by the federal government to review the broadcasting and telecommunications acts released its recommendations to amend parts of those pieces of legislation, which also suggested bringing foreign online players that benefit from the system under the broadcasting rules followed by Canadian operators.
“We all have a role to play in supporting the future of film and television created in Canada.” – Netflix
Bell’s position in the latter’s consultation revealed a vertically-integrated company – one that owns content and the networks to distribute it – that recommended the government force large foreign internet services to contribute 20% of their previous year’s Canadian revenues to the Canada Media Fund, which supports Canadian content.
When reached for comment, Bell said it is still reviewing the proposed legislation and may give additional insight in the coming days.
Rogers also said it is still studying the bill. During the call, Rogers’ vice-president of regulatory affairs Pamela Dinsmore asked about the construction of the new conditions of service and whether the broadcasters could propose how the traditional five per cent of broadcasting revenues that go toward the system from licenced BDUs like cable and IPTV companies could be spent. The response from the government was that the CRTC would have the flexibility to determine that, provided the direction from the federal government.
CRTC spokeswoman Patricia Valladao said “the CRTC welcomes the government’s tabling of a bill that addresses the changing digital broadcasting environment, provides for a more flexible approach to regulation and modernizes the CRTC’s enforcement powers.
“The proposed amendments also address a number of the concerns we raised in the Harnessing Change report and in our submission to the Broadcasting and Telecommunications Legislative Review Panel.”
Meanwhile, the Regulator has been studying the market impact of online broadcasting distribution undertakings, entities that essentially provide live television online versus traditional carrier methods over satellite, fibre or cable.
Valladao confirmed to Cartt.ca that the Regulator is working to finalize the report with the firm it has hired to commission it.
Others in the industry have reacted positively to the new bill. Corus said it applauds the government’s move to bridge the divide between domestic and foreign players while reiterating its long-held position that the industry requires a “lighter regulatory burden” to compete.
The Canadian Communication Systems Alliance said it is pleased that it bolsters the CRTC’s powers to investigate and apply administrative monetary penalties for any potential anti-competitive behaviour on the part of the vertically-integrated companies.
The Coalition for the Diversity of Cultural Expressions said it wishes for a “swift” review process so that the amendments can become law in 2021; the Canada Media Fund said it hopes the measures supports the creative sector; the Canadian Media Producers Association (CMPA) congratulated the minister on the “important legislation”; the Writers Guild of Canada said it expects the bill to have a positive impact on the creation of Canadian content and also hopes it is passed soon; and the Directors Guild of Canada said the new rules will strengthen cultural sovereignty and secure the industry’s future in the uncertain digital age.
While Quebecor said the proposed legislation is important to even the playing field, it raised concerns about the lack of mention of CBC/Radio-Canada’s mandate, which it alleges is driven by a “culture of commercial performance.” Quebecor said this adds additional importance on the CRTC’s current review of the public broadcaster’s licence, which was pushed to next year due to the Covid crisis.
Meanwhile, Friends of Canadian Broadcasting ripped the bill for not taking a harder stance on the likes of Facebook, Google, and Netflix and fretted about how the amendments could pave the way for foreign ownership of Canadian media companies and less use of Canadian talent when producing content.
However, a government official said on the call that the bill, in its current iteration, is a “first step in a series of steps,” so more could be coming down the pipe, later.
Canadian Heritage said Netflix is present in over 60% of Canadian households and generated $1 billion in revenue last year in Canada.
The federal government had an opportunity under then-Heritage Minister Melanie Joly in 2017 to possibly implement significant changes to the system by bringing Netflix and others under the broadcasting system, critics said. Instead, it worked to approve an investment from the streaming platform of $500 million over five years in the country, which it surpassed quickly. Critics like to point out that while Netflix makes content in Canada, it doesn’t make Canadian content.
“We all have a role to play in supporting the future of film and television created in Canada,” Netflix spokeswoman Lindsey Scully said in an email. “We are reviewing the legislation and remain committed to being a good partner to Canada’s creative community while also investing in local economies.”
The proposed bill, however, is facing stiff opposition from University of Ottawa professor Michael Geist and Conservative MPs. Their arguments are grounded in the timeless adage that if a company is forced to pay more to deliver a service to citizens, it will simply offset those costs by increasing prices for said consumers – a la Netflix sales taxes.
“Another path streaming companies could take, instead of charging more, is to offer less content,” said Dan Albas, former shadow minister of ISED, on his website. On his blog, Geist said the bill would reduce investment and limit consumer choice.
“Rather than fund newly mandated Canadian content,” Albas surmised, “some platforms may respond to new regulations by simply dropping their amount of total content available to stream, in order to artificially raise their amount of Canadian content.”
