By Howard Law, author of MediaPolicy.ca and Canada vs. California: How Ottawa took on Netflix and the streaming giants (Lorimer, 2024)
In October 2022, Netflix appeared at the Senate committee reviewing the proposed Bill C-11, the Online Streaming Act, when the Conservative senator Fabian Manning pitched a softball question: What was the Hollywood giant’s “main priority” in amending a bill it didn’t welcome?
The Canadian spokesperson for the streamer was succinct in his answer: “If I had to choose just one, it would be the issue of copyright ownership.”
Last week, Netflix got what it wanted.
The CRTC’s landmark ruling on Canadian content awarded foreign streamers the option to take up to 80 per cent majority copyright in any CanCon production it commissions or finances in the future. The flip side of that rule is that the Canadian independents who partner with Netflix et al to make the shows become turn-key contractors on their own cultural creations.
This is what an American branch plant economy on Canadian soil looks like.
To industry observers, you already understand the ramifications of this CRTC ruling on television production and, as a refresher, I posted a backgrounder last weekend. The gist: ownership of copyright in a show is key to the financial health of the ecosystem of Canadian producers of Canadian television drama. That has been the norm in Canada for decades, or at least for the decades before the streamers came to town.
It’s not a surprise that the commission would come down on the side of some cross-border sharing and splitting of copyright.
The federal Liberals deftly left the final line-drawing on copyright to the CRTC when it passed section 10 (1.1) of Bill C-11, instructing the CRTC to take into account whether Canadian television producers “have a right or interest in relation to a program, including copyright, that allows them to control and benefit in a significant and equitable manner from the exploitation of the program.”
In the same parliamentary breath, the CRTC was also directed, wink-wink, to consider “the extent to which [streamers] collaborate with independent Canadian producers.”
After the bill passed, the federal cabinet issued a policy direction telling the CRTC to “support Canadian ownership of intellectual property” and “to consider the vital role of Canadian independent producers,” but then added the deliciously vague caveat to “recognize that the Act applies to foreign broadcasting undertakings.”
The CRTC put those instructions into the mixer and emerged with an 80/20 split of copyright in favour of the US streamers. What’s more, it put no binding restrictions on how rapaciously the streamers might use that majority copyright to negotiate the conditions of partnerships with Canadian producers to make their CanCon.
It’s smart cultural policy to find an accommodation between Hollywood’s interests and our own. After all, only one side is holding a Trump card.
But any good culture policy that withstands the test of the time also requires some basic commercial fairness.
When Netflix and the Californians begin commissioning Canadian content, they will be bringing supersized production budgets to the table as well as better global distribution of CanCon shows than just selling to foreign cable distributors. The streamers ought to get recognition for providing that bigger economic opportunity. That’s why the Liberals never embraced a maximal policy of 100 per cent Canadian copyright over streamer CanCon.
All things considered, the CRTC’s copyright split between US streamers and Canadian producers ought to have been closer to 50/50.
As for picking 80/20 in favour of the Americans, the CRTC pegged that to a risibly inappropriate policy marker: the permissible copyright splits for the long standing “treaty co-productions” of Canadian-international collaborations on shows that share Canadian and foreign production companies, creative executives and staff, and copyright.
Using the treaty co-production template as a policy precedent is disingenuous: the co-pro rules are designed for television producing countries not named the United States of America to combine bigger production budgets and access government subsidies in both countries, all of it at the cultural cost of diluting the Canadian look, feel and content in a show.
While 80/20 copyright splits are hypothetically permitted in co-pros, in practice the splits are between 40 per cent and 60 per cent (with Canada oscillating on either side of the 50 per cent watershed) as this CMPA chart reveals:
What’s more, co-pro budgets make up a tiny 3.5 per cent of total CanCon television production and that’s before we take the streamers into account, making it an even smaller percentage. Talk about the tail wagging the policy dog.
The other bad thing the CRTC did was to open the door to streamers insisting that their Canadian partners hire an American lead producer, the quarterback of the creative team making the show. That’s a green light for the streamers to make faux CanCon for an American —I mean, global— audience.
Go watch Amazon Prime’s The Sticky if you want to know what I mean. It’s a slickly done dramedy inspired by the real-life story of Québec’s 2011 maple syrup heist. On screen, it’s patronizing about Canada and, hitting a ten out of ten on the cringe-o-meter, features Québécois characters speaking to each other in English when they’re alone.
On the other hand, there’s hope: Netflix’s The Decline (Jusqu’au declin) is authentic as hell, clearly done with a Canadian-first audience in mind.
The Sticky’s producer and showrunner team was, as far as I can tell, entirely American. The lead producer of The Decline was Canadian. It shows.
I suppose we’ll see what kind of Canadian content we get from the streamers over time.
The Québec producers’ association expressed polite but clear concern about the CRTC ruling on copyright. Its English Canadian counterpart, the CMPA, said little and in fact its message to its producer members could be described as sunny. That surprised me since the CMPA lobbied hard but unsuccessfully in Parliament and during the CRTC inquiry for full Canadian copyright and for “terms of trade,” shorthand for the CRTC enforcing a fair dealing code for streamers to obey when partnering with Canadian producers. What the CRTC gave them was non-binding principles of fair dealing that amount to “Netflix, be nice.”
In truth, all of the Canadian producers are waiting for the other CRTC shoe to drop in a further ruling expected soon.
First, the producers undoubtedly expect a CRTC rule that requires streamers to commission at least 75 per cent of their Canadian content through Canadian independents. That purchasing rule already applies to Canadian broadcasters.
But the biggest question is how much Canadian content will the CRTC require of the US streamers? That’s usually measured as CanCon spending expressed as a percentage of Canadian revenues earned.
For the moment, Canadian specialty broadcasters are required, on average, to spend 29 per cent of revenues on CanCon and in practice greatly exceed it. Canadian television networks must spend 30 per cent of revenues, with a five per cent envelope earmarked for CanCon drama, documentaries and certain live events (higher for the French language network TVA).
What will the streamers have to spend on CanCon in partnership with Canadian independents? For the Canadian producers, perhaps a glut of commission fees salves all copyright wounds.
But another, bigger shoe to drop is whether the CRTC’s 80/20 copyright rule favouring the streamers is a virus that infects the 100 per cent Canadian copyright rules that govern the CanCon subsidies controlled by the federal government through the Heritage CAVCO program and the Canada Media Fund.
Back in 2023, the federal cabinet instructed the CRTC to “consider whether its determination of what constitutes a Canadian program complements other Canadian content policies that are applicable to the Canadian broadcasting system, including those pertaining to audio-visual tax credits or government funding.”
Despite the 100 per cent Canadian copyright rule for subsidies, the CRTC gave us a red, white and blue 80/20 copyright rule for program spending.
The word “complements” is a bit of a riddle here. It’s fair for Canadians to ask whether, thanks to the CRTC rulings on copyright and lead producer, we are backing into a new federal copyright rule on funding US streamers with Canadian subsidies.
But Mark Carney, the prime minister who abandoned our Digital Services Tax upon American request, wouldn’t go that far. Would he?
Photo via CBC
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