Regulator aims to float services of “exceptional importance” through fund
By Ahmad Hathout
The CRTC on Thursday ordered online streamers to contribute a total of 15 per cent of their annual Canadian revenues to Canadian content funds, which includes the five per cent base amount the regulator ordered them to pay in a 2024 decision that foreign streamers are currently fighting in court.
Simultaneously, the regulator is reducing the amount Canadian private broadcasters have been paying into the system – from between 30 and 45 per cent to at least 25 per cent – which is the CRTC’s answer to leveling the playing field.
“The modernized framework will ensure a stable level of contributions that will continue to deliver over $2 billion in contributions to Canadian programming,” the CRTC said in one of two mammoth decisions Thursday. “This level of funding will represent a floor, not a ceiling, and the Commission expects that broadcasting ownership groups will, overall, continue to exceed their requirements. The Commission is of the view that this equitable approach, which includes both Canadian broadcasting ownership groups and unaffiliated online broadcasting ownership groups, will yield sustainable results for the Canadian broadcasting system.
The new rules apply only to those entities making annual revenue of at least $25 million, meaning those under that threshold – considered “small” – will no longer be subject to expenditure requirements – though they are still subject to other rules, including those related to accessibility, news and exhibition.
Those making between $25 million and $100 million – considered “medium” – will be given full flexibility in how they want to allocate their obligation. For example, an ownership group will be able to choose which of its traditional and online services will be meeting its contribution requirements and how, “in a way that is adaptable its business model and without limitations,” the CRTC says. That means they can put their obligations toward direct expenditures, such as the creation and acquisition of Canadian programming and dubbing, or indirect expenditures, such as money toward the Certified Independent Production Funds, the Broadcasting Accessibility Fund or the Canada Media Fund (CMF).
These medium sized companies will also be allowed to count up to 10 per cent of their obligation toward spending on international marketing and the promotion of Canadian programs, which was a recommendation of a recent CRTC-commissioned report.
“This measured flexibility will help to ensure that Canadian programming remains visible and competitive in an increasingly global and digital marketplace, while supporting the participation of medium-sized players in the broadcasting system,” the CRTC said.
The highest earners – those making $100 million or more and considered “large” – will have to specific expenditure requirements.
“Large broadcasting ownership groups, by virtue of their scale, business models, and overall influence, have the greatest impact on the Canadian broadcasting system. Given this impact, the Commission finds that these groups should be subject to more structured and targeted CPE requirements to ensure that they make meaningful and commensurate contributions to the achievement of the broadcasting policy objectives set out in the Act, as well as the Commission’s policy objectives,” the CRTC said.
As such, these large players – of which there are about “10 or so” operating in the country, according to a CRTC official – will be required to put money into French-language programming — 75 per cent on traditional French-language groups, which is the existing requirement, and 30 per cent on streamers, who must put 50 per cent of that toward original first-run content. “This approach will undoubtedly open new doors to the French-language independent production sector and benefit French-Canadian audiences who will have access to more relevant content on more platforms than before,” the CRTC said.
The large playerws will also be required to plow two per cent for programming made by official language minority communities (OLMCs), spending on which will no longer yield for traditional broadcasters a 25 per cent credit they applied against their expenditure requirement when they spent on this programming.
While online streamers will be required to continue to pay the 1.5 per cent to the Independent Local News Fund (ILNF) already incumbent on them as part of the existing five per cent base contribution, thee large traditional players will now be required to support news by contributing an amount equal to the greater of 15 per cent of their total CPE or its average news expenditures over the previous three broadcast years. The CRTC said it will establish specific French-language news requirements for ownership groups operating in both official langauge markets — namely Bell and Corus — and will launch a consultation “to help ensure that Canadians have access to timely local and national news on radio and on television.”
As to why the CRTC didn’t mandate more spending on news by streamers — which is a specific policy challenged by them in court because they say they don’t make or benefit from news — a CRTC official said foreign streamers are better positioned to put their money elsewhere in the system, while domestic players are better suited to fund Canadian news.
These large Canadian broadcasters and streamers will also be required to invest a minimum of 30 per cent in “enhanced” production partnerships with Canadians that hold the majority of the copyright in the Canadian programming – that’s a minimum of 20 per cent, as established by a previous CRTC decision – and contribute to a new fund for services of exceptional importance, which are those that must be carried by the broadcasters.
The broadcasters required to contribute toward the fund supporting these programs of exceptional importance – called Services of Exceptional Importance Fund (SEIF) – will put 1.55 per cent of their TV revenue into the pot. To offset that, the CRTC is aiming to eliminate the wholesale carry fees that have been the mechanism supporting these programs.
“The Commission considers that relieving BDUs of the requirement to pay mandated wholesale rates, and extending the responsibility to support SEIs to all applicable broadcasting ownership groups, will reduce the financial burden currently held by BDUs and create a more equitable funding structure for SEIs,” the CRTC said in a separate decision on discoverability of programming and support for exceptional services.
These services, which have suffered financial losses as Canadians cut the traditional TV cord, have been looking forward to such a fund for long-term sustainability. Some of them, in the meantime, have received a bump in their wholesale rate.
The CRTC also ruled that it is eliminating the “programs of national interest” (PNI) expenditure category, which included a 75-per-cent spending requirement on Canadian independent production companies.
“It is the Commission’s view that regulatory tools other than PNI expenditure requirements can better support independent producers and facilitate creating a variety of programming,” the CRTC said. “In particular, the recent changes made to the definition of “Canadian program” (notably regarding measures that incentivize the sharing of copyright in the program), as well as the decisions set out in the present regulatory policy,” such as the enhanced partnerships requirement, “may impact the genres of programming that will be most at risk in the future.”
The CRTC is also seeking to enhance indigenous programming and will give medium and large broadcasters the opportunity to get a 50 per cent credit against their expenditure requirement when they spend on content made by and for indigenous producers. For equity-deserving groups, the CRTC will also require large broadcasters to “develop measures to create opportunities for producers from equity-deserving groups.”
In support of the CMF, the CRTC said it will implement a requirement on large and medium-sized streamers to contribute a minimum of two per cent of their expenditure requirmeent on the fund. The commission previously said in a 2024 decision that these broadcasters should have the flex to spend up to 1.5 per cent of that two per cent directly on Canadian programming instead of sending it all to the CMF.
The regulator also said it is of a preliminary view that the revenue of the hybrid video-on-demand services should not be exempt. “HVOD undertakings are functionally online undertakings,” the CRTC said. “Considering their potential footprint in the broadcasting system, the Commission is of the preliminary view that the modernized CPE framework should apply to undertakings that currently operate under the HVOD undertaking exemption order.”
To round out this phase of the modernization of the Broadcasting Act — brought on by the Online Streaming Act — the CRTC said in the second decision that it expects the Canadian broadcasting sysetm to take “concrete steps” to achieve discoverability outcomes, including allowing audiences to have access to, and easily find and consume a “full range of Canadian and Indigenous content and services”; that Canadian and indigenous content and services be promoted and prominently featured; and the “availability, prominence, and consumption of Canadian and Indigenous content and services are transparently measured, as are the impact and effectiveness of the steps taken to improve those discoverability outcomes.”
Examples of those include ensuring content is featured equitably in search results and audiences can easily filter their recommendations to find content in French; prominently feature local, regional and accessible programming, including news; facilitating the installation, integration and promotion of programs of exceptional importance; investing in or providing for technical upgrades allowing these programs to be made available through online platforms; and distributing and promoting Canadian content both domestically and internationally.
