By Len St-Aubin, a policy consultant who has worked for clients including Netflix, and was a member of the policy teams that developed the 1991 Broadcasting Act and the 1993 Telecommunications Act
On August 28, Cartt published Howard Law’s commentary rebutting my contention that Bill C-11 and CRTC regulation risk destabilizing market-driven CanCon.
Law took issue with my assertion that foreign streamers have driven the significant increase in foreign investment (FI) in CanCon over the last 10 years:
“…The fact is that foreign television companies around the globe were snapping up CanCon through pre-sales and advances long before Netflix brought its service to Canadian audiences in 2011. The CMPA’s 2009 Profile – the last production year prior to the global financial crisis – revealed (ex 2-48) that foreign pre-sales and advances for English language Canadian content were 14 per cent of the overall financing mix of Canadian, foreign, public and private sources. Fourteen years later in 2023, it had crept up to 17 per cent.”
So I rechecked the CMPA data for English language CanCon TV production:
- Over 10 years from 2005/06 to 2014/15, FI in fact fluctuated between 10 and 14 per cent of total financing (Profiles 2010 and 2018). The link in Law’s article was actually for Profile 2013. The data show that 2008/09’s 14 per cent was a high point. It was 12 or 13 percent before, then dropped to 10 or 11 per cent.
- Over the same 10 years, financing from Canadian public and private broadcasters combined consistently exceeded FI — even while declining from 30 to 23 per cent.
- The picture changed in 2015/16. Since then, FI has increased to between 17 and 20 per cent.
- Beginning in 2017/18, FI has matched or exceeded financing from Canadian public and private broadcasters combined (which continued its decline).
- As well, Profile 2023 shows that, in the 10 years from 2013/14 to 2022/23, total FI in Canadian TV (certified and uncertified) doubled from $446 million to $898 million (data not available for earlier years).
I appreciate Law’s point that, after inflation, that 10-year growth is 57 per cent not 100 per cent. Still, 57 per cent real growth over 10 years is significant by any standard.
So what changed in 2015? Competitive global streamers’ voracious appetite for content. It’s possible, as Law suggests, that other foreign television companies’ demand for CanCon rebounded. But to suggest that streamers were not the main drivers of very significant growth in FI is to ignore market developments.
Points not addressed in Law’s rebuttal:
- As Canadian broadcasters’ financing declined, increasing FI (mostly from streamers) supported the growth in certified English language CanCon TV from $2.4 to $3.7 billion over the last 10 years — a growth rate of 16 per cent after inflation as Law noted.
- More importantly, by 2022-23, FI in the fiction category was 50 per cent higher ($309 million) than financing from Canadian private and public broadcasters combined ($204 million). In children’s content it was 48 per cent higher. CRTC regulation refers to this content as Programs of National Interest (PNI).
- In response to C-11, broadcasters want the CRTC to reduce PNI obligations, while they continue to spend more on US drama and comedy than on Canadian.
- Nothing in C-11 or CRTC follow-up regulation ‘levels the playing field’ for Canadian broadcasters — except, perhaps, spreading the regulatory ‘burden’ of CanCon.
As for Law’s comment on French-language CanCon, the data show that FI has remained unchanged at about one per cent since 2005/06.
But Law’s example of Netflix’s investment in Jusqu’au Declin reveals another CanCon conundrum. Québécois investors had declined the film. Ironically, despite Québécois creators, talent and production, the film is not certified CanCon because it was fully foreign financed.
That film is one of many productions produced here for global streamers that would qualify as CanCon — but for foreign financing. Regardless of certification, Canadian creators, writers, artists, talent and crews are all benefiting from market-driven FI.
Law resurfaces the notion of a 29 per cent levy on streamers’ Canadian revenues. Let’s consider potential outcomes.
Driving some streamers out of Canada is the most likely. Why? First: unlike Canadian broadcasters, global streamers don’t need to serve Canada. The heavier regulation gets, the greater the incentive to leave. At 29 per cent even Netflix or Disney would need to rethink. That could lead to less, not more, FI in CanCon.
Second: regulatory uncertainty. Bill C-11 captures all streamers, big or small. The CRTC can exempt from regulation, but cannot exclude from the Act — and it periodically revisits exemptions. So the current revenue threshold for regulation is not just a disincentive to growth in Canada, and market entry, it’s a moving target.
For Canadians, exiting streamers would reduce choice. For Bell’s Crave, it would create an opportunity to acquire even more foreign content and make online streaming more like cable-TV.
If other countries followed suit, it would hurt Canada’s innovative digital-first creators who have thrived in the unregulated online global market, earning up to 90 per cent of revenues outside Canada. Policy intended to protect old media would impede innovation. And there is the risk of trade retaliation impacting other sectors of the economy.
Such outcomes are not in the public interest.
The point is: the data show there is global demand for CanCon. Streamers are the latest, and almost certainly, most voracious buyers. And investments in foreign location production here help sustain Canada’s outsized production sector. But the ‘CanCon system’ risks destabilizing FI in CanCon with outdated, heavy-handed regulation and CanCon criteria that are out-of-touch with global audiovisual markets and production.
As I’ve said before, I support measures to incentivize and engage foreign streamers in the production of market-driven CanCon. In my opinion, decades-old broadcasting regulation is not an appropriate, efficient or effective way to do that.
Back in 2021, a commentary I wrote for Cartt proposed a more market-based approach. Howard Law recommended it. It’s not perfect. But it’s a better start than what’s happening now.
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