Bell and Rogers Tell the CRTC Netflix Should Fund Canadian Content [u]

The Canadian broadcast industry is struggling with the rising numbers of ‘cord cutters’, as people continue to change their viewing habits to streaming online, with services such as Netflix. According to recent Netflix data, 70 per cent of viewers watch the service on their televisions.

The Canadian Radio-television and Telecommunications Commission (CRTC) has been asked by the Trudeau government to release a report on how to sustain a business model that supports Canadian content, and has until June 1 to do so.

Leading up to the CRTC report, Canadian broadcast companies have submitted their comments to the CRTC, and The Financial Post has reported a summary of the positions held by companies such as Rogers, Telus, Bell, Shaw, Corus and Quebecor, which all have different ideas on what should be done.

Bell and Rogers want the CRTC to have companies such as Netflix to fund investments in Canadian programming, but both differ in their proposals.

Rogers wants all content providers to adhere to a revised framework and Canadian content rules, while also pay 30 per cent of revenue to fund Canadian programming.

“This is a pivotal moment for the Canadian broadcasting system. If foreign and domestic over-the-top services are not required to contribute to the country’s cultural objectives, the volume and quality of Canadian content will inevitably decline,” according to the Rogers submission.

As for Bell, it explained to the CRTC if any streaming service generates over $100 million in revenue per year, it should pay 20 per cent of revenue to fund Canadian programming, and have this in place by 2022.

“The regulatory model must urgently recognize that a two-tier system, one regulated and one not, is unsustainable,” Bell said.

Bell also cited data from Numeris to claim Netflix beat CTV in 2016, when it came to the largest primetime viewership in the coveted 25-54 demographic.

As for Telus, Shaw and Corus, these companies told the CRTC in their submissions the broadcast industry should be deregulated instead.

Telus said foreign and Canadian services should be on a level playing field, saying “Left unchecked, this regulatory imbalance poses a threat to the survival of the domestic broadcasting sector,” said the company.

Corus said Canadian broadcasters are at a disadvantage versus foreign streaming services, pegging the number at 25-30 per cent, since companies like Netflix don’t have to follow traditional broadcaster rules and also pay sales taxes.

Shaw wants the CRTC to eliminate financial contributions required by broadcasters and TV providers, saying these regulatory and financial strains “artificially accelerate the growth in foreign online providers and the decline of licensed players.”

Quebecor proposed sales taxes on digital streaming services and also called for relaxed regulations, while also questioned if it would be even be possible to enforce regulations on foreign video services.

Netflix is estimated to have 6 million Canadian subscribers and did not produce a submission for the second round of consultation to the CRTC. Previously, the company told the Commission “importing broadcast-era rules to internet media will not achieve intended policy goals and will limit growth, competition, and creative freedom for new media models and creators.”

Last fall, Netflix and the Canadian government signed a landmark $500 million CAD deal, for Canadian productions, with money to be spent in Canada (updated to clarify Netflix’s Canadian investment).

Netflix currently has 117 million subscribers worldwide and generated $11 billion USD in revenue for 2017. CEO Reed Hastings recently predicted the company is set to hit $15 billion USD in revenue for 2018, during a media tour of Netflix’s new Hollywood facility at the Sunset Bronson Studios.

A recent report by the CBC claimed numerous Canadians continue to sign up for illegal pirated live TV services, priced at a fraction of the cost of a cable TV subscription.

What do you think the CRTC should do with foreign streaming services like Netflix?