Netflix, Disney, and other streaming services have mounted a legal challenge to a rule that forces them to donate 5 percent of their Canadian revenues to subsidize different kinds of made-in-Canada content, including local news and content created by and for various diverse “equity-deserving” groups.
The Motion Picture Association-Canada (MPA-Canada), which represents the interests of Netflix, Disney, Sony, Paramount, Universal, and Warner Bros. Discovery (HBO) in the Canadian market, said in a July 4 announcement that it had filed two petitions with Canada’s Federal Court of Appeals challenging the regulation, which it accused of being discriminatory.
One of the petitions is a request for permission to lodge an appeal against the regulation, which was created by the Canadian Radio-television and Telecommunications Commission. The CRTC is a quasi-judicial tribunal that regulates the Canadian communications sector in the public interest whose decisions are not automatically subject to appeal.
The second petition is an application for judicial review of the rule, which is not an appeal on the merits but a review of the process and legality of the decision.
“The CRTC’s decision to require global entertainment streaming services to pay for local news is a discriminatory measure that goes far beyond what Parliament intended, exceeds the CRTC’s authority, and contradicts the goal of creating a modern, flexible framework that recognizes the nature of the services global streamers provide,” Wendy Noss, president of MPA-Canada, said in a statement.
The CRTC, which declined to comment on the specifics of the case due to ongoing litigation, told The Epoch Times in an emailed statement that it is required by recent legislation to modernize the Canadian broadcasting system and that the requirements it imposed on online streaming services—due to enter into force on Sept. 1, 2024—are part of that process.
“The CRTC will continue to balance consulting widely with moving quickly to build the new regulatory framework. As this particular matter is before the Federal Court of Appeal, it would be inappropriate for the CRTC to comment,” the spokesperson said.
The CRTC’s rule, announced on June 4, requires online streaming services that make $25 million or more in annual revenues and that are not affiliated with a Canadian broadcaster to contribute 5 percent of those revenues to a number of funds, which will direct the money to specific content areas.
“The contributions will be directed to areas of immediate need, such as local news on radio and television, French-language content, Indigenous content and content created by and for equity-deserving groups, official language minority communities (OLMC), and Canadians of diverse backgrounds,” the CRTC said in a statement.
Canadian local news production will absorb 1.5 percent of the 5 percent, with the rest apportioned to the other identified areas of need.
The streaming services had until June 14 to submit comments on the proposed rule, which is set to be in effect for the 2024-2025 broadcasting year, which in Canada starts on Sept. 1.
