Minister of Canadian Identity and Culture Marc Miller announced that the government would inject $600-million of support to Canada’s audio and audiovisual sectors.Spencer Colby/The Canadian Press
Ottawa will direct the broadcasting regulator to scrap its requirements for foreign streaming platforms to fund local news and niche broadcasters in Canada, according to two senior government sources.
The federal government is planning a series of steps that would require the Canadian Radio-television and Telecommunications Commission, or CRTC, to roll back key decisions it has made implementing the controversial Online Streaming Act.
The legislation, which became law in 2023, forces foreign companies that stream audio and video content to contribute financially to Canada’s cultural industries, as traditional broadcasters have long been made to do.
But the act has become a trade irritant with the Trump administration because of the costs it imposes on American companies, such as Netflix and Amazon, and Ottawa is signalling its willingness to cut back on those demands.
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Last week, the federal government initially directed the regulator to review its recent ruling requiring streaming giants to triple to 15 per cent the proportion of Canadian revenues they must inject into Canada’s cultural sector under the act.
The two senior government sources subsequently told The Globe and Mail that Ottawa is now preparing to ask the regulator to scrap entirely its initial 2024 ruling forcing foreign streamers to pay a base contribution of 5 per cent of their Canadian revenues into Canada’s cultural industries, including local news.
They said the government will also issue a policy direction exempting foreign streamers from having to contribute to a new fund for niche broadcasters.
The two sources said Ottawa is planning to enter into talks with foreign streamers and other stakeholders to determine “a more reasonable rate” of contribution to Canadian programming, which has yet to be decided. But they said the requirements to fund local news and niche broadcasters would not be included.
The Globe is not naming the two sources, who were not authorized to speak publicly about the changes.
Last week’s intervention is widely seen as an attempt by Mark Carney’s government to assuage U.S. concerns about the Online Streaming Act’s impact on U.S. film and music streaming giants.
However, Marc Miller, Minister of Canadian Identity and Culture, said last week that a key aim is to get money flowing swiftly to Canadian TV, film, music and broadcasting, which are sorely in need of funding.
Money expected to flow from streaming platforms after the passing of the act in 2023 has been held up by a number of legal challenges to rulings by the CRTC implementing the law.
The act has been criticized by United States Trade Representative Jamieson Greer, who has said that it unfairly targets American tech companies. Last week, Canada-U.S. Trade Minister Dominic LeBlanc met with Mr. Greer in Washington for talks about the United States-Mexico-Canada Agreement ahead of a July 1 deadline by which the countries must decide whether to renew the deal or renegotiate it.
In May, Mr. Carney met Netflix CEO Ted Sarandos in New York where he held a roundtable with several business leaders and entrepreneurs. The Prime Minister’s Office declined to comment on the meeting or any forthcoming decisions relating to the Online Streaming Act.
Netflix is a member of the Motion Picture Association – Canada. The group has launched a legal challenge to the 2024 CRTC decision, which required major global streaming platforms to contribute 1.5 per cent of their Canadian revenue to funds supporting the production of local news. This is a portion of the CRTC’s 5-per-cent base-contribution demand.
The federal government plans to issue a policy direction saying that foreign streaming platforms would not have to contribute to the CRTC’s new Services of Exceptional Importance Fund (SEIF), according to the sources.
When the CRTC made its 15-per-cent announcement last month, it unveiled plans to set up the fund to ensure the long-term sustainability of niche broadcasting services, such as news programming with a focus on Indigenous communities, official language minority communities, or Canadians with disabilities.
They include CPAC, a broadcaster that provides up-to-the-minute reports on developments in Parliament, politics and public affairs; APTN, the Aboriginal Peoples Television Network, which includes entertainment and news reporting focusing on First Nations content and issues; and the French-language Canadian television network TV5/Unis.
Broadcasting groups, including streamers with Canadian revenues of $100-million or more – with the exception of CBC/Radio Canada – would have to contribute 1.55 per cent of their audiovisual revenues to the SEIF, the CRTC said last month.
Last week, Mr. Miller announced that the federal government is stepping in to fill some of the gap that will be left by reducing funding requirements by foreign streamers under the act.
Mr. Miller announced that the government would inject $600-million of support to Canada’s audio and audiovisual sectors. The two government sources said this is likely to include funding for local news and broadcasters that would no longer get financial support from foreign streamers through the CRTC’s Services of Exceptional Importance Fund.
Hermine Landry, a spokesperson for Mr. Miller said Sunday: “We will not back down from protecting and strengthening the Canadian cultural sector at a time when it needs it most.”
“We intend to develop a policy direction that takes into account affordability for Canadians, while providing greater flexibility for those contributing to the broadcasting system.”
The government does not plan to change requirements in the Online Streaming Act for foreign streaming platforms, such as Spotify, to promote Canadian content, including TV, music and film, the sources said.
The regulator recently modernized the definition of Canadian content, which is also being challenged in the courts.
The new definition requires that key creative positions be held by Canadians. And key roles, such as director and screenwriter, should be held by humans, not artificial intelligence. It also requires collaboration between foreign streaming services and Canadian companies, ensuring that at least 20 per cent of ownership rests with a Canadian partner and that a higher proportion of key creative positions are held by Canadians.
There are a number of formal steps that need to be gone through before policy directions can come into force. And Parliament is preparing to break for the summer later this month.
Netflix and The Digital Media Association (DIMA), which represents music streamers including Spotify, Apple and Amazon, welcomed the minister’s decision to force the CRTC review last week.
But the Canadian Media Producers Association expressed disappointment.
“We are concerned that the federal government has sold out Canadian culture in favour of big U.S. tech interests,” Kyle Irving, chair of the CMPA, said in a statement.