Ottawa orders CRTC review of policy to raise streamers’ spending obligations

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Ottawa has ordered Canada’s telecom regulator to review a controversial two-week-old policy that increased the amount foreign streamers would be required to funnel toward Canadian content, after criticism that the decision constituted a potential trade irritant with the United States.

In late May, the Canadian Radio-television and Telecommunications Commission implemented a new framework that tripled the share of Canadian revenues companies that stream audio and video content online would be required to dedicate to Canadian and Indigenous programming, from 5 per cent to 15 per cent.

Foreign streamers – which were already fighting the original contribution requirement in Canadian court – said in May that the CRTC’s new framework directly violated Canada’s obligations under the United States-Mexico-Canada Agreement.

The CRTC’s framework is part of the implementation of the federal government’s Online Streaming Act, which updated Canadian content requirements for the age of digital media. It modernized decades-old rules requiring domestic broadcasters to fund the creation of Canadian cultural content in an updated Broadcasting Act that now incorporates foreign streaming services, such as Netflix and Disney+.

Ottawa’s goal was to ensure Canadian films, music and TV are promoted by streaming platforms, which would also have to support Canadian cultural industries financially. But the act has increasingly become a source of complaint for the U.S. government amid trade talks because it imposes costs on American companies.

The USMCA, which governs North American trade, is up for a mandatory review on July 1 and negotiations over its future are gathering steam. Canada formally asked for the pact to be renewed this week, but the Trump administration is expected to seek trade concessions from Ottawa.

Wednesday’s intervention by Marc Miller, Minister for Canadian Identity and Culture, is widely seen as an attempt to assuage U.S. concerns about the Online Streaming Act, including from U.S. Trade Representative Jamieson Greer, the Trump administration’s top trade official.

Speaking to reporters, Mr. Miller acknowledged Mr. Greer’s concerns. He said the federal government does not entirely agree with the CRTC’s recent decision.

“It’s no secret to anyone that’s been paying any attention to this that the USTR has identified these issues as a trade issue. It would be disingenuous to suggest that this is the single issue,” Mr. Miller said, referring to the U.S. Trade Representative.

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The Online Streaming Act received royal assent in 2023 but has yet to be fully implemented by the CRTC, the broadcasting regulator. It is the subject of multiple legal challenges, including by music streamers and American movie studios.

U.S. trade officials and members of Congress have previously said the act discriminates against U.S. streaming giants. Earlier this year, Republican Representative Lloyd Smucker introduced a bill designed to investigate whether it unfairly burdens American companies.

On Wednesday, the Department of Canadian Heritage said the framework review is necessary to ensure streaming service subscription fees do not climb. It did not directly mention trade issues.

“The CRTC’s new requirements would impose new costs on the companies providing these services, which could ultimately fall on Canadian consumers through higher prices. At a time when Canadians face cost-of-living pressure, now is not the time to make culture and entertainment more expensive,” the department said in a news release.

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Conservative heritage critic Rachael Thomas accused the government of doing a U-turn, after previously insisting it could not get the CRTC to reverse its decision to increase the proportion of revenues streamers would have to pay out.

“They got up in the House over and over and over again and claimed there was nothing they could do about it,” she told reporters. “Today ... they’re actually admitting that there is something they can do about it.”

Lindsay Doyle, director of global affairs for Netflix Canada, said in an e-mailed statement that Mr. Miller’s Wednesday announcement is a “step in the right direction,” as the CRTC’s “previous decisions make Canada less competitive for production.”

The Digital Media Association (DIMA), which represents music streamers including Spotify, Apple and Amazon, also welcomed the minister’s decision to force the CRTC review.

Graham Davies, president and chief executive of DIMA, said in a statement: “We are encouraged by the government’s clear recognition that championing Canadian culture must go hand-in-hand with protecting affordability, innovation, and consumer choice.”

However, some Canadian organizations were dismayed by the government’s decision to review the contribution obligations for foreign streaming giants.

The Canadian Media Producers Association said it was concerned the federal government had “sold out Canadian culture in favour of big U.S. tech interests.”

“Concessions with nothing in return only result in demands for more concessions,” CMPA board chair Kyle Irving said in a statement.

And ACTRA – the Alliance of Canadian Cinema, Television and Radio Artists – said the decision “lets billionaire streamers and studios completely off the hook.”

“Rather than requiring wealthy media companies to modestly invest in Canada’s cultural ecosystem, Ottawa has chosen to transfer that responsibility to Canadian taxpayers under the guise of ‘consumer protection,’” said ACTRA national president Eleanor Noble.

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Rogers Communications Inc. spokesperson Zac Carreiro said the company was pleased with Mr. Miller’s announcement, because the CRTC’s framework decision had introduced “complicated and onerous new expenditure quotas” on Canadian broadcasters, while “placing a much lighter set of obligations on American streamers.”

In order to reorient the CRTC’s framework, Canadian Heritage said Wednesday that government would develop new policy directions to adjust the implementation of the Online Streaming Act. These policy directions, it said, would aim to keep access to content affordable for consumers, protect choice and ensure flexibility for streamers and broadcasters.

Ottawa also promised $600-million in new investment “to provide stability and immediate support” for Canada’s audio and audiovisual sectors until that new policy can be set. This amount will be adjusted once the new rules are finalized.

The new investment will include funds for Indigenous programming and parliamentary broadcaster CPAC, as well as local news, suggesting the government’s policy direction may address foreign streamers’ objections to financially supporting news content in Canada.

The Motion Picture Association, whose members include Disney, Netflix, Paramount and Amazon, is among those who have challenged the requirement to contribute to news production in Canada.

In 2024, MPA-Canada launched a legal challenge to a CRTC decision requiring major global streaming platforms to contribute 1.5 per cent of their Canadian revenue to funds supporting the production of local news.

Mr. Miller said the $600-million funding injection is necessary because litigation against the Online Streaming Act has frozen planned contributions to Canada’s cultural sector.

“We introduced Bill C-11, as you recall, to make sure that people were paying their fair share. Since then, there’s been litigations that have frozen funds that were supposed to or intended to support the sector, and haven’t. Today we’re impatient to make sure that that gets out,” Mr. Miller added.

Canada’s media industries “can’t wait for the litigations to be solved before people and jobs get lost,” he added.

The Canadian Association of Broadcasters said in a statement it was encouraged to see the new funding, but that the implementation of rules should not be delayed any further.

Editor’s note: An earlier version of this story misstated that the CRTC was ordered to review its policy on Monday. Canadian Heritage issued the order on Wednesday.