Legal Challenge to Canadian Content Regulation by Streaming Services
In a bid to challenge a regulation that mandates them to donate 5 percent of their Canadian revenues to support made-in-Canada content, streaming giants like Netflix and Disney have taken legal action. The Motion Picture Association-Canada (MPA-Canada), representing the interests of major studios including Sony, Paramount, Universal, and Warner Bros. Discovery (HBO), has filed two petitions with Canada’s Federal Court of Appeals, alleging discrimination and questioning the authority of the regulation.
The regulation in question was created by the Canadian Radio-television and Telecommunications Commission (CRTC), a quasi-judicial tribunal responsible for regulating the Canadian communications sector. The MPA-Canada’s first petition seeks permission to appeal against the regulation, while the second is an application for a judicial review to assess the process and legality of the decision.
Wendy Noss, president of MPA-Canada, argues that the CRTC’s decision is discriminatory and goes beyond what Parliament intended. She claims that it contradicts the goal of creating a modern framework that recognizes the nature of services offered by global streamers. The group emphasizes that streaming services and global studios already invest significantly in Canadian content production, contributing over $6.7 billion annually. This investment exceeds what major Canadian content and news-producing entities combined contribute.
The CRTC, responsible for modernizing the Canadian broadcasting system, highlighted that the requirements imposed on online streaming services are part of this process. However, they refrained from commenting on the ongoing litigation.
The CRTC’s rule, announced on June 4, stipulates that online streaming services generating $25 million or more in annual revenues must contribute 5 percent of those revenues to various funds. These funds will allocate the money to specific content areas such as local news, French-language content, Indigenous content, and content created by and for diverse groups. Out of the 5 percent, 1.5 percent will support Canadian local news production while the remaining portion will be allocated to other areas of need.
The streaming services were given until June 14 to submit their comments on the proposed rule. If implemented, the regulation will come into effect for the 2024-2025 broadcasting year, starting on September 1.
The legal challenge by streaming services raises important questions about the balance between supporting Canadian content and ensuring fair treatment of global entertainment platforms. It highlights the tension between regulatory frameworks and the flexibility required to accommodate the nature of streaming services. While the outcome of this legal battle remains uncertain, it serves as a significant moment for the future of content regulation in Canada.
