Netflix, Disney ask Canada court to stop proposed tax on streaming revenue: report

Netflix and Disney and other major US streaming services  have asked a Canadian court to stop plans by authorities to force them to fork over 5% of their sales in the country to help finance local broadcast news and other domestic content.

The Motion Picture Association-Canada, which represents the streamers, said last month’s order by the Canadian Radio-television and Telecommunications Commission, “exceeds the broadcast regulator’s authority and fails to recognize the billions of dollars the companies spend in Canada each year,” according to a report from Dow Jones.

“Our members’ streaming services do not produce local news nor are they granted the significant legal privileges and protections enjoyed by Canadian broadcasters in exchange for the responsibility to provide local news,” said association president Wendy Noss.

The CRTC had previously said the payments would begin in the 2024-25 broadcast year, starting Sept. 1, and are expected to contribute 200 million Canadian dollars per year, roughly $147 million, to the broadcasting system, the report said.

In their filing with Canada’s Federal Court of Appeal, lawyers for the streaming companies said the regulator didn’t show “any basis” for why foreign streamers are required to contribute to the production of local television and radio newscasts.

They argued the imposed fee could lead to higher prices for Canadian streaming customers, and it may even cause streaming providers like Netflix, Disney+, Paramount+ and Max to reconsider their presence in Canada.

The broadcast regulator “concluded, without evidence, that ‘there is a need to increase support for news production,’” the lawyers added in their filing.

“Imposing on foreign online undertakings a requirement to fund news production is not appropriate in the light of the nature of the services that foreign online undertakings provide,” the filing added.

The Canadian association said the broadcast regulator “acted unreasonably,” and is seeking appeal court intervention.

The law was passed last year in a bid to ensure online streaming services promote Canadian music and stories and support Canadian jobs.

Last month, CRTC chairwoman, Vicky Eatrides, said the mandated contributions are meant to address concerns that “certain types of content like local interest stories will not be made or distributed anymore.

Or that they will become less available because they will not be funded by market forces alone.”

Reps for the MPA-C and CRTC did not immediately respond to requests for comment.