Streaming platforms launch multiple legal challenges to Bill C-11 payments in Canada

Foreign streaming platforms – including Netflix, Disney, Paramount and Spotify – have launched Federal Court challenges to the implementation of measures under Ottawa’s Online Streaming Act, which will force them to inject millions of dollars into Canada’s broadcast sector.

The Motion Picture Association – Canada, which represents studios such as Disney, Paramount, Sony, Universal and Warner Bros. Discovery, this week launched dual legal challenges in Federal Court to decisions by the CRTC, Canada’s broadcasting regulator, which is implementing the act, also known as Bill C-11.

The music streaming platforms Amazon, Apple and Spotify also filed a legal challenge in the Federal Court of Appeal over the CRTC’s decision to compel them to make financial contributions in Canada under the act.

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The challenges threaten to delay the implementation of the act, which would compel foreign streaming giants to pay about $200-million a year to support Canadian music, TV, film and radio.

The Motion Picture Association – Canada, whose members include Netflix, argues that the funding mechanism chosen by the CRTC could lead to the disclosure of sensitive, confidential financial information to Canadian broadcasters they compete with.

It is concerned that the CRTC would make its members contribute to the Canadian Association of Broadcasters, named with the CRTC in the court filing, alleging that it would enable the latter to calculate the annual Canadian broadcasting revenues of streaming platforms from the amount of money they contribute.

The CRTC announced last month that platforms such as Netflix NFLX-Q, Spotify SPOT-N and Amazon Prime will have to contribute 5 per cent of their annual Canadian revenues to support broadcasting in this country.

Foreign streaming platforms that are not affiliated with a Canadian broadcaster and make at least $25-million or more of Canadian broadcasting revenue a year will have to pay out, under a regime that follows the passing of Bill C-11 last year.

The Motion Picture Association – Canada (MPA – Canada) has also challenged a decision to make streaming platforms, including Netflix, contribute to local news in Canada. It says the CRTC has no authority to make them support local news here – that this was not envisaged when Bill C-11 was going through Parliament.

“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,” said Wendy Noss, president of the MPA – Canada.

“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.”

Graham Davies, president and CEO of the Digital Media Association, said three of its members – Amazon, Apple and Spotify – have filed legal challenges in Canada about the contributions under Bill C-11. They have also raised concerns about having to contribute to local news funds in Canada.

“The contributions must be made to various government-mandated funds, such as local news production for the benefit of commercial radio stations, that have been preselected by the CRTC,” he said in a statement. “The approach taken is backward-looking and bad public policy from the current Government of Canada, and fails to acknowledge streaming’s existing contributions to music production.”

Foreign streaming platforms will have to contribute to a variety of funds, including those supporting the creation of Indigenous content and work by Black filmmakers and other Canadians from diverse backgrounds.

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Two per cent of the projected $200-million annual funding will support Canadian film and TV through the Canada Media Fund or through direct funding for Canadian content.

Another 0.5 per cent will go to the Black Screen Office Fund, the Canadian Independent Screen Fund for BPOC Creators or the Broadcasting Accessibility Fund. The Indigenous Screen Office of Canada, which supports the telling of Indigenous-led stories across film, television and digital media, will receive 0.5 per cent of the money.

The Indigenous Music Office, a new fund supporting Indigenous music, will receive 0.15 per cent of the funding by December.

The MPA – Canada said it was concerned about having to pay into a local news fund administered by the Canadian Association of Broadcasters.

Kevin Desjardins, president of the Canadian Association of Broadcasters (CAB), said “the MPA – Canada’s lawsuit fully demonstrates the foreign global streamers’ avaricious approach to the Canadian market.”

“As the foreign global streamers remain focused on sucking billions of Canadian dollars out of the Canadian-owned media system, the CAB remains focused on ensuring that we keep Canadian journalists in Canadian newsrooms,” he said. “The CAB has acts as the administrator of funds such as the Independent Local News Fund, with a focus on the efficient distribution of funds to broadcasters, without fees and additional administrative burden. The CAB has historically received similar confidential financial information from cable and satellite distributors and dealt with it appropriately and without issue. We have the ability and the integrity to do so going forward.”

Mirabella Salem, a spokesperson for the CRTC, said “the Online Streaming Act, which amended the Broadcasting Act, requires the CRTC to modernize the Canadian broadcasting framework.”

“As this particular matter is before the Federal Court of Appeal, it would be inappropriate for the CRTC to comment.”