Broadcasting Cartel Cares for Largesse, Not Canadian Content

Commentary, Government, Fergus Hodgson

When the Canadian government announced last year that it was to overhaul the communications framework, there was the promise of room for much-needed foreign investment. However, instead of liberalization, submissions from dominant lobbies that have been recently revealed point to more subsidies, protectionism, and content chicanery.

The process began in June 2018, when Ottawa appointed seven experts to recommend changes to three laws: the Telecommunications Act, the Radiocommunication Act, and the Broadcasting Act. The latter predates the internet and has become a battleground between disruptive newcomers and traditional broadcasters who enjoy protection. Existing Canadian-content (CanCon) regulations include a myriad of quotas on radio and TV programming, ownership requirements, and mandatory carriages in subscriptions.

The panel met with and received submissions from companies, industry leaders, creators, and viewers up until January. With assurances of transparency and openness to everyone, over 2,000 submissions arrived. However, not all saw the light of day as promised. Documents from major players were curiously absent.

Regulations for Thee, Funds for Me

Michael Geist, a University of Ottawa professor and expert in intellectual-property, had to file an Access to Information Act request and obtained the relevant documents five months later. These documents confirm how the major broadcasters intend to dictate Canadian consumption.

Bell is Canada’s largest radio broadcaster and own dozens of TV stations, including the most-watched private network, CTV. The conglomerate told the panel that Netflix, Amazon, and other foreign providers should hand over 20 percent of their Canadian revenues for a CanCon-production fund. Bell also argued foreign firms should be blocked from receiving government funding, even for Canadian productions in Canada.

Bell supports CanCon subsidies for itself, not Canadian art. The two are different, and Bryan Adams famously failed to be Canadian enough for CanCon. In 1992, he complained it was disrespectful and “breeding mediocrity.” The supposedly temporary measure had been in place for decades and has only grown since.

Telecommunications giant Rogers—Canada’s largest publisher and the owner of several radio and TV stations—wants the government to expand the newspaper bailout to broadcasters. In alliance with Bell, Rogers has called for the same taxes on foreigners for the CanCon fund, a de-facto tariff on foreign content.

Geist notes this proposal could break the new NAFTA deal (USMCA). It opens “Canada up to retaliatory measures … that could result in hundreds of millions in new tariffs.”

Other notable submitters include the Alliance of Canadian Cinema, Television, and Radio Artists, which seeks to reserve search-engine top-results spots for CanCon. Similarly, the CBC envisions prominent, manipulated displays of CanCon in online platforms’ menus and recommendations. The CRTC believes “all stakeholders should be obligated and incented to promote and make content by Canadians discoverable, including government funding supports.”

Some notable submissions went even further, advocating for new taxes on internet subscriptions and a quota for Canadian films and shows in Netflix’s library. Cogeco, the fourth-largest cable operator in Canada, claimed that unregulated Netflix content could undermine the sovereignty, the “safety, and well-being of Canadian consumers, or the integrity of their democratic institutions.”

Corus and SaskTel, the latter a crown telco, had the gall to block the disclosure of their submissions by claiming potential harms to their competitive positions.

No Canadian Content on Netflix?

Protectionists decry that online video distributors displace local programming by opening the floodgates to Hollywood. CBC President Catherine Tait has likened Netflix to the bloody British and French imperialism in India and Africa.

A closer inspection finds slightly less violence.

Canada was the second country after the United States where Netflix set up shop in 2010. Netflix proved so popular the firm launched a local production unit and is investing $525 million in Canadian content. This supports both anglophone and francophone local creators through funding, education, and training.

Netflix has already shot original programs in Canada with Canadian directors and artists, such as sci-fi films ARQ, Lost in Space, and Altered Carbon. According to the firm’s submission to the review panel, the parochial government criteria prevents them from being certified as CanCon—no matter how much local talent they employ—because of foreign financing.

When broadcasters argue Netflix does not support Canadian film or television, what they really mean is that Netflix does not jump through outdated hoops. CanCon requirements need to evolve in order to  adapt to the contemporary realities of a sector that cares less and less about borders.

Further, the supposed plight of Canadian artists is fiction. Geist notes that “spending on Canadian-content production has hit an all-time high… The increase in foreign investment in production in Canada has been staggering. Before Netflix began investing in original content in 2013, total foreign investment… was $2.2 billion. That number has more than doubled in the past five years to nearly $4.7 billion.”

Regulatory Capture

The panel’s final report and recommendations are due in February 2020. Nevertheless, Heritage and Multiculturalism Minister Pablo Rodríguez appears to have made up his mind. 

After an interim report on June 26, he promised “we’ll require web giants to create Canadian content [and] promote it on their platforms.” He will follow the diktats of the broadcast cartel and introduce legislative changes accordingly.

The review process has revealed itself as a distraction. All along, the goal was clear: keep the crony CanCon system in place.