Foreign streaming services such as Netflix and Disney+ are challenging a regulatory directive under the Online Streaming Act aimed at contributing financially to the Canadian broadcasting sector, including local news.
The Motion Picture Association-Canada (MPA-Canada), which also represents platforms HAYU, Sony’s Crunchyroll, Paramount+ and Pluto TV, has filed two legal challenges in Federal Court in response to the new rule.
The Canadian Radio-television and Telecommunications Commission (CRTC) said in June that foreign broadcasters must contribute 5% of their annual Canadian revenues to a fund dedicated to the production of Canadian content, including local television and radio news, as well as Indigenous and French-language content.
The CRTC said streaming companies that are not affiliated with a Canadian broadcaster – and that generate at least $25 million in Canadian revenue – would be required to pay into the fund, which is expected to inject about $200 million into the system each year.
MPA-Canada is seeking leave to appeal and judicial review of the CRTC’s decision, arguing that the regulator does not have the legal authority to compel foreign companies to support Canadian news production and that it made “errors of law and jurisdiction.”
The U.S.-based Digital Media Association also says three of its members – Amazon, Apple and Spotify – have filed legal challenges against the mandatory financial contributions, calling the CRTC’s decision a “step backward” and unsustainable.
The CRTC said in a statement Friday that it “will continue to strike a balance between broad consultation and rapid action to build the new regulatory framework,” but declined to comment on the legal challenges while the case is before the court.
Measure deemed discriminatory
The CRTC’s decision is aimed at leveling the regulatory playing field between tech giants and cable companies, but a spokeswoman for MPA-Canada said requiring global streaming services to pay for local news “is a discriminatory measure that goes well beyond what Parliament intended.”
“Our members’ streaming services do not produce local news, nor do they benefit from the important legal privileges and protections that Canadian broadcasters enjoy in exchange for the responsibility of providing local news,” the group’s president, Wendy Noss, said in a statement.
In its court filings, MPA-Canada also argues that the CRTC rule could indirectly allow the disclosure of confidential revenue information from foreign broadcasters to Canadian broadcasters with whom they compete.
The Digital Media Association also expressed concerns that its members would have to share “sensitive commercial information” with third parties, including Canadian broadcasters.
“The approach taken is a step backward and bad public policy on the part of the current Government of Canada, and fails to recognize the existing contributions of music streaming to music production,” the association wrote in a statement that urges the CRTC to rethink its implementation of the Online Streaming Act.