Major streamers must pay 15% of revenues to Canadian content, CRTC says

Large TV streaming services like Netflix must contribute 15 per cent of their Canadian revenues to Canadian content, the federal broadcast regulator said Thursday.

That’s three times the five-per-cent initial contribution requirement the CRTC set out in 2024, which is being challenged in court by major streamers, including Apple and Amazon.

Contribution requirements for traditional broadcasters, which currently pay between 30 and 45 per cent, will be lowered to 25 per cent.

“The total contributions are expected to stabilize the funding at more than $2 billion in support of Canadian and Indigenous content, such as French-language content and news,” the regulator said in a press release.

The CRTC made the decisions as part of its implementation of the Online Streaming Act, which the U.S. has identified as a trade irritant ahead of trade negotiations with Canada.

Scott Shortliffe, the CRTC’s vice-president of broadcasting, told reporters Thursday the CRTC is not involved in trade negotiations.

“Because we’re an arm’s length quasi-judicial tribunal, we are not in touch with the government about the status of trade negotiations. We’re applying Canadian law in Canada,” he said.

“We believe that they will be respected by these companies. Whether they choose to challenge them through any of the measures that are available in Canadian law is, of course, totally up to them.”

The CRTC also set out rules on how the money must be spent for both streamers and broadcasters, including contributions toward production funds and direct spending on Canadian content.

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Most of the streamers’ financial contributions can go toward content, though the CRTC is imposing rules on how that money must be spent for the largest streamers.

For instance, streamers with Canadian revenues of more than $100 million annually must direct 30 per cent of spending toward partnerships with Canadian broadcasters and independent producers.

Large Canadian broadcasters will have to direct at least 15 per cent of their contributions toward news.

The new financial contribution rules apply to streamers and broadcasters with at least $25 million in annual Canadian broadcasting revenues. The decision covers audiovisual programming, meaning it affects traditional TV broadcasters and online services that stream television content.

The regulator also said Thursday online streamers will have to take steps to ensure Canadian and Indigenous content is available and visible to audiences.

“This will make it easier for people to find this content on the platforms they use, while giving broadcasters flexibility in how they meet the new expectations,” the CRTC said in the release.

Details of those requirements will be determined at a later time.

“We’re not imposing a system-wide series of requirements now. We’re saying that we will work with each group, whether it is a domestic broadcasting group or a streaming group, to say how can you best fulfil these general principles, and that will be forthcoming,” said Shortliffe.

The CRTC is also establishing a new fund to support specific TV channels, including CPAC, the Canadian service that provides direct coverage of political events. CPAC recently cancelled two flagship programs, citing “accelerating revenue decline,” an uncertain broadcasting landscape and delays by the CRTC in modernizing the broadcast system

The Services of Exceptional Importance Fund will replace a funding mechanism which sees TV service providers like cable companies pay wholesale rates on a per-subscriber basis.

Shortliffe said that funding base has been in decline, noting “this has put a lot of strain on those services.”