Business
Netflix in Canada—All in the name of ‘modernizing’ broadcasting: Peter Menzies
From the MacDonald Laurier Institute
By Peter Menzies
Canada’s content czars are stuck in the past and trying to drag everyone back with them
Next week, the Canadian Radio-television and Telecommunications Commission (CRTC) will go live with its efforts to wrestle the internet and those who stream upon it into submission. Whether it fully understands the risks remains unclear.
There are 127 parties scheduled to appear before a panel of commissioners at a public hearing in Gatineau starting November 20. The tone-setting opening act will be Pierre-Karl Peladeau’s always-scrappy Quebecor while the UFC will throw the final punches before the curtain drops three weeks later.
The list of presenters consists mostly of what those of us who have experienced these mind-numbing hearings refer to as “the usual suspects”—interests whose business plans are built around the Broadcasting Act and the requirements of related funding agencies.
The largest Canadian companies will ask the CRTC to reduce its demands upon them when it comes to feeding and watering Big Cancon: the producers, directors, actors, writers, and other tradespeople who make certified Canadian content.
Quebecor, for instance, will be arguing for its contribution to be reduced from 30 percent of its revenue to 20 percent—a draw it proposes be applied to designated streamers. More money from foreign companies and less from licensed domestic broadcasters will be a recurring theme.
But there will also be a new slate of actors—those with business models designed to entertain and attract consumers in a free market—who will be staring down the barrel of CRTC Chair Vicky Eatrides’ stifling regulatory gun for the first time.
Disney+ is set to take the stage on November 29. Meta, the Big Tech bete noire that refused to play along with the Online News Act, is up on December 5.
But the big day will almost certainly be November 30 when Netflix locks horns with the Commission and what appear to be its dangerously naive assumptions.
More than half the streamer’s 30-page submission is dedicated to detailing what it is already contributing to Canada.
Some examples:
- $3.5 billion in investment;
- Thousands of jobs created;
- Consumers are 1.8 times more likely to watch a Canadian production on Netflix than they are on a licensed TV network;
- Le Guide de la Famille Parfaite—one of many Quebec productions it funded—was in Netflix’s global top 10 for non-English productions for two weeks.
Netflix is insisting on credit for what it already contributes. It has no interest in writing a cheque to the Canada Media Fund and takes serious umbrage with the CRTC’s assumption it will.
“The (hearing) notice could be understood to suggest that the Commission has made a preliminary determination to establish an ‘initial base contribution’ requirement for online undertakings,” Netflix states in its submission. “The only question for consideration would appear not to be whether, but rather what funds would be the possible recipients of contributions.
“Netflix submits that this is not an appropriate starting point.”
It gets worse. The CRTC is considering applying some of the non-financial obligations it imposes on licensed broadcasters such as CTV and Global to the streaming world.
Executive Director of Broadcasting Scott Shortliffe told the National Post recently that “Netflix is clearly producing programming that is analogous…to traditional broadcasters” and that it could be expected to “contribute” in terms of the shape of its content as well as how it spends its money.
In other words, the CRTC’s idea of “modernizing” broadcasting appears heavily weighted in favour of applying its 1990s way of doing things to the online world of 2023.
If that’s the case, the Commission is entirely unprepared to deal with the harsh truth that offshore companies don’t have to play by its rules. For decades, primary CRTC hearing participants have been dependent on the regulator. In the case of broadcasters like CTV and cable companies such as Rogers, their existence is at stake. Without a license, they are done. Which means they have to do what the Commission wants. But if the regulatory burden the CRTC places upon the offshore streamers doesn’t make business sense to them, they are free to say, “Sorry Canada, the juice just isn’t worth the squeeze. We’re outta here.”
This is most likely to occur among the smaller, niche services at the lower end of the subscription scale. The CRTC has to date exempted only companies with Canadian revenues of less than $10 million. Any company just over that line would almost certainly not bother to do business in Canada —a relatively small and increasingly confusing market—if the regulatory ask is anything close to the 20 percent commitment being suggested.
Ditto if the CRTC goes down the road Shortliffe pointed to. It would be absurd to impose expectations on unlicensed streamers that are similar to those applied to licensed broadcasters. For the latter, the burden is balanced by benefits such as market protection granted by the CRTC.
For streamers, no such regulatory “bargain” exists. Too much burden without benefits would make it far cheaper for many to leave and sell their most popular shows to a domestic streamer or television network.
The Online Streaming Act (Bill C-11), which led to this tussle, was originally pitched as making sure web giants “contraibute” their “fair share.”
So, as it turns out, was the Online News Act (Bill C-18).
That legislation resulted in Meta/Facebook getting out of the news business and Google may yet do the same. As a consequence, news organizations will lose hundreds of millions of dollars. Many won’t survive.
Eatrides and her colleagues, if they overplay their hand, are perfectly capable of achieving a similarly catastrophic outcome for the film and television industry.
Peter Menzies is a Senior Fellow with the Macdonald-Laurier Institute, a former newspaper executive, and past vice chair of the CRTC.
MxM News
Quick Hit:
Ontario Premier Doug Ford announced Tuesday that the province is suspending its 25% surcharge on electricity exports to the U.S. following President Trump’s decision to double tariffs on Canadian aluminum and steel.
Key Details:
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Ford confirmed Ontario’s suspension of the electricity surcharge after Trump’s tariff escalation put Canadian industries under pressure.
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The Ontario premier said he and Lutnick would meet with U.S. Trade Representative Jamieson Greer on Thursday in Washington to discuss a “renewed USMCA.”
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In a statement on X, Ford acknowledged the move, stating, “In response, Ontario agreed to suspend its 25 percent surcharge on exports of electricity to Michigan, New York and Minnesota.”
Diving Deeper:
Just hours after President Trump doubled tariffs on Canadian aluminum and steel, Ontario Premier Doug Ford announced Tuesday that the province will suspend its 25% electricity surcharge on power exports to three U.S. states. The policy reversal comes as Ontario seeks to avoid further economic retaliation from Washington.
Trump’s latest round of tariffs—upping duties on Canadian steel and aluminum to 50%—were issued in direct response to Ontario’s electricity tax on U.S. consumers in Michigan, New York, and Minnesota. The move threatened to escalate an already tense trade standoff, with Trump warning of additional penalties targeting Canada’s auto sector if broader trade disputes weren’t addressed.
Ford took to X to confirm Ontario’s decision to pull back on the surcharge, saying he had a “productive conversation” with Commerce Secretary Howard Lutnick. The two will meet in Washington on Thursday alongside U.S. Trade Representative Jamieson Greer to discuss a possible “renewed USMCA,” signaling a potential shift in trade relations between the two nations.
“In response, Ontario agreed to suspend its 25 percent surcharge on exports of electricity to Michigan, New York and Minnesota,” Ford and Lutnick stated in a joint announcement.
The suspension of Ontario’s surcharge marks a significant concession in the ongoing trade dispute, which has sent shockwaves through financial markets and rattled Canadian industries. Trump had labeled Ontario’s surcharge an “abusive threat” and pledged to take decisive action to ensure American energy security.
Beyond the immediate tariff battle, Ford’s willingness to engage in talks about a “renewed USMCA” could indicate Canada’s growing concern over Trump’s broader trade agenda. The U.S.-Mexico-Canada Agreement, originally signed during Trump’s first term, remains a key economic framework, but Trump has long criticized Canada’s tariffs on American dairy and its limited contributions to North American security.
While Ontario’s suspension of the electricity surcharge could ease tensions in the short term, the broader U.S.-Canada trade relationship remains in flux as Trump continues pushing for more favorable terms for American industries.
MxM News
Quick Hit:
President Trump announced Tuesday an additional 25% tariff on Canadian steel and aluminum imports, raising the total levy to 50%, in retaliation for Ontario’s decision to charge Americans in three border states 25% more for electricity.
Key Details:
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Trump declared Ontario’s electricity surcharge on New York, Michigan, and Minnesota as an “abusive threat,” vowing to declare a National Emergency to counteract its impact.
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The president threatened to impose a steep tariff on Canadian automobile imports by April 2nd if other longstanding trade disputes aren’t resolved, warning that it could “permanently shut down the automobile manufacturing business in Canada.”
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Trump also called out Canada’s minimal contributions to military security, arguing that the U.S. subsidizes the country’s defense by more than $200 billion a year, saying, “This cannot continue.”
Diving Deeper:
President Trump took direct aim at Canada on Tuesday, unveiling an aggressive tariff hike on steel and aluminum imports from America’s northern neighbor. The move raises the current duty by an additional 25%, bringing the total to 50%, and follows Ontario Premier Doug Ford’s controversial decision to slap a 25% surcharge on electricity exports to U.S. border states.
Trump, in a post on Truth Social, blasted Ontario’s move as an “abusive threat” to American energy consumers and promised swift action. “I will shortly be declaring a National Emergency on Electricity within the threatened area,” Trump wrote, saying this would enable the U.S. to “quickly do what has to be done” to counteract Canada’s pricing.
But the trade battle didn’t stop there. Trump also called on Canada to eliminate tariffs of up to 390% on American dairy exports, a policy the president previously fought against during his first term. If Canada fails to act, Trump warned he would ramp up the pressure by imposing new tariffs on Canadian car exports, a move he said would effectively cripple the country’s auto industry.
“If other egregious, long-time Tariffs are not likewise dropped by Canada, I will substantially increase, on April 2nd, the Tariffs on Cars coming into the U.S., which will, essentially, permanently shut down the automobile manufacturing business in Canada,” Trump warned.
In addition to the latest tariffs, Trump took a broader swipe at Canada’s role in global security, reiterating a long-held grievance that the U.S. shoulders an unfair burden for its northern ally’s defense. “Canada pays very little for National Security, relying on the United States for military protection,” Trump wrote. “We are subsidizing Canada to the tune of more than 200 Billion Dollars a year. WHY??? This cannot continue.”
Trump then again floated annexing Canada into the United States to eliminate trade barriers and lower Canadian taxes. “The only thing that makes sense is for Canada to become our cherished Fifty-First State,” he wrote, claiming this would bring economic relief and greater security. “And your brilliant anthem, ‘O Canada,’ will continue to play, but now representing a GREAT and POWERFUL STATE within the greatest Nation that the World has ever seen!”
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