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End free ride for foreign streaming giants

End free ride for foreign streaming giants

Written by
Jerry Dias & Daniel Bernhard
November 12th, 2019
End free ride for foreign streaming giants

This article was originally published in the Toronto Star and is reprinted here with permission

On Tuesday, the Disney+ streaming service becomes available in Canada, hot on the heels of Apple+, which launched on Nov. 1. Many people are celebrating their arrival as a boon for Canadian viewers: hundreds of new programs, available anytime, anywhere, for less than $9 per month.

One of the reasons why these foreign services are so cheap is that the federal government does not require them to invest a single red cent to produce Canadian content or collect sales taxes. Meanwhile, licensed Canadian broadcasters are mandated to invest 30 per cent of their revenues in CanCon.

It is estimated that Netflix made more than $1 billion in Canada in 2018, making them Canada’s largest private broadcaster. If they were held to the same standard as Canadian broadcasters, they would have been required to invest more than $300 million in Canada’s screen industries last year. The government’s decision to exempt Netflix from our rules saved the American tech giant nearly $1 million a day. That’s $1 million a day that goes to billionaire California corporations instead of creating skilled jobs in Canada’s media sector.

And as Disney, Apple, and CBS grow their Canadian businesses, the number of uninvested dollars and uncreated jobs will only grow.

While other countries are reining in the streaming giants, Canada is standing still. The government’s policy effectively sends hundreds of millions of dollars a year to California corporations, at the direct expense of Canadian screen industries and Canadian storytelling.

Some argue that regulating Netflix, Apple, Disney, Amazon, and the other streaming giants is complicated. Because the Broadcasting Act isn’t well-adapted for the internet. Because broadcasting is only part of their business. Because we can’t enforce our laws and rules when American companies are involved.

These excuses are both unfortunate and incorrect. And they’re costing us dearly, as Canadian media jobs go uncreated and Canadian stories go untold.

The truth is, fair regulation for streaming giants isn’t complicated at all: it’s the law. The Broadcasting Act already says that Netflix, Apple, Amazon and Disney are broadcasters. The CRTC has the authority to regulate but has chosen to look the other way, sparing these U.S. tech giants from the obligation their Canadian competitors must uphold.

End free ride for foreign streaming giants

The government could instruct the CRTC to take this on, but has chosen not to.

Instead, this government signed a secret deal with Netflix to make American content on Canadian sets in exchange for exemptions from Canadian regulation and taxation. In 2018, the prime minister himself rose in the House to promise that he would not require firms like Netflix to collect sales taxes. Why? To keep prices down. Yet in the four years since Mr. Harper and then Mr. Trudeau promised “No Netflix Tax,” Netflix has raised its Canadian prices three times. Joke’s on us.

The government’s special treatment for Netflix is unacceptable, and they know it. Before the election, Heritage Minister Rodriguez promised that the next Liberal government would end the “free ride” for streaming services like Netflix.

After the election is now. This is the time to act.

Here are two steps the government must take to restore fairness to Canadian broadcasting.

First, they must require the streaming giants to collect sales taxes. This is a no-brainer. Quebec and Saskatchewan have already proven that this can work. Doing so would generate at least $130 million per year, and level the playing field for Canadian companies. How can our firms compete when their competitors don’t charge taxes? Most countries favour their own firms over foreign competitors. For some reason, Canada is doing the opposite. This reverse national treatment must stop.

Second, the government must instruct the CRTC to stop exempting American streaming giants from CanCon investment requirements. This would infuse more than $300 million into Canada’s screen industries, at no cost to consumers, creating well-paying jobs for Canadian workers telling Canadian stories.

This could be the golden age of Canadian storytelling. But that won’t happen unless the government keeps its promise to end the free ride for foreign streaming giants.

We insist they do.

Jerry Dias is president of Unifor; Daniel Bernhard is executive director of Friends of Canadian Broadcasting.

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