Déjá Vu: Canada Reintroduces Legislation to Regulate Online Streaming Services

On Wednesday, February 2, 2022, Canadian Heritage Minister Pablo Rodriguez introduced Bill C-11 titled the Online Streaming Act (the “Bill”), to amend the Broadcasting Act. The Bill is a new version of the Liberal government’s previously proposed broadcasting legislation, Bill C-10, which failed to pass in the Senate last year before Parliament dissolved ahead of the federal election. The Bill proposes changes that would bring online streaming services, such as Netflix, Amazon and Spotify, under domestic broadcasting regulation and may require them to, among other things, make expenditures to support Canadian audio or audio-visual programs. This could potentially include funding for programs created and produced by Canadian minority groups and serving minority populations such as Indigenous peoples, racialized communities, cultural and linguistic minorities, LGBTQ2+ communities, and persons with disabilities.

If passed, the Bill would give the Canadian Radio-television and Telecommunications Commission (CRTC) the power to: (i) decide which streaming services to regulate; (ii) require and determine any financial contributions to be made by these services, and (iii) regulate the discoverability of Canadian programs on streaming platforms. Failure to comply with the CRTC’s orders could lead to monetary penalties.

The Bill addresses and updates certain controversial provisions in Bill C-10 which critics claimed would unduly interfere with non-commercial content on social media. In particular, the Bill is supposed to only cover “commercial” social media content, such as professional music videos, and not, in Minister Rodriguez’s words, “cat videos” or social media “influencers”.¹ According to the Minister, the Canadian government has “listened to concerns around social media and we fixed it”.² Heritage Canada officials have subsequently indicated that the government will be issuing a Policy Direction to the CRTC to guide its determinations on what types of social media content should be caught by and excluded from the Bill once it is proclaimed into law.

Some of the proposed amendments to the Broadcasting Act in the Bill are based on recommendations by the Broadcasting and Telecommunications Legislative Review Panel (the “Panel”), which reviewed Canada’s broadcasting laws and published 97 recommendations in its final report released in January 2020.³ The Panel rejected a so-called “Netflix tax” (i.e., charging consumers an extra levy on subscriptions to streaming services such as Netflix) and instead recommended that streaming services with access to the Canadian market contribute a percentage of their Canadian-derived revenues to fund Canadian programs.⁴ Aligned with the Panel’s recommendations, the Bill proposes to classify internet streaming services as “online undertakings” under the Broadcasting Act. This classification would bring them into the regulatory system that currently only imposes “Canadian content” financial contribution requirements on traditional Canadian “broadcasting undertakings”.

Canada’s Liberal government has a minority in the House of Commons. For the Bill to pass into law, the government will need the support of other Canadian political parties in Parliament. Both the New Democratic Party and the Bloc Québécois are expected to support the proposed legislation, as they both previously supported Bill C-10. The government had previously indicated that if Bill C-10 was passed, and online broadcasters contributed to Canadian content at a similar rate as traditional broadcasters, streaming services could have contributed $830 million in additional funding to Canadian television and music production by 2023.⁵ Presumably, the projections for Bill C-11 would be similar. However, the government has previously acknowledged that the CRTC, as the independent regulator, will determine whether and how online undertakings are required to contribute, and the form of those contributions.

Mixed Reaction to the Bill

Not surprisingly, reaction to the Bill by leading industry players has been mixed. Canadian producers and talent guilds are generally supportive, however some critics are concerned the proposed legislation is too onerous and may alienate international streaming services. Others have noted that the existing CRTC definition of a “Canadian program”, which is based on the minimum participation of Canadians in key creative and technical “point” positions (e.g., writer, director, actor, etc.), is too rigid and needs to be updated for the goals of the Bill to be effectively implemented. In response, Minister Rodriquez indicated he would ask the chair of the CRTC to clarify the definition of Canadian content.⁶ 

Reynolds Mastin, the President of the Canadian Media Producers Association (CMPA), which represents independent production companies, welcomed the new bill, and said it would “reinforce Canadian cultural sovereignty, requiring that foreign tech giants play by the same rules as Canadian companies.” Mastin added that “[t]he Online Streaming Act must ensure that Canada’s indie producers have a fair opportunity to negotiate with content buyers to own, control and monetize the intellectual property that they develop and produce”.⁷ Marla Boltman, Executive Director of Friends of Canadian Broadcasting, said that updating the Broadcasting Act is overdue and necessary to bring large tech companies into the Canadian regulatory system.

The head of public policy at Netflix Canada, Stéphane Cardin, said Netflix is “investing in Canadian creators and working with industry partners to bring Canadian stories to the world…We are reviewing the new legislation, but support a forward-looking and flexible framework that recognizes how different players contribute to our creative system”.⁸

Looking Forward

The Bill passed its first reading in the House of Commons and is expected to have its second reading at the next sitting. It will then be considered by the Standing Committee on Canadian Heritage, before a third reading by the House of Commons. It must then go through three readings by the Senate. It is expected that the Bill will be amended as a result of these reviews.

If the Bill passes, the next steps will involve the issuance of a Policy Direction by the government to the CRTC to guide its use of the new tools afforded by the Bill as well as a series of proceedings conducted by the CRTC with relevant stakeholders. Once those proceedings are concluded, the CRTC will then determine how the new regulatory regime for “online undertakings” will work, who will be part of the new system, and who will be exempt. Most importantly, the CRTC will define the nature of the financial or other contributions by the online streaming services to the Canadian broadcasting system and the new definition of a “Canadian program”. Stay tuned!

For further information concerning the proposed changes to the Broadcasting Act, please contact any member of our Entertainment Group.

¹ Marie Woolf, “Liberals aim to quell free speech concerns with new Online Streaming Act”, the Canadian Press (2 February 2022).
² Ibid.
³ Broadcasting and Telecommunications Legislative Review, Canada’s Communications Future: Time to Act, Final Report (January 2020).
⁴ Ibid at 13.
⁵ Bill Curry and Janice Dickson, “Broadcasting bill targets online streaming services”, The Globe and Mail (4 November 2020).
⁶ Townsend, Kelly, “Minister Rodriguez tables Bill C-11 to amend Broadcasting Act”, Playback (3 February 2022).
⁷ Supra note 1.
⁸ Ibid.