Peter Menzies: Canada's cultural protection attempts are having the opposite effect

The CRTC's latest ruling would make the domestic broadcast industry reliant on U.S. giants

We’re deeper in the arms of America now.

And for that you can thank the people whose job it has been for half a century to keep us safe from the threat of the USA’s cultural imperialism.

The Canadian Radio-television and Telecommunications Commission (CRTC) last month shifted the burden of sustaining the nation’s film, television, music and news industries to Donald Trump’s America.

Its May 21 decision, the latest in a series designed to implement the goals of the Online Streaming Act, demands that major companies such as Netflix and Spotify dedicate 15 per cent of their Canadian revenues to certified Canadian content, Indigenous content and broadcast newsroom subsidies. In a previous, preliminary, decision, the CRTC set the contribution level from streamers at five per cent.

While tripling down on streamers, the CRTC simultaneously decided to lower the burden on licensed domestic broadcasters to 25 per cent from between 30 to 45 per cent. Contributions by cable and satellite companies remain at five per cent of revenues.

The outcome, given the growth in streaming and declines in traditional platforms, essentially surrenders Canada’s ability to fund its primary cultural industries domestically and permanently ties the survival of the $10 billion domestic film and television industry (half of which is certified Canadian content) to levies imposed on American companies.

The lowering of Canadian spending obligations for domestic production will also mean Corus, Bell, TVA and Rogers will have more freedom to spend on the acquisition of low-cost American content and there will be fewer opportunities for Canadian entertainers and sports on domestic platforms. The system won’t be entirely akin to that of a 51st state, but it will be close. Less need for Rick Mercer, Eugene Levy, CFL, PWHL, curling, Canada Soccer and basketball and more room for NCAA anything.

The decision is certainly inconsistent with Prime Minister Mark Carney’s efforts to lessen Canada’s economic dependence on the United States and become less subordinate to it. But it is entirely in line with the goals of the 2023 Online Streaming Act which was, as former Prime Minister Justin Trudeau’s cabinet ministers described it, all about getting “money from web giants.”

The web giants, however, have never been real keen on that idea. A coalition of companies including Spotify, Amazon, Disney and Netflix challenged the initial five per cent decision in federal court. The outcome of that remains pending, after which another challenge regarding financial disclosure requirements may be heard.

Chief among their complaints has been the imposition of an obligation to fund Canadian newsrooms. The logic for that remains elusive given that none of the streamers — music or video — delivers news and therefore competes for news consumers.

Little wonder the latest decision was greeted by the U.S.-based Motion Picture Association (MPA) with a both barrels blast.

“The Motion Picture Association strongly condemns the CRTC’s decision to impose unprecedented, unnecessary, and discriminatory investment obligations on American streaming services operating in Canada,” CEO Charles Rivkin stated in a news release. “This burdensome framework unfairly targets global streamers with requirements that directly violate Canada’s obligations under the United States-Mexico-Canada Agreement (USMCA).

“This decision triples the cost of doing business in Canada and will spark even more inflation in the market, making further investment and innovation less attractive. For years, the MPA has consistently made clear that Canada’s Online Streaming Act is an unfair trade practice. We urge the Canadian government to reconsider this approach.”

Almost as if on cue, Heritage Minister Marc Miller indicated that the Carney government might be doing just that. He wasted no time, posting on social media within hours of the decision that:

“We are reviewing the CRTC decision. As we carefully assess its impacts, it will always be paramount to ensure that Canadians continue to see themselves reflected on screen, hear Canadian voices, and celebrate what makes this country unique.”

This will not be happy news for the CRTC, although nor will it be unexpected.

The Americans have not been pleased with Canada’s digital legislation — the Online Streaming Act, the Online News Act and the Digital Services Tax (DST) — since their conception prior to Donald Trump’s second ascension to the presidency in 2024. And their companies certainly aren’t happy with Bill C-22, the privacy-invading, democracy-threatening Lawful Access Act. Carney backed off on the DST last summer at Trump’s insistence and Miller indicated earlier this year that, seeing as the Online Streaming Act had been mentioned by U.S. Trade Representative Jamieson Greer as an irritant, Canada might be open to some amendments heading into CUSMA negotiations. He’ll be thinking even harder about that now.

One possible outcome from Miller’s “review” and assessment of impacts is that Carney’s cabinet will order the CRTC to give this latest decision a second look. That would put its implementation on hold for, probably, at least a year while it waits for what sort of, if any, Online Streaming Act survives trade negotiations. That’s the upside. The downside is that an industry that’s already been on hold for years will continue its stasis.

The CRTC did, in its decision, try to throw the streamers a bone in the form of how they spend their 15 per cent obligation, indicating investment and not just fund contributions could be acceptable. That is a considerable and welcome shift as it is hardly unreasonable to expect foreign companies to invest in Canada’s cultural flourishing. While encouraging foreign investment, no sovereign nation allows its economy to be culturally overwhelmed and plundered.

But the Online Streaming Act, which the government once predicted would be fully implemented by the end of 2024, was never going to find that balance. Instead, without intervention, it appears destined to deliver higher streaming costs to Canadian consumers, possibly fewer streaming companies, and more American dominance of Canadian broadcasting — along with an ever deepening economic dependence on the United States for what will remain of Canadian cultural content.

What was needed from the start was a 21st-Century communications act centred on the internet, with an entirely new regulator focused on opportunities. But that train has left the station and the one the government chose to ride is now a broken down wreck. Every year, we grow deeper into the arms of America.

Peter Menzies is a senior fellow with the Macdonald-Laurier Institute, past vice-chair of the CRTC and a former newspaper publisher.

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