Peter Menzies: Hey, feds, how are those broadcasting reforms going?
Not so good, eh? What a shock.
By: Peter Menzies
All the noise, all the clatter surrounding the Online Streaming Act was always going to fade once the legislation was passed and turned over to the Canadian Radio-television and Telecommunications Commission, which is nothing if not good at boring things into oblivion.
That said, watchers of the bill, which gave the CRTC majesty over all things audio and visual on the internet, had been led to believe regulation of the online world would be relatively straightforward. Chairs and Heritage ministers, previous and current, assured the public and politicians that a new structure designed to force foreign streamers to divert their investment into Canadian content funds would be in place by the end of 2024.
After that, the story went, foreign streaming money would be pouring into funds dedicated to Canadian film and television content which would soon become preeminent among your Apple TV and Netflix offerings. In Quebec, francophone music would top everyone’s playlist and existentialist angst would ease — all in time for the election scheduled in 2025.
Outside observers — including this one — were less optimistic, offering Eeyore-like predictions of a process that could drag on for the remaining years of the decade. That, we said, risked bringing an end to the years of prosperity the industry had enjoyed since the dawn of online streaming. There was every reason to believe the greatest period of investment in the industry’s history would fade away in the mists of uncertainty and the nation’s digital producers and musicians would have less access to global markets.
Guess who’s predictions were most likely to have made you money had you fancied a wager?
Those of the skeptics, of course. Who but a fool would put money on the ability of this government and its agencies to get anything done as promised?
The CRTC announced earlier this month that its new target for implementation of the Online Streaming Act (aka Bill C-11) is now — here’s a surprise — the end of next year or 12 months later than its original prediction.
But wait: even if it hits that target, there are still necessary follow-up procedures to be completed. One will delve into how TikTok, YouTube and everyone else can be better at reflecting the government’s diversity, equity and inclusion agenda. The other will review the regulator’s practices and procedures to make sure they are “more agile, easier to understand and more efficient.”
So, practically, we’re now looking at the second half of 2026 before consumers notice any regulator-driven changes in their entertainment choices.
That’s if everything goes smoothly and there aren’t too many more legal actions like the one Google launched challenging the CRTC’s calculation of the fees it charged online content providers to cover the cost of regulating them. Google paid up, but is appealing in federal court because the CRTC included revenue from user-generated content — which isn’t supposed to be regulated — in its calculations.
In summary, one year after the act was passed, the CRTC has incurred one related court appeal, dropped two proceedings, added five more and still hasn’t published any decisions from the three-week marathon hearing held last November and December.
No one outside the CRTC knows for sure why the brakes have been so firmly applied to what appeared to be a hell-bent-for-leather process. But it is probably the fact that they now must grapple with the consequences of their decision to treat the internet like traditional broadcasting. Those are many, but among them is that any actions taken by the CRTC are likely to increase costs and reduce choices for consumers.
That will happen. If the CRTC wants streamers like Netflix to pay into its preferred funds instead of (or in addition to) the way they’ve been investing for the past decade, the money has to come from somewhere. Or — and this is something the CRTC hasn’t faced before — if streamers don’t like the regulator’s new rules, they could just leave the country. Some no doubt will.
In other words, a debacle every bit as precipitous as that which resulted in news providers being banned from Facebook thanks to the Online News Act is possible.
That would not be a good look for the CRTC and it would be an even uglier prospect for a government already facing electoral annihilation, at least if current polls are to be believed.
So it should not come as a surprise that CRTC Chair Vicky Eatrides and Heritage Minister Pascale St-Onge have concluded that prudence is the preferred course.
Under the circumstances, they have chosen wisely. Because evidence continues to show that the premise upon which the bill has been justified — that there is a crisis in certified Canadian content production — is imaginary.
The latest data (see chart below, from the report) from the Canadian Media Producers Association (CMPA) shows that the industry continues to thrive. So much so that it has doubled in size over the past decade, growing from a $5.96 billion industry to $12.19 billion. The Golden Goose has been foreign production, but Cancon is among the golden eggs, increasing in strength by more than 50 per cent to $3.68 billion annually.
The CMPA, however, is not happy. It cautions that these numbers indicate a “high-water mark” fuelled by a post-COVID bounce. Indeed, it is dourly predicting that the impact of industry strikes in the United States, combined with a slowdown in Canadian content commissioning, will shrink the business back to pre-pandemic levels.
People will debate the extent to which that dire forecast is due to regulatory uncertainty, but it is well established that investment goes only where its outcomes can be depended upon.
And, as predicted, Canada is no longer that place.
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The Liberals have walked into a bit of a trap on this one. Streaming services are getting more expensive everywhere, with less new content as the golden age of streaming comes to an end with the end of the “free money” from a long stretch of low interest rates. It’s going to be worse here because of new regulations, and some streaming services may simply walk away. Canadians are going to notice that and resent it, and blame the Liberals. The Liberals will squawk and dissemble that’s it’s really broader trends at play, not really their fault. However, just like inflation, they certainly will have played some part in the problem with their policies and they were in charge when it happened.
TV and movie production was in an unprecedented boom for the past decade because of the rush to build the online streaming services and fill them with content. That’s all come to a screeching halt as interest rates were increased to respond to inflation, and the already dubious economics of the streaming business faced a reckoning with sharply increased borrowing costs for production. The coming downturn in Canadian production needs to be evaluated in that context, but I have little doubt in the ability of the Canadian government to make it worse.
The problem with the CanCon model remains that it doesn’t seem to produce content that Canadians actually want to watch. The old problems with low production values have been addressed with big budgets, and there’s less of the mediocre acting characteristic of a lot of ‘70s and ‘80s CBC and CTV shows. The politically mandated “Canadian” plots and themes have gotten even worse and less appealing to a mass audience with the injection of intersectional theory in everything. Efforts to bring the stories of an unrepresented 1-3% of the population to the screen keeps failing to turn those into stories that can engage even 10% of the audience, let alone everybody. You only have to flip through foreign offerings on streaming services find interesting shows from other countries and cultures and show it can be done, but 70 years of the Canadian bureaucratic approach hasn’t worked.
Hardly surprising. This government seems to be the champion of finding solutions for problems that exist only in their cloistered little minds.