Foreign streaming services challenge requirement to pay into fund for Canadian news

Global streaming services such as Netflix and Disney Plus are challenging a regulatory directive under the Online Streaming Act to contribute money to Canada’s broadcast sector, including for local news.

Motion Picture Association-Canada, which also represents platforms HAYU, Sony’s Crunchyroll, Paramount Plus and Pluto TV, has filed two legal challenges in Federal Court in response to the new rule.

The Canadian Radio-television and Telecommunications Commission said in June that foreign streamers must contribute five per cent of their annual Canadian revenues into a fund devoted to producing Canadian content, including local TV and radio news, as well as Indigenous and French-language content.

The CRTC said streaming companies that are not affiliated with a Canadian broadcaster – and that make at least $25 million in Canadian revenue – would be required to pay into the fund, which is expected to inject about $200 million into the system every year.

MPA-Canada is seeking a leave to appeal and a judicial review of the CRTC’s decision, arguing the regulator has no statutory authority to compel foreign companies to support Canadian news production and that it made “errors of law and jurisdiction.”

The U.S.-based Digital Media Association also says three of its members – Amazon, Apple and Spotify – have filed legal challenges to the mandatory financial contributions, calling the CRTC decision “backward-looking” and unsustainable.

The CRTC said in a statement Friday that it will “continue to balance consulting widely with moving quickly to build the new regulatory framework,” but declined to comment on the streamers’ legal challenges as the case is before the court.

The CRTC’s move is meant to level the regulatory playing field between tech giants and cable companies, but a spokesperson for MPA-Canada said requiring global entertainment streaming services to pay for local news “is a discriminatory measure that goes far beyond what Parliament intended.”

“Our members’ streaming services do not produce local news nor are they granted the significant legal privileges and protections enjoyed by Canadian broadcasters in exchange for the responsibility to provide local news,” the group’s president, Wendy Noss, said in a statement.

In its court filings, MPA-Canada also argues that the CRTC rule could indirectly allow the disclosure of foreign streamers’ confidential revenue information to the Canadian broadcasters they compete with.

The Digital Media Association has also expressed concern about its members having to share “sensitive commercial information” with third parties, including Canadian broadcasters.

“The approach taken is backward-looking and bad public policy from the current government of Canada, and fails to acknowledge streaming’s existing contributions to music production,” the association wrote in a statement that urges the CRTC to rethink its implementation of the Online Streaming Act.