The Canadian Radio-television and Telecommunications Commission (CRTC) has established an initial base contribution for online streaming services in Canada, with a focus on injecting funds to target areas of interest.
The decision, issued Tuesday (June 4), will require online broadcasters to contribute 5% of Canadian revenues to the domestic broadcasting system as a base contribution requirement.
The requirement applies to foreign-owned streaming services with annual domestic revenues of $25 million or more and does not include online services affiliated with Canadian broadcasters. It is expected to inject roughly $200 million into the domestic broadcasting system per year.
The base contributions will be directed to target areas to help advance policy objectives under the amended Broadcasting Act. They include local news on radio and television, French-language content, Indigenous content, and content for equity-deserving communities and official language minority communities (OLMC).
Within the 5% of contributions from audiovisual streaming services, 2% will be directed to the Canada Media Fund (CMF) or direct expenditures to certified Canadian content and 1.5% to the Independent Local News Fund.
Of the remaining 1.5%, 0.5% will be directed to the Indigenous Screen Office (ISO) Fund; 0.5% for funds servicing equity-deserving groups such as the Black Screen Office Fund, the Canadian Independent Screen Fund for BPOC creators, and the Broadcasting Accessibility Fund; and 0.5% for Certified Independent Production Funds (CIPF) with envelopes that support OLMC producers and producers from diverse communities.
This roughly means that of the estimated $200 million per year, 40% will be directed to the CMF; 30% to the Independent Local News Fund; 10% to the ISO Fund; 10% to funds for equity-deserving groups; and 10% to CIPFs supporting OLMCs.
One stipulation to the CMF contributions is that streamers will be able to use 1.5% (or 75%) of their allocation to the Fund for the production or acquisition of Canadian content, with the remaining 0.5% (or 25%) going directly to the CMF. Of this allocation, a maximum of 60% can be directed to English-language content and 40% to French-language content, differing from the traditional two-third and one-third split. If a streaming service does not use expenditures for French-language content, that portion must be contributed to the CMF.
Audio online undertakings will also be required to make a 5% contribution. Accordingly, the allocation is divided as follows: 2% to FACTOR and Musicaction; 1.5% to a temporary fund for local news production; 0.5% to the Canadian Starmaker Fund and Fonds RadioStar; 0.5% to the Community Radio Fund of Canada; 0.5% to the Community Radio Fund of Canada; 0.35% to direct expenditures to the development of Canadian and Indigenous content; and 0.15% to the Indigenous Music Office and a new fund to support Indigenous music.
The changes go into effect in the next broadcast year, which begins on Sept. 1, with revenues derived from the previous broadcast year.
“This base contribution decision sets the foundation for meaningful participation by online streaming services in the Canadian broadcasting system,” read the Commission’s decision. “The contributions made by traditional broadcasters and online streaming services will be fine-tuned as the Commission moves forward with the implementation of the amended Broadcasting Act.”
The CRTC held a three-week hearings process last November seeking feedback on how base contributions could be implemented in Canada’s broadcasting system.
Global streamers came out firmly against mandatory base contributions, arguing that their business models are fundamentally different from traditional broadcasters, and that they already contribute billions of dollars to the system. The Motion Picture Association – Canada issued a report on Monday (June 3) stating that foreign studios and streamers contributed $7.58 billion for the Canadian sector in 2021-22, with $874 million directed to Canadian-owned content.
A number of Canadian organizations, including the Canadian Media Producers Association (CMPA) and the CMF, argued that registered CIPFs from equity-seeking organizations such as the Black Screen Office and the ISO should receive a portion of the base contributions, with the bulk allocated to the CMF.
Many stakeholders argued that 5% of an undertaking’s revenues would be a reasonable base contribution rate. Broadcasters such as Corus Entertainment and Bell Media argued that a portion of the contributions should be used to support Canadian news programming.
Last May, the CRTC proposed a flexible three-category approach to ensure traditional and online undertakings will contribute to the Canadian broadcasting system.
The first category covers the base contributions above. The second category is a flexible financial requirement, which would let undertakings select their secondary contributions from a number of options; a third category is intangible requirements, which would cover contributions through methods such as promotion and discoverability.
Consultations on the other forms of contributions are currently set for phase three of the CRTC’s regulatory plan to implement Bill C-11, which is expected to begin in late 2025.
The next steps in the regulatory plan include the publication of a preliminary report on the definition of Canadian content and consultations on closed captioning this summer, and consultations on public interest groups and the structural relationships between small, medium and large traditional and online undertakings in the fall and winter.
“Today’s decision will help ensure that online streaming services make meaningful contributions to Canadian and Indigenous content,” said CRTC chairperson and CEO Vicky Eatrides in a statement. “The CRTC will continue to move quickly, listen carefully, and take action as we implement the new legislation.”
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