The Canadian Radio-television and Telecommunications Commission (CRTC) has issued its final orders regarding streaming service contributions under the Broadcasting Act, which have gone into effect as of Sept. 1.

On June 4, the Commission ordered foreign-owned online undertakings with annual domestic revenues of $25 million or more — and not affiliated with domestic broadcasters — to contribute 5% of Canadian revenues as a base contribution requirement within the broadcasting system. The contributions will be allocated to various funds in the audio and audiovisual sectors, including the Canada Media Fund (CMF).

The CRTC issued final orders on Aug. 29, ahead of its implementation, to clarify certain aspects of the requirements, including their interpretation, application and data collection. The clarifications are based on comments received from more than 50 intervenors following the June decision.

One key takeaway was the debate over the calculation of the 5% contribution. Several stakeholders, including the Motion Picture Association – Canada (MPA-Canada) and Apple Canada, proposed that the CRTC clarify “that contributions should not be calculated based on the revenues of an ownership group.” Instead, MPA-Canada suggested revising the definition of “annual contributions revenues” to refer to the total revenues attributable to an online undertaking (less excluded revenue).”

The Writers Guild of Canada (WGC) responded stating that MPA-Canada misinterpreted the proposed orders as it referred to an “online undertaking” making contributions.

After reviewing the comments, the CRTC clarified that the intent of the policy is to calculate base contributions at individual online undertaking level. It thereby amended the definition of “annual contributions revenues” to mean “total revenues attributable to an online undertaking derived from its Canadian broadcasting activities during the previous broadcast year less any excluded revenue.”

Another issue was the concern over the double-counting of revenues. The parties seeking clarity were Amazon, Apple and MPA-Canada, among others, who asked that the CRTC clarify that revenues are not counted more than once toward any online undertaking’s contributions. The parties used the example of an online undertaking acting as a reseller for other services.

In response, the CRTC revised its definition of “annual contributions revenues” to clarify that, when calculating annual contributions revenues, if an online undertaking’s service is being resold (either directly to consumers or as part of a bundle), only the portion paid to the undertaking should be included. The remaining portion (the portion retained by a reseller) should be counted by the reseller only. This clarification regarding double-counting also applies when calculating the $25 million applicability threshold.

The CRTC also revised its definition of “annual contributions revenues” to clarify that it “may accommodate requests for alternative reporting periods and permit respondents to file data based on the closest quarter of their respective reporting years.”

The Commission declined a proposal to exclude acquisitions from the measure that allows foreign-owned online undertakings to deduct a portion of their CMF contributions to support English- and French-language Canadian content (as recognized by the CRTC and CAVCO), stating that using the deductions to only support production would not align with the CRTC’s intent to provide sufficient flexibility.

A number of parties also flagged concerns about sharing private financial data to outside organizations. MPAC-Canada specifically mentioned the Canadian Association of Broadcasters (CAB), which operates the Independent Local News Fund that undertakings will need to pay in to. CAB represents private broadcasters in Canada, which are direct competitors.

In response, the CRTC ordered that payments to CAB are contingent on a mutual agreement between both parties, which could come in the form of a non-disclosure agreement or the use of a third-party administrator.

MPA-Canada has challenged the base contributions decision in court on the grounds that the CRTC should not require streamers to pay into a fund for local news when it is not part of their business model.

According to the CRTC, it received more than 50 comments from the industry including broadcasters and distributors, associations representing official language minority communities (OLMCs), associations representing private broadcasters, associations representing the creative sector, funds, advocacy groups, unions and guilds, diversity groups, screen offices, public interest and research groups, and individuals.

The final orders from the CRTC are available on its website.

With files from Kim Izzo

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