The Canadian government’s decision to partner with American streaming giant Netflix as part of its new cultural and creative industries plan has not come without criticism.
On Sept. 28 Mélanie Joly, Min. of Canadian Heritage, spoke to unveil the plan to “build our Creative Canada.” The most attention-garnering portion of the announcement was an agreement on a $500 million investment with Netflix.
The partnership would see Netflix help fund movies and television shows in both official languages over the next five years, with $25 million going to French-Canadian content.
It would also see the creation of a “permanent film and television production presence,” entitled Netflix Canada.
What isn’t clear from the announcement is whether the $500 million, five-year commitment is different from investments Netflix already makes in Canada.
“Netflix discloses all kinds of information in America through the Federal Communications Commission and the U.S. Securities and Exchange Commission but they don’t disclose diddly-squat in Canada,” said Dwayne Winseck, a professor at Carleton University’s School of Journalism and Communication.
“Basically what we see there is that this is a pledge that’s locked in as a guaranteed minimum. The next question is what happens if they don’t meet the minimum. Well who knows,” said Winseck.
Netflix released a follow-up statement on Oct. 10 entitled, “What Netflix’s half a billion CAD investment in Canada is really all about” in order to set the record straight on questions and “conspiracy theories” about the deal.
The release detailed how the recent price hike for subscribers ($10.99 from $9.99 in the States) was not correlated to the new investment and illustrated what would follow. Still notably missing were any past financial records.
The release also downplayed any possibility of Canadians seeing an Internet broadband or Netflix tax, something Prime Minister Justin Trudeau has adamantly rejected in the past.
New federal NDP leader Jagmeet Singh recently declared his support for the proposed tax, which would see sales taxation rules apply to Netflix and similar foreign online companies operating in Canada.
The tax is already in place in Australia and some U.S. states including Illinois (Chicago), Pennsylvania and Florida.
“This is not the right place to take care of this problem because it’s a general taxation problem and you can’t just single out an American e-commerce provider and apply GST or HST to it but not to any others,” said Winseck.
“You’re not going to get sales tax policy delivered through cultural policy these days, that would be the tail wagging the dog,” Winseck said.
Canadian industry outlook
According to the Canadian Media Producers Association’s (CMPA) Profile 2016 report, Canadian film and television production generated a total of $8.5 billion for the country’s economy in 2015-16.
A 2016 Hill Strategies Research Inc. bulletin stated that the 2014 GDP contribution of the cultural industries ($61.7 billion) was larger than the GDP output of agriculture, forestry, fishing and hunting ($29 billion) combined.
Among the largest contributors to the cultural amount was audio-visual and interactive media at $18.4 billion followed by visual and applied arts at $11.2 billon.
Profile 2016 also stated there were 140,600 full-time equivalent jobs generated in Canada in 2015/2016 by film and television production. (The report used government fiscal year of April 1 to March 31.)
What will happen next?
It also remains to be seen where the money will be spent besides on the broadly worded “original productions in Canada.”
Netflix already licenses Canadian made-content for its service, with TV shows like CBC’s Murdoch Mysteries and Alias Grace, Discovery Channel’s Frontier, and cult-hit Trailer Park Boys. It also produces and/or co-produces smaller productions like I Am The Pretty Thing That Lives in the House which are only available on the streaming service.
Some outside of the three main cities of Toronto, Montreal and Vancouver have doubts of whether they’d feel any effects of the deal.
Bruce Harvey, film commissioner at the Ottawa Film Office, is one of those people. Harvey said he’d like to see some of the funds help Ottawa. A lack of a proper production facility in the city leads to obligatory on-location filming, something that can disrupt neighbourhoods for long shoots.
“When you look at Ottawa, we’re not batting our weight (in film production) when you look at the size of the city,” said Harvey.
“The money (announced) is geared towards production and I think it should go towards production but is Netflix a potential partner for building a sound stage in Ottawa? Possibly, is that something we can talk about? Possibly,” said Harvey.
Prominent Canadian performance associations like the CMPA, the Alliance of Canadian Cinema Television and Radio Artists (ACTRA) and the Writer’s Guild of Canada lauded Joly’s announcement in respective press releases.
However, Stephen Waddell, ACTRA’s National Executive Director, added a “note of caution” about the Netflix partnership saying that Netflix’s ability to create its own rules will “continue undermine our broadcasting system.”
ACTRA’s Nov. 2016 submission to the ministry regarding culture consultations detailed worries about Canadian broadcasters operating within the “traditional system” while others “specifically Netflix, in the same market, are completely exempt” from regulations, taxes and meeting requirements.
Netflix has denied it’s a broadcaster, stating it’s instead an “online service.”
Others saw some positive signs in Joly’s speech beyond the Netflix agreement.
“Probably the more significant part of the Minister’s announcement was the promise to top up the Canadian Media Fund (CMF), because they’ve seen a drop in their revenues,” said Anja Karadeglija, Editor at The Wire Report, an online publication that specializes in business, tech and government.
According to the fund’s website, the CMF delivers “financial support to the Canadian television and digital media industries” and receives money from the government and cable companies. Karadeglija said the top-up is required, since the revenues of TV providers have dropped in recent years.
For Mark Edwards, of Ottawa-based entertainment law firm Edwards PC, Creative Law and a former media producer himself, another positive was the revelations on showcasing the results of this partnership abroad.
“The aspect of the announcement that interested me the most was the $125 million the federal government is going to put into international marketing of Canadian content,” said Edwards, referring to the creative export strategy that was also a part of the minister’s announcement.
Joly proposed $125 million will to go towards the new strategy, which is in collaboration with Global Affairs Canada.
“That jumps out at me because, although Canada currently supports the international sale of its productions, I really do think this is the future of Canadian productions: reaching out beyond Canadian borders to tell stories to the rest of the world and reduce our dependence on the government and mandated subsidies,” said Edwards.
Representatives from Joly’s office were contacted but did not return communication in time for publication.
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