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Summary:

Netflix could soon be forced to spend more money on Canadian content and run programming “that reflects Canadian attitudes, opinions, ideas, values and artistic creativity,” if Canada’s TV incumbents have their way. An industry consortium asked regulators this month to treat Netflix like plain old TV.

Canada

Canadian cable and satellite TV network operators have formed an alliance that’s pushing to get Netflix regulated like a plain old TV network, which would include requirements to spend a significant amount of money on Canadian-produced content. The group sent a letter to Canada’s Radio-television and Telecommunications Commission (CRTC) earlier this month, asking to extend traditional TV regulation to a certain “foreign over-the-top service operating in Canada.”

The alliance consists of 35 executives from private broadcasters and pay TV operators like Rogers, Astral Media and BCE, the operator of the CTV network. Big cable operator Shaw is not part of the group, but is supporting the effort, according to a Globe and Mail report. The paper quotes Shaw SVP of regulatory affairs Ken Stein as saying, “They have to be part of the system.”

Now what would being part of the system mean? If Netflix were regulated like a TV network in Canada, it would have to contribute money to the Canada Media Fund, which receives close to $200 million from cable and satellite TV companies per year. Netflix could also be forced to produce and run a certain amount of Canadian content. Canadian broadcasting law describes these stipulations the following way:

“The Canadian broadcasting system should… encourage the development of Canadian expression by providing a wide range of programming that reflects Canadian attitudes, opinions, ideas, values and artistic creativity, by displaying Canadian talent in entertainment programming and by offering information and analysis concerning Canada and other countries from a Canadian point of view.”

The funny thing about these demands is that private broadcasters have long objected to the idea that similar regulation should apply to online platforms, as Michael Geist pointed out today. For example, Shaw went on the record as saying that there’s no need for Internet regulation just two years ago, saying: “The beauty of the Internet is the power of the customer. The customer should be trusted to make their own Canadian content choices.” Bell, Telus  and Astral also argued against applying broadcast regulation to Internet video.

So why the change? It looks like Netflix’s success took broadcasters by surprise. Geist is quoting numerous executives today saying that the Internet is complementary, not competitive. That’s very different from this month’s open letter, which notes that Netflix directly competes on content. “It is buying exclusive rights with studios in the windows of certain linear Canadian programming services,” the letter reads.

Canadian broadcasters may not actually be successful in their attempts to regulate Netflix, but the mere threat could give investors pause — especially given the company could face similar regulation in other countries. The European media market, in particular, is highly regulated, and any attempt to compete with traditional network operators in countries like the U.K., Germany or France could easily lead to similar resistance.

Image courtesy of (CC-BY-SA) Flickr user Яick Harris.

  1. Canadian broadcasters have managed to stifle domestic OTT innovation using the “restrictions” imposed upon them: CANCON, CMF, etc… and have now been end run by Netflix.

    The Canada Media Fund is abused by these broadcasters in getting to be named as co-production partners in order to access money in this fund and then locking up all the digital & streaming rights for $0.

    CANCON is a protectionist residue left by governments of yore, when Canadian produced content looked distinctively Canadian. Today, Canadian produced content meets or exceeds the quality of any US based production.

    CANCON was also put in place as Broadcasters get to chose what to put on TV. This gave Canadian productions a fair shot at being put on TV. With digital distribution, the viewer makes all the decisions. CANCON or not, they will watch what appeals to them.

    Digital Distribution has also torn down boarders allowing media to flow both ways – in and out of Canada. Today ex-pats and people genuinely interested in Canadian produced content are enjoying Canadian produced titles around the world without having to see it on their local broadcast TV.

    Micheal Geist did an excellent job contrasting the broadcasters position 2 years ago with yesterday’s stance. 2 years ago, they thought no one will watch TV on the internet. They all had their own TV Everywhere plans in place which didn’t really go anywhere. They OWN the TV market so if their plans stalled surely no one else could make a go of it.

    Today, Netflix is showing a way to do it successfully; and they are doing it in their own back yard. The only recourse is to ask the CRTC to do something about it – immediately. The CRTC should just tell the broadcasters that they will revisit this issue in 2014, as they decided two years ago in the last set of meetings on this topic.

    The broadcasters need to evolve and embrace this technology and not look to continually stifle its growth.

    Of note, most broadcasters are also the large ISP’s in Canada. It’s interesting that the cost to deliver a bit of information has gone down over the last decade while the cost to receive that same bit has skyrocketed. Another way broadcasters are trying to put this genie back in the bottle.

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  2. SteveINtheUKok Saturday, April 16, 2011

    I can understand this for content chosen by other people, scheduled programming on a broadcast channel but this is video on demand. They could add as much Canadian content as has ever been made and people will still watch the movie they went to netflix to watch :-)

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