CBC Wants Netflix Tax

Netflix is a disruptive technology because it frees people from commercial television networks and cable.  With an internet connection, you can watch all the TV shows and movies for as single $8 a month payment.

It is inevitable that indentured media outlets like the CBC would fight back with regulatory threats instead of adopting new media.

The Huffington Post Canada  |  By Daniel Tencer – The CBC and Netflix have found themselves on opposite sides in a battle over the future of funding for Canadian content.

The CBC wants the CRTC, Canada’s telecom regulator, to require Netflix to subsidize the production of local programming.

In a submission to a CRTC review of Canadian TV regulations, the broadcaster argued any “over-the-top” streaming service, such as Netflix, that earns more than $25 million a year in Canada should be required to pay into the Canadian Media Fund, Cartt.ca reports.

But Netflix is adamant it should stay exempt from paying into the fund. In its own submission to the CRTC, the U.S.-based streaming service said a “Netflix tax” — as it called it — would force the company to raise prices for Canadian consumers.

The company argued it’s unfair for it to pay into a media fund that it cannot draw on to finance its own original programming.

The tax “might translate into an increase in price without … a commensurate benefit for Canadian content, its producers, or Canadian consumers,” Netflix said, as quoted at the Hollywood Reporter.

The tax would “amount to subsidizing productions made primarily for Bell, Rogers, Shaw/Corus and Videotron, who would acquire exclusive online streaming rights in addition to broadcast rights,” the company said.

[Netflix already licenses Canadian movies and Canadian television programs for Canadian customers from Canadian media distributors like Alliance Atlantis.]

The CRTC has previously ruled that over-the-top streaming services like Netflix should be exempt from CanCon rules, but as services like Netflix take an ever larger share of the TV viewing market, groups like the Canadian Media Producers Association (CMPA) are calling for a rethink of that position.

The group estimates Netflix’s Canadian revenue at $650 million a year, given an estimated 6 million subscribers. [Industry analysts doubt that Netflix will ever make as profit in Canada considering the fees it pays for media licenses exceed revenues.]

“There is therefore no denying that, regardless of whether it siphons subscribers from licensed [cable and satellite companies] or simply supplements subscribers’ television viewing, Netflix [has become] a significant player … in the context of the entire Canadian broadcasting system,” the CMPA said in its CRTC submission.

The CRTC is undertaking a thorough review of Canada’s broadcast regulations, in an effort to update them for the rapidly changing new media environment.

As part of the process, it collected submissions from the industry and citizens on everything from the future of CanCon to “pick-and-pay” pricing schemes and the “mandatory carriage” of certain channels on cable and satellite TV.

The deadline for submissions passed late last month, and the next step in the overhaul process will be to hold public hearings, which are slated to begin in September.

By Stephen Pate, NJN Network