Canada’s Regulator Orders Major Streamers to Allocate 15% of Revenue to Canadian Content

Major television streaming platforms like Netflix and Disney will now be required to direct 15 percent of their annual Canadian revenues toward Canadian and indigenous content, the federal broadcast regulator has announced.

The new threshold triples the original five percent contribution requirement established by the Canadian Radio-Television and Telecommunications Commission (CRTC) in 2024. That policy is currently being challenged before the Federal Court of Appeal by major streaming and entertainment companies, including Apple, Amazon, Spotify and the Motion Picture Association-Canada. A ruling is expected soon, and the payments have been put on hold pending the court’s decision.

CRTC Vice President of Broadcasting Scott Shortliffe said at a May 21 media briefing that the regulator will not stand still while the court challenge proceeds.

“The overall policy of the CRTC is we move forward,” Shortliffe said. “If we waited for courts to rule, whether it’s on the broadcasting or telecom side, [it] would just give an incentive for everyone to take us to court on everything all the time.”

The agency has also restructured contribution obligations for traditional broadcasters. They were originally required to contribute between 30 and 45 percent, but this will be reduced to 25 percent, the CRTC said in a May 21 press release.

“The total contributions are expected to stabilize the funding at more than $2 billion in support of Canadian and Indigenous content, such as French-language content and news,” the regulatory agency said. “This also includes the creation of a new fund to support services of exceptional importance. These measures will help ensure that Canadian stories continue to be told and made available to audiences across the country.”

The CRTC’s decisions are part of its enforcement of the Online Streaming Act, which the United States has flagged as a trade irritant in advance of trade discussions with Canada. Ottawa has argued that the streaming legislation is covered by the cultural exemption specified in the Canada-United-States-Mexico-Agreement (CUSMA).

Shortliffe noted, however, that the CRTC is not involved in any aspect of trade negotiations.

“Because we’re an arm’s length quasi-judicial tribunal, we are not in touch with the government about the status of trade negotiations. We’re applying Canadian law in Canada,” he told reporters. “We believe that they will be respected by these companies. Whether they choose to challenge them through any of the measures that are available in Canadian law is, of course, totally up to them.”

Minister of Canadian Identity and Culture Marc Miller said the Liberal government will review the implications of the CRTC’s latest decision.

“As we carefully assess its impacts, it will always be paramount to ensure that Canadians continue to see themselves reflected on screen, hear Canadian voices, and celebrate what makes this country unique,” said Miller in a May 21 X post.

Rachael Thomas, who serves as the Conservative’s shadow minister for Canadian identity and culture, argues the new CRTC rules will “drive business out of Canada and increase prices for consumers.”

“As Canada approaches the reviewal of CUSMA, the Liberals are doubling down on an existing trade irritant and leaving Canada in a precarious position,” she said on X.

The trade association that lobbies for major Hollywood studios and streaming companies in Canada was also critical of the agency’s decision.

“The Motion Picture Association (MPA) strongly condemns the CRTC’s decision to impose unprecedented, unnecessary, and discriminatory investment obligations on American streaming services operating in Canada,” MPA CEO Charles Rivkin said in a statement.

“This burdensome framework unfairly targets global streamers with requirements that directly violate Canada’s obligations under the United States-Mexico-Canada Agreement,” he added.

Contribution Rules

The CRTC guidelines establish how the funds must be allocated for both streamers and broadcasters. The new rules apply to audiovisual programming, which means it impacts traditional TV broadcasters as well as online platforms that provide television content.

Most of the streamers’ financial contributions can go toward content, though the CRTC is imposing rules on how that money must be spent for the largest streamers.

Streamers generating more than $100 million annually in Canada, for example, are required to allocate 30 percent of their expenditures to collaborations with Canadian broadcasters and independent producers.

Major Canadian broadcasters must channel at least 15 percent of their contributions to news, but those with lower revenue will be exempt from the contribution requirement.

“Under the new rules, broadcasters with annual Canadian broadcasting revenues above $25 million will make meaningful contributions to the broadcasting system,” the CRTC said. “No broadcasters below that threshold will be required to spend on Canadian content, which will reduce the overall regulatory burden in the system.”

Those required to allocate funds toward content will be expected to take action to make Canadian and indigenous content accessible and visible to the public, the CRTC said.

“This will make it easier for people to find this content on the platforms they use, while giving broadcasters flexibility in how they meet the new expectations,” the agency said in its press release.

The CRTC is not imposing a system-wide series of requirements now, Shortliffe said, noting that the details of those requirements will be determined later.

“We’re saying that we will work with each group, whether it is a domestic broadcasting group or a streaming group, to say how can you best fulfil these general principles, and that will be forthcoming,” Shortliffe added.

The CRTC is also creating a new fund aimed at supporting particular television channels, such as the Cable Public Affairs Channel (CPAC), the Canadian service that offers direct coverage of political events. CPAC recently discontinued two of its flagship programs due to an “accelerating revenue decline,” an unpredictable broadcasting environment, and the CRTC’s delays in updating the broadcasting system.

The new fund, the Services of Exceptional Importance Fund, will serve as a replacement funding mechanism that requires television service providers, such as cable companies, to pay wholesale rates based on subscriber numbers.

Shortliffe remarked that this funding base has been decreasing, which “has placed significant pressure on those services.”

The Canadian Press contributed to this report.