Streaming services challenge Canadian rules on revenue-sharing for news

A person navigates to the online social-media pages of the Canadian Radio-television and Telecommunications Commission (CRTC) on a cellphone in Ottawa on Monday, May 17, 2021. (Sean Kilpatrick / The Canadian Press)

Global streaming companies said on Thursday they were challenging new Canadian rules that oblige them to help pay for local news, saying Ottawa had acted unreasonably and provided no legal basis for the demand.

The Canadian Radio-television and Telecommunications Commission (CRTC), the national broadcasting regulator, said in June that major online streaming services must contribute 5 per cent of their Canadian revenues to support the domestic broadcasting system, including news generation.

The Motion Picture Association-Canada, which represents firms including Netflix and Disney+, has filed applications in a federal court for leave to appeal the rules and also ask for a judicial review.

"The decision does not reveal any basis for the CRTC's conclusion that it is appropriate to require foreign online undertakings to contribute to news production," it said in a legal filing.

"The CRTC acted unreasonably in compelling foreign online undertakings to contribute monies to support news production."

The CRTC said the funding would be directed to areas of what it called immediate need in the broadcasting system, such as local news on radio and television, French-language content, and Indigenous content.

The regulator declined to comment because the matter is before the courts. It has previously said the rules, which are due to become effective in September, will raise roughly $200 million a year.

The measure was introduced under the auspices of a law passed last year that the government says will ensure that online streaming services promote Canadian music and stories, and support Canadian jobs.

Other streaming platforms the MPA-Canada serves include Paramount, Sony, NBCUniversal and Warner Bros Discovery.

(Reporting by Ismail Shakil, editing by David Ljunggren and Diane Craft)