PCH memo on Netflix, obtained under ATIP, https://www.scribd.com/document/383336048/PCH-Memo-Bell-Netflix

PCH memo on Netflix, obtained under ATIP, https://www.scribd.com/document/383336048/PCH-Memo-Bell-Netflix

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Government Memo Suggests Netflix Outspends Canadian Private Broadcasters on Canadian English Scripted Programming

Canadian Heritage Minister Melanie Joly view of cultural policy shifted gears in recent months with her emphasis on the need for all players to contribute and rhetoric on “no free rides”, a position that could lead to taxes on Internet services. While Netflix has been a popular target for many Canadian cultural organizations, according to documents released under the Access to Information Act, Canadian Heritage officials appear to have evidence that Netflix spends more on Canadian English-language scripted programming than the Canadian private broadcasters. The revelations come in a June 2017 internal memo to Graham Flack, the Canadian Heritage Deputy Minister, which respond to correspondence from BCE’s Mirko Bibic. Bibic met with Flack in April 2017 and was concerned with department comments about Netflix outspending Bell.

The Canadian Heritage memo summarizes the Bibic email, noting that Bell spends on news and other programming not covered by Netflix. On the issue of scripted programming, however, the memo appears to concede that Netflix spends more than Bell Media. Part of the memo is redacted due to commercial reasons, but the key sentence states:

PCH memo on Netflix, obtained under ATIP, https://www.scribd.com/document/383336048/PCH-Memo-Bell-Netflix

The redacted information would appear to confirm that Netflix outspends Bell on English scripted programming, since that is precisely what Bibic says he was told in his meeting with Canadian Heritage officials. Bibic writes that “you indicated that Netflix spends more on Canadian content than the private Canadian broadcasters.” Bibic notes that he “presumes that Netflix has shared with the Department the data (presumably with appropriate backup) to justify their claim that they spend more than Canadian broadcasters in Canada.”

 

Bibic email, obtained under ATIP, https://www.scribd.com/document/383336048/PCH-Memo-Bell-Netflix

Yet public information on production spending is consistent with the government’s memo. When Netflix began investing in original content in 2013, the total foreign investment in Canadian productions (including foreign location and service production, Canadian theatrical, and Canadian television) was $2.2 billion. That number has doubled in the last five years, now standing at nearly $4.7 billion. Canadian content production hit an all-time high last year at $3.3 billion, rising by 16.1%. Notably, the increased expenditures do not come from broadcasters, whose relevance continues to diminish year-by-year. In fact, the private broadcasters (led by Bell) now contribute only 11% of the total financing for English-language television production. The increasing irrelevance of private broadcasters for financing Canadian television production is particularly pronounced in the fiction genre (ie. scripted programming) with private broadcasters only contributing $59 million or five percent of the total. By comparison, foreign financing was $285 million.

Proponents of Netflix taxes or regulation claim that the emergence of unregulated streaming services such as Netflix will mean less money to support to Canadian productions. Minister Joly appears to have joined that chorus despite the fact that her own department acknowledges that Netflix spends more on English-language scripted programming than Canadian broadcasters without specific regulation or legislated mandates.

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6 Comments

  1. Makes sense. Nothing worse than watching under-funded (cheap!) dramatic content, it’s horrible.
    No way Canadian broadcasters can compete with Netflix, and once Netflix/Disney deal ends next year, we may see even more Netflix investment in Canada…or maybe Disney will invest, who knows!
    The point remains, it is unnecessary to tax Netflix in Canada…in fact it is the wrong move entirely.

  2. “The Canadian Heritage memo summarizes the Bibic email, noting that Bell spends on news and other programming not covered by Netflix.”

    I’m not sure how much Bell/CTV is spending on news, but the local London news program has the budget of a college TV station or less, judging by their production values. It’s not even in HD. It’s an embarrassment.

    Haven’t seen much of old Mirko since the days of the usage based billing (UBB) debate a few years ago when Bell would trot him out to various TV news shows to lie to Canadians about UBB.

  3. Yeah, who cares about French-language production anyway? Why don’t they just speak white?

  4. Fortinbras says:

    From the correspondence cited, it’s not clear whether Netflix spent $127.8 million on certifiable English-language Canadian programming in 2016 or even on programming produced within Canada – including the location shooting and post-production of U.S. programs. Without details, the aggregate number is very questionable.

    If the $127.9 million Netflix number is accurate, then those (such as Michael Geist) who celebrated Minister Mélanie Joly’s September 2017 claim that Netflix would spend at least $500 million over five years on Canadian production should reconsider how meaningful Netflix’s commitment was. Netflix was already spending more than $100 million a year on “production in Canada” prior to Joly’s new deal.

    What is more, as suggested by the previous comment on this page, the growth of unregulated streaming services means less money to support Canadian productions, if we take the time to include French-language production in the “Canadian” total to which Michael Geist refers.

    Thank goodness if Minister Joly has shifted gears in recent months with an emphasis on the need for all players to contribute (“no free rides”). Perhaps she no longer believes in the rhetoric of Internet “exceptionalism” which seeks to shield digital television programming services operated by giant American companies from the fiscal and regulatory obligations of their domestic counterparts. Even the staid old Toronto Globe and Mail, changed its anti-government tune (a little) in an editorial last week, distancing itself from the conservative and libertarian think tanks from which Michael Geist appears to draw his inspiration on issues related to broadcasting.

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