Politics

Netflix deal will lead to more Canadian content, heritage minister says

Critics question whether streaming giant getting preferential treatment

CBC News

September 30, 2017

Canadian Heritage Minister Mélanie Joly outlines the Liberal government's vision for cultural and creative industries in a digital world in Ottawa on Thursday. (Adrian Wyld/Canadian Press)

Heritage Minister Mélanie Joly is shedding some light on what Canadians can expect from the government's agreement with Netflix, amid criticism about a lack of details in the new creative sector policy she introduced this week.

The government's creative strategy, announced Thursday, broadly aims to support Canadian culture and includes plans to beef up Ottawa's contribution to the Canadian Media Fund, invest in local news and assist artists, musicians, writers and other creators in a changing digital landscape.

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The plan also includes an agreement with streaming company Netflix to spend at least $500 million over five years on Canadian productions.

One of the questions that remained after Thursday's announcement that Netflix would open a Canadian production company was whether the $500 million would go to creating Canadian content as defined by Cancon rules, or just to producing content in this country, such as when an American crew shoots in a Canadian location. The former would require employing Canadians in key artistic and production roles.

While simply producing programs in Canada doesn't appear to be off the table, the idea is to employ Canadians, Joly told CBC Radio's The House.

"There's no need for Netflix to open a Canadian production company in Canada just to do service production," Joly said, using the industry term for foreign producers using Canada as a shooting location.

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The Liberal government's vision for Canadian content and cultural industries in the digital world goes through a big dose of Netflix. But how will that work? We sit down with Heritage Minister Mélanie Joly to talk about her strategy.  13:59

Netflix also can't use the money to buy content that's already been produced and aired in Canada, Joly's office said.

The company will also be finding ways to highlight Canadian content, such as creating an "award-winning Canadian films" category in its menu, her office said.

Tax advantage?

Critics of the agreement have suggested Netflix is gaining an edge over homegrown companies, since the government's strategy doesn't require the company to pay corporate tax or remit sales tax on its Canadian subscriptions.

Putting a tax on digital platforms is a tough question for Finance Minister Bill Morneau to tackle, Joly said.

"That's, quite frankly, a very complicated question," she said. "All countries in the world are asking themselves how to deal with digital platforms that are mainly American, out of Silicon Valley."

The planned Canadian Netflix operation will be the first production house run by the company outside of the United States.

Globally, Netflix plans to spend $7 billion US on productions next year.

The $500 million allocated for Canada is just a minimum, Joly noted; the company could end up spending more.

Netflix's absence from Thursday's announcement also did not go unnoticed by critics. Joly said the company will be providing more details on its plans soon.

Joly added the government is eyeing other big internet companies with which to make Canadian production agreements.

"Netflix has much more invested in production than any other platform yet … they're the leaders right now in terms of platforms," she said.

"Facebook has said they want to do that. Amazon is right now trying to do that. And so that's why we want to have those discussions."

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David Cochrane puts that question to Heritage Minister Mélanie Joly  9:53

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