CMPA invokes threat of Netflix to argue for more Cancon funding

GATINEAU--In response to the potentially disruptive forces of Netflix Inc. in the Canadian broadcasting system, the CRTC should hold firm on its Canadian content spending requirements in its new group-based licensing system, encouraging more support, not less, the Canadian Media Production Association (CMPA) told the commission Thursday. CMPA president and CEO Norm Bolen told commissioners that Netflix could be a spur for the creation of more Canadian content. If American content becomes more difficult for Canadian broadcasters to acquire as a result of over-the-top services like Netflix picking it up, he said, investing more in Canadian content is the best way to compete. “The Canadian broadcasters say reduce the Cancon obligations. We say the ultimate consequence of reducing Canadian content obligations is that you’ll have significant problems in the system,” he said. “We should be investing more in Canadian programming to differentiate our services from those American broadcasting services.” The CMPA defended the CRTC’s group licensing framework’s requirement for 30 per cent Canadian programming expenditures and five per cent for programming of national interest, which includes Canadian scripted dramas, documentaries and awards shows. The CMPA’s calls for more Canadian content spending Thursday followed on three days of hearings that saw complaints about the requirements from major broadcasters. Commissioner Tom Pentefountas, the vice-chair of broadcasting, said broadcasters appearing at the hearings had presented various figures suggesting that Canadian drama “is a loser—a constant and continual loser.” “They’re telling us they are bleeding themselves dry on Canadian works of drama,” Pentefountas said. “It’s a financial nightmare for them.” Bolen said he doesn’t buy the “defeatist position” that Canadian programming is a grand failure for broadcasters. “If you accept that conclusion, then why have Canadian programming at all?” he asked. “Just let the Canadian broadcasters run 100 per cent foreign until that model completely drains away. Because that’s what’s going to happen to it—it’s going to drain away.” But commissioner Leonard Katz countered that broadcasters say American programming generates higher revenues. Showing less American content would mean less revenue and less investment in Canadian programming, Katz suggested. But Bolen said he would not support an argument supporting what he called “the heroin drip of American programming.” “As long as we continue to feed the addiction, we’re actually doing more to accelerate this hurtling toward oblivion of the Canadian broadcasting system,” he said. Also before the commission Thursday, Reel One Entertainment president Tom Berry pointed the finger at Netflix as a “clear threat to our industry” that could hasten the decline of Canadian broadcasting. “The changes that have been transforming the Canadian broadcasting sector and the changes which are clearly visible on the horizon have the potential not only to undermine our current business models but to threaten the foundation of the Canadian broadcasting system itself,” Berry said. Berry warned that Netflix provides an “unregulated alternative” to the content produced by CRTC licensees without contributing to the Canadian broadcast system. He pointed out that Netflix shares pay windows for Twentieth Century Fox titles with Superchannel and recently acquired Paramount Pictures’ Canadian pay windows after the company failed to renew with The Movie Network. He also noted that satellite provider Dish Network recently purchased Blockbuster Inc., suggesting that soon Netflix won’t be the only big over-the-top player around. In less than one year, Netflix has reached nearly 1 million Canadian subscribers, a figure that Berry said took Canadian pay television more than a decade to reach. A new report released Thursday by Solutions Research Group said that 47 per cent of connected Canadians prefer to rent movies online than go to the video store—a significant increase from a number that measured 33 per cent a year ago. “I believe that Canadian companies will need all the flexibility they can get to respond to this attack. And I believe that they will need this flexibility during the term of their licence,” Berry said. Berry said that all Canadian producers would be hurt if no means is found to require Netflix to contribute to Canadian broadcasting. “The term ‘broadcast’ hasn’t meant what it used to mean for 25 years,” he said. When asked whether Reel One could benefit from more demand for productions as a result of Netflix deals, Berry pointed to the Internet’s effect on the music industry, saying not all new technology is a windfall. “I wouldn’t assume that Netflix coming in is going to make me money. Although, if they’re another buyer, I’m in favour of that as long as they contribute to the Canadian system fairly,” Berry said. Pentefountas answered that with a question. “ by forcing them to pay for your product basically, simply because it’s Canadian?” mburgess@thewirereport.ca

CMPA invokes threat of Netflix to argue for more Cancon funding

Broadcast | April 7, 2011

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