Netflix and Disney ask Canadian court to halt proposed streaming revenue tax

Netflix, Disney and other major U.S. streaming services have asked a Canadian court to halt plans by authorities to force them to pay 5% of their domestic sales to help fund local news broadcasts and other domestic content.

The Motion Picture Association of Canada, which represents streaming companies, said the order issued last month by the Canadian Radio-television and Telecommunications Commission “exceeds the authority of the broadcast regulator and fails to recognize the billions of dollars the companies spend in Canada each year,” according to a Dow Jones report.

“Our members’ streaming services do not produce local news and do not benefit from the important privileges and legal protections that Canadian broadcasters enjoy in exchange for the responsibility of providing local news,” said association president Wendy Noss.

The CRTC had previously said payments would begin in the 2024-25 broadcast year, starting Sept. 1, and are expected to contribute C$200 million per year, or about $147 million, to the broadcasting system, according to the report.

In their filing with Canada’s Federal Court of Appeal, lawyers for the streaming companies said the regulator had shown “no basis” for why foreign streamers are required to contribute to the production of local television and radio newscasts.

They argued that the fees could lead to higher prices for Canadian streaming customers, and could even cause streaming providers like Netflix, Disney+, Paramount+ and Max to reconsider their presence in Canada.

The broadcasting regulator “concluded, without evidence, that there is a need to increase support for news production,” the lawyers added in their filing.

“Imposing an obligation on foreign online companies to finance the production of information is not appropriate in light of the nature of the services that foreign online companies provide,” the filing adds.

The Canadian association said the broadcast regulator “acted unreasonably” and is seeking intervention from an appeals court.

The law was passed last year with the aim of ensuring online streaming services promote Canadian music and stories and support Canadian jobs.

Last month, CRTC Chair Vicky Eatrides said the mandatory contributions are intended to address concerns that “certain types of content, such as local interest stories, will no longer be produced or distributed.”

Or that they will become less available because they will not be financed by market forces alone.”

Representatives for the MPA-C and the CRTC did not immediately respond to requests for comment.