The Canadian Radio-television and Telecommunications Commission ("CRTC") released its long-anticipated decision to require online undertakings to make financial contributions to the production of Canadian and Indigenous programming. In Broadcasting Regulatory Policy CRTC 2024-121 – The Path Forward – Supporting Canadian and Indigenous content through base contributions ("BRP 2024-121"), the CRTC requires online streaming services to make contributions to Canadian and Indigenous content as it continues to implement its plan to modernize the Canadian broadcasting regulatory framework under the amended Broadcasting Act.
Background
In Broadcasting Notice of Consultation CRTC 2023-138, the CRTC stated it would develop and implement this new contribution framework over three steps. The decision in BRP 2024-121 addresses the first step in this process, and provides significant determinations on the following issues:
- Applicability: determining which online undertakings the framework will apply to;
- Base contributions: the percentage of annual Canadian broadcasting revenues that applicable online undertakings will be required to make in support of Canadian and Indigenous content; and
- Recipients of the base contributions: which funds will be recipients of the base contributions.
The remainder of this bulletin outlines the CRTC's determinations on these significant matters.
The CRTC's Determinations
Applicability
The CRTC decided that the threshold for applicability will be $25 million or more in "annual contributions revenues," which excludes revenues generated from audiobook services, podcast services, video game services and user-generated content. Any other revenues derived from broadcasting activity in Canada are included in the annual contributions revenues for the purpose of the base contributions, including revenue derived from providing unique transaction services and revenue from thematic and niche services.
The base contribution will be imposed on online undertakings regardless of national origin, however online undertakings that are affiliated with a traditional broadcasting undertaking or broadcasting ownership group are excluded from the new base contribution obligation.
Base Contributions
The CRTC is imposing a base contribution level of 5% of annual contribution revenues for both audio-visual and audio online undertakings. As noted above, for the purposes of determining the 5% base contribution, revenues derived from podcast services, video game services, audiobook services, and advertising and subscription revenues associated with the broadcast of user-generated content are all considered excluded revenue and do not form part of an online undertaking's annual contributions revenues.
For the purpose of determining applicability and base contributions, the calculation of an online undertaking's annual contributions revenues are based on an online undertaking's "annual Canadian gross broadcasting revenues" (as defined in the Appendix) during the previous broadcast year.
The CRTC will require applicable online undertakings to participate in annual broadcasting surveys, providing information on revenues (including financial statements reviewed by a third-party accountant), contributions and programming to the Commission via its Data Collection System, where it will validate declared contributions with recipient funds.
Recipients of the Base Contributions:
The base contributions will be directed to areas that the CRTC considers to be of immediate need, such as local news on radio and television, French-language content, Indigenous content and content created by and for equity-deserving groups, official language minority communities (OLMC) and Canadians of diverse backgrounds. The decision also contains a series of discreet flexibilities and accounts for direct contributions to certified Canadian content, as set out below.
Contributions from audio-visual online undertakings will be directed to the following funds:
- 2% to the Canada Media Fund and/or direct expenditures towards certified Canadian content (to provide flexibility and to encourage online undertakings to produce Canadian content, the CRTC will allow online undertakings to contribute up to 1.5% of their annual contributions revenues derived from audio-visual activities to the production or acquisition of certified Canadian content (to a maximum of 60% allocated to English-language productions and 40% allocated to French-language productions) – but the remaining 0.5% must be allocated to the Canada Media Fund);
- 1.5% to the Independent Local News Fund;
- 0.5% to the Black Screen Office Fund, the Canadian Independent Screen Fund for BPOC creators, and/or the Broadcasting Accessibility Fund;
- 0.5% to the Certified Independent Production Funds supporting OLMC producers and producers from diverse communities; and
- 0.5% to the Indigenous Screen Office Fund.
Contributions from audio online undertakings will be directed to the following funds:
- 2% to FACTOR and Musicaction;
- 1.5% to a new temporary fund supporting local news production by commercial radio stations outside of designated markets;
- 0.5% to the Canadian Starmaker Fund and Fonds RadioStar;
- 0.5% to the Community Radio Fund of Canada;
- 0.35% to direct expenditures targeting the development of Canadian and Indigenous content (with specific activities being permitted, such as songwriting camps developed for Canadian and/or Indigenous artists and Canadian events, such as shows and festivals, which exclusively feature Canadian and/or Indigenous artists); and
- 0.15% to the Indigenous Music Office and a new fund to support Indigenous music.
Next Steps
The CRTC will impose this new base contribution requirement by way of orders issued pursuant to sections 9.1 and 11.1 of the Broadcasting Act. The text of the proposed orders is set out in the appendix to BRP 2024-121. Interested parties may file comments on the proposed orders by June 14, 2024. Members of OLMCs may submit comments no later than June 25, 2024. Parties may also file a reply on July 2, 2024.
The new framework will take effect in the 2024-2025 broadcast year, with the base contribution requirements set to begin September 1, 2024.
This decision is a significant step by the CRTC in implementing the amended Broadcasting Act, which will continue to take place over the next several years in accordance with the CRTC's recently updated regulatory plan to modernize Canada's broadcasting framework.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.