CRTC Hearings: Paramount Questions Financial Viability of Continuing in Canada

Paramount, owner of streaming service Paramount+, has questioned their ability to operate in Canada under the new regulations.

We are continuing to offer coverage of the CRTC hearing. We’ve already showcased things like Bell’s comments that a level playing field is not enough, and organizations like Corus and Rogers demanding huge chunks of the loot they hope to pillage from successful platforms. The companies bemoaned their lack of ability to innovate and that they should just get free money to make up for their laziness.

Of course, a big problem in all of this is the fact that streaming platforms need to have a financial ability to turn a profit in this country in order to offer their services. Some people might honestly believe that they are profitable already, so paying more shouldn’t be a problem. The thing is, if all of these services they are offering in Canada is no longer turning a profit, then that saps their motivation to offer such services in Canada in the first place.

Yes, you could play the card of Canadian exceptionalism, but if the money isn’t there, then the services those companies offer will also slip through the exits in this country as well. As we’ve seen with Twitch and South Korea, platforms will pull out of countries that are economically unviable because the cost of doing business is too high.

This dynamic appears to be in play for Paramount. Could Paramount+ leave Canada over the Online Streaming Act? Apparently, the door is not closed to that possibility. A transcript of what was said can be read on the CRTC website and some of the comments are a bit spooky.

One of the long running talking points by supporters of the Online Streaming Act is that streamers make lots of money in Canada, and contribute nothing in return. As we’ve already seen in the case of YouTube, that is definitely not the case. Paramount, for their part, also pushed back against this when they said this:

5610 Just yesterday, we announced two more comedy projects in development with the Emmy award winning Canadian producers at Boat Rocker. And we have, once the paperwork is done, several more scripted drama projects, including a truly inventive film from Eva Thomas, soon to be announced as in development.

5611 I’d now like to present just a few highlights.

5612 First is “500 Days in the Wild”, a stunning Paramount+ Original feature doc that is having its world premiere at the Whistler Film Festival this upcoming Friday. The doc follows the journey of Canadian filmmaker Dianne Whelan as she became the first person to travel the 24,000 kilometre TransCanada Trail, the longest trail in the world. Six years later, not 500 days later, Dianne returned home to BC, not worn out but wiser, more hopeful, and with 780 hours of Go Pro footage that she, with us, has distilled into a beautiful, breathtaking two‑hour doc that is a love letter to Canada.

5613 After screening at Whistler, “500 Days” will release in theatres before it then lands on Paramount+ in Canada.

5614 Next is “Hate the Player: The Ben Johnson Story”, a scripted comedy. Yes, a comedy, an audacious, buzzy comedy about the scandal you know and don’t know about Canadian sprinter Ben Johnson. We are working with hilarious Canadian writer Anthony Q. Farrell and the cutting‑edge team at New Metric Media.

5615 We also have “Carpe Demon” and “They Drive at Night”, two really fun drama projects in development with Emily Andras and Craig Wallace, two of Canada’s top sci‑fi genre showrunners.

5616 Living in Canada, each is followed by a massive built‑in global fan base so we’re honoured that both Emily and Craig chose Paramount+ in Canada because of our local roots and our global reach as the home to develop their next series.

5617 And lastly, I want to highlight “Len & Cub”, an event drama series we are proudly developing that is based on a treasure trove of old photos found recently at an estate sale in rural New Brunswick. These early 20th century photos were never meant to see the light of day as they privately, secretly documented the romantic relationship between two young Canadian men in the Maritimes.

5618 On this ground‑breaking project, a true story, we are partnered with Muse Entertainment in Quebec and Maritimer Elliot Page’s Page Boy Productions.

5619 All these projects celebrate Canada, which is our first priority. “Canada First” describes our commissioning strategy and “Canada First” is at the beating heart of our development slate.

These comments definitely serve multiple purposes. The most immediately obvious is the counterpoint to the talking point that streaming platforms don’t contribute to Canadian culture. This is a pretty effective way at countering that by highlighting a number of the investments the streaming platform had made.

Another practical purpose highlighting this serves is to also suggest that those investments are at risk should the Online Streaming Act move ahead. That was made clear during the question and answer period:

5645 MR. SMITH: ‑‑ Commissioner, I want to make sure I answer your question. You know, our initial position, which I might repeat during this conversation a few times, is that we’re not opposed to being a part of the system and contributing to the system. That’s entirely not what we’re saying. We’re just saying in this moment, before we get to step two, that we would prefer to continue with the projects that we’ve already described.

5646 And our biggest challenge, which I think IATSE touched on a little bit, is that we only have a finite amount of resources in market. And we can’t do both at the same time. So our preference in step one right now is just to continue with the projects that we’ve already invested in. And then as we get through step two and better defined Canadian content, I think we’d be able to comment more fully on how we might be able to contribute.

5650 MS. HELLER: Could I just add a little bit to what Doug had to say about that particular question, and again emphasizing that we are here as constructive participants in this, and we certainly recognize that we are going to be making an overall contribution.

5651 But in terms of giving a specific financial requirement at this time, we just feel that we aren’t able to do that because there are just so many things that are unknown to us at this stage that are critical pieces of information for us, such as, you know, what is the definition of Canadian content, to what extent are the contributions that we just described to you, how would those be factored in, how much will they count, you know, will we have equitable access to production funds. So there’s just a lot of open questions that make it very challenging for us to answer that question at this stage of the process.

This does send a pretty powerful message. If the system makes it financially unviable to do business in Canada, then the implication is that the streaming service might need to consider the idea of basically leaving the country. It isn’t just the Paramount+ streaming service that could leave the country, but all of the financial benefits from their investments going with it.

This idea is not even all that new for streamers operating in Canada. Even before YouTube spoke to the CRTC, we reported back in June that Disney+ was halting investment in Canada in response to then called Bill C-11. While the company didn’t say it directly, it was implied that the new financial requirements to stay in Canada would impair their ability to, at least, make future investments in Canada.

If anything, Paramounts position re-iterates what is on the minds of many streamers based outside of the country are thinking: the possibility of halting their investments in Canada and pulling out of the country.

It’s probably fair to say that Paramounts position is that a system that gets put in place would recognize the contributions that Paramount already makes in terms of contributing to the system. That was made additionally clear here:

5657 COMMISSIONER LEVY: Which raises the question, in your worldwide experience, what are the most effective practices?

5658 MR. MURPHY: So quite simply, we think incentives are the most effective practice, right. Requirements, obligations, taxes, right, they tend to be disincentives to the kind of investment that we’re making, that we want to make, that is part of our strategic business model for Canada.

5659 We described for you quite a lot of original Canadian content we’re working on, Canadian programming that we’re acquiring. We’re doing that because we want to succeed in Canada. That’s what Canadians want to see. They know us for our global content, but they want to see Canadian stories and faces. And we intend to deliver that, and that’s what we’re working on now.

5660 And when the Bill passed, I think it was our understanding that that was a real advantage for us. And we would come to you and demonstrate our commitment and our sincerity and describe some of those projects. And you would say, That’s fantastic. Let’s encourage you to do that by counting that and letting you use your strength in directing it to Canadian culture.

5661 We still hope to do that. But we’re here in this phase of the hearing on the initial question. And I think our perspective is there may be consequences that are antithetical to the goals you’re trying to achieve if we jump ahead and move to an initial base contribution when we are just getting started in Canada and have, we think, a very impressive development slate. And we don’t want to divert resources, and that is what a base contribution would do to us.

5662 So I think the question for you all is: Is the trade‑off worth it? We submit that it’s not. And we don’t have to decide all of the questions today at this phase. We just hope we can delay until we can consider all the issues, I hope, starting at the beginning of 2024.

Paramount’s ask in all of this doesn’t seem to be that unreasonable. If you are, for instance, asked, by law, to contribute $10 million per year. Well, if you already have Canadian projects already going on worth $8 million in investments, then the remaining $2 million could be added to the pool afterwards. These are not real numbers, but gives the idea of where I think Paramount is kind of leaning towards. Financial benefits and incentives such as tax breaks would also be something Paramount is interested in as well.

For those pushing for this bill, that is not what they want. For them, if the ask is $10 million, then a company like Paramount is expected to doll out the full $10 million to them all in the name of nationalism. Any financial investments they make over top of it for their own productions would have to be paid out of pocket otherwise. For a company like Paramount, you can see why that is an ask that is too great and would have them considering heading for the exits.

If the CRTC decides to just do whatever the supporters of the bill are demanding, there is a very real risk that numerous platforms will just head for the exits. It wouldn’t necessarily be unprecedented given that Meta already dropped news links in Canada in response to the failed Online News Act law.

Still, it would send a strong message to the world that Canada is closed for business if numerous streaming platforms were to suddenly say they are leaving Canada in response to the Online Streaming Act. The chances of a platform like YouTube leaving in response is pretty low at the moment, but for other platforms, it is a much more open question. As technology continues to move forward, Canada, in that scenario, would get left further and further behind as a result thanks to these backwards looking policies that props up the past at the expense of the future.

Drew Wilson on Twitter: @icecube85 and Facebook.

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