The Money is Heading for the Exits: Disney Pauses Investments in Response to Bill C-11

Investments have started heading to the exits after the passing of Bill C-11. Disney is pausing investments in Canada.

The fallout of the passing of Bill C-11, now the Online Streaming Act, is continuing. Critics have long highlighted the nightmare scenario’s that would befall Canada should the bill pass. This includes the breakdown of innovation inside Canada as digital first creators find out that the government made it all but impossible to succeed online as their content gets downranked, the discouragement of creating new platforms within Canada thanks to the heavy handed regulations, the exodus of streaming platforms for smaller “niche” products, investment dollars heading for the exits as regulatory uncertainty grips the nation, and international trade retaliation from the US to block the impending abuses of the legislation.

Supporters dismissed all of that as little more than conspiracy theories, misinformation, and disinformation. This while doing little to back up their side of the story – opting to instead rely on talking points and relying on the conspiracy theory that any criticism of their holy precious bill is just one giant conspiracy by big tech to thwart efforts to make the platforms pay their fair share, whatever the heck that meant.

Despite the messaging campaigns by the large media outlets in Canada (which turned out to be one of the more ultimate signs of projection when they accuse real journalism sites like us as being “opinion only”), it seems that reality is starting to crash hard, proving that critics were right all along. Already, the nightmare scenario has begun playing out with the smaller streaming services threatening to pull out of the country if they don’t get exceptions to continue operating. This in response to the CRTC consultations.

Now, another warning that has come to fruition is the issue of investment dollars heading for the exits. One of the larger streaming platforms, Disney+, has announced that it is pausing all new investments in Canada for original productions. From Variety:

Disney+ has put the brakes on original commissions in Canada until at least the end of the year, Variety can reveal.

Sources indicate that the Mouse House has put a pin in local programming from across its brands in Canada, and isn’t actively commissioning. It’s understood that this mandate will be in place until the end of 2023 and could extend into 2024.

Disney+ officially launched in Canada in November 2019, but like other streaming services north of the border, it’s taken a few years to get originals underway. Last summer, the company hired respected Telefilm executive Stephanie Azam as its director of content for Canada — an appointment that generated some buzz in the local industry.

One reason for Disney’s absence could be Bill C-11, Canada’s Online Streaming Act, which was passed in late April, and will require online streaming companies to invest in Canadian content (known locally as CanCon), as traditional broadcasters in the country already do. In exchange, streamers could also qualify for certain financial incentives and tax breaks.

As it becomes increasingly clear that Canada is especially hostile to innovation, it is likely that others who have put production dollars in Canada may begin to think twice about such a decision. The fallout in all of this could easily mean that investment dollars starts to dry up in the production sector. That could very easily lead to massive layoffs in the sector – the polar opposite of what the government tried to convince Canadians would happen as part of its sell job of Bill C-11 in the first place. None of this is really that surprising in the end. It was extremely predictable.

“These risks were obvious,” noted University law professor, Michael Geist, “yet much like the risks to blocked news or streaming services, the government ignored them, repeatedly rejecting efforts to amend the bill by addressing the uncertainty. That inaction has consequences and it leaves Canadian consumers and the creative community to pay the price.”

Provinces will no doubt also suffer in all of this. Provinces like British Columbia and Ontario will no doubt feel the brunt of this as both provinces have invested heavily in tax breaks to attract movie and television production companies to come to Canada and film their projects here. If the fallout continues and more production companies start pumping the breaks on investments in Canada, those tax dollars could hit those provinces hard. After all, online streaming is where these companies are focusing much of their growth in the first place. If there are huge additional barriers to entry, what’s the point? There are no doubt other countries that would happily play host to these project – if not, the investments can start folding inwards back to the US.

At any rate, critics have long warned the government that things like this would happen. Those warnings were ignored and the government chose to blindly pass the bill anyway in a fit of wilful ignorance and anger. In the end, all they have accomplished is set the tone that Canada is an anti-innovation and anti-investment nation telling the world to go elsewhere with their money and ideas.

Drew Wilson on Twitter: @icecube85 and Facebook.

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