Cultural funding fight with Netflix reignites age-old debate — what is Cancon anyway?

Canadian studios and production crews are busier than ever before — thanks in part to demand from foreign streaming giants such as Netflix, Amazon and Disney-owned Hulu, who need to feed binge-watchers' voracious appetite for on-demand entertainment.

But at the same time, those American behemoths are being accused of not contributing their fair share to produce Canadian content and culture. Many of the shows they're producing here are aimed at worldwide audiences, with little connection to this country or its identity, critics say.

The campaign by Canadian broadcasters to force streaming companies like Netflix to contribute to the Canada Media Fund, which kick-starts Canadian productions that tell Canadian stories, has renewed the long-standing debate in this country about what exactly constitutes Canadian content.

Is it more important to tell uniquely Canadian stories or to have a thriving film and television production industry north of the border? And do thrifty consumers care about either if it means they may have to pay more for the right to binge their favourite programs?

A bustling industry

Hard at work in a suburban Toronto studio, the producer of Netflix's Designated Survivor series, starring Canadian actor Kiefer Sutherland, doesn't have time to even think about such concerns.

Currently shooting its third season, Canadian-born Chris Grismer heads up a team of about 200 television and movie professionals — camera and sound technicians, hair and makeup professionals, directors, staging and props people.

"It's difficult to get crews right now," said Grismer, who grew up in Saskatchewan. "It's difficult to even find a spot to shoot in Toronto, because everything that could be studio space has already been turned into studio space."

Supporters of Canadian culture point out that much of the boom in production here stems from the creation of American programs like Designated Survivor. Known in the business as "service production," nothing that ends up on the screen will say "Canada," despite it being shot here by Canadian professionals, often with Canadian stars.  

In Designated Survivor, for example, the son of iconic Canadian actor Donald Sutherland plays the president of the United States, in a completely American storyline.    

But the show's producer wonders what it really means, these days, to refer to content as "Canadian."

"Netflix itself is making a lot of shows that are made by Canadian producers and Canadian writers that I would consider Cancon in the traditional sense of the word," Grismer said during a short break from filming.

Michael Geist, a professor at the University of Ottawa and the Canada Research Chair for the internet and e-commerce, points out the irony that even the television series based on Margaret Atwood's novel, The Handmaid's Tale — an international smash hit made in Canada for Hulu, now shooting a third season — doesn't meet the specific, detailed requirements for Canadian content and therefore can't access certain funding.

The CRTC's points system recognizes the contributions of various production professionals, but not authors.

"Our system right now is among the most rigid anywhere in the world," Geist said. "And so, taking a book by a famous Canadian author and trying to bring it to the screen doesn't get you any further in terms of saying that's actually a Canadian story."

All of this is taking place in an environment where there is no Canadian content emergency.- Prof. Michael Geist, University of Ottawa

With a federal government review of Canada's 30-year-old broadcast regulations underway this month — with the goal of modernizing those rules for the digital age — a chorus of critics are accusing Netflix and the other streaming services of getting a free ride in this country.

"Many players, including web giants, are not contributing to the system," Heritage Minister Mélanie Joly said last summer, when she announced the review. "What we want is fairness in the system."

Unlike those web giants, Canadian distributors of broadcast content such as Rogers, Shaw and Bell are required to pay a portion of their revenues into the Canada Media Fund, an agency that uses those funds to launch Canadian programming. It's a system that has been phenomenally successful, according to Reynolds Mastin, CEO of the Canadian Media Producers Association.

"We punch well above our weight," he said of Canada's cultural output. "Especially when you consider that we're right next door to the biggest global entertainment market in the world with 10 times the number of people."

Without the funding from streaming services though, he and other stakeholders fear Canadian programs such as Kim's Convenience, Letterkenny and Murdoch Mysteries, or movies like the Oscar-winning The Shape of Water, wouldn't get made.

Michael Geist has a much different assessment of the situation.

"All of this is taking place in an environment where there is no Canadian content emergency," said Geist, who made a submission to the expert panel reviewing the regulations.

"The data tells us that the amount being spent on registered Canadian content is record-setting right now."

Geist worries that adding regulations and fees to streaming companies will increase prices for consumers.

"We know right now that Canada has some of the most expensive internet and wireless services in the world, so saying that we're going to increase fees on those services, I think, runs the risk of making those services less affordable."

He also notes that while domestic broadcasters carry an additional financial burden related to Cancon, they also enjoy certain benefits: access to cultural funding, copyright rules related to distribution, and access to wireless spectrum.

'Market-driven' investment

In its submission to the federal government's expert panel, Netflix says streaming companies have "enriched Canada's production sector, without government intervention."

The company says it will "significantly" exceed the $500 million it promised to spend on productions in Canada over five years, and will spend $25 million on initiatives "to develop the next generation of diverse Canadian talent, with a focus on francophones, women, and Indigenous creators."

Netflix insists it should be excluded from any new proposed legislation.

"We do not subscribe to the theory that a 'regulated investment' is more valuable than a consumer and market-driven one," the company's submission says.

It's a battle Netflix has been fighting in other countries as well. France and Germany are bringing in rules that will require the streaming giants to showcase programming indigenous to those countries on their sites.

Reynolds Mastin of the producers association says the Canadian industry has reached "a critical juncture in its history," and it's time to change the rules.  

"Those companies that profit from the Canadian system should also contribute to it."

The expert panel will release a summary of the 2,000 submissions it received from interested parties in June, and recommendations are expected by the fall.