A funding design meant to replace the declining 5% BDU levy with foreign streaming money has been withdrawn under trade pressure. The CRTC’s May package must be redrawn, with implications for the AVMSD review and Korea’s levy debate

Canada will scrap the base content contribution imposed on foreign streaming services including Netflix, Prime Video and Disney+, and replace the money with government spending. In a July 17 letter to the Federal Court of Appeal, Michael Morris, senior general counsel for litigation at Canada’s Department of Justice, informed the court that the government intends to eliminate the base contribution requirement on streaming services and to provide government funding in its place. The rate increase alone does not explain how it got here.
Canada’s content funding has run for almost two decades on cable, satellite and IPTV distributors paying at least 5% of broadcasting revenue into production funds, and that money has been shrinking since 2013-14 as subscribers cut the cord. Moving the gap onto foreign streamers was the practical purpose of the Online Streaming Act. When the CRTC’s May package eased obligations on smaller domestic players through thresholds and allocation flexibility while tripling the burden on foreign ones, the file stopped being cultural policy and became trade policy.