By Paul Vieira


OTTAWA--Canada's Liberal government on Wednesday ordered the country's broadcast regulator to revise its released online-streaming decision that sparked the likelihood of fresh trade retaliation from the U.S.

Canada's Culture Minister Marc Miller said the cabinet didn't agree with elements of the May 21 decision, and was worried about significant price increases from streaming providers to comply with the regulatory order. He added the possibility of trade retaliation from the Trump administration also was a factor.

Miller told reporters "it's no secret to anyone" about the Trump administration's dislike for the streaming policy, "but it would be disingenuous to suggest that this is the single issue" that fueled the decision. He added, "There's a real concern, and I don't want to underplay this, around affordability. We know that in countries where these types of decisions have taken place, that there are real impacts on production costs, and potential increase in user fees, which are not insignificant for people that have many streaming services."

Industry watchers and consumer groups said the directive kills efforts by the Canadian Radio-television and Telecommunications Commission to sharply increase the level of payments that U.S. streaming companies like Netflix would have to fork over to finance Canadian productions. The regulator, known as the CRTC, also proposed reducing the financial burden on domestic, over-the-air broadcasters toward producing Canadian content. This prompted a sharp rebuke from Hollywood, which asked President Trump to explore options to compel Canada to reverse its decision.

Under the proposal, online streaming companies like Netflix, Walt Disney, Apple, Amazon.com and Paramount Skydance would be required to allocate 15% of their Canadian revenue--up from 5%--to domestic programming, with an emphasis on French-language and indigenous content. Domestic, over-the-air broadcasting companies, such as those owned by BCE and Rogers Communications, would have their share of revenue drop to 25% from the present 30% to 45% range. However, the domestic broadcasters said their mandatory financial contributions would still increase under this proposal, because the regulator would apply a broader scope of what's considered revenue, while also limiting what type of Canadian programming they could finance.

Miller "killed the centerpiece of the government's broadcasting policy," said Michael Geist, an internet-law expert and professor at the University of Ottawa. "Governments do not move to unwind CRTC decisions within two weeks unless they have concluded that it cannot stand."

The CRTC's decision last month represented the latest attempt to implement legislation adopted under former Prime Minister Justin Trudeau in 2023 to compel online streaming companies to showcase more Canadian content and contribute to the domestic entertainment sector. Wednesday's move also marks the second time in nearly a year that Prime Minister Mark Carney retreated from previous Liberal government tech policy to assuage the Trump administration. About a year ago, Canada ditched a proposed digital-services tax after President Trump halted trade negotiations with Canada.

Miller said the government would develop new policy directives for the broadcast regulator in regards to standing legislation, with an emphasis on keeping streaming services affordable for Canadians. In addition, Miller pledged 600 million Canadian dollars, or the equivalent of $434 million, of immediate support to the country's music and broadcasting sectors. A CRTC spokeswoman said the regulator is aware of Miller's directive, and will review cabinet's policy directives when they are released.

The Motion Picture Association was not immediately available for comment. The powerful Hollywood lobby group said what the Canadian regulator proposed would impose "discriminatory investment obligations" on its members, adding it violated Canada's trade obligations. The U.S. Ambassador to Canada, Pete Hoekstra, weighed in, arguing it represented fresh trade barriers that marked a deterioration in the investment climate for U.S. companies. Canadian broadcasters also harbored concerns, arguing their contributions toward Canadian programming would also increase because the regulator would be applying the 25% burden on a broader set of revenue.

Lindsay Doyle, Netflix's director of public policy in Canada, said the reversal marks "a great step in the right direction," adding the previous CRTC decisions would "make Canada less competitive for production." Netflix said Canadian viewership of the streamer's Canadian content grew by 20%, following the release of popular shows and without regulatory direction. Rogers Communications, a Toronto-based company with broadcast holdings, said it commended the government's "swift and decision action" to direct the regulator to try again.

Miller's decision to halt the regulator's decision comes a day after senior Canadian officials traveled to Washington to try to revive trade talks with the Trump administration, and get negotiations on a more productive path. Discussions between Ottawa and Washington toward the review of the current U.S.-Mexico-Canada trade treaty had essentially stalled, with U.S. Trade Representative Jamieson Greer describing discussions with Canada as challenging. The USTR had flagged the online streaming rules as a source of trade friction.

The Canadian Media Producers Association said that it was concerned that the Liberal government "has sold out Canadian culture in favor of big U.S. tech interests," adding that it is likely that streaming firms would continue to increase their prices regardless of Wednesday's U-turn.

The CRTC's spending obligations on streamers and broadcasters "were way out of line internationally and would have driven up costs for consumers," said Josh Tambish, senior Canada director for the U.S.-based Chamber of Progress, a left-leaning technology industry policy group. "Miller deserves full credit for supporting Canadian content without raising costs or reducing choice for Canadians."

On Monday in the Canadian legislature, Miller along with other Liberal lawmakers voted against a nonbinding motion from the Conservative Party to reverse the CRTC's proposed broadcasting decision. The motion was defeated in a 193 to 134 vote.


Write to Paul Vieira at paul.vieira@wsj.com


(END) Dow Jones Newswires

06-03-26 1813ET