Netflix’s secrecy clashes with CRTC mandate

Canadian regulators say not providing expenditure and subscriber info puts the U.S. streaming service's new media exemption licence at risk.
September 19, 2014

Netflix was clear Friday what the CRTC’s Let’s Talk TV hearings were not about.

They were not about readily handing over the subscriber numbers for Netflix Canada to the regulator, or Netflix Canada revenues and the production budgets for Netflix series shot in Canada.

“(That’s) a heck of an answer for someone who takes hundreds of millions of dollars out of the Canadian economy.”

Or much else without being compelled to do so with an order from CRTC chair Jean-Pierre Blais, discovered Corie Wright (pictured), director of global public policy for the U.S. video streaming giant, during her appearance at the hearings.

Blais early on let Wright know it was “actually quite offensive” to not trust the CRTC with confidential information.

That tense exchange changed after a break where Wright let the CRTC know it had talked to counsel and now felt comfortable with providing business data to the regulator, providing it could guarantee its confidentiality.

That wasn’t enough for Blais, who promptly let Wright know withholding requested business data to the CRTC on a confidential basis put its exemption order to operate in Canada at risk.

Blais then ordered Netflix to supply requested business information to the CRTC by Monday at 5 p.m.

Wright then asked if the regulator could “guarantee the confidentiality of the information requested.

“You are not entitled to a special treatment. The order stands,” Blais responded coldly.

That didn’t have Wright backing down when CRTC vice chair Tom Pentefountas later asked for Netflix’s production expenditure in Canada.

“Are you undertaking to do it, or do we have to order it?” Blais, who like Wright are trained lawyers, asked. Wright then asked if the information submitted could be guaranteed to remain confidential. “I never use the word guarantee. I am ordering you again to provide the information,” Blais next said, continuing to load Netflix up with weekend homework.

Wright in her opening remarks to the CRTC pointed to Netflix not being required to offer Canadian content, but did so anyways, both in Canada and abroad.

Given the popularity of Canadian content on Netflix Canada, Wright argued against regulatory intervention online. “Given this success, regulating internet content appears unnecessary. Worse still, it could generate outcomes inconsistent with public policy objectives,” she added.

But Wright was reluctant to provide key data on Canadian content expenditures when later ordered to do so by Blais and Pentefountas.

“Yes, again I have to assess whatever information we have that will be responsive to that. I don’t have that off the top of my head,” she said when ordered to provide confidentially how much Netflix paid for rights to Canadian content. She insisted some “data roll-ups” that the CRTC was asking for could not be pulled together over the weekend.

“Then I’m going to have to order you to provide that information by 5 p.m., or whatever date we will amend depending on the information we receive on Monday,” Blais said, pushing back.

Pentefountas, while joking at times with Wright, during his questioning also said her reluctance to accept CRTC requests for information represented “a heck of an answer for someone who takes hundreds of millions of dollars out of the Canadian economy.”

Wright held her ground, telling the CRTC that the lack of a guarantee of confidentiality threatened that key business data from Netflix could be made public.

“We were given to understand that in submitting information to the commission, while it could be given treatment, in fact it could not be guaranteed confidentially if somebody decided to request the commission make it public and apply a public interest test,” she argued.

“We understand that, and the assurance has been quite clear,” Pentefountas said.

When the CRTC vice chair handed the questioning baton to Blais, the discussion with Wright then settled down to other business issues, like promotion and algorithms operated by Netflix and how it was selecting and streaming French language programming in France.

Wright also promised to get back to the regulators about details of Netlix’s operations in Europe. Canada is looking closely at how the company deals with government oversight in France, where the ministry of culture imposes a 2% VOD tax on revenues that are north of 10 million euros, and does not allow films to be streamed on SVOD services less than 3 years after their initial distribution.

The CRTC wants to know if the U.S. company is willing to appease the French by following rules around discoverability and funding of local content, and if so, why it wouldn’t be able to do that here.

“How long do we have to wait for a Canadian House of Cards or Marseille?” Pentefountas asked.

From Playback/with files from Melita Kuburas

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  • liam young said:

    Quote: “(That’s) a heck of an answer for someone who takes hundreds of millions of dollars out of the Canadian economy.”
    Do we ask the same thing of Costco, WalMart, Home Depot, Best Buy, Lowe’s and hundreds of other conglomerates that sponge billions from the Canadian economy?
    I can’t get over the audacity of the CRTC grilling an innovator like Netflix. If you don’t know, the CRTC works for Rogers, Bell and other media monopolies in Canada, so it’s easy to understand Netflix reluctance to reveal any data about its business. The CRTC does NOT represent the interests of Canadians simply interested in content at a reasonable price.
    The CRTC has outgrown its usefulness. Time to shut it down before they bring about another tax, only to hand it over to their friends at Bell and Rogers.

  • Frank Massa said:

    I love it.. you tell Blais NETFLIX !

  • Evolvenow said:

    I couldn’t agree more emphatically with Liam. The Canadian telcos have grown fat inside their walled gardens. Netflix is threatening to tear down those walls and give Canadian consumers – and producers – access to global markets unfettered by self-interested bureaucrats. The CRTC was once a cultural necessity, now it is a corrupt inhibitor to progress.

  • Sylvain said:

    Liam, I’m so sorry to hear that from you… I think you are out of line regarding that.

    First, tens of millions of GST and PST are lost because Netflix is an out of Country company.
    2nd, they broadcast canadian content without having invested in those content. Netflix should participate in the Canadian content fund as all the others. That goes for Amazon and Google too.

    Actually, we are giving Netflix a great ride without any regulation, that’s simply outrageous !

  • Evolvenow said:

    Sylvain, it’s time that Canadian media got off the government teat and acted like a global business. We have world-class media talent and infrastructure, but our dependency on government handouts leaves us ingratiated to bureaucrats. In the meantime, Bell Rogers Shaw etc continue to grow fat on an artificial divide originally created to foster the early sprouts of Canadian content.

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