By Paul Vieira


OTTAWA--Netflix, Walt Disney and other U.S. streaming companies have asked a Canadian court to stop plans by authorities to force them to fork over 5% of their sales in the country to help finance local broadcast news and other domestic content.

The Motion Picture Association-Canada said the order last month from the Canadian Radio-television and Telecommunications Commission exceeds the broadcast regulator's authority and fails to recognize the billions of dollars the companies spend in Canada each year.

"Our members' streaming services do not produce local news nor are they granted the significant legal privileges and protections enjoyed by Canadian broadcasters in exchange for the responsibility to provide local news," said Wendy Noss, the association's president. The association represents Netflix, Walt Disney, Warner Bros. Discovery, and Paramount Global, among others.

Streaming companies and industry watchers had warned that the levy could lead to higher prices for millions of Canadian subscribers, with others indicating the streamers might reconsider their presence in Canada.

A representative from the regulator, or CRTC, didn't immediately respond to a request for comment on the court proceedings. Last month, the regulator's chairwoman, Vicky Eatrides, said the mandated contributions are meant to address concerns that "certain types of content like local interest stories will not be made or distributed anymore. Or that they will become less available because they will not be funded by market forces alone."

The CRTC had previously said the payments would begin in the 2024-25 broadcast year, starting Sept. 1, and are expected to annually contribute 200 million Canadian dollars, or the equivalent of $147 million, to the broadcasting system.

In their filing with Canada's Federal Court of Appeal, lawyers for the streaming and film companies say the regulator didn't reveal "any basis" for why foreign streamers are required to contribute to the production of local television and radio newscasts.

The broadcast regulator "concluded, without evidence, that 'there is a need to increase support for news production,'" the lawyers said in their filing. "Imposing on foreign online undertakings a requirement to fund news production is not appropriate in the light of the nature of the services that foreign online undertakings provide."

The Canadian association says the broadcast regulator "acted unreasonably," and is seeking appeal court intervention.


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


(END) Dow Jones Newswires

07-04-24 1124ET