Banff: Netflix Launches Canadian Charm Offensive Amid Bid to Regulate U.S. Digital Players

Travelers S02E01 Still 1 - Publicity - H 2018
Courtesy of Netflix

The streamer is battling local TV producers and broadcasters looking to level the playing field with the U.S. video titan: "Global internet giants should not be allowed to write their own rules."

As Netflix vp acquisition Larry Tanz did the rounds of the Banff World Media Festival this week — appearing on a panel and taking pitches for new series from Canadian producers — it was all smiles, handshakes and shoulder pats in his dealings with local TV creators.

"We want to see passionate creators who really have a story to tell that's true to them," Tanz on Tuesday told a festival audience of local producers eager to pitch their homegrown Canadian shows to his programming team. "It can be specific to a region, or to Canada or to a more universal theme," he added, with an eye to Travelers, a Netflix sci-fi drama shot in Vancouver that streams exclusively on the U.S.-based digital platform in 190 world markets for its third season.

But behind the scenes, Tanz and fellow Netflix execs faced a familiar chorus from local critics about the U.S. streamer's evil algorithms, its unfair Canadian market advantage and how it doesn't play by the same rules as domestic broadcasters. And on the eve of Banff, Canadian Prime Minister Justin Trudeau's government in Ottawa unveiled an expert panel to investigate ways to regulate online video and music streaming services and tax their growing business presence north of the border.

"Digital platforms greatly benefit from our creative industries. They must do their part," federal heritage minister Melanie Joly declared during her opening keynote address in Banff. Her goal: deciding whether and how to force Netflix, Spotify and other U.S. digital players to follow "Canadian-content" quotas and join the decades-old broadcasting system, and yet doing so without driving up the monthly cost for Canadians of U.S. digital service subscriptions.

Against that political backdrop, Tanz's task this week at Hollywood's Rocky Mountains retreat has been to demystify the streaming behemoth to local TV creators, in part by offering Travelers as a case study of how they can make shows together. Elizabeth Bradley, then vp of content at Netflix, earlier held a fireside chat at the Canadian indie producers' Primetime conference in Ottawa in Feb. 2018 to similarly educate TV creators on working with the streaming giant.

"The numbers don't determine what shows we make. We have to make creative bets without the data telling us whether stand-up comedy will be successful, whether Korean drama will be successful, whether an unscripted show in Mexico will be successful. So the ideas drive the decisions," Tanz told The Hollywood Reporter.

As they meet with Canadian writers, producers and broadcasters, hearing pitches, buying shows and partnering with local networks like the CBC on series like Alias Grace and Anne with an E, the goal is to help build a business for Netflix in Canada, and for Canada. "I've been to Banff before, and other people on our team come here on a regular basis. We love to talk about content, as opposed to the Netflix strategy. There's plenty of other forums that cover that," Tanz insisted.

Travelers creator and executive producer Brad Wright added that he pitched his homegrown series, which is shot with an all-Canadian crew and talent, as he would to any other TV network. "They're very creative-driven. They like someone with a creative vision and kind of let you do your thing. You get notes, but there's no manipulation," Wright said of his experience with Netflix.

Despite that optimism, the unfolding Canadian debate this week comes down to deciding how a heavily regulated Canadian media industry should stick its hands into Netflix's deep pockets as the streaming giant expands into Canada and the rest of the world market.

The U.S. streamer has already committed to invest at least $500 million over five years in Canadian production, which includes $25 million in industry development. In reality, Netflix currently pours more than $100 million a year into Canada's production sector, both for original Canadian series it acquires and its own films and TV series shot here. 

Despite that commitment, Netflix's critics are urging Canada to start regulating U.S. digital platforms operating locally, and to force Tanz and his company to create and promote local programming, just as domestic companies already do.

"I do think they ought to pay [for local content]," Barb Williams, executive vp and COO of Canadian broadcaster Corus Entertainment told THR as she voiced concerns over what she sees as an uneven playing field between domestic media players who face mandatory local content spending obligations and online American streaming giants like Netflix and Amazon Prime that do not.

“As technology changes, global internet giants should not be allowed to write their own rules,” added Stephen Waddell, national executive director of ACTRA, the country's actors union. Elsewhere, Martin Katz, an indie producer and chair of the Academy of Canadian Cinema and Television, doesn't buy the argument from Netflix and other American players that they already tap Canadian producers to make film and TV product for the world market, which makes new regulatory obligations unnecessary.

"That's just an excuse for not complying with local spending rules that everyone complies with," Katz argued.

Mark Montefiore, executive producer for New Metric Media, cited the Toronto Blue Jays, the only Canadian team in professional baseball, to illustrate the need for a level playing field between local broadcasters and U.S. digital insurgents.

"If the New York Yankees can get players from Costa Rica, the U.S., from anywhere, and the Blue Jays are forced to only hire Canadian players and pay extra taxes in Canada — how can they compete?" said Montefiore, who recently sold the first two seasons of his Canadian comedy Letterkenny, which co-stars Jay Baruchel, to Hulu for the U.S. market.

He added that the federal government should deregulate all online streaming players in Canada, or not regulate any of them, to end the unfair advantage U.S. digital players have over locals in not having to pay into the traditional TV funding system.

That said, American digital players are still investing in local Canadian shows as Tanz and his Netflix team looked to generate goodwill in Banff.

Midway through the TV market, new casting was announced for an upcoming CBC/Netflix drama, Northern Rescue, which will be toplined by William Baldwin and Kathleen Robertson. "We are extremely pleased to be working yet again with our good friends at Netflix,” said producer Don Carmody (Chicago), who is executive producing the homegrown project and has made three other series for the U.S. streamer via his Toronto-based Don Carmody Television.

But for other Canadian producers not producing for Netflix, there is fear over how to reach nameless, faceless streaming TV execs before they are left behind. That's especially so in French-speaking Quebec, where Netflix programmers last week met with local producers as their provincial government gets set to impose a sales tax on subscribers of U.S. digital platforms.

And even if local producers do land one of their homegrown Canadian series on a U.S. streaming service or elsewhere internationally, they face having less money with which to produce their show, as compared to a U.S. import shot locally, owing to regulatory demands.

Kevin MacLellan, chairman of global distribution and international at NBCUniversal, on Monday talked about his studio having acquired a stake in Vancouver indie producer Lark Productions to give their homegrown series global reach.

MacLellan said local regulations have Canadian content series produced via the Lark Productions subsidiary with a lower per-hour budget than NBCUniversal series also shot in Canada with often the same production crews and infrastructure. 

Take Universal Television's The Bold Type, a Freeform drama that is shot in Montreal. "It's done very well in the U.S. and is selling incredibly well around the world, to the extent its budget is much higher than for a Canadian show. But it's the same group of [production] talent. The only difference is we're spending more money making it," said MacLellan.

He insisted Bold Type underlines how Canada's production talent is exceptional: "We're not the only studio producing so much in Canada."

MacLellan added, however, that Canadian series have smaller production budgets than comparable NBCUniversal series shot across Canada. That's because Lark series are fully Canadian in terms of content and NBCUniversal's investment is structured so it can tap generous tax credits and subsidies available to regulated local producers, but with restrictions.

"[With] the amount of money that we're allowed to spend [for local content] because of quota requirements and the number of hours you have to produce, we're not able to spend the same amount of money on a per-hour basis," said MacLellan. "There's no reason we wouldn't be able to produce with the same talent that's producing the shows for the U.S. [for Canadian content] if we had more money to do it. And those shows would travel far more successfully and get higher license fees outside Canada," he added.

The Banff World Media Festival wraps Wednesday.