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Netflix in campaign to ‘set record straight’ on $500-million pledge for Canadian productions by Daniel Leblanc

Oct 10, 2017

Source: Globe and Mail

After facing widespread criticism from key players in Canada's cultural industries, Netflix Inc. has started a public-relations campaign to "set the record straight" about its pledge to spend $500-million on Canadian productions over the next five years, most notably that that spending will be in addition to its existing plans.

The streaming service and the federal government have faced a series of attacks over the fact the company does not pay sales taxes in Canada and refuses to submit to any quotas on its television productions in the country.

After staying largely silent in recent days, Netflix has issued a long statement to fight back against the attacks that are widely circulating in Canada.

"Since the announcement, we've seen lots of excitement, questions, and even some conspiracy theories about our investment. We'd like to set the record straight," said Corie Wright, Netflix's director of global public policy, in the statement.

For starters, the company is arguing in a new blog post that its recent price increase in Canada was in no way related to the promised investment in Canada, but was rather already in the works.

Secondly, the company said that it did not invest in Canada in return for a tax break from the federal government.

"We have not made any deals about taxes. Our investment was approved under the Investment Canada Act. No tax deals were part of the approval to launch our new Canadian presence," Ms. Wright said.

"Netflix follows tax laws everywhere we operate. Under Canadian law, foreign online services like Netflix aren't required to collect and remit sales tax." The company is stating that its deal with Canadian Heritage Minister Mélanie Joly is for the production of content above and beyond existing plans.

"Our commitment marks a long-term investment in Canada – not just a next-week, next-month, or next-year investment. That means that now that we've been given the green light to establish a local production presence, we have some planning and hard work to do before we can make any additional official announcements," Ms. Wright said.

Since the Netflix investment was announced on Sept. 28, a number of critics have said the government should have tried to force the U.S.-based company to play by the rules in place for Canadian broadcasters.

"It's unfortunate that the government doesn't hold all broadcasters and distributors to the same rules when they are working in Canada," said David Sparrow, national president of the Alliance of Canadian Cinema, Television and Radio Artists, which represents 23,000 people working in film, television and digital media.

"In Canada, we have created regulations and rules by which companies are allowed to access our Canadian people and marketplace. Netflix and the other over-the-top services are not necessarily contributing to that content creation," he added.

Other online players are more positive, stating Ottawa is looking to the future with the deal with Netflix and, eventually, other digital platforms.

"This was a bold and courageous move in building partnership between government and private enterprise," said Shahrzad Rafati, the founder and chief executive of Vancouver-based BroadbandTV. "Digital is undeniably the future, and whether the government engages with platforms like Netflix or not, they will garner eyeballs and be successful."

© Globe and Mail