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Will U.S. streaming companies play ball with the CRTC?: Peter Menzies

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From the MacDonald Laurier Institute

By Peter Menzies

Domestic streamers have to live with the rules the CRTC comes up with, not so when it comes to global streamers

The fundamental weakness in Canada’s Online Streaming Act will be exposed for all to see on Nov. 20, when the Canadian Radio-television and Telecommunications Commission (CRTC) comes face-to-face with American streaming companies.

For the first time, the regulator will be dealing with companies that, if they don’t like the rules and the financial burden the CRTC imposes, are free to leave the country.

To be clear, neither Netflix, Disney+ nor any other company has yet suggested they are prepared to quit Canada. There have been no threats to do anything similar to what Meta did and Google might – stop carrying news – in response to the Online News Act. But there is nothing that compels foreign companies from continuing here if CRTC decisions make it no longer sensible for them to do so.

That shapes the conversation in a way that the commission, which commences a three-week-long hearing Nov. 20 involving 127 intervenors, isn’t accustomed to. Throughout its history, the primary players in CRTC procedures have always been captives of “the system” – domestic companies that depend for their existence on a commission license or rely upon the regulator’s decisions for their sustenance. They may not like the rules the CRTC comes up with, but they have to live with them.

Not so when it comes to global streamers that, as it turns out, are global.

Netflix’s base here is robust – 6.7 million subscribers – but that is just 10 per cent of its U.S. audience and only 2.8 per cent of its global subscriber base. According to its submission to the CRTC, it has already invested $3.5-billion in film and TV production since launching here in 2010 – roughly equivalent to the Canada Media Fund’s spend over the same period. And, it claims, people are 1.8 times more likely to view a Canadian production on Netflix than on TV. Let that sink in.

Disney+ makes similar arguments. It has 4.4 million Canadian subscribers out of a global total of about 147 million (down significantly this year). It points out that it has invested $1.5-billion in Canada, which is one of its top four production markets. As it gently states in its submission to the CRTC: “We encourage the commission to adopt a modernized contribution framework and a revised, modern definition of a ‘Canadian program’ that provide sufficient incentives for global producers and foreign online undertakings to continue to bring large-scale productions to, and make capital investments in, Canada.”

Large domestic companies that have been forced by regulation to contribute to the production and airing of certified Canadian content, meanwhile, argue for their “burden” in that regard to be reduced and shifted onto the backs of foreign companies.

In its submission, BCE Inc., which has a current profit margin of 21.2 per cent, describes the broadcasting system as in crisis, accuses streamers of having “contributed precious little to the Canadian system” and calls for its contributions to be reduced from 30 per cent to 20 per cent of the media division’s revenue – a figure it believes should be applied to all offshore streamers with more than $50-million in Canadian revenue.

BCE Inc. goes on to argue that if the commission takes its advice and forces the streamers to pay 20 per cent of their revenue directly into Canadian content funds, an additional $457-million – growing to $678-million by 2026 – will pour into the pockets of ACTRA, the Writers Guild and others involved in the creation of certified Canadian TV and film content.

And that, right there, is where Netflix, with a profit margin of 13 per cent clears its throat. Politely but firmly, it says the CRTC appears to have already made up its mind that streamers should be paying into funds and “submits that this is not an appropriate starting point.”

The decade prior to the introduction of the Online Streaming Act was by far the most prosperous in the history of the Canadian film and television industry, including in terms of Canadian content production.

Most of that growth took place beyond the reach of the CRTC, which was in charge of an increasingly irrelevant system upon which many legacy companies had grown dependent. But instead of fostering what was working, the government chose to sustain what wasn’t.

So now, as with the Online News Act, it’s playing at a table where it no longer holds all the cards.

Peter Menzies is a senior fellow with the Macdonald-Laurier Institute, a former publisher of the Calgary Herald and a previous vice-chair of the Canadian Radio-television and Telecommunications Commission (CRTC).

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Business

UN plastics plans are unscientific and unrealistic

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News release from the Coalition of Concerned Manufacturers and Businesses of Canada

“We must focus on practical solutions and upgrading our recycling infrastructure, not ridiculous restrictions that will harm our health care system, sanitary food supply, increase costs and endanger Canadians’ safety, among other downsides.”

This week Ottawa welcomes 4,000 delegates from the United Nations to discuss how they will oversee a reduction and even possible elimination of plastics from our lives. The key problem is no one has ever figured out how they will replace this essential component of our modern economy and society. The Coalition of Concerned Manufacturers and Businesses of Canada (CCMBC) has launched an information campaign to discuss the realities of plastic, how it contributes massively to our society and the foolishness of those who think plastics can be eliminated or greatly reduced without creating serious problems for key industries such as health care, sanitary food provision, many essential consumer products and safety/protective equipment, among others. CCMBC President Catherine Swift said “The key goal should be to keep plastics in the economy and out of the environment, not eliminate many valuable and irreplaceable plastic items. The plastics and petrochemical industries represent about 300,000 jobs and tens of billions contribution to GDP in Canada, and are on a growth trend.”

The UN campaign to ban plastics to date has been thwarted by reality and facts. UN efforts to eliminate plastics began in 2017, motivated by such terrible images as rivers with massive amounts of floating plastic and animals suffering from negative effects of plastic materials. Although these images were dramatic and disturbing, they do not represent the big picture of what is really happening and do not take into account the many ways plastics are hugely positive elements of modern society. Swift added “Furthermore, Canada is not one of the problem countries with respect to plastics waste. Developing countries are the main culprits and any solution must involve helping the leading plastics polluters find workable solutions and better recycling technology and practices.”

The main goal of plastic is to preserve and protect. Can you imagine health care without sanitary, flexible, irreplaceable and recyclable plastic products? How would we keep our food fresh, clean and healthy without plastic wraps and packaging? Plastic replaces many heavier and less durable materials in so many consumer products too numerous to count. Plastics help the environment by reducing food waste, replacing heavier materials in automobiles and other products that make them more energy-efficient. Many plastics are infinitely recyclable and innovations are taking place to improve them constantly. What is also less known is that most of the replacements for plastics are more expensive and actually worse for the environment.

Swift stated “Environment Minister Steven Guilbeault has been convinced by the superficial arguments that plastics are always bad despite the facts. He has pursued a campaign against all plastics as a result, without factoring in the reality of the immense value of plastic products and that nothing can replace their many attributes. Fortunately, the Canadian Federal court overturned his absurd ban on a number of plastic products on the basis that it was unscientific, impractical and impinged upon provincial jurisdiction.” Sadly, Guilbeault and his Liberal cohorts plan to appeal this legal decision despite its common-sense conclusions. Opinion polls of Canadians show that a strong majority would prefer this government abandon its plastics crusade at this point, but history shows these Liberals prefer pursuing their unrealistic and costly ideologies instead of policies that Canadians support.

The bottom line is that plastics are an essential part of our modern society and opposition has been based on erroneous premises and ill-informed environmentalist claims. Swift concluded “Canada’s record on plastics is one of the best in the world. This doesn’t mean the status quo is sufficient, but we must focus on practical solutions and upgrading our recycling infrastructure, not ridiculous restrictions that will harm our health care system, sanitary food supply, increase costs and endanger Canadians’ safety, among other downsides.” The current Liberal government approach is one that has no basis in fact or science and emphasizes virtue-signaling over tangible and measurable results.  Swift noted “The UN’s original founding purpose after World War II was to prevent another world war. Given our fractious international climate, they should stick to their original goal instead of promoting social justice warrior causes that are unhelpful and expensive.”

The CCMBC was formed in 2016 with a mandate to advocate for proactive and innovative policies that are conducive to manufacturing and business retention and safeguarding job growth in Canada.

SOURCE Coalition of Concerned Manufacturers and Businesses of Canada

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Automotive

The EV ‘Bloodbath’ Arrives Early

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From the Daily Caller News Foundation

By David Blackmon

 

Ever since March 16, when presidential candidate Donald Trump created a controversy by predicting President Joe Biden’s efforts to force Americans to convert their lives to electric-vehicle (EV) lifestyles would end in a “bloodbath” for the U.S. auto industry, the industry’s own disastrous results have consistently proven him accurate.

The latest example came this week when Ford Motor Company reported that it had somehow managed to lose $132,000 per unit sold during Q1 2024 in its Model e EV division. The disastrous first quarter results follow the equally disastrous results for 2023, when the company said it lost $4.7 billion in Model e for the full 12-month period.

While the company has remained profitable overall thanks to strong demand for its legacy internal combustion SUV, pickup, and heavy vehicle models, the string of major losses in its EV line led the company to announce a shift in strategic vision in early April. Ford CEO Jim Farley said then that the company would delay the introduction of additional planned all-electric models and scale back production of current models like the F-150 Lightning pickup while refocusing efforts on introducing new hybrid models across its business line.

General Motors reported it had good overall Q1 results, but they were based on strong sales of its gas-powered SUV and truck models, not its EVs. GM is so gun-shy about reporting EV-specific results that it doesn’t break them out in its quarterly reports, so there is no way of knowing what the real bottom line amounts to from that part of the business. This is possibly a practice Ford should consider adopting.

After reporting its own disappointing Q1 results in which adjusted earnings collapsed by 48% and deliveries dropped by 20% from the previous quarter, Tesla announced it is laying off 10 percent of its global workforce, including 2,688 employees at its Austin plant, where its vaunted Cybertruck is manufactured. Since its introduction in November, the Cybertruck has been beset by buyer complaints ranging from breakdowns within minutes after taking delivery, to its $3,000 camping tent feature failing to deploy, to an incident in which one buyer complained his vehicle shut down for 5 hours after he failed to put the truck in “carwash mode” before running it through a local car wash.

Meanwhile, international auto rental company Hertz is now fire selling its own fleet of Teslas and other EV models in its efforts to salvage a little final value from what is turning out to be a disastrous EV gamble. In a giant fit of green virtue-signaling, the company invested whole hog into the Biden subsidy program in 2021 with a mass purchase of as many as 100,000 Teslas and 50,000 Polestar models, only to find that customer demand for renting electric cars was as tepid as demand to buy them outright. For its troubles, Hertz reported it had lost $392 million during Q1, attributing $195 million of the loss to its EV struggles. Hertz’s share price plummeted by about 20% on April 25, and was down by 55% for the year.

If all this financial carnage does not yet constitute a “bloodbath” for the U.S. EV sector, it is difficult to imagine what would. But wait: It really isn’t all that hard to imagine at all, is it? When he used that term back in March, Trump was referring not just to the ruinous Biden subsidy program, but also to plans by China to establish an EV-manufacturing beachhead in Mexico, from which it would be able to flood the U.S. market with its cheap but high-quality electric models. That would definitely cause an already disastrous domestic EV market to get even worse, wouldn’t it?

The bottom line here is that it is becoming obvious even to ardent EV fans that US consumer demand for EVs has reached a peak long before the industry and government expected it would.

It’s a bit of a perfect storm, one that rent-seeking company executives and obliging policymakers brought upon themselves. Given that this outcome was highly predictable, with so many warning that it was in fact inevitable, a reckoning from investors and corporate boards and voters will soon come due. It could become a bloodbath of its own, and perhaps it should.

David Blackmon is an energy writer and consultant based in Texas. He spent 40 years in the oil and gas business, where he specialized in public policy and communications.

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