Streaming giants challenge new Canadian revenue-sharing rules

OTTAWA (Reuters) -Global streaming companies said on Thursday they were challenging new Canadian rules that oblige them to help pay for local news, saying Canada's federal government had acted unreasonably and provided no legal basis for the demand.

The Canadian Radio-television and Telecommunications Commission (CRTC), the national broadcasting regulator, said in June that major online streaming services must contribute 5% of their Canadian revenues to support the domestic broadcasting system, including news generation.

The Motion Picture Association-Canada, which represents Netflix, Walt Disney Co and other companies, has filed applications in a federal court for leave to appeal the rules and ask for a judicial review.

"The decision does not reveal any basis for the CRTC's conclusion that it is appropriate to require foreign online undertakings to contribute to news production," it said in a legal filing.

"The CRTC acted unreasonably in compelling foreign online undertakings to contribute monies to support news production."

The CRTC said the funding would be directed to areas of what it called immediate need in the broadcasting system, such as local news on radio and television as well as French-language and Indigenous content.

The regulator declined to comment because the matter is before the courts. It has previously said the rules, which are due to become effective in September, will raise roughly C$200 million ($146 million) a year.

The measure was introduced under the auspices of a law passed last year that the federal government says will ensure online streaming services promote Canadian music and stories and support Canadian jobs.

Other streaming platforms the MPA-Canada serves include those offered by Paramount, Sony, NBCUniversal and Warner Bros Discovery.

(Reporting by Ismail Shakil; editing by David Ljunggren, Diane Craft and Paul Simao)