As Local Spending Mandate Looms, Netflix’s Ted Sarandos Hosts Star-Studded Toronto Bash

The parade of stars and VIPs partying on April 4 at Netflix’s Canadian headquarters launch had good reason to show up.

Netflix CEO Ted Sarandos hosted a glitzy bash in his new home base in Toronto, having invited Hollywood talent — like Stranger Things star Noah Schnapp; Suits actor Patrick J. Adams; Never Have I Ever actress Maitreyi Ramakrishnan; and Robbie Amell, star of Upload, the sci-fi afterlife comedy shot in Vancouver — to rub shoulders with local Netflix execs like Danielle Woodrow and Tara Woodbury, who steer the streamer’s local content strategy north of the border.

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“We’re excited to have a new home here in Toronto and are looking forward to all of the great work to come with the talented people in this country,” Sarandos said while toasting his party guests, who included Canadian Prime Minister Justin Trudeau and his wife, Sophie Grégoire Trudeau; U.S. ambassador to Canada David L. Cohen; U.S. consul general to Toronto Susan R. Crystal; and Canadian ambassador to the U.S. Kirsten Hillman.

The casual passersby on Spadina Avenue would have had little idea Netflix’s buzzworthy party on the 32nd floor of The Well office tower came just as Canada’s Parliament is set to pass into law Bill C-11. That long-overdue revamp of the country’s media regulatory regime will impose first-time rules and obligations on U.S. digital giants operating in the Canadian market.

And that includes American streamers and social media platforms being compelled to make mandatory payments to support local Canadian film, TV and music content on orders from the country’s TV and telecom czar.

Joining Sarandos on the Netflix Canada guest list to celebrate local projects and relationships was Just For Laughs president Bruce Hills, who this week unveiled a three-year comedy content deal to kick off with three French-language stand-up comedy specials, and Feel Good comedy star Mae Martin, who has just received a Netflix order for the mystery thriller Tall Pines, which they created and will star in.

Also in attendance at the flagship Toronto office was The Last of Us star Lamar Johnson, who also appeared in Clement Virgo’s locally shot Brothers drama, and fellow Canadians Jay Baruchel, Elisha Cuthbert, Nina Dobrev, Stephen James, Shamier Anderson and Connor Jessup.

Netflix presenting and toasting Canada’s media and political elite gave a rare peek behind the curtain at the fast-evolving power dynamics of Canadian entertainment, including culturally important film and TV producers as they compete against a Hollywood streaming juggernaut in an increasingly global business.

Set to receive royal assent, Bill C-11, or the Online Streaming Act, will change Canada’s federal Broadcasting Act to create a new “online company” category and, for the first time, regulate foreign media players like Netflix, Amazon and Spotify that are active in the Canadian market.

After the legislation passes into law, another round of lobbying in Ottawa’s corridors of power will take place as the CRTC, the country’s media regulator, will be tapped to hammer out a new framework to ensure Netflix and other streaming giants subsidize local film and TV production, and specify how deep the Americans will dip into their pockets to do so.

Ahead of those discussions, Netflix execs have been keen to show off their Canadian bona fides to the local industry. This week, the streaming giant announced it had jumped on board an untitled homegrown Indigenous comedy to be shot in Canada’s Arctic circle for local broadcasters CBC and APTN.

That greenlight follows Netflix bringing local comedies like Schitt’s Creek, Kim’s Convenience and Workin’ Moms to worldwide audiences and acclaim. The new Canadian law to subject U.S. tech giants and other foreign players to CRTC regulation and local content obligations is a marked change from their rapid and unchecked rise in the Canadian market after coming north to do business.

In earlier lobbying in Ottawa ahead of passage of the Online Streaming Act, foreign streamers led by U.S. tech giants convinced politicians to create a two-tier Canadian industry where the Americans will be allowed to use fewer local creators, like directors and screenwriters, than traditional broadcasters already have to as part of their regulatory obligations.

Netflix Canada Office Opening
Canadian Prime Minister Justin Trudeau and Maitreyi Ramakrishnan at Netflix’s Toronto party.

In return, U.S. media players will be expected to continue driving their original movies, TV series and audio product to Canada for production. In 2017, Netflix surprised the Canadian industry by unveiling a deal with the federal Department of Canadian Heritage, which referees domestic film and TV production, that had the video streamer promising to spend $500 million over five years to shoot film and TV content in Canada.

After two years, Netflix said it had spent that amount on production north of the border, including early investments in original Canadian-created and produced content, and now says it has spent $3 billion on film and TV series shot on soundstages mostly in Toronto and Vancouver since 2017, and wants to double down on the Canadian market with its new headquarters.

That largesse was not lost on Canadian stars and creatives as they mingled in Netflix Canada’s high-design workspaces, meeting rooms and a spread that includes a lobby entrance with a lounge, barista bar and floor-to-ceiling glass walls offering an impressive view of Toronto’s iconic CN Tower.

The Canadian government led by Justin Trudeau in recent years has looked to foreign digital players to finance homegrown content as they continue to dominate local soundstages to produce their own originals, while also enjoying an increasing share of eyeballs watching TV in the Canadian market.

As the CRTC gets set to hold another round of hearings, briefings and consultations on how it will regulate U.S. digital giants — and crucially define what does and doesn’t count as Canadian, especially as it applies to user-generated content on YouTube, TikTok and Facebook or as part of the streamer’s local spending obligations — the American players will argue they will continue to invest in local indie production.

But they’ll want to continue doing so on market-driven terms to appeal to the widest of audiences and with few regulatory encumbrances holding back their pursuit of local subscribers and ad-supported streaming eyeballs.

The American media players are especially keen to avoid the CRTC forcing them to manipulate their algorithms to prioritize locally made Canadian content for discoverability at the expense of popular fare from the U.S. and the rest of the world.

In upcoming appearances before Parliamentary committees, Canadian Heritage department officials and the CRTC, the American players will increasingly have to span two worlds in Canada: producing their own original film and TV content in production hubs in Toronto and Vancouver for their global platforms, and investing in local film, TV and music content as part of a still-to-be-negotiated regulatory framework.

The U.S. digital players directing production coin to local Canadian creators will also aim to get more of their homegrown product into the world market, as with Canadian music superstars like Drake and The Weeknd soaring on Spotify and Apple Music.

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