Supreme Court Will Hear Fee-For-Carriage Appeal

The Supreme Court of Canada said today it will decide whether or not the CRTC has the jurisdiction to institute the fee-for-carriage (or value for signal) regime it okayed in 2010.

When the CRTC made its policy announcement in March of that year, it referred the jurisdictional question to the Federal Court (pre-empting the carriers, who would have done the same thing). Then in March 2011, the Federal Court issued a 2-1 decision saying the CRTC did, in fact, have the right to okay a new value-for-signal policy where off-air TV broadcasters would have the right to be paid for their signals by the customers of cable, satellite and telco TV distributors.

Those signals had always been made available and transmitted for free, with the distributors even performing simultaneous substitution so that Canadian viewers see Canadian ads, even when watching an American station (the whole signal is substituted for the Canadian one, though, when a Canadian broadcaster has purchased the rights to those shows).

While the fee-for-carriage issue might have gone away for good and the court challenges were moot, given all of the major broadcasters are now owned by BDUs – all of whom were on the record saying value for signal was a bad idea – Bell Canada has changed its perception since buying CTV.

"We believe the federal court was correct in finding that value for signal falls within the CRTC's jurisdiction, and we are confident the Supreme Court of Canada will agree when they are presented with the relevant facts and arguments,” said Bell Media president Kevin Crull today in a statement.

“We will argue forcefully at the Supreme Court that the value for signal regime falls squarely within the CRTC's jurisdiction, as it is directly connected to the policy objectives of the Broadcasting Act, and is consistent with the Commission's mandate to supervise and regulate the broadcasting system.”

“As we have previously stated, conventional television stations must have a regulatory framework that allows them to survive on their own merits, regardless of whether or not they are integrated with cable and satellite companies. As with most other channels on the dial, local television stations should receive compensation for their signal. Otherwise they are left to rely solely on advertising revenue, which continues to prove to be unsustainable. This antiquated compensation model is not viable in today's media landscape."

Phil Lind, executive vice-president, regulatory, at Rogers Communications, not surprisingly, has an opposing viewpoint.

“I think we’re on the right side of the issue,” says Lind. The lower court decision “had to be overturned for a whole bunch of reasons. They read the federal legislation the wrong way that would have implications for a lot more than us... it really had to be reviewed.”

However, as Lind noted last week in our story on the CRTC’s new vertical integration policy, the new regs remove the hammer any such company has in a carriage dispute. Namely, the VI policy doesn’t allow for any signals to be taken away from viewers while corporations battle over fees.

So even if Rogers and the other carriers involved in the case lose at the Supreme Court, “then we would go back to the Commission and argue ‘now that you’ve decided that 1. conditions have changed, that distributors now own the broadcasters; and 2. the broadcasters are very healthy; and 3. you’ve already set out the rules, Commission, that would negate them being able to withdraw the signal, so what the hell?” said Lind.

“I think there is a certain amount of re-thinking going on at the Commission anyway on this issue.”

When asked why Bell stands alone as a distributor in favour of value for signal, Lind says he’s perplexed. “It’s funny because they were our strongest allies and mounted some very vigorous arguments against it... But when Kevin Crull took over CTV, he did the numbers and said ‘well, we’re going to realize more net overall revenue by charging subscribers for the service.’

“Over and above anything else, it’s wrong. And I think Shaw made a judgement that it’s wrong (when that company bought Canwest Global). It’s bad policy to charge people two, three, four, five dollars a month and they get nothing for it,” said Lind.

“It’s been enormously disruptive in the United States and it absolutely eliminates any possibility that broadcasters and distributors can work together. And in Canada, that’s not a good thing.

“If Bell had maintained its position, this thing would be over. But, they switched sides.”

Filings are due into the court late next spring with the industry facing the court in the fall of 2012.

Source: Cartt | September 29, 2011

Originally Posted: 10/6/2011 12:56:59 PM
Last Updated: 10/6/2011 2:31:06 PM