GATINEAU – If BCE is going to own CTV (and with it, French sports channel RDS) plus the piece of the Montreal Canadiens it currently holds, then there must be special rules put in place governing sports programming exclusives in Quebec, according to Quebecor Media CEO Pierre Karl Péladeau.
Péladeau was speaking in front of the CRTC this morning as the Commission’s hearing into the acquisition of CTV by BCE continued.
While first stating that the valuation BCE put on CTV is too low (the CRTC says it is worth $2.67 billion, BCE says $2.2 bil) and must be re-evaluated by an independent third party to verify what it really is worth. Without that, a proper tangible benefits package (typically 10% of the value of such a transaction) can’t be determined, said the Quebecor CEO. The re-evaluation, “is not just appropriate, but essential,” he said.
Without an independent re-calculation, BCE’s $220.8 million benefits package is much too low and an “attempt to abdicate from its regulatory obligations,” added Péladeau.
When he turned his attention to sports programming, Péladeau professed his fear BCE/CTV may corner the market on all the top tiered sports rights in the country and then keep it all for itself and its many platforms, unfairly harming QMI properties. RDS carries all French language Habs games in Quebec, CTV owns CFL rights across Canada, plus many other exclusives, for example.
And when you look at that through the prism of what BCE CEO George Cope said in September when the CTV purchase was announced, Péladeau said he was “alarmed.” Cope told analysts in September, repeated the QMI CEO to commissioners: “No we don’t have to offer anything to our competitors, in the mobile or the sports genre, in the news genre or on any of the technologies. It’s a business decision that we have to make to optimize the value of Bell… It also means that we will make these decisions as we go forward. It’s important for people to understand, that mobile is deregulated and we have access to the best media assets in Canada, and specifically our ownership of Montreal Canadiens. Hopefully what you do now is to go forward thinking of these developments. Our ownership now in RDS is thinking of those developments and the world will probably overtime unfold recognizing the leverage that we’ve got through that ownership today.”
This means that when it comes to sports, BCE/CTV needs new rules governing its operations in Quebec, so that popular sports properties are available to all on all platforms, said Péladeau, especially since the CRTC recently issued a decision against Quebecor, demanding its TVA content be made available to other VOD operators in Quebec.
“It seems to us important to point out that the arguments behind this decision… has to be applied consistently in the context of this transaction,” he said.
CRTC chairman Konrad von Finckenstein indicated some agreement with Quebecor on the sports exclusivity argument noting the FCC has instituted some regulations on Comcast/NBCU on non-replicable right such as sports. “I think we will have a case with regards to hockey games between you and Bell,” said the chair.
However, he also noted: “This issue will be part of the June hearing (on vertical integration).”
Exclusive rights is a complex issue, as all parties have noted. Even Rogers executives couldn’t quite put a finger on how to deal with it. “Our initial thinking is that if something appeared on linear TV, there would be a rule,” said the company’s EVP regulatory, Ken Engelhart. However, other ancillary video like outtakes, would be fair game for exclusives (something Telus and Cogeco oppose, since they want no exclusives at all).
Plus, there’s no real rule of thumb on what producers would want to do with their content. Do they want the biggest audience or a tight (potentially lucrative) relationship with a single provider, asked commissioner Stephen Simpson.
“The content producer is focused on maximizing revenue for his product,” responded Rogers vice-chairman Phil Lind, matter-of-factly. However, later, Lind said that as a broadcaster with content, “I want maximum eyeballs. But as a distributor, maybe not.”
One way Rogers wants to maximize its eyeballs is to increase viewership of its OTA stations, so it is conditionally supporting BCE’s proposal to use $84 million in tangible benefits money to upgrade is satellite TV technology to MPEG-4. Rogers is the only distributor to support this. Why, commissioner Louise Poirier asked?
Rogers wants its off-air stations carried by Bell Satellite TV. Right now Bell does not distribute CitytvHD stations in Vancouver, Calgary, Edmonton and Winnipeg, which means the company loses the simultaneous substitution eyeballs and revenue when it airs its U.S. programming (the simsub regs say distributors don’t have to substitute a technically inferior signal, so the Citytv SD signal is not substituted over the American HD signal when City’s U.S.-purchased programming is aired).
Also uncarried by Bell are its OMNI SD stations in Edmonton and Calgary and none of the Rogers-owned OMNI HD signals from across Canada.
“Rogers’ support for this particular benefit is contingent on Bell TV’s carriage, within one year of the decision approving this application, of the signals of all standard definition over-the-air television stations that offer more than five hours of local programming per week. This would, of course, include all of the Rogers-owned Citytv and OMNI stations,” said Pam Dinsmore, Rogers’ VP regulatory.
The hearing continues tomorrow with Bell’s rebuttal phase.
