Cable / Telecom News

Quebecor vs. Bell: When engaging in a regulated activity, you’ve accepted the rules of the game, says Attorney General in TVA Sports dispute



By Ahmad Hathout

OTTAWA – Lawmakers envisaged the Broadcasting Act giving the CRTC broad powers to temporarily regulate disputes between broadcasters and program providers in the public interest, including when they involve economic relationships, the federal government is arguing in court documents.

The argument hits at the heart of an appeal by Quebecor which last April pulled its TVA Sports signal from Bell TV subscribers because the company believed its channel was undervalued compared to the Bell Media’s RDS channel. The move caused the CRTC to convene an emergency hearing and forced Quebecor to redistribute the signal based on the standstill rule, where the parties must maintain the status quo as the dispute is negotiated.

Quebecor asked for a judicial review of the decision in federal court, arguing the CRTC has no jurisdiction to regulate the economic relationships between it and Bell and claiming the regulator violated the Copyright Act by forcing it to provide its signal without its consent. Bell, despite being the opposing party, also argued that the standstill rule should be nixed but that the current appeal should be rejected because that rule was in force at the time of the CRTC’s decision.

The Attorney General of Canada (AG), as Telus and Cogeco have this month, argues Section 10 of the Broadcasting Act gives it the power to enforce the status quo, which it said simply extends the original mutual distribution agreement the two parties came to in 2011. Telus and Cogeco said in their submission Quebecor wasn’t being forced against its will because it agreed to the original term and the Regulator has the ability to continue that agreement so long as the parties are in a dispute (since the 2011 deal, the two parties have never come to amicable terms for the channel’s distribution and have relied on CRTC final offer arbitration, the last of which went in favour of Bell’s offer in 2015).

Taking it an argument further, however, the AG, in asking the court to dismiss Quebecor’s appeal, said in the pursuit of coming to a resolution of least disturbance to viewers, the CRTC must also by both law and nature get into the economic affairs of the group.

“The Broadcasting Act is a federal law of economic regulation,” the attorney general argued in a submission this month. “The policy objectives listed in subsection 3 (1) of the Broadcasting Act are not exclusively cultural and refer specifically to the economic dimension inherent in the regulation and oversight of the Canadian broadcasting system.

“In fact, it is difficult to imagine how the CRTC could resolve a dispute between a programming and distribution undertaking regarding the supply of programming without affecting their economic relationships. Disputes that arise necessarily relate to the distribution of programming, which invariably includes an economic component.”

“The argument that the exercise of the CRTC regulatory power cannot in any way affect the contractual relationships between [the players] would lead to absurd results.” – Attorney General of Canada

But if there was any doubt about its power to influence economic relationships, the AG said the court should look at the Commission’s ability to force broadcast undertakings to carry channels at rates it sets under section 9(1)(h), or the must-carry statute. The most prominent recent case of that law in practice is the CRTC granting Rogers’ OMNI channel the license to be carried on basic TV.

“The argument that the exercise of the CRTC regulatory power cannot in any way affect the contractual relationships between [the players] would lead to absurd results,” the AG said, illustrating the point by imagining a scenario by which the CRTC requires a program be carried by the BDUs but the program undertaking would have the power to set the rates for distribution.

A large part of the AG’s argument hinges on the fact that at one point in time, in 2011, the two parties got together and hammered out a deal for the distribution of TVA Sports. That fact, the AG said, not only strengthens its claim that it was only temporarily extending the agreement by applying the standstill rule, but it also puts in doubt Quebecor’s claim that the CRTC has violated the Copyright Act.

That’s because the original agreement to allow Bell to broadcast Quebecor’s copyright immediately places the standstill rule on standby because the distribution of the channel must precede the application of that very rule. “When a copyright holder engages in a regulated activity, [it] is presumed to accept the rules of the game,” the AG said.

But the columns supporting Quebecor’s very appeal foundation – that it ended the agreement between the companies and the CRTC was forcing it to give up its copyright – is missing, the AG said, for one simple reason: To end an affiliation agreement, Quebecor would’ve had to give Bell a 180-day notice that it wanted out, but that did not happen.