Law Times

PAGE 14 FOCUS April 26, 2010 • lAw Times Lawyer surprised at carriage-fee ruling Regulator 'just put the whole thing off for whatever period of time it takes' BY PAUL BRENT For Law Times I f the current dispute about signal fees between television networks on one side and the cable and satellite companies on the other could be described as a fight over money between longtime spouses, then the Canadian Radio-television and Telecommunications Commission's role is one of a reluctant and uncertain mar- riage counsellor. The federal broadcast regu- lator made headlines recently when it moved on the four- year fight between the content makers and content provid- ers by deciding the country's conventional networks could negotiate payments for their signals from the cable and satel- lite firms. "The current dispute between conventional broadcast- ers and distributors threatens the overall integrity of the broadcast- ing system," said CRTC chair- man Konrad von Finckenstein. "Broadcasters and distributors have a symbiotic relationship. The time has come for them to put their differences aside and work together to ensure the continu- ation of conventional television, which Canadians clearly value." At the same time, the CRTC second-guessed itself by turn- ing to the Federal Court to de- termine if it does, in fact, have the authority to force the two sides to sit down and negoti- ate. The CRTC has asked the court whether it has jurisdiction The court referral likely put the fee- for-carriage issue off until after the next election, says Lawson Hunter. under the Broadcasting Act to force the two sides to talk be- cause the current language of the Copyright Act says cable and satellite providers can ac- cess signals for free. As one columnist in the Montreal Gazette wrote: "So it was a good day for lawyers and lobbyists — this case could go on for years." The dispute pits the major distributors led by Rogers Com- munications Inc., Bell Canada, and Shaw Communications Inc. on one side and major network owners CTVglobemedia Inc., CanWest Global — and Rogers — on the other. Public broad- caster CBC/Radio-Canada and French-language stations are excluded given their different mandates and markets. The dispute, which re- mained unsettled after months of hearings involving the par- ties, centres on how the chang- ing digital television landscape has eroded the finances of con- ventional television stations that are expected to produce a certain amount of Canadian programming. The CRTC, which appears sympathetic to the networks' arguments, not- ed "the increasing fragmenta- tion of viewing audiences and the reality of corporate con- solidation in the marketplace." As well, conventional stations faced a downturn in advertis- ing revenues while specialty services offered through cable companies showed continued financial strength through both ads and subscriptions. "One of the most conten- tious issues in the hearings had been whether local television sta- tions ought to be compensated by cable companies for the inclu- sion of those stations in the cable packages," Stephen Coughlan, a professor at Dalhousie Univer- sity's Schulich School of Law, wrote about the hearings. "The issue had become more acute with the drop in advertising rev- enue available to conventional television, which in turn could be traced to the increasing op- tions available to consumers due to specialty services provided by cable companies. "The television stations had, in general, argued that they ought to be compensated be- cause most viewers in fact watch conventional television through their subscription service ob- tained from a cable company: the cable companies did not pass along any portion of those sub- scription fees, even though more than half of consumers' viewing hours were spent watching con- ventional television. The cable companies, in contrast, generally argued that no such compensa- tion should be paid: convention- al television was free over the air and increasingly on broadcasters' web sites." While the dispute is com- monly referred to as "fee for carriage," the commission has used the term "value for signal," a difference that could allow the sides to come to some sort of agreement that doesn't involve a financial sum. During the hearings, the When it comes to IP in Canada, We're Well Read Ridout & Maybee LLP: Editors of the Canadian Patent Reporter it all starts somewhere www.ridoutmaybee.com To advertise in an upcoming issue, contact our sales team: Karen Lorimer 905-713-4339 karen.lorimer@thomsonreuters.com Ridout_LT_Feb9-16_09.indd 1 www.lawtimesnews.com 2/5/09 10:52:55 AM Narrow 1/8 - 2X.indd 1 2/15/11 2:42:10 PM Kimberlee Pascoe 905-713-4342 kimberlee.pascoe@thomsonreuters.com CRTC proposed that the solu- tion would be for the two sides to enter negotiations on the sub- ject, a move that won support from broadcasters. "Both sides had presented legal opinions to the commission on the issue, to differing effects," Coughlan not- ed. "Local stations had argued that the commission could or- der such negotiations while the cable companies argued that this would be beyond the jurisdic- tion of the commission." The CRTC's reticence to tackle the question of its jurisdic- tion was surprising, says Lawson Hunter, a former senior federal civil servant and now a lawyer with Stikeman Elliott LLP. "The commission certainly has juris- diction to determine its own ju- risdiction and often they would take a stance and then, as I say, if someone were affected by that, then they themselves would ap- peal or seek review." Of course, sending the mat- ter to court creates delay, Hunter adds. "By referring it immediately [to the Federal Court], they basi- cally just put the whole thing off for whatever period of time it takes for all of the appeals. From a political point of view, that may be an attractive idea, at least for the government because it means that they don't have to deal with the consumer issue. . . . It means that it is probably put off un- til after the next election, which the government would probably like." The fee-for-carriage dispute has overshadowed the CRTC's efforts to introduce a new "group-based" television policy. In the words of the commission, it's intended to give English-lan- guage private television broad- casters "greater flexibility to offer high-quality programs that are of interest to Canadians." In an effort to take into ac- count ownership consolidation in both conventional television stations and specialty services, the CRTC says it will consider a broadcast group's total rev- enues when setting obligations related to the objectives of the Broadcasting Act. As a result, it will propose that the three larg- est ownership groups spend at least 30 per cent of their gross revenues on Canadian pro- gramming. "However, they will be able to shift resources among their English-language conventional television sta- tions and specialty services to meet this obligation," the com- mission said. "The new approach to licens- ing on the basis of ownership groups reflects the trend of media convergence," said von Fincken- stein. "Our framework will en- able the large groups to attract viewers to their different televi- sion services while encouraging the creation of original Canadi- an programs. In doing so, we are providing the industry with flex- ibility to adapt to the new reality of increased consumer choice in a digital world." LT

• Cover
• Judicial Supervision
• Aging Lawyers
• Focus On IT/Telecommunications