OTTAWA – A number of Canada’s independent cable operators have balked at signing a new omnibus carriage agreement for the up-to 30 specialty channels owned by Bell Media and instead are demanding the CRTC step in and decide who’s right.
According to sources with direct knowledge of the agreement and the ongoing battle, both Cogeco Cable and the Canadian Cable Systems Alliance have been through a few rounds of official CRTC staff mediation, which hasn’t yielded much in the way of results. It now looks like the disputes are headed towards binding, final offer arbitration in front of a CRTC commissioner in the new year, although nothing has yet been set.
Other carriers also known to be objecting to the Bell Media carriage agreement include EastLink, Telus and MTS. While Videotron and Shaw Communications have both put pen to paper and signed the Bell affiliate agreement, announcing it publicly, Rogers Communications has yet to make an announcement and it’s not clear at this time whether or not the company has signed.
Cogeco and the CCSA (which represents about 100 independent carriers) are farthest along in their formal complaints which were initially filed with the Commission in August, prior to the new vertical integration policy announcement.
According to a source who has seen the proposed agreement, the independent, non-vertically integrated BDUs are not objecting to the wholesale rates Bell is demanding for its specialties, but to the packaging and penetration demands. “It says we have to agree to the status quo for the next five years,” said the source who asked not to be named since non-disclosure agreements have been signed by all parties involved.
“Five years is an awful long time in this world. You don’t want to be locked into those packaging deals for that long… and the minimum penetration requirements in it means you can’t move channels around.”
The independent BDUs feel that Bell Media is not abiding by the Code of Conduct set out by the Commission in the Vertical Integration policy decision in September. That code says, among other things, that a programmer should not in its agreements demand “minimum penetration or revenue levels that force distribution of a service on the basic tier or in a package that is inconsistent with the service’s theme or price point;” nor refuse “to make programming services available on a stand-alone basis.”
Besides, as part of the vertical integration decision, the Commission also asked the carriers for proposals which will provide consumers with more choice or more flexibility in how they pick the TV channels they want to pay for. “So Bell is saying all existing packages for existing services have to continue while at the same time, the Commission is demanding more packaging flexibility to provide consumer choice,” he added. “We’d be screwed if we signed these deals and then can’t provide any flexibility at all.
“On the rates, we think we’ll probably have to bite the bullet on things like TSN. Sports has gone up in price and everybody knows that.”
Given that Bell Media has switched some popular programming to RDS2 (hockey) and also owns the rights to the Winnipeg Jets broadcasts in Manitoba, Videotron and Shaw were most likely getting pressure from its customers to add these new channels, “so it’s no surprise they signed,” said the source.
The CRTC declined all comment on the matter when contacted about this by Cartt.ca on Monday, but CRTC chairman Konrad von Finckenstein let the industry know what he is thinking about the Code of Conduct when he said to Cartt.ca last week: “It is there in order to regulate the behaviour between BDUs and small independent (broadcasters), or the behaviour between large programmers and small BDUs, whichever way it goes. There is a clear set of expectations. Abide by it. You do it at your own risk if you don’t.”
When contacted by Cartt.ca on Monday, Bell confirmed there are BDUs who have not yet signed the contract, that complaints are ongoing at the Commission and that no final arbitration sessions have been scheduled. Mirko Bibic, Bell Canada’s senior vice-president, regulatory and government affairs defended the company’s contract, saying it has already been signed by companies representing 85% of Canadian TV subscribers. He declined to name the companies but adding the subscription totals of Videotron, Bell TV, Bell Aliant, Shaw Communications and Rogers all together (about 8.8 million) gets close to 85% of all Canadian pay TV subscribers (nearly 11 million).
“We are indeed talking to a few distributors who still today remain out of contract despite the fact that market terms have been established for carriage of our services through the signing of well over 140 new deals with BDUs representing more than 85% of subscribers,” said Bibic in an e-mail.
“While we would prefer to reach deals through commercial negotiations, we will not hesitate to use CRTC mediation and/or final arbitration if that is what is needed to conclude deals with the last few BDUs. Needless to say, it is untenable for those BDUs to continue to carry our very valuable content without contracts being in place.”
Which leads us back to Bell’s vehement objections to the CRTC vertical integration policy, which boasts a new standstill rule where broadcasters are not allowed to withhold their signals during a dispute such as this one.
“Now, at the whiff of any dispute between a programmer and a BDU, one of the parties can raise their hand and the CRTC will intervene and set the terms and conditions. That’s called price regulation and the CRTC had said it was not in the business of regulating price – but now they are,” said Bibic to Cartt.ca back in September.
“It’s completely unnecessary and the heaviest form of regulation possible in any industry.”
There will be more to come on this as we wait to see where it goes.
