OTTAWA – Communications giant Bell Media was batting .500 Friday after the CRTC awarded it a win, and a loss, in two final offer arbitration disputes between it and the Canadian Independent Distributors Group (CIDG) and Telus.
In its decision on Bell Media versus the CIDG, a group consisting of the CCSA, Cogeco and MTS, the Commission noted that both sides made “significant strides” to resolve the issues between them, and that both offers provided commercially reasonable terms and more consumer choice.
The CIDG final offer affiliation agreement, however, was “inconsistent” with the standstill rule of the Commission’s vertical integration framework, according to the decision, a rule designed to protect consumers from loss of service during disputes between BDUs and programmers. That rule (see paragraph 29 here) states that in exchange for continued service during any dispute between a programmer and a BDU, the rates determined by the Commission, or agreed to by the parties if settled independently, would be applied when the last agreement reached for distribution of the service expired.
Further, the decision continues, Bell Media’s proposal better addresses the Commission’s determination to providing programmers “with reasonable and predictable levels of revenue for each programming service, and its expectation that a programming service should not be completely insulated from the effects of consumers exercising choice. It also better addresses the Commission’s determination in regard to giving programming services time to adapt to an increasingly consumer-focussed environment.”
The CIDG had objected to packaging, penetration, and other terms offered to them by Bell Media for carriage of 29 specialty channels including the likes of TSN, Comedy Network, BNN, MuchMusic, Discovery, Bravo, and RDS. Bell maintained that its wholesale costing model, a penetration based rate card that had already been signed by a number of other distributors, rewards stable packaging with stable long-term rates for distributors.
The two sides have been negotiating for more than a year in a process that included mediation sessions with the Commission and an expedited hearing into dispute resolution processes. Friday’s decision marks the first time in the history of Canadian TV regulation that final offer arbitration has been used to settle a carriage dispute.
In siding with Telus in its dispute with Bell Media, the Commission said that the telco's final offer included “creative and innovative elements” not contained in Bell’s final offer.
“While the Commission recognizes that both offers sought to balance the priorities of reasonable rates and a fair and equitable competitive environment, it considers that the Telus offer presents a unique packaging and pricing model, which offers consumers greater choice, while at the same time satisfying Bell Media’s need for revenue predictability”, the decision reads.
Originally part of the CIDG, Telus stepped away from the coalition as its issue with Bell Media centred on maintaining its packaging flexibility for sports service TSN.
The Commission directed all parties to sign off on the winning final offer affiliation agreement no later than July 25.
More to come.
– Lesley Hunter
