Rogers busines rep says it wouldn’t have entered into a major licensing deal if representations were not accurate
By Ahmad Hathout
Warner Bros. Discovery (WBD) allegedly failed to disclose to Rogers that the U.S.-based producer of television programming had an outstanding two-year non-compete agreement with previous rights holder Bell before the cable giant signed a multi-year deal for those rights in June, a new court filing reveals.
The non-competition covenant, in effect, would have prevented WBD from engaging a competing service – in this case, Rogers – on the supply of its programming for the two-year period, per the shareholder agreement. Rogers said it was not made aware of this because WBD had been bound by confidentiality clauses on each covenant, which it said it only learned about after Bell filed a legal challenge to block the deal and attached material indicating as much.
“None of us on the Rogers side were ever informed by Warner or anyone else of any restrictive covenants, contractual limitations, or other encumbrances that would have prevented Warner from proceeding with the Licensing Agreement,” Michael Goldsmith, senior director of business affairs at Rogers Media and co-negotiator on the deal, said in an affidavit filed on August 6 at the Ontario Superior Court, adding Warner assured Rogers it had “all necessary power and authority” to grant the licensing rights to Rogers.
“Warner did not share with us any of the contents of those agreements either,” Goldsmith said. “While my colleagues and I knew at a high level that Warner was involved in joint ventures with Bell Media for the Canadian rights to certain Discovery brands and programming, we did not know that the joint venture corporations were governed by shareholder agreements that contained two-year non-competition covenants, which the Bell Applicants now rely on.”
Rogers Media “would not have entered into a major licensing deal involving a significant financial commitment from our business if we believed that Warner’s representations and warranties were not accurate, and that Warner was not able to grant us the licensing rights to the Discovery brands and programming that it had agreed to provide,” Goldsmith added.
The restrictive covenants only affect some of the programming on which Bell had rights, including Discovery Channel, Discovery Velocity, Discovery Science, and Animal Planet, and not those held by Corus, which has not brought similar legal proceedings against Rogers. Goldsmith said, based on his reading, certain programming, like that under the Investigation Discovery brand, will not be restricted by the covenants.
Goldsmith revealed that Bell’s case is having a “disruptive” impact on the marketplace, specifically when it comes to advertising.
Rogers signed the deal around the time when broadcasters are gearing up to sell advertising on their programming to begin the broadcasting year on September 1. So, Rogers advertised the Warner programming to said advertisers with campaigns.
“The claims that the Bell Applicants have advanced in this proceeding are generating uncertainty and difficulties with advertisers,” Goldsmith said in his affidavit. “Advertisers and marketers should be able to enter into agreements in a predictable manner on the timelines that they are accustomed to in the industry. The disruption brought on by the Bell Applicants’ claim is harmful to our business, and our ability to engage productively with our partners.”
On June 4, four days after Rogers and WBD entered into the licensing agreement, Kevin Assaff, Bell Media’s vice president of legal and business affairs, sent a letter to Rogers’s chief legal officer, Marisa Wyse, stating that Bell Media had become aware of the business discussions, according to the affidavit.
Assaff’s letter, according to the affidavit, spelled out a warning to Rogers that it was effectively engaging in interference if it were going to move ahead with any deal with WBD. But Goldsmith said Rogers couldn’t be engaging in any interference because it had no idea there were restrictions in the first place, as it trusted Warner’s word. In fact, Goldsmith alleges the letter did not mention or attach with it the restrictive covenants on which Bell’s claims are based.
A second letter came from Assaff on June 9 – one day before Rogers’s planned 10 am EST press release announcing the agreement – further threatening legal action against WBD’s and Rogers’s alleged “illegal course of conduct,” Goldsmith said, adding Bell had still not provided the agreements that restricted Rogers from negotiating a deal.
In response to the Bell letters, Rogers said Bell’s claims were “meritless. Rogers has a valid and enforceable licensing agreement with Warner Bros. Discovery, which was executed before your June 4 letter.
“Your June 9 letter refers to certain agreements between Bell Media and WBD, which include ‘non-competition covenants.’ Rogers has no knowledge of these contractual arrangements and did not induce WBD to breach any obligations between Bell Media and WBD, or otherwise interfere with Bell’s contractual relationships,” Rogers added. “Nor will Bell Media suffer any actionable, much less irreparable, harm in connection with Rogers’ licensing agreement with WBD.”
Rogers was notified about an opportunity to do a licensing deal directly with Warner in August 2023, which would allow the cable giant to bypass the “middleman” – in this case Bell and Corus, which held rights to the premium content until January 1, 2025.
Negotiations between Rogers and WBD began in October, according to the affidavit, before confirmation of a deal was announced this June. As a result, Rogers becomes the English-language content rights holder, distributor and advertising representative across the country for various Warner television brands and its programming, including HGTV, Food Network, the Oprah Winfrey Network, Discovery Channel, Investigation Discovery, and Animal Planet.
Barring an injunction, the deal would take effect January 1, 2025. If there is an injunction ordered, Goldsmith said his understanding is that it could suspend the broadcast of the Discovery Channel – which reaches approximately five million Canadian households – on linear television in Canada until January 1, 2027, which Goldsmith said is unprecedented in Canadian television history.
“Preventing [Rogers Media] from broadcasting its newly-planned Discovery Channel for an extended period of time in favour of the commercial interests of the Bell Applicants and at the expense of Canadians at large would, in my view, do a disservice to our media landscape and to millions of television subscribers,” Goldsmith said.
