MONTREAL — Quebecor’s TVA is so fed up with how its all-sports channel is being treated by Bell that an executive confirmed it will defy a CRTC demand and pull TVA Sports from all Bell TV distribution systems at 7 p.m. Wednesday, just as the National Hockey League playoffs begin.
"We don't have confidence" in the CRTC process, said Groupe TVA COO Martin Picard in an interview. "We've already waited too long."
While the Commission has a dispute resolution process that uses final offer arbitration to impose new carriage contracts when asked to do so by one of the parties, Quebecor has already lost two of those rounds to Bell over the distribution of TVA Sports. In the latest one, reached in January 2018, the Commission found Bell's offer seemed more reasonable based on historic rates, programming expenditures, ratings and other comparisons to RDS, while Quebecor's offer was better in terms of rates for volume discounts and what other smaller TV providers paid, but that those factors had less weight.
It's the focus on historic rates that disturbs TVA executives the most. No matter how much TVA Sports improves, Picard argued, it will always lag behind RDS, which is older and has had higher wholesale rates historically. "Historic rates aren't a reflection of the current situation," he said.
"We need to have a balance of power, which doesn't exist in the current system that perpetuates the status quo."
Though CRTC data from 2017 shows that, on a per subscriber basis, TVA Sports and RDS get similar wholesale fees, Picard said that number is distorted because of RDS's carriage across Canada at significantly lower rates than in Quebec. Provincial breakdowns of either channel's wholesale fees, or how much Bell and Quebecor pay each other for their sports channels, are confidential, but Picard said there's a "much larger difference" in rates within the Quebec market.
Similarly, while Bell points out RDS has higher ratings than TVA Sports, except during NHL playoffs, Picard said those numbers should be pro-rated to the number of subscribers, and by that metric they're then on equal footing.
"The conditions are toxic in the industry, as it relates to the pressure that Bell exerts in negotiations for wholesale rates for specialty channels.” – Martin Picard, TVA Group
Rather than increase rates for subscribers, Picard said TVA wants a more equitable redistribution of existing wholesale fees, meaning less for RDS and more for TVA Sports. However, the CRTC, he said, never reduces fees like that during arbitration processes.
Besides the wholesale fee difference, TVA is also sore about Bell's packaging of TVA Sports, which is not included in the most popular channel package on Bell TV, while RDS is. That alone costs TVA millions of dollars a year. "We have to fight for each subscriber" to add TVA Sports as an add-on channel, Picard said.
So, rather than wait, Picard said the company must act now to ensure the future of TVA Sports. "We can not unduly lose $20 million a year," he said.
He's ready to take it as far as it needs to go, even if it means hurting TVA Sports financially in the short term. "The conditions are toxic in the industry, as it relates to the pressure that Bell exerts in negotiations for wholesale rates for specialty channels," Picard said. "They're perpetuating their monopoly."
Picard said there are currently no plans to pull other TVA-owned specialty channels from Bell TV.
More broadly, TVA and Quebecor are looking for the CRTC to step back and stop cutting them off at the knees during negotiations. Though Bell accuses the group of asking the CRTC to micromanage commercial contracts, Picard said instead they want the Commission to step back and allow the two parties to settle their dispute through commercial arbitration, outside the Commission confines (which Bell has refused to do).
"Bell doesn't want to change the rules of the game," he said, "because they're to its advantage."
