Quebecor takes CRTC content sharing decision to Federal Court

Quebecor Media Inc. has filed a motion with the Federal Court of Appeal to contest a CRTC decision in January that forces the company to share its exclusive video-on-demand content with Bell Canada and Telus Corp. “The CRTC exceeded its powers, by-passed the applicable test, and improperly applied inapplicable regulations,” Quebecor wrote in a memorandum of fact submitted to the court. In January the CRTC ruled that Quebecor had acted with undue preference when it held back competitors from using exclusive TVA content for video-on-demand services. Quebecor owns both Videotron Ltd., which offers TVA content on its Illico video-on-demand service, and television network TVA Group Inc. The CRTC decision required TVA to make its programs available without delay on Telus' and Bell's video-on-demand services. The company was also required to negotiate agreements within 30 days for carriage of the content and agree on a process to determine fees, terms and conditions for the deal. The commission said that should Quebecor fail to meet the requirements, it would consider issuing a mandatory order. On Feb. 25, Videotron and TVA filed a motion with the Federal Court of Appeal against the decision. In its notice of motion, Quebecor said the CRTC erred in applying the undue preference provisions, under the pay TV regulations, to TVA's production and distribution activities, because TVA is a broadcaster and not a distributor. The company also argues that the commission erred when it applied the undue preference provision in its broadcast distribution undertaking (BDU) regulations to video-on-demand programs. Quebecor added that the CRTC failed to assess whether Bell and Telus had suffered material adverse effects as part of not having access to the content. “The complaints by Bell and Telus contained no evidence establishing that the absence of the TVA programs on the VOD services of Bell and Telus caused each of them a particular prejudice,” Quebecor wrote in its memorandum of fact. “The Bell complaint simply mentions that TVA is a popular television network and that the lack of access to its content constitutes a competitive disadvantage for Bell, while the Telus complaint asserts vaguely that it suffers a prejudice from the fact that the popular programs broadcasted on TVA are not available on its VOD service.” Richard J. Paradis, president of consulting firm Groupe CIC and an instructor in the Université de Montréal's communications department, said in an interview that Quebecor's court application is an attempt to push back implementation of the decision. “They're trying to go and say the commission does not have jurisdiction over the distribution sector, and they're probably going to get told by the Federal Court that that's not true,” he said. “The CRTC is usually quite diligent at looking at what it can and can't do.” Paradis said the court has a recent history of siding with the CRTC, as it did in its decisions on value for signal, Cogeco Inc.'s acquisition of Corus Entertainment Inc.'s Quebec radio stations, and the Globalive Wireless Management Corp. case. “It's two or three cases we've had in the past six months where the Federal Court ruling comes down favouring the CRTC's jurisdiction, and this is probably going to be another one,” he said. Paradis noted that the commission recently told Bell to hold off on exclusive content deals on mobile and online platforms as part of its acquisition of CTVglobemedia Inc. until it can review the topic at its vertical integration hearing in June. Bell and Telus are expected to file replies with the court in the next two weeks. Quebecor will then have 10 days to issue a reply, and the court will decide whether the case will be heard. Quebecor has also filed updates with the commission about the status of the implementation of the decision about sharing its TVA content for video-on-demand. TVA said it put days of effort towards meeting the CRTC's requirements, but is encountering major difficulties towards delivering the content. Quebecor requested a closed-door meeting with Bell, Telus and the CRTC to discuss the challenges it is facing. “QMI believes that a closed-door meeting ... will allow for the discussion of the difficulties faced and to search for logistically and technically possible solutions that are also respectful of the rights of parties and third-parties,” the company wrote. Quebecor said a major obstacle is that some of its content was acquired through exclusive distribution arrangements with independent producers or foreign rights holders. The company now has to negotiate new contracts with the parties to meet the commission's requirements. In reply, Bell wrote to the commission that it should reject Quebecor's call for a confidential meeting and proceed with a “show cause” hearing. A show cause order requires a party to appear before the commission and provide reasons why it should not be forced to meet the decision's requirements. “Quebecor's suggestion that the parties instead reconvene for a confidential conference with the Commission is just an attempt to further delay, in the face of a clear Commission order, to provide the programs at issue to Bell now,” Bell wrote. Telus' reply is not yet available to the public due to confidentiality issues. But in an email, Telus spokeswoman Amélie Cliché said the company stands by its initial position that “the CRTC's decision and order was absolutely correct to ensure competition and choice for consumers and that we are opposing Videotron and TVA's request for leave to appeal.” A CRTC official said the commission has not set a timeframe to answer Quebecor's request because the file remains open with a court challenge pending. Bell declined to comment Thursday. kfournier@thewirereport.ca

Quebecor takes CRTC content sharing decision to Federal Court

Broadcast | March 17, 2011

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