Astral seeks CRTC arbitration in dispute with Videotron over fees, multiplatform rights

The CRTC is encouraging Quebecor Media Inc. and Astral Media Inc. to find commercial terms in a content rights dispute after Astral asked the commission to arbitrate a disagreement over the wholesale prices for its pay and specialty and TV content, including The Movie Network and HBO. In a letter to the CRTC on March 6, 2013, Johanne Saint-Laurent, senior vice-president of business affairs at Astral, requested that the CRTC lead a final offer arbitration process on the renewal of a distribution agreement with Videotron Ltd., a Quebecor subsidiary. The two companies began negotiations in March 2012 to renew Videotron's broadcast, video-on-demand and online distribution of the Astral content, after which Astral “came to the conclusion that the proposals of the parties became irreconcilable,” according to the letter, which was among documents filed with the CRTC. “Commission staff reminds parties that the Commission considers it preferable that parties negotiate on a commercial basis the terms of affiliation agreements,” CRTC planning officer Martha King said in a responding letter to Quebecor and Astral on April 12. “Parties are also encouraged to continue negotiations, including participating in mediation (such as Commission staff-assisted mediation) throughout this process.” The CRTC letter said the regulator will notify the companies by April 23 whether it will reject or accept the request. If the CRTC goes ahead with dispute resolution, it said, it will outline dates for final offer arbitration meetings and the issues to be discussed. Astral is taking its dispute to the CRTC as the company looks to transfer its control to BCE Inc. in a $3.38-billion deal that will be the subject of a CRTC public hearing in May. Competition in the Quebec video market is intensifying as companies offer more online, on-demand options. In February, Astral filed a complaint over Videotron's new Club Unlimited video-on-demand cable TV service, saying it competed directly with the broadcaster's Super Écran pay TV channel. Club Unlimited is also available to subscribers online and on mobile devices. BCE, as part of its plan to acquire Astral and the company's The Movie Network and HBO content, also says it will launch a new TV Everywhere product with premium sports and entertainment programming. As part of the CRTC's consultation on BCE's acquisition of Astral, competing broadcast distributors have accused Bell of requesting excessive rates for the online, on-demand rights to its programming, which could shut out its competitors. Bell said it is offering market-based rates, and that the cost of online, on-demand rights are rising due in part to upward pressure from foreign competitors like Netflix Inc. Astral, in a letter to the commission on April 5, said it is seeking final offer arbitration in a dispute with Videotron that “relates exclusively to monetary issues, namely the wholesale rates to be paid for Astral’s pay and specialty services and the value of non-linear rights that Astral makes available to Videotron.” The company said the dispute must be resolved in a “timely” manner given its proposed transfer of control to BCE, and that harm could come to its TV services if the issue isn't resolved before the transaction's closing date this summer. Astral's letter referred to arguments presented by Videotron about the rate structure of its affiliation agreement with the broadcaster, particularly higher rates for multi-platform rights. Astral said it negotiates with other broadcast distributors in the Quebec market, including Cogeco Cable Inc., BCE division Bell Media, and Telus Corp., and that all of them face the same market conditions and some have signed renewal agreements with the company under the same terms. Astral's pay and specialty channels include Cinépop, Super Écran, TMN and TMN Encore (with HBO programming), The Family Channel, and Disney Junior. Videotron told the commission in a letter in March that it is willing to accept final offer arbitration for Astral's pay services, though it said the disagreement over the specialty channels is not “exclusively monetary” and may be resolved through a hearing process, according to the CRTC letter. In a separate letter filed with the CRTC on April 10, Fasken Martineau lawyer Laurence Dunbar, representing Videotron, said the Quebecor company introduced “pick-a-pack” channel services in Quebec in 2000 and that today more than 58 per cent of its digital cable customers subscribe to its Sur Mesure service, through which they can choose a package of 20 of their favourite channels. Videotron said Quebec is now the sole market in North America that offers pick-a-pack services, and that, over the past three years, this new model has resulted “in a fundamental change in the traditional business model of cable television.” The company suggested an expedited hearing during the month of May and said it would be willing to separate the issues into three groups looking at the content for Super Écran, TMN and HBO; English-language pay channels; and French-language pay channel Cinépop. Astral suggested two “concurrent” final offer arbitration processes, one related to the eight French-language specialty services and another for its pay TV services. Quebecor and Astral declined to comment for this story. The CRTC held a closed-door, final offer arbitration process last year to end a dispute between Bell Media and a group of independent broadcast distributors. Under that process, the CRTC chooses from offers made by the parties. —With reporting by Simon Doyle at sdoyle@thewirereport.ca and reporting and copy editing by Danika Grenier at dgrenier@thewirereport.ca

Astral seeks CRTC arbitration in dispute with Videotron over fees, multiplatform rights

Broadcast | April 19, 2013

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