CRTC approves talks on TV signal fees

Canada's private TV broadcasters celebrated somewhat of a victory Monday after the CRTC ruled that they can negotiate fair market value for their over-the-air signals from cable and satellite companies.

However, the broadcast regulator is first deferring judgment to the Federal Court of Appeal, saying itmustconsult the court toensure it has the jurisdiction to impose a negotiation frameworkon the two sides.

The decision is thelatest development in the bitter, ongoing battle over whether cable and satellite companies should pay for the conventional television signalsthey nowpick up for free to include in the packages they sell.

"Broadcasters and distributors have a symbiotic relationship," said Konrad von Finckenstein, chair of the Canadian Radio-television and Telecommunications Commission, on Monday in a statement. "The time has come for them to put their differences aside and work together to ensure the continuation of conventional television, which Canadians clearly value."

A court decision could be about six months away, von Finckenstein estimated.

New system

The fee-for-signal battle has for years pitted conventional broadcasters, includingCTV, Global and CBC, against the cable and satellite companies mainly, Rogers, Bell and Shaw that widely distribute their free, over-the-air signals.

If the federal court approvesthe CRTC ruling, the broadcasters and the BDUs could move forward with a new system of negotiating compensation for traditional TV signals (a compensation system alreadyexists for signals for specialty channels).

Paul Sparkes, CTVglobemedia's executive vice-president of corporate affairs, said he sees the rulingas a recognition "that there is a value associated withthe content that we produce."

"We're very happy with that," Sparks said.

"[The ruling] just gives us that bargaining power that enables us to have a fair market negotiation for the re-transmission of our content, which [BDUs] think is valuable because they're charging consumers for it already."

Canadian broadcasters have long argued that amid today's plethora of TV channels and the drop in ad revenue, local TV programming is increasingly endangered without a solid new source of revenue.

According to CRTC reports released last week, private TV broadcasters reported losses (before interest and taxes) of $116.4 million in 2009 which followed the massive 93 per cent drop in profits to $8 million during 2008.

Cable companies had profits (before interest and taxes) of $2.3 billion, an increase from $2.1 billion a year earlier. They also saw an overall rise in revenues of 11. 9 per cent in 2009.

Ruling draws criticism

Monday's decision riled the cable and satellite firms, (known as broadcast distribution undertakings, or BDUs), which have argued that under the Broadcast Act the CRTC doesn't have the authority to force them to pay for conventionalTV signals.

"It's an inappropriate decision, and it's bad for consumers," saidMirko Bibic, Bell's head of regulatory affairs, onMonday afternoon from Gatineau.

"We will argue that the CRTC doesn't have the jurisdiction I firmly believe they don't and hopefully, we'll win in court."

Rogers Communications vice-chair Phil Lind reiterated that if the CRTC imposes any new fees, they will be passed on to consumers, just as they did with the commission's 2009 increase to the Local Programming Improvement Fund.

If von Finckenstein thinks the BDUs will negotiate, "he's dreaming in Technicolour," Lind retorted.

As well, consumer groups, media unionsand those representing the creative community criticized the decision.

Ian Morrison, spokesperson for the Friends of Canadian Broadcasting,blastedit as "a business-as-usual decision" thatdumped the tough work onto the federal court.

"It's pretty difficult to negotiate on the basis of withdrawing your product from the market. It's certainly not in the interest of the viewers, and the CRTC has a responsibility to stick up for the viewers," he said.

Monday's CRTC ruling also included:

• Changes to Canadian content rules, requiring broadcasters to spend 30 per cent of gross revenues on homegrown content, but allowing them greater flexibility to air that material, including shifting it to specialty and pay channels as well as airing it on main networks.
• Requiring broadcasters to spend at least five per cent of gross revenues on "programs of national interest," including dramas, documentaries and award shows.
• Plans to examine a complete broadcasting group (a main network lumped together with specialty and pay channels) when considering the next bout of licence renewals, due in August 2011.

Government awaits report

Canadian Heritage Minister James Moore issued a statement Monday afternoon, reiterating that the government's primary focus is "the interests of Canadian consumers."

Last fall, Moore ordered the CRTC to submit a report after issuing its ruling. That report will be released Tuesday.

"We appreciate today's decision of the CRTC on the future of an important industry for all Canadians," Moore said. "We look forward to the public release of the second report by the CRTC."

The Conservative government has the power to overturn the CRTC's ruling, as it did in December when it allowed wireless provider Globalive access to the Canadian market after the commission had rejected its application.