Redistribute current TV fees, Quebecor urges CRTC

Quebecor Media proposed its own solution to the battle over the value of conventional television signals on Wednesday, suggesting cable and satellite distributors divert some of the fees they pay to specialty channels to traditional broadcasters instead.

Quebecor president Pierre Karl Péladeau floated the idea before the Canadian Radio-television and Telecommunications Commission in Gatineau, Que. The broadcast regulator is holding hearings into Canadian television, with an emphasis on whether cable and satellite providers should compensate broadcasters for their signals but not pass that cost on to consumers.

Quebecor Media, which owns both dominant Quebec broadcaster TVA as well as cable distributor Vidéotron, presented its argument for a "rebalancing" of the existing system by industry players, so as not to increase the cost of television for consumers.

"You seem to be worried about the public reaction … [to fee hikes]. Well, you are right to be," Péladeau told the CRTC commissioners. 

'I don't see anything outrageous in the proposition that all players in the television broadcasting industry should have access to the same sources of financing.' — Pierre Karl Péladeau, Quebecor president

Péladeau agreed that the conventional television business has been damaged by the rise of specialty channels in the past 30 years.

He proposed that some of the fees those channels currently get from cable and satellite distributors — known as broadcast distribution undertakings, or BDUs — go to conventional broadcasters instead.

"I don't see anything outrageous in the proposition that all players in the television broadcasting industry should have access to the same sources of financing," Péladeau explained, adding that stakeholders should be given three years to negotiate the redistribution of the fees "on a free-market basis."

Though Péladeau criticized the bitter ad campaign between the English-language broadcasters and the BDUs, he nonetheless said he felt the CRTC has a responsibility to aid Canadian broadcasters.

"The situation truly is a cause for concern," Péladeau said, noting that nearly all high-quality programming about Canadians is provided by conventional broadcasters.

"Conventional television is the cornerstone of our broadcasting system and plays a vital role in Canada's democratic, cultural, social and economic life."

Regulation has favoured distributors, Asper argues

In the afternoon session, however, broadcaster Canwest Global — which owns both a traditional network as well as a host of specialty channels — argued against the Quebecor proposal.

"The specialty business has been attractive. … We acknowledge that it's a profitable business," Canwest president and CEO Leonard Asper told CRTC chair Konrad von Fickenstein and his fellow commissioners.

However, specialty channels have regulatory obligations that provide a check against their profitability, namely the CRTC-mandated Canadian programming expenditure requirements, Asper said.

He argued that the BDUs — who face less regulation than broadcasters — should pay their "fair share."

"Broadcasting is a regulated business," Asper said. "Once you decide to regulate, it should be fair regulation.

"Over the past 40 years, regulatory policies and decisions have favoured one sector to the detriment of another, resulting in a massive wealth transfer."

Canwest calls for negotiation

Like broadcasters CTV and CBC, Canwest is calling for the CRTC to compel the BDUs to negotiate a fee for the traditional over-the-air signals they carry. If they refuse to come to the table or to decide by a certain deadline, then an arbitrator would be required to set one. It also asked that the BDUs be prevented from raising rates for customers.

In exchange, Canwest said it would accept the requirement of a set amount of spending on and airing of Canadian programming.

"We want to be constructive," Asper said. "We would sit down and discuss anything with the BDUs. What we need is a referee."

Unlike CTV, however, Canwest is not in favour of pulling its signals if the BDUs don't negotiate.

"I'm not sure how long we could last if we withdraw our service," said Charlotte Bell, Canwest's senior vice-president of regulatory affairs.

Asper pointed out that if a cable or satellite provider stopped carrying the signal of one network, it might face complaints or a letter-writing campaign but would still have "five, six, 700 channels" to offer.

"If we drop our signal, it's over," he said.

Asper also lashed out against the notion put forth by cable and satellite providers that since conventional broadcasters make their signals available over-the-air for free, the signals have no value.

"Then why are they charging customers for our product?" he said. "Clearly, the only ones getting free television are the cable and satellite providers."

The hearing, which began Monday, is scheduled to continue through Nov. 27. A hearing with consumers will be held Dec. 7.