Canada Moves to Adopt U.S.-Style Retrans Regime - Broadcasting & Cable

Canada Moves to Adopt U.S.-Style Retrans Regime

Regulators embrace "value for signal" framework to give broadcasters right to negotiate retransmission consent fees
Author:
Publish date:

Pending an OK from the court, Canada's communications regulators have
adopted a version of the retransmission consent negotiation ("value for
signal") regime followed by their American counterparts--a regime that
industry critics in the U.S. say is broken and which the FCC is
currently reviewing.

In language that the National Association
of Broadcasters will want to clip and save, the Canadian
Radio-Television and Telecommunications Commission said: "[T]he
Commission has found that it is necessary to provide the licensees of
private local television stations with the right to negotiate a fair
value for the distribution of their programming services."

Canada
has mandatory carriage of stations (must-carry) but no option for
stations to try and collect payment.

U.S. broadcasters have
been arguing that getting fair value for their signals is the reason
behind some of the recent retrans impasses, impasses that have drawn
criticisms from some House Democrats and an inquiry into the system by
the FCC.

The CRTC released an order March 22 establishing the
new regime, similar to the U.S. must-carry/retrans system. But
implementing the rules is subject to a decision by the Canadian courts
over whether the CRTC has the jurisdiction to "implement a negotiated
solution for compensation for the fair value of private local
conventional television signals."

Cable operators there had
argued that it was establishing a new copyright in the signals and was
thus beyond the power of the commission. They had also said they did not
plan to pay for something that was delivered free over the air.

Canadian
broadcasters, sounding like their U.S. brethren, argued that times were
tough and it was time to get a cut of that dual-revenue stream.
"[C]onventional television broadcasters have access to fewer advertising
dollars," said CRTC, summarizing the broadcasters' arguemnts for the
"value for signal" regime. They further argued that local television is
not free for most consumers since the majority of Canadian households
subscribe to a BDU [Broadcasting Distribution Undertakings, Canada's
version of an MVPD] and pay for stations through their monthly bill
payments, and added that the BDUs do not pass a portion of those
payments to local broadcasters.

Like the FCC, the CRTC says it
will intervene in cases where there is evidence that the parties are not
negotiating in good faith.

The Canadian move comes as the FCC
is having some second thoughts about retrans. The commission requested
comment last week on a Time Warner Cable-led petition to overhaul the
system, including: untying cable nets from broadcast stations in those
deals; not allowing broadcasters to pull their signals if the contract
runs out without a new deal; and independent arbitration.

The
CRTC said the new rules would not go into effect until and unless the
court ruled it had jurisdiction.

Washington law firm Wiley Rein
sent a representative last fall to testify about the U.S. retrans system
at the invitation of CRTC.

Canadian cable operator Rogers
Communications was not happy with the prospect of going from free to a
fee. "The CRTC today has essentially placed a tax on all cable and
satellite customers," said Rogers Chairman Phil Lind in a statement.

Related

Passing the Retrans Buck

In the latest salvo in the battle between cable operators and broadcasters over pay for play, Charter Communications will start itemizing the price increases it says it has to pass along to customers because of retransmission consent costs.