Cogeco Cable challenges CRTC order

Canadian content distributors decry 'U.S.-style' negotiations

TORONTO -- Canada's TV regulator faces mounting hurdles as it looks to resolve the country's bitter retransmission fee feud by ordering American-style negotiations between broadcasters and cable operators.

Canadian cable operator Cogeco Cable said it will approach the Federal Court of Appeal to argue the Canadian Radio-television and Telecommunications Commission (CRTC) has no jurisdiction to order content distributors to negotiate a fair compensation rate with broadcasters for their local TV station signals.

"In our opinion, the CRTC has no authority to establish new intellectual property rights. That is the role of government and elected officials," Yves Mayrand, vp of corporate affairs at Cogeco Cable said in the wake of the regulatory decision.

As in the U.S. market, retransmission deals that the CRTC envisions for the Canadian market after industry negotiations are to run for three years.

If Canadian distributors refuse to negotiate so-called cash-for-carriage deals, they will be liable to black-outs of U.S. programming on their schedules if ordered by domestic broadcasters that own the Canadian rights to those shows.

Scotia Capital media analyst Jeff Fan in an investors note said allowing broadcasters to start charging for their over-the-air TV signals was a win for struggling broadcasters, but he questioned whether the CRTC decision on retransmission fees will pass muster with Canadian courts or politicians.

Fan said the Federal Court of Appeal may rule the regulator has no jurisdiction to order content distributors to cut a deal with broadcasters.

He added the federal government may also overturn any potential TV-viewing tax on Canadians, just as it surprised observers by overturning an earlier CRTC decision on the mobile phone market last November.

Elsewhere, Phil Lind, vice-chairman of Rogers Communications, Canada's largest cable and mobile phone operator, said the CRTC erred in ordering U.S.-style negotiations between distributors and broadcasters because the Canadian TV market is "vastly different" from the American one.

Lind said Canadians already subsidize domestic broadcasters and shouldn't have to shell out more to view over-the-air TV signals they currently receive for free.

"Canadian regulators require the payment of hundreds of millions of dollars of subsidies from Canadian distributors for Canadian programming," Lind said, referring to the Canadian Television Fund and other industry subsidies for domestic broadcasters that are passed onto consumers.

Tapping new retransmission revenue has become a rallying cry for domestic broadcasters as they struggle to fend off growing competition for eyeballs from niche channels and the Internet, and endure fewer TV ad dollars.
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