CCTA opposes proposed royalty changes on retransmission of distant TV signals

The Canadian Cable Television Association (CCTA) is opposing proposed royalty changes on the retransmission of distant television signals for 2004-08 for fear that cablecos will lose their Quebec discount and also because it considers the proposed increase too large. The Copyright Board of Canada is not expected to hold hearings into the matter until June 2005. "They are proposing significant increases in the amounts that would be paid. Since 1999, Class 1 cable systems have been paying 70 cents per subscriber per month, and from 2004 onward, they have proposed to increase that to $1," CCTA VP of legal affairs Jay Kerr-Wilson tells Canadian Communications Reports. There are about 6.7 million Class 1 basic subscribers and a 30-cent increase would translate to an additional $2.01 million paid out by distributors a month. The CCTA states in its written objection to the proposed increases, "The proposed fees do not reflect the fair, reasonable and appropriate value of the transmission of the literary, dramatic, musical and/or artistic works carried on distant signals. The proposed fees do not reasonably reflect either the amount or the impact of the works carried on the distant signals retransmitted by a retransmitter." Kerr-Wilson also explains that proposed changes to who could benefit from the 50% discount for cable operators in French markets would virtually eliminate the discount. The original intent of the discount was to recognize that a significant majority of television viewing in Quebec is to local, French-language signals and that little of that viewership is to distant signals, which are predominantly English. To account for that, the Copyright Board determined that cable operators in French markets should pay 50% of the normal royalties for distant signals. "The collectives have proposed changes to the way French discount operates that would mean very few cable systems would be able to use the French market discount," says Kerr-Wilson. "So there is still a French market discount, but there are conditions placed on it that would mean very few cable companies would actually be able to use it. So there would be significant increases in royalties paid for cable systems operating in Quebec." Under the new proposal, the discount would not apply to subscribers who (a) are served by a cable system that offers a basic service consisting of over-the-air signals, or over-the-air signals and specialty services, the majority of which are in the French language; or (b) receive one or more English-language signals or English-language specialty or pay television services on a discretionary basis. The CCTA submission states, "The proposed changes to the French market adjustment set out at section 10 of the statement of proposed royalties...are unjustified, would severely limit the application of the French market adjustment in a way that is extremely prejudicial to retransmitters operating in the province of Quebec and other French-language markets in Canada, and do not reflect the relative value of the works carried on distant signals in those markets." In a separate process, an Order in Council will change the Copyright Act regulations by amending the definition of "local signal" to make it applicable to all retransmitters eligible for compulsory licences. As a result, some of the signals carried by direct-to-home (DTH) satellite TV distributors would be considered local. For example, the signals of Ottawa TV stations carried in the Ottawa market by a satellite TV distributor would be considered local. Currently, every signal carried by a DTH satellite TV distributor is considered out-of-market. To date because the DTH operators haven’t had any of their signals defined as local market, they have been unable to benefit from the French-market discount. DTH operators want the regulations changed to include a definition of local signals for them. If that happens, and the proposed changes to qualification for the French- market discount are also changed, the satellite TV distributors would find themselves no further ahead. "(DTH operators) now have changes to the definition of local signals, but there has been a proposed change to the discount as well. It will take a hearing to figure out what’s happening," Kerr-Wilson notes. The CCTA is against the proposed royalty changes for a number of other reasons, including an undue administrative burden. In its objection filed with the board on Sept. 10, 2003, the CCTA opposes having to make separate monthly payments to each of the eight collective societies involved in the process. The cable industry also doesn’t like the fact that a retransmitter who provides a distant signal would be required to pay the same amount per subscriber in royalties as a retransmitter who provides multiple distant signals. "This aspect of the proposed tariff structure could give certain retransmitters an advantage over competitive retransmitters operating in the same market," the CCTA writes.

CCTA opposes proposed royalty changes on retransmission of distant TV signals

Broadcast | March 25, 2004

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