Distributors say CRTC value for signal regime an attempt to ‘create copyright law’

TORONTO—The CRTC’s proposed value for signal regime appears to be hanging in the balance at the Federal Court of Appeal as distributors launched into oral arguments Monday saying the proposed system overreaches the commission’s jurisdiction and creates “a new entitlement to copyright” for broadcasters. Lawyers representing broadcasting distributors argued before the court the CRTC’s proposed system effectively gives broadcasters a new copyright—a right only Parliament has the power to create. “What the CRTC has done is opened up its book of synonyms,” Neil Finckelstein, a partner with McCarthy Tétrault who is representing Cogeco Inc., Bell Canada and Bell Aliant at the hearings, said Monday. Finckelstein argued the proposed value for signal regime—which would give broadcasters the power to “delete” or pull their local, over-the-air signals from distributors as leverage to negotiate compensation or “fair value” for redistributing them—effectively expands the Copyright Act. Finckelstein said that, in the CRTC’s language, “signal of programming undertaking” is a synonym for “communications signal” under the Copyright Act; “deletion” is the same as a “not authorized” copyrighted work; “foreign or domestic” equals “local or distant”; and exchanging “fair value” is the same as paying a “royalty.” He argued the CRTC’s proposed regime would be akin to giving broadcasters a new right and expanding the broadcasting retransmission regime outlined in the Copyright Act. “It expands to the regime, not only lengthwise to the cable distributors, but widthwise to distant and local signals,” he said. Last March, the CRTC decided over-the-air broadcasters like CTVGlobemedia and Canwest Global should have the right to negotiate value for the carriage of their signals with cable and satellite providers such as Rogers Communications Inc. and Bell Canada. Through negotiations, distributors could provide “value” for the carriage of broadcasters’ local signals through various deals—such as offering better positions on the dial or carrying a broadcaster’s specialty channel at a special rate. In the event that negotiations failed, broadcasters would have the power to pull or “delete” their programming, in which case distributors would also have to black out the same programming offered at the same time by foreign or “distant” channels. But due to questions about the CRTC’s jurisdictional authority to implement the decision, the commission referred the matter to the Federal Court of Appeal. Two days of hearings are now under way in Toronto. Although distributors Shaw Communications Inc. and BCE Inc. are in the process of acquiring broadcasting groups Canwest Global and CTV, respectively, both Canwest and CTV continue to argue in favour of the CRTC’s value for signal regime in the court process. Shaw and Bell Canada have argued strongly against a value for signal or fee for carriage regime. Benjamin Zarnett, a partner with Goodmans LLP, presented Monday on behalf of broadcasters CTV, V Interactions Inc. and the Newfoundland Broadcasting Co., and told the court that broadcasting and copyright policy are distinct and that the option for broadcasters to negotiate value for signal would operate parallel to the Copyright Act. Broadcasting regulation, Zarnett said, starts with the premise that broadcasters must have a CRTC-issued licence to operate. But Copyright regulation presumes that uses of works are free unless restricted by the Copyright Act, he said. He added that copyright law is enforced through court action, and a value for signal negotiation regime would be enforced by the CRTC. “It’s a false premises to start by saying that if there are similarities, these things must be the same,” Zarnett said. “Superficial similarities to copyright do not make copyright.” Zarnett also pointed to section 31(2)(b) of the Copyright Act, which says that distributors do not infringe copyright if their retransmissions are “lawful under the Broadcasting Act.” The section addresses any overlap between the two acts, he said, and argued that a conflict arising between the broadcasting and copyright acts would have to be so narrow that compliance with one statute involves breach of the other. Steven Mason, a partner with McCarthy Tétrault, also presented arguments to the court Monday on behalf of the distributors, and argued the CRTC’s proposed negotiation regime gives broadcasters “the fundamental right to exclude” their programming “for economic benefit.” During an exchange with Justice Karen Sharlow, the justice asked Mason whether there is another regime that could “accomplish the same objectives using different techniques.” But Mason said any system that imposes a fee on broadcasting distributors contradicts the legislative intention within the Copyright Act—a statute he said that did not intend charging distributors to pay for the retransmission of free, over-the-air signals. “We can characterize it as a fee or as a term of licence, but no matter which way we slice it, ultimately it ends up right back where we started in our submission, which is that this is copyright law,” Mason said. “If it is copyright law, the CRTC cannot create it.” Zarnett also argued Monday the CRTC’s regulatory powers are used to maintain an intricate balance between numerous elements within the Canadian broadcasting system. The commission’s proposed value for signal regime is an attempt to ensure the health of one element in the system—over-the-air broadcasters—in light of audience fragmentation, competition from new media and declining ad revenues, he said. Canwest also presented its arguments Monday in support of CTV, and Rogers is scheduled to present arguments Tuesday. The hearings are scheduled to wrap up Tuesday afternoon. Justice Sharlow, Justice Carolyn Layden-Stevenson and Justice Marc Nadon are hearing the arguments. sdoyle@thewirereport.ca

Distributors say CRTC value for signal regime an attempt to ‘create copyright law’

Broadcast | September 14, 2010

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