Quebecor appeals civil damages against Bell; seeks over $150M more

Quebecor Media Inc. filed an appeal of the damages handed down in a Quebec Superior Court civil judgment related to satellite piracy of BCE Inc.'s satellite TV system, said Serge Sasseville, senior vice-president of corporate and institutional affairs at Quebecor. Quebecor, on behalf of its subsidiaries Videotron Ltd. and TVA Groupe Inc., filed an appeal on Aug. 21 “only regarding the awarding of damages,” Sasseville said in a phone interview. A Quebec Superior Court decision on July 23 by Justice Joel A. Silcoff concluded that Bell did not take appropriate measures to prevent the illegal decoding of its satellite television signals. The decision said Bell had the necessary technology to address the problem and was aware of the extent of the piracy being committed. In the civil case, Quebecor launched four related lawsuits seeking more than $300 million in damages for lost subscribers to its broadcast distribution service and channels. Quebecor argued Bell was negligent in its approach to fighting piracy on its Bell ExpressVu satellite TV system (now called Bell TV) and that the company deliberately ignored piracy in an effort to increase market share and the use of Bell satellite equipment in Quebec. The judge ordered Bell to pay damages of $262,000 to TVA and $339,000 to Videotron plus interest since 2005 as well as Quebecor’s expert witness costs of about $386,000 to Videotron and $42,800 to TVA. Bell must also pay Quebecor’s court costs. Sasseville said Quebecor agrees with Silcoff’s findings and that the appeal is based on the judge’s decision to disregard its expert testimony related to the piracy damages. “The grounds for appeal on behalf of Videotron and TVA are that the trial judge erred when he concluded that our experts’ testimony and report on damages should be discarded,” Sasseville said. Silcoff wrote in the decision that a report prepared by Quebecor's expert witnesses, Alain Lajoie and Jonathan Allard, principals at Navigant Conseil LJ Inc., did not quantify the claim for damages incurred by Videotron after 2005. Lajoie and Allard said that depending on the scenario and a zero per cent level of acceptable piracy, “the damages incurred during the post piracy period would range from a low of $37,140,714 to a high of $347,703,307 all calculated in dollars discounted as of August 31, 2005,” according to the court decision. Silcoff said the authors of the report did not state the number of subscribers who chose to stay with Bell ExpressVu or migrate to Videotron. “For some incomprehensible reason, and notwithstanding their willingness to opine on the damages allegedly incurred during the Piracy Period, they conclude this determination should be made by the Court,” Silcoff said. The judge added that rather than stating the duration of the post piracy period, the witnesses “provide different scenarios for the Court to adopt based upon what it believes most appropriate.” The court decision said that for those reasons one could not look to the Navigant report for assistance to quantify claims in damages from either Videotron or TVA. “The approach and methodology used by Vidéotron’s expert, Navigant, to quantify the compensatory damages claimed is flawed and should not be retained,” Silcoff said in the decision. Videotron failed to prove how the amounts claimed were “a direct and immediate consequence of the alleged fault of BEV ,” Silcoff said. “here appears to be no differentiation in the minds of the authors between financial information in evidence in these proceedings and such information, not in evidence, forming part of the financial books and records of the Plaintiffs and their affiliate or sister companies.” Sasseville said the judge was “arguing erroneously that the underlying financial information was never admitted in proof by Videotron.” He said Quebecor is arguing on behalf of Videotron and TVA that the financial information in the Navigant report was admitted in evidence at the trial and accepted by both parties. Sasseville said the amount of damages was reduced as a result of documents submitted after the evidentiary phase of the hearing. Following the conclusion of the hearing’s evidentiary phase, the court decision said, Videotron “substantially” reduced its claim for damages based on a fixed three per cent acceptable level of piracy and an annual churn rate of 12.6 per cent among Videotron subscribers. The churn rate, the decision said, corresponds to an average period of subscription for Videotron clients of 7.9 years. The claim was also reduced by fixing the company’s market share at 71 per cent and “reducing the duration of the Post-Piracy Period during which damages are claimed to a total of approximately 6.8 years, commencing March 1, 2005 and terminating December 31, 2011,” the decision said. Quebecor's damages claimed for Videotron are for the piracy period of August 2000 to 2005, Sasseville said, and that “the actual damages could be between $7.5 million and $28.5 million, but future damages would be $144.5 million.” He said total damages claimed for Videotron for that period would be between $152 million and $173 million and that “regarding the claim for TVA, we told the judge that according to the proof that was laid at the hearing, the damages were between $339,000 and $1.1 million.” Bell argued during the case that it implemented anti-piracy measures following the creation of an anti-piracy task force in 2002. The company said those measures included legal action against people engaged in piracy, programs to encourage pirates to becomes subscribers, a “zero-tolerance policy” approach, a public education campaign, investigations and collaboration with law enforcement authorities, and smart card swaps on its equipment. Bell spokeswoman Jacqueline Michelis said in an emailed statement to The Wire Report that piracy was a “broad problem” faced by all satellite television providers 10 years ago. “Bell ExpressVu dealt with those piracy issues appropriately at the time, as documented in the case we presented to the Court,” Michelis said. “Note that the Court reduced the damages sought by our competitor by 99.85%—to $600,000 from the $387 million that TVA/Vidéotron demanded.” dgrenier@thewirereport.ca

Quebecor appeals civil damages against Bell; seeks over $150M more

Broadcast | September 17, 2012

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Quebecor appeals civil damages against Bell; seeks over $150M more

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