Is broadcasting heading for more litigious environment?

BCE Inc.’s appeal of a CRTC decision to ban the use of simultaneous substitution for the Super Bowl in future years could be a sign of more conflict and court challenges to come as the broadcasting industry awaits further decisions from the CRTC’s Let’s Talk TV review, some experts are warning. The Super Bowl decision is the second CRTC directive Bell has challenged at the Federal Court of Appeal in recent weeks, following its February challenge of a ruling that compelled it to treat video streamed through its mobile-TV app like any other data, broadcasting consultant Peter Miller noted in a phone interview. “That’s, quite frankly, the kind of behaviour we haven’t seen from major broadcasters for decades. There hasn’t been this kind of litigation, particularly from one individual major broadcaster, against the CRTC, for decades,” Miller said. “The fact that we’re returning to a more litigious environment in broadcasting is testimony to how challenging the environment is, and how big the dollars are that are at risk for the broadcasting system and the players in it.” He added: “The reality is, there’s a lot at stake and there’s a lot of controversy as to how it should be handled.” “I’m not sure this is the last we’ll hear of appeals and requests that the CRTC reverse its decisions,” he said, noting that the CRTC has yet to release decisions on content and pick-and-pay coming out of its Let's Talk TV review of the future of television. The next announcement, regarding Canadian content and genres, is scheduled for Thursday. “These two appeals from Bell may be just a sign of things to come.” On March 2, Bell filed a motion for leave to appeal the CRTC’s decision to prohibit the use of simultaneous substitution for the Super Bowl and specialty channels, while otherwise keeping the practice, which it had considered eliminating completely. Kevin Goldstein, Bell Media’s vice-president of regulatory affairs, said during a panel discussion Friday at the Prime Time in Ottawa conference that the TV industry is entering a "combative" time. “I think we’re going to see a very, very combative environment going forward,” he said in response to a question by Miller, who moderated the panel, about whether we are headed to a more fractious environment in broadcasting with the release of the Talk TV results. “I think we all expected change. I think we’re getting change we probably didn’t expect,” he added. “If think if the commission is kind of pushing the boundaries on things, if they’re implementing rules that impact certain specific licensees, I think it’s a natural defence mechanism for those to take whatever legal avenues are available to them,” Goldstein said. “And also, if we get increasing numbers of kind of complaints-driven policy, where we’ve made financial and business decisions based on what we thought the regulatory environment is, and it seems to be shifting sands underneath us, yeah, I think we’re likely to see a lot more challenges and a lot more fractious environment.” During the Prime Time conference, Bell Media president Kevin Crull also spoke about Super Bowl decision, calling it an example of “heading in the wrong direction” and saying that the retransmission of U.S. networks in Canada is the equivalent of Aereo, the service ruled illegal by the U.S. Supreme Court last year. David Elder, a communications lawyer at Stikeman Elliott in Ottawa, said in a phone interview that the CRTC cannot defend its policy in court against Bell. “The CRTC has to tread very carefully in terms of its participation. It does commonly participate in appeals of its decision, but there is a body of case law that says it can’t really argue directly in defence of its own position,” he said. He likened the CRTC to a lower court that is now having its decision appealed at a higher level. “If you have a lower court ruling that gets appealed to the Supreme Court, the lower court doesn’t appear before the Supreme Court and argue why its decision was right,” he said. The CRTC would normally speak on jurisdictional questions or serve as a resource for the court, “but typically the heavy lifting on appeals is usually carried by another interested party.” Bell Media spokesman Scott Henderson said in an email that the leave to appeal document was served to the attorney general and the CRTC, but wasn’t sent to any other parties. Elder said in a followup interview that “it would be, at a minimum, the attorney general that would argue the other side of the case and defend the CRTC’s decision. And if other parties wanted to be involved, they could apply to the court to appear as interveners.” CRTC spokeswoman Patricia Valladao said the regulator could not comment on its plans to challenge the appeal, since the issue is before the courts. The federal Department of Justice, which would conceivably provide lawyers on behalf of the attorney general for such a case, did not respond to requests for comment by the time of publication. Lawyers from the Justice Department stepped in to defend the CRTC wireless code against a Federal Court of Appeal challenge by carriers, after the judge in that case found submissions from the CRTC “cross the line into advocacy in support of the CRTC’s decision and are inappropriate.” Elder noted that there likely aren’t many other parties “that would have that much skin in this game. I mean, it’s a decision that’s isolated to a single program, at the moment anyway, and I don’t know who would feel strongly enough about it to want to incur the expense of litigation.” He said Bell’s case has some merit and it has a shot at winning. “Part of it relates to timing. A big part of the value of acquiring Canadian rights to programming is the fact that simultaneous substitution is available,” he said. “So when you’re a broadcaster and you purchase those rights knowing that that’s available, you have some reasonable protection that you’ll be able to exercise those rights,” he said. He added that there’s also merit to the argument that the CRTC has singled out one program “for differential treatment, while admitting in their decision, or finding in their decision that simultaneous substitution continues to be required and has merit and will continue for broadcast services other than specialty services and the Super Bowl.” In the court filing, Bell had argued that since its licence for the Super Bowl extends “beyond 2017,” the year when the CRTC’s new rule will come into effect, the decision retrospectively overrides “significant terms” of Bell’s agreement with the NFL. It said the CRTC does not have the authority to “make regulations that have retrospective effect or interfere with vested contractual rights,” and that the Broadcasting Act “does not authorize the making of regulations singling out a particular program or licensee,” among other arguments. Richard Paradis, president of media consulting firm Groupe CIC, said Bell “is in its right to at least see what the Federal Court thinks about it, and if I was them, I’d ask for damages.” “Why did they pick on one particular show and, on top of that, one particular company?” Paradis said in a phone interview, adding that Bell has signed contracts that the CRTC “didn’t even take into account.” At the time of decision, Bell Media would not specify how much simultaneous substitution is worth for the Super Bowl, though estimates have pegged total advertising during the four-hour broadcast as worth between $15 million and almost $19 million. According to the CRTC, simultaneous substitution is currently worth about $250 million to the industry. During the Talk TV hearing in the fall, Bell Media president Kevin Crull said the value of simultaneous substitution for live events accounts for up to $40 million every year for Bell’s CTV network, which broadcasts the Super Bowl. Not everyone agrees on how strong Bell’s case is. University of Ottawa law professor Michael Geist wrote on his blog Tuesday that Bell’s argument is weak because “it argues that the decision is unreasonable based largely on the grounds that it interprets broadcast policy differently than the CRTC.” Geist also said the CRTC did give notice that it could target the Super Bowl specifically with its simultaneous substitution rules, and the CRTC decision does not discriminate against Bell by singling out one licence, or interfere with Bell’s agreement with the NFL, because Bell continues to be the only Canadian broadcaster of the Super Bowl. The Association of Canadian Advertisers sent letters to the CRTC and Heritage Canada asking for a meeting on the issue two weeks ago and has not heard back yet, vice-president of policy and research Bob Reaume said in a phone interview. In the letters, it asked Heritage Minister Shelly Glover and CRTC Chairman Jean-Pierre Blais to reverse the CRTC decision. The association noted that almost one-fifth “of all TV viewing in this country is to signals that cannot currently be accessed by advertisers in Canada,” such as U.S. and other international channels or on-demand channels. “Therefore, approximately one-fifth of these valuable Canadian audiences currently go untapped. That a CRTC decision would impose further restrictions is not only flawed in its logic as a policy, but will bring real harm to Canadian advertisers, broadcasters, performers, the production community and all other employees in this ecosystem,” the letter said. “Simultaneous substitution not only protects the program rights negotiated and acquired by Canadian broadcasters, it also gives our advertiser member companies across the country the opportunity to reach Canadian consumers with advertising that is relevant to them,” it said, adding that the Super Bowl is “the most important of those opportunities." The Alliance of Canadian Cinema, Television and Radio Artists (ACTRA) also asked Glover to reverse the CRTC's decision. “Simultaneous substitution provides Canadian broadcasters with the protection needed to exploit the exclusive territorial rights they legitimately acquired and thereby generate revenues that, in part, support Canadian content creation,” it said in the letter. “We fail to see how a highly successful policy that has served Canadian viewers so well, and funded the broadcasting system in Canada can suddenly be right for some programs yet not for others,” it added. — With reporting by Anja Karadeglija at akarad@thewirereport.ca and editing by Derek Abma at dabma@thewirereport.ca

Is broadcasting heading for more litigious environment?

Broadcast | March 9, 2015

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