Broadcasters in legal fight over fees

Depending on the outcome of a Supreme Court of Canada hearing this week, television subscribers across the country face the prospect of having their TV signals turned to static during critical moments — such as during the Stanley Cup playoffs.

While the threat doesn’t apply to this spring’s broadcast schedule, it is a real risk down the road as the country’s biggest TV distributors square off against Bell Canada En- terprises Inc. in an Ottawa courtroom today in the culminating legal battle of what has been a long-standing war over fees Bell’s new broadcast arm wants to charge distributors.

Lined up against Bell Media are Rogers Communications Inc., Calgary-based Shaw communications inc., Telus Corp., Cogeco Cable Inc., and virtually every other distributor in Canada with the exception of Bell’s own distribution arm, which sells satellite and Internet-protocol TV services.

The group opposes the adoption of so-called “fee for carriage” rights for conventional broadcasters, such as Bell’s CTV network. Unlike specialty channels, broadcast networks have been prohibited from charging distributors such as Rogers subscriber fees for their station signals, in part because networks have historically received the bulk of prime time TV audiences and ad revenues and held preferential channel placement.

Before being acquired by Bell last year, CTV, alongside the global network (now shaw Media), Rogers-owned Citytv and Quebecor’s TVA Groupe were rebuffed in attempts to change that and win the right to charge TV distributors fees for picking up and retransmitting station signals.

But in March 2010, with the conventional model under pressure — ad revenue hitting a free fall during a recession that tipped an over-leveraged Global into bankruptcy — regulators reversed course, electing to adopt a U.s.-style “retransmission consent regime.”

The Canadian Radio-television and telecommunications Commission, however, first asked the Federal Court to determine whether it had the powers to enact the relief.

Cable operators say no, and plan to argue their case in the higher court this week.

But Bell, which formerly opposed any retransmission payment model before acquiring the country’s largest broad- caster last spring, is now fighting to have the regime applied on rival cable operators.

Despite owning the smaller City network, Rogers remains opposed, as does Shaw, which is perhaps a surprise given the cable company’s acquisition of Global, the second-biggest broadcaster, in late 2010.

In Canada, if jurisdiction is approved by the Supreme Court and enacted by regu- lators, a uniquely Canadian predicament arises: Networks owned by competing telecom companies would be empowered to yank station signals off rival TV systems if carriage agreements cannot be negotiated. Some suggest there is added incentive for broadcasters to do just that: By disrupting service at a rival of the parent company, subscribers may switch distributors.