The Supreme Court of Canada will weigh in on a fight between two of Canada’s communication giants, Rogers Communications and BCE Inc., over what critics call a “TV tax.”
At issue is a move by Canada’s broadcast watchdog that would allow local TV stations to negotiate a price for providing their signals to cable or satellite service providers, which currently get those signals for free.
A controversial ruling last year by the Canadian Radio-Television and Telecommunications Commission followed extensive industry wrangling over the issue. It also raised the spectre of local stations being blacked out if those negotiations were to break down – which has happened in the United States, where some viewers have been left in the dark for the World Series or the Academy Awards.
Mindful of the controversy, the broadcast watchdog referred its own decision to the Federal Court of Appeal to rule on whether the regulator had overstepped its bounds. That court sided with the CRTC earlier this year.
But major cable or satellite providers Rogers, Cogeco Cable Inc. and Shaw Communications Inc. asked the Supreme Court of Canada to step in, and on Thursday the top court agreed to hear their appeal, likely next year.
The fight now pits those cable and satellite operators against a former ally: BCE Inc., which reversed its objections to local TV fees after it purchased CTV and its network of local stations.
Rogers argues the CRTC overstepped its authority, making changes that should instead go through Parliament as amendments to the Broadcast Act.
“We’re saying that the CRTC doesn’t have the right to do this,” Rogers chairman Phil Lind said in an interview. “The last court didn’t get it. But now I think the Supreme Court will get it.”
But Kevin Crull, president of BCE unit Bell Media Inc., said in a statement that Bell believes the CRTC is within its rights and that the future of local TV is at stake.
“We will continue to stand up for local television, ensuring consumers are provided with local programming that reflects our communities, promotes local identity and feeds into our national culture,” Mr. Crull said.
Unlike specialty channels, for which cable and satellite companies pay a fee, local over-the-air stations make their money solely from advertising. This, TV industry figures have argued, has left them more vulnerable to economic swings.
But Mr. Lind says much has changed in the industry since the CRTC’s original decision: BCE purchased CTV, and Shaw picked up TV stations once owned by CanWest. “The distributors now own the broadcasters,” he said, which gives the TV stations more negotiating clout.
As well, the broadcasting business is much healthier now than when the CRTC made the ruling, Mr. Lind added.
Mr. Crull, in his statement, said local TV stations deserve compensation for their signals. “Otherwise they are left to rely solely on advertising revenue, which continues to prove to be unsustainable. This antiquated compensation model is not viable in today’s media landscape.”
BCE held a different position before it took full ownership of CTV Inc., co-sponsoring a publicity campaign attacking the idea as a “TV tax,” and calling the fees “bad for Canadian consumers.”
But BCE had a change of heart when it announced the CTV deal last year, pledging not to pass on the costs of any such local TV station fees to its TV subscribers.