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Report on Business Péladeau comes out swinging as Quebecor faces off against Bell at CRTC hearing

The regulator should enforce its own rules. The entire regulatory system is broken.

Those were the duelling arguments put forward by BCE Inc. and Quebecor Inc., respectively, at a hearing Wednesday before the Canadian Radio-television and Telecommunications Commission.

The hearing was hastily called last week after a dispute boiled over between the companies on the terms under which BCE’s Bell TV carries Quebecor’s TVA Sports channel. Decrying its unfair treatment by Bell, Quebecor yanked the signal for the French-language sports channel last Wednesday evening just in time for puck drop of the first game of the NHL playoffs.

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Quebecor said its action was a result of stalled negotiations over the fee paid for the channel, as well as Bell’s refusal to place TVA Sports in its most popular TV package, as it does with its own French-language sports channel, RDS. Bell has said that Quebecor is asking for higher fees than its own TV provider, Videotron, pays for Bell’s French-language sports channel, RDS.

But the CRTC’s regulations prohibit channel-owners from taking their signals off the air during carriage disputes. At the hearing on Wednesday, the regulator asked Quebecor to demonstrate why it should not be subject to penalties for doing so, including suspending or revoking the channel’s licence – without which it cannot broadcast on Canadian television.

In response, Quebecor chief executive Pierre Karl Péladeau argued that the CRTC does not have the authority to enforce this rule, since a provision against pulling channels is not in the Broadcasting Act. The Act gives the CRTC the authority to regulate the sector and to enforce rules to resolve disputes over channel carriage.

Mr. Péladeau argued that the dispute is not simply over business terms, but is a matter of survival for its channels and said that if the fees paid for specialty channels are not “rebalanced,” they risk failing entirely. He suggested a new system for pricing specialty channels be put in place, which pegged their fees to “measurable criteria” such as their ratings and their investment in Canadian programming. He also said that if the CRTC suspended or revoked TVA Sports’s licence, it would be the end of the channel.

“We cannot continue suffering operational losses, sitting around and doing nothing,” Mr. Péladeau said. “The broadcasting system is broken.”

Bell, on the other hand, argued that Quebecor should be penalized for breaking the rules. According to the company, more than 400,000 Bell TV viewers tried to tune into the playoffs on TVA Sports on April 10.

“Withdrawing the signal was an affront to viewers, to the Commission and the rest of the participants in the broadcasting system who play by the rules,” Robert Malcolmson, Bell’s senior vice-president for regulatory affairs and government relations, said at the hearing. He added that the “most punitive of sanctions” is appropriate, and asked that the CRTC revoke Quebecor’s licence for TVA Sports.

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If the regulator is not willing to do that, Bell said that it should suspend the TVA Sports licence for the duration of the NHL playoffs, and order Quebecor to show the games for free on its main TVA channel; or if not, to require Quebecor to provide the channel for free to Bell during the playoffs and to prevent the company from airing ads during the games and from running public relations campaigns that “disparage” Bell or other distributors.

Last week, Bell secured an injunction from the Quebec Superior Court requiring Quebecor to restore the TVA Sports signal, which is effective until April 23. Bell executives told the CRTC that they were concerned Quebecor would pull the signal again when the injunction expires and asked the regulator to issue a “mandatory order” to maintain the signal. Furthermore, it argued that a maximum fine of $250,000 should be enforced on Quebecor under the section of the Broadcasting Act that prevents companies from broadcasting without a licence.

“The regulator regulates,” Mr. Bibic said at the hearing. “You have a stakeholder who broke the law. The facts are clear.”

In a response at the hearing, Mr. Péladeau fired back that Bell’s requests constituted an attempt to “muzzle” Quebecor, and called to mind “the best years of the Soviet Union.”

Despite the evident tension at the hearing, Bell and Quebecor do agree on one point.

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“We think the regulatory model should be changed, that it’s obsolete, that it should be modernized,” BCE chief operating officer Mirko Bibic said in an interview. “... All that is fair stuff. But there are ways to advocate for change. And one way you can’t advocate for change is to break the law and hold viewers hostage.”

In a statement after the hearing, the CRTC said it would make a decision “as soon as possible” owing to the significance of the issue.

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