Pierre Karl Péladeau likes playing the underdog, telling anyone who will listen that Quebecor is always fighting the good fight against the vested interests in Canada’s broadcasting industry.
His latest crusade to get the Canadian Radio-television and Telecommunications Commission (CRTC) to rewrite the rules governing carriage fees for specialty channels seems destined to hit a wall, just as the Montreal Canadiens seemed to have done basically every season since Quebecor’s TVA Sports channel acquired the French-language rights to national NHL broadcasts in 2014.
The mediocre Canadiens, along with Quebecor’s failure to win a Quebec City NHL franchise, explain TVA Sports’ problems more than Bell Canada’s refusal to pay higher carriage fees to offer the channel to Bell TV subscribers. But that didn’t stop Mr. Péladeau from yanking TVA Sports off Bell TV for the opening round of the hockey playoffs.
The stunt earned TVA Group a stiff rebuke from the CRTC, which last week issued a mandatory order requiring the company to comply with its regulations. They forbid a broadcasting licence holder from unilaterally pulling its signal during a fee dispute with a cable or satellite television distributor. Quebecor has so far complied with the order, but Mr. Péladeau pledges to fight on.
“The dramatic imbalance in the specialty channels’ subscription fees has serious consequences for the viability and survival of French-language television,” the Quebecor chief insisted after the CRTC issued its order. “Immediate action is needed.”
Short of breaking up Canada’s telecommunications and broadcasting oligopoly, however, it’s hard to see what else the CRTC could do to help TVA Sports other than impose even stricter regulations on an industry that Mr. Péladeau has long complained is, well, over-regulated.
Quebecor accuses Bell of giving “undue preference” to its own Réseau des sports (RDS) channel, which, unlike TVA Sports, is included in Bell TV’s most popular television package. Bell argues RDS is simply more popular with its subscribers than TVA Sports. Still, RDS’s inclusion in Bell TV’s “Good” package boosts – artificially, perhaps – its subscriber revenue.
In 2017, for instance, RDS earned about $125-million in subscriber revenue, compared with about $75-million for TVA Sports. RDS had about 2.8 million subscribers, while TVA Sports had 1.8 million. Both channels have lost tens of thousands of subscribers in the past few years, as more and more Canadians cut the cord entirely or opt to choose their channels à la carte.
RDS’s profits have declined since TVA Sports acquired the French-language rights to about two dozen regular-season Canadiens games and the NHL playoffs. Even so, RDS, which holds regional rights to Canadiens games, remains Bell’s most lucrative French specialty channel, posting a pretax profit of $24.5-million and an operating margin of 16.2 per cent in 2017.
TVA Sports has been in the red every year since its 2012 launch. In 2017, it generated a pretax loss of $21.3-million, according to CRTC data. Still, that was far less than the $33-million pretax loss it posted in 2016, when the Canadiens failed to make the playoffs altogether.
TVA Sports has posted cumulative pre-tax losses of about $150-million since 2012, making it a far bigger drain on Quebecor than its Sun News network, which it shut down in 2015. Quebecor blamed the demise of Sun News, which was billed as a Canadian version of right-wing Fox News, on the CRTC’s refusal to force cable and satellite TV providers to include the channel in basic cable packages. But the truth is the channel never found a big enough audience in Canada for its scrappy right-wing news format. Quebecor overestimated its potential.
Ditto for TVA Sports. Quebecor appears to have overpaid for its NHL rights, which cost TVA Sports about $60-million a year. The channel’s advertising revenue has fluctuated from one year to the next, largely depending on whether the Canadiens make the playoffs. The team isn’t vying for the Stanley Cup this year, either, depriving TVA Sports of a badly-need boost.
Quebecor’s failure to snag an NHL franchise for Quebec City has further undermined the strategy it envisioned in launching TVA Sports, leaving big holes in the channel’s programming schedule that it has often filled with obscure, and little-watched, extreme sports competitions.
For Mr. Péladeau, blaming Bell and the CRTC for TVA Sports’ problems is easier than admitting that the channel’s viability has always been tied to the Canadiens’ fortunes and the fate of a Quebec City NHL franchise. Neither has panned out as Mr. Péladeau hoped or imagined.
Mr. Péladeau is not wrong in declaring Canada’s broadcast regulatory system to be “broken.” The problem is, no one has come up with a better one for an era in which conventional and specialty-television networks must compete with unregulated foreign streaming services. Forcing Bell to pay higher carriage fees for TVA Sports or include it in its most popular package would only lead to higher bills for Bell TV subscribers, leading some to drop the service.
Heritage Minister Pablo Rodriguez has undertaken a review of the Broadcasting Act. But any changes to the way the CRTC regulates the industry could come too late for TVA Sports. If it’s any consolation to Mr. Péladeau, he isn’t the only one wishing the Canadiens would up their game.
Konrad Yakabuski