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Report On Business Quebecor blasts CRTC’s ‘regulatory straightjacket’ placed on broadcasters

Pierre Dion, president and chief executive officer of Quebecor and Quebecor Media arrives for their annual meeting in Montreal, June 19, 2014.

Christinne Muschi/Reuters

Canada's federal broadcast regulator must move swiftly to untie broadcasters' hands or risk having the television industry overrun by U.S.-based online competitors, Quebecor Inc. argued Tuesday.

The Quebec media company dominated the second day of Let's Talk TV, a wide-ranging hearing into the future of television in Canada, with pleas for flexibility to face competitive threats posed by increasingly popular streaming services such as Netflix, which are currently unregulated in Canada.

In a series of spirited exchanges, Quebecor president and CEO Pierre Dion hammered home his belief that the Canadian Radio-television and Communications Commission (CRTC) cannot continue to treat traditional and Internet television as separate entities, keeping a "regulatory straightjacket" on broadcasters but granting online players freedom.

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Some stakeholders have argued online players such as Netflix should have to pay to support the production of Canadian content, as domestic broadcasters do. But Mr. Dion said regulating the Internet is unrealistic, and urged the CRTC to "lighten the regulatory burden" on broadcasters instead.

But skeptical CRTC officials repeatedly pressed Quebecor's leaders about why they can't simply take on a service like Netflix directly.

"What stops you from being in competition with Netflix as an [over-the-top online] service?" asked Tom Pentefountas, vice-chairman of the CRTC, adding, "If the [regulatory] handcuffs are so tight, give up your license."

"Well, that wouldn't be good for the consumer and traditional TV," Mr. Dion shot back.

On one hand, Mr. Dion said viewers care less and less about whether content comes through a traditional TV signal or is streamed online. "There's going to be one system for the consumer and we're all going to be in the same system," he said. At the same time, he cautioned that "There is a broadcasting system that we all want to protect here," built over the last half-century.

Quebecor already launched a Netflix-like streaming service for TV shows and movies in early 2013, called Club illico, which now has 111,000 subscribers. But Quebecor still feels "very small" next to Netflix, Google and Amazon, Mr. Dion said.

"Because we're going to fight against those companies that are worldwide now and have incredible budgets, we need all the flexibility possible within that broadcasting ecosystem," Mr. Dion argued.

Even though Quebecor was an early adopter of consumer-friendly options such as smaller basic cable packages and "build-you-own" bundles, it also cautioned the CRTC's current proposal to allow consumers to buy most channels one by one would only cause them to trim their subscriptions.

"We'd like to warn you that [requiring] 100 per cent pick-and-pay would increase the phenomenon of cord-shaving," said Manon Brouillette, president and CEO of Vidéotron, the Quebecor-owned cable company.

The lion's share of Quebecor's $459-million in broadcasting revenue for 2013 still came from regular TV subscriptions. The company is particularly concerned about keeping younger audiences on cable, with good reason: Last year, weekly viewing hours for traditional TV declined fastest among viewers aged 35 and under, who watched more video online, according to CRTC data.

In an interview before the hearing began, CRTC chairman Jean-Pierre Blais suggested Netflix should not be held up as a "bogeyman," but that TV distributors should "study why it caught the marketplace and the imagination of Canadians so well … and then out-do them."

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