Policy

Canada Moves To Adopt U.S.-Style Retrans

3/22/2010 9:30 PM Eastern

Pending court approval, Canada's communications regulators have adopted a version of the retransmission consent negotiation ("value for signal") regime followed by their American counterparts -- one that industry critics in the U.S. say is broken and which the Federal Communications Commission is currently reviewing.

In language that the National Association of Broadcasters will want to clip and save, the Canadian Radio-Television and Telecommunications Commission said: "[T]he Commission has found that it is necessary to provide the licensees of private local television stations with the right to negotiate a fair value for the distribution of their programming services."

Canada has mandatory carriage of stations (must-carry), but no option for stations to try and collect payment.

U.S. broadcasters have been arguing that getting fair value for their signals is the reason behind some of the recent retrans impasses, impasses that have drawn criticisms from some House Democrats and an inquiry into the system by the FCC.

The CRTC released an order March 22 that would establish the new practi ce, similar to the U.S. must-carry/retrans system. But implementing the rules is subject to a decision by the Canadian courts over whether the CRTC has the jurisdiction to "implement a negotiated solution for compensation for the fair value of private local conventional television signals."

Cable operators there had argued that it was establishing a new copyright in the signals and was thus beyond the power of the commission. They had also said they did not plan to pay for something that was delivered free over the air.

Canadian broadcasters, sounding like their U.S. brethren, argued that times were tough and it was time to get a cut of that dual-revenue stream. "[C]onventional television broadcasters have access to fewer advertising dollars," said CRTC, summarizing the broadcasters' arguemnts for the "value for signal" regime. They further argued that local television is not free for most consumers since the majority of Canadian households subscribe to a BDU [Broadcasting Distribution Undertakings, Canada's version of an MVPD] and pay for stations through their monthly bill payments, and added that the BDUs do not pass a portion of those payments to local broadcasters.

Like the FCC, the CRTC says it will intervene in cases where there is evidence that the parties are not negotiating in good faith.

The Canadian move comes as the FCC is having some second thoughts about retrans. The commission requested comment last week on a Time Warner Cable-led petition to overhaul the system, including: untying cable nets from broadcast stations in those deals; not allowing broadcasters to pull their signals if the contract runs out without a new deal; and independent arbitration.

The CRTC said the new rules would not go into effect until and unless the court ruled it had jurisdiction.

Washington law firm Wiley Rein sent a representative last fall to testify about the U.S. retrans system at the invitation of CRTC.

Canadian cable operator Rogers Communications was not happy with the prospect of going from free to a fee. "The CRTC today has essentially placed a tax on all cable and satellite customers," said Rogers Chairman Phil Lind in a statement.

March