Media: Quebecor told to end self-dealing of TV content

By Jamie Sturgeon | Montreal Gazette | Jan. 26, 2011

TORONTO — Regulators have ordered Quebecor Media Inc. to abolish a pact between its broadcast network, Groupe TVA Inc., and cable division Vidéotron Ltee. that gives the latter exclusive access to on-demand programming.

The precedent-setting decision is a loud and clear warning shot to the country’s large integrated telecom carriers, such as BCE Inc., that walling off broadcast content for use only on their own television and Internet systems will not be tolerated.

Stemming from complaints made last June by BCE’s Bell Canada and Telus Corp., the Canadian Radio-television and Telecommunications Commission has found that an “exclusivity agreement” has existed between TVA and Videotron’s Illico service, which provides shows and programs on demand to its mainly French-speaking cable and Internet customers.

TVA is the largest broadcaster in Quebec and the producer of many of the most popular francophone programs. The agreement with Videotron gives TVA’s carrier sibling “a preferential position in the market relative to its competitors,” the CRTC found. More, the deal has a direct and “adverse effect on competition” by limiting consumer choice and giving the Quebec cable operator undue pricing power.

In its complaint, Bell, which counts Quebec as a core market for television subscribers, argued that it tried on numerous occasions to reach an agreement with Quebecor’s broadcast arm to no avail.

“Bell indicated that it tried several times, without success, to acquire the rights to distribute TVA programs on its video-on-demand [VOD] service,” the commission said.

Telus, which doesn’t compete directly in Quebec but holds a licence to, made similar claims.

Regulators ruled Wednesday that Quebecor must immediately cease giving its own subsidary “undue preference” to TVA on-demand programming. Specifically, the company must within thirty days have settled carriage agreements with Bell and Telus or have devised an agreeable process for expeditiously arranging such deals.

With no presence in Quebec, neither of the country’s other two major television distributors, Rogers Communications Inc. or Shaw Communications Inc., filed complaints about the arrangement. However, Wednesday’s decision sets the stage for establishing far-reaching ground rules that go well beyond Quebec’s borders and hold deep implications for every large integrated telecom carrier, including the country’s two largest cable providers.

Bell’s complaint was made before the telecom giant bid $1.3-billion to acquire CTV Inc. in September, a move that not only transforms the former phone monopoly into the largest telecom and media company in the country but locks in the bulk of the country’s broadcast assets under telecom carriers.

While insiders wondered whether the Montreal-based firm would have made the intervention had its bid for the country’s largest broadcaster already been made, others said Wednesday’s ruling — coming just days before the CTV bid goes before the CRTC for approval — likely means regulators will be looking for stiff assurances that the conglomerate will not use its content exclusively on any platform, including online and wireless.

Bell, which did not return a request for comment, has hinted at the potential value exclusivity could yield, signing pacts with sports leagues like the NHL and NFL for mobile streaming — agreements that could now come under increased regulatory scrutiny during hearings next week as well as fierce calls of hypocrisy from its Quebec rival.

-30-