Value for signal case in Supreme Court today

April 17th, 2012 by Barry Sookman Leave a reply »

This morning, the Supreme Court of Canada will begin hearing an appeal from the decision of the Federal Court of Appeal in the so called “value for signal” case. The Court of Appeal, in a split decision, ruled that the Broadcasting Act empowers the CRTC to establish a regime to enable private local television stations to choose to negotiate with broadcasting distribution undertakings a fair value in exchange for the distribution of the programming services broadcast by those local television stations.

The appellants argue, among other things, that the CRTC does not have the power to establish the regime as doing so would conflict with the rights of BDUs under the Copyright Act. The Supreme Court factums of the parties and the link to the webcast of the oral argument in the Cogeco Cable Inc., v. Bell Media Inc case can be found here.

The Supreme Court summary of the case is as follows:

Communications law Broadcasting Broadcasting policy Legislation Interpretation Conflicting legislation Jurisdiction of Canadian Radio Television and Telecommunications Commission (CRTC) Whether CRTC empowered, pursuant to mandate under Broadcasting Act, to establish regime enabling private local television stations to negotiate with broadcasting distribution undertakings a fair value in exchange for distribution of programming services broadcast by local television stations Whether value for signal regime proposed by CRTC necessarily conflicts with rights of broadcasting distribution undertakings under Copyright Act Broadcasting Act, S.C. 1991, c. 11, ss. 2(1), 3(1), 3(2), 5 Copyright Act, R.S.C. 1985, c. C 42, ss. 21, 31.

The Canadian Radio Television and Telecommunications Commission (CRTC) referred the following question to the Federal Court of Appeal:

Is the Commission empowered, pursuant to its mandate under the Broadcasting Act, to establish a regime to enable private local television stations to choose to negotiate with broadcasting distribution undertakings a fair value in exchange for the distribution of the programming services broadcast by those local television stations?

The regime to which this question refers is sometimes called the “value for signal” regime, which would permit a private local television station to negotiate with cable television service providers (“broadcast distribution undertakings” or “BDUs”) for an arrangement under which the BDUs provide consideration to the television station for the right to retransmit its signals. The CRTC has determined that such a value for signal regime is necessary to ensure the fulfilment of the broadcasting policy objectives set out in s. 3(1) of the Broadcasting Act. The operators of private local television stations generally favour the proposed value for signal regime while BDUs generally do not. Under the current regulatory model, BDUs pick up the over the air signals of private local television stations and retransmit them to their subscribers for a fee. The CRTC requires BDUs to provide certain benefits to private local television stations for those signals. The CRTC has concluded that the existing model does not adequately deal with recent changes to the broadcasting business environment. Among the changes noted by the CRTC are the development of direct to home satellite television services, the development of speciality television channels that are permitted to receive fees directly from BDUs that carry them, and the widespread adoption of alternative media platforms. These changes have caused advertising revenues for private local television stations to fall while the revenues of BDUs have increased, resulting in a significant shift in their relative market positions and a financial crisis for the private local television stations. The CRTC concluded that this financial crisis may be averted by adopting a value for signal regime that invokes market forces. The CRTC therefore brought an application for a reference to the Federal Court of Appeal to determine its jurisdiction to implement the proposed regime.

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