Supreme Court to hear “value for signal” appeal

The Supreme Court of Canada granted leave this morning to Cogego and other telcos to appeal the “value for signal” decision of the Federal Court of Appeal. The question in the case is whether the CRTC has the jurisdiction, under its mandate under the Broadcasting Act to establish a system allowing private local television stations to choose to negotiate with broadcasting distribution companies a fair value in exchange distribution of programming services distributed by the local television stations?

The Supreme Court has summarized the case as follows:

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.

The majority of the Federal Court of Appeal (Sharlow and Layden Stevenson JJ.A.) held that the CRTC does have the jurisdiction under the Broadcasting Act to implement the proposed value for signal regime and that nothing in the Copyright Act precludes the CRTC from doing so. Nadon J.A., dissenting, found that the proposed value for signal regime was ultra vires the powers of the CRTC, because it conflicts with s. 31(2)(d) of the Copyright Act which precludes payment of royalties for the retransmission of “local signals”.

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