Bell vs. TVA Sports: Breaking down the arguments

Quebecor’s decision to pull TVA Sports from Bell TV sparked a war of words, with both sides making claims (TVA’s more publicly), some of them contradictory. Who’s right and who’s wrong in this battle? I’ll do my best to break down some of those arguments below, and update this as more come to light:

TVA: Bell is refusing to pay enough for TVA Sports

This is, of course, the crux of Quebecor’s argument, but it really depends how you define “enough.” Quebecor CEO Pierre Karl Péladeau says other providers in Quebec have agreed to increase their per-subscriber rates for TVA Sports above $5 per month, but Bell hasn’t. Bell, meanwhile, argues that TVA is seeking a higher rate for TVA Sports on Bell TV than Videotron pays for RDS.

It’s an argument that can’t really be verified because it’s so subjective.

Bell: TVA is breaking the law

I’m not a lawyer, and can’t make legal determinations, but it seems pretty clear to me, and to the CRTC, that what TVA is proposing to do violates both the spirit and the letter of the Broadcasting Distribution Regulations. The “standstill rule” imposed by the CRTC says that during “any dispute” between a broadcaster and a distributor, both must keep the channel available to subscribers until it is resolved:

15.01 (1) During any dispute between a licensee and a person licensed to carry on a programming undertaking or the operator of an exempt programming undertaking concerning the carriage or terms of carriage of programming services or concerning any right or obligation under the Act, the licensee shall continue to distribute those programming services at the same rates and on the same terms and conditions as it did before the dispute.

The CRTC has stated twice now that this rule applies to this situation. If TVA Sports goes through with its threat to pull its signal, it would be violating this rule.

TVA: The CRTC does not have the power to impose agreements between broadcasters and distributors like this

This is apparently the entirety of TVA’s legal argument for why it was justified in cutting the TVA Sports signal despite the CRTC’s warning. It argues that Section 15.01 of the Broadcasting Distribution Regulations is illegal because it is not a power specifically listed in the Broadcasting Act.

From Quebecor’s opening statement at the CRTC Wednesday, in a brief part by Marc Tremblay:

Plus spécifiquement, nous sommes d’avis que les articles 14(2) et 15 du Règlement sur les services facultatifs ainsi que certaines prescriptions du Bulletin de radiodiffusion et de télécommunication CRTC 2013-637 ne relèvent pas des pouvoirs du CRTC en vertu de la Loi sur la radiodiffusion, et de toute façon sont manifestement déraisonnables.

(There is no article 14(2), but there is 12(4), which provides that parties to a dispute must participate in CRTC-led mediation.)

And from its letter to the commission before the hearing:

En effet, en forçant le maintien de la relation contractuelle entre les entreprises de distribution et les entreprises de programmation pendant le processus de règlement des différends (règle du statu quo) ainsi qu’en prévoyant un processus d’AOF qui peut être initié à la seule demande d’une partie, lequel mène ultimement à une détermination par le CRTC du tarif d’un service de programmation, le CRTC détermine les modalités et conditions des ententes d’affiliation, ce qui n’est pas permis aux articles 9 et 10 de la Loi sur la radiodiffusion.

Quebecor’s argument here is that imposing an agreement (rather than just mediating one) essentially means the commission is imposing a commercial agreement on the two parties and forcing TVA to provide a service against its will.

But the Broadcasting Act is pretty clear:

10 (1) The Commission may, in furtherance of its objects, make regulations

(h) for resolving, by way of mediation or otherwise, any disputes arising between programming undertakings and distribution undertakings concerning the carriage of programming originated by the programming undertakings;

(k) respecting such other matters as it deems necessary for the furtherance of its objects.

This power is pretty broad, covers “any” dispute, and both TVA as a programming undertaking and Bell TV as a distribution undertaking are subject to it. The only requirement is that this be done through a regulation, which is exactly what the CRTC did when it imposed the first dispute resolution regulation way back in 1994. The current standstill rule was developed in 2011 and imposed as an amendment to regulations shortly thereafter.

Quebecor might have a case that this CRTC regulation is exceeding its authority, but it would be highly unlikely for the commission itself to agree. So this will have to be fought in a higher court.

And as Bell notes in its statement to the hearing, TVA would still have to follow the law until it is overturned:

You cannot violate a law just because you don’t think it is valid.  Unless and until it is set aside – or you obtain a stay – you have to comply with it.

UPDATE (April 18): In its decision, the CRTC has rejected TVA’s argument:

TVA’s position that the Commission does not have the jurisdiction to set terms and conditions of affiliation agreements is inconsistent with the broad power given to the Commission by Parliament to make regulations to resolve any dispute by way of mediation or otherwise. Given that terms and conditions, including rates, are fundamental to the resolution of carriage disputes, the interpretation urged on the Commission by TVA Group would render the regulation-making power set out in section 10(1)(h) empty of meaning, an absurd result that cannot have been Parliament’s intention.

Bell: Quebecor lied in its PR campaign

From Bell’s opening statement to the CRTC hearing:

Throughout its campaign, Québecor abused the prerogative and privilege of a broadcasting licence to lie to the public.  On Saturday, April 6th, TVA began to air continuous screen crawls that deliberately misled our customers by stating that Bell was pulling the signal and encouraging subscribers to cancel their Bell TV service.

Technically, that’s not what TVA’s on-screen messages said. Here’s what they actually said:

TVA told me that it believes people understood the message and got that TVA Sports was pulling its signal from Bell TV. That’s bullshit. The deliberately misleading implication here is that Bell is the one blacking out TVA Sports, and that’s the message that got through. Any reasonable person would read this message this way.

TVA: Bell is discriminating against TVA Sports in its packaging

Bell TV’s move in 2016 to the Bon/Meilleur/Mieux three-tier packaging system has had a noticeable effect on TVA Sports’s subscriptions, because the Bon package does not include TVA Sports, but the vast, vast majority of Bell subscribers choose the Bon package over the other two. The Bon package does include RDS.

TVA points to the English equivalent, Good, that includes both TSN and Sportsnet. But Sportsnet is much older than TVA Sports, and has many more deals for content.

The CRTC has a rule called “undue preference” to deal with this kind of situation, and TVA is taking advantage of that rule by filing a complaint to the commission. Once TVA proves that there is preference, Bell must prove that this preference is not undue. In its reply, Bell argues both that there is no preference for TVA (because the two can’t really be compared) and that the preference is not undue (because comparisons show RDS is clearly better).

Bell: Bell would have to increase retail prices if it added TVA Sports to its “Bon” package

Bell of course doesn’t have to do anything. It could just eat into its profits. But realistically, a move to add TVA Sports to that package would likely bring the retail price up. TVA’s argument that doesn’t want prices to go up, but rather a “redistribution” (i.e. Bell channels get less money) isn’t realistic.

On the other hand, the same argument could be made that if Bell is forced to take RDS out of that package, its price should come down.

Bell: TVA wants the CRTC to micromanage channel packaging

From Bell’s reply to the undue preference complaint:

Repackaging TVA Sports to Bon would be a reversion to micro-regulation of packaging and significantly impact consumer choice and flexibility, a key tenet of (the Let’s Talk TV decision). As one of the most expensive French-language discretionary services, this would increase the retail cost of Bon from $42 by a bare minimum of (the wholesale rate for the TVA Sports).

The problem with this argument is that Bell’s packaging isn’t the most pro-choice. While it complies with the letter of the rules about à la carte channel selection and small basic packages, its pricing means that most of its subscribers choose the pre-assembled “Bon” package, and Bell TV strongly pushes people toward “Bon”, “Meilleur” or “Mieux” and adding on other channels as necessary.

Bell could adjust its prices to encourage more à la carte or pick-a-pack selection, or even create more pre-assembled theme packages. But instead it sticks to these choices, the most popular of which has its sports channel but not its competitor’s.

A CRTC ruling in favour of TVA in this case would simply set the rule that if Bell wants to put RDS in this package, it must put TVA Sports as well. That’s pretty light on the micromanagement scale, and it’s only necessary because the company that owns Bell TV is the same one that owns RDS.

TVA: The CRTC always sides with Bell

TVA has already lost two arbitrations to Bell over the distribution of TVA Sports. The last one, issued last year, said Bell’s offer was more reasonable overall, though Quebecor’s was better in terms of how much other distributors paid for it and how volume discounts would apply.

The CRTC uses a process called final offer arbitration. It asks both sides to come up with final offers, evaluates both of them, and chooses one in its entirety. The goal of this process is to encourage both sides to come up with an offer that looks the most reasonable, and reward the one that comes the closest. Quebecor failed twice, and its behaviour recently only seems to reinforce the idea that its frustration is causing it to make unreasonable demands.

Bell: TVA is trying to re-litigate a dispute that was settled last year

From Bell’s answer to the CRTC in the undue preference complaint case:

this Application is a veiled attempt at reversing not only two Commission decisions but also that of the Federal Court of Appeal.  In 2015, TVA Sports lost a final offer arbitration (FOA) to Bell TV.  In 2018, they lost a second FOA to Bell TV.  Subsequently, the Federal Court of Appeal denied their application for judicial review.  With this current Application and an accompanying claim for damages in the Quebec civil court, TVA Sports has demonstrated a blatant disregard for due process.

Quebecor’s counterargument is essentially that the FOA process itself is invalid. But from the CRTC’s perspective, this is pretty on point. The wholesale fee and the packaging issue are not new and have been brought up before.

On the other hand, just because TVA Sports lost an arbitration case doesn’t mean Bell TV isn’t being unfair in its packaging of TVA Sports vs. RDS. The CRTC will evaluate that complaint under different criteria.

TVA: TVA Sports made huge investments and so should get a higher fee

Looking at CRTC financial data, it’s clear that TVA Sports has greatly increased its spending on programming over the past few years. But the vast majority of that increase comes from a $68-million jump in 2014-2015. That was the first year the new NHL deal came into effect (TVA pays about $60 million a year for the national rights, and RDS pays about the same for regional rights to its Canadiens games).

Bell argues that TVA overpaid for NHL rights (while conveniently leaving out that it overpaid just as much to hold on to the Canadiens) and shouldn’t be rewarded for throwing its money away.

But regardless, TVA Sports now has NHL hockey, including 22 regular-season Canadiens games, special events like the all-star game and the draft, and the NHL playoffs. Its value has clearly gone up, it’s just a question of how much.

Bell: RDS has higher ratings than TVA Sports

Ratings for TVA Sports vs. RDS (Bell graphic)

Since TVA Sports took away the national rights to NHL games from RDS in 2014, the two have been in a much tighter ratings battle. But RDS managed to hold on to 60 of 82 regular-season Canadiens games, and so TVA Sports comes out ahead overall only during the NHL playoffs, which are exclusive to TVA. There were also smaller spikes during the 2016 World Cup of Hockey (owned by the NHL and also exclusive to TVA) and the 2017 Rogers Cup, when Canadian Denis Shapovalov made it to the men’s singles semifinal.

TVA’s counterargument is that RDS has higher ratings because it has more subscribers, because of the way it’s packaged. It prefers another metric, dividing ratings by the number of subscribers. But that too introduces a bias, because plenty of people subscribe to RDS who have no interest in the channel. To get a fair playing ground for analysis, the packaging would have to be the same. Which I’m sure TVA would be more than happy with.

TVA: If the CRTC imposes a deal that doesn’t increase TVA Sports’s royalties, TVA Sports could go out of business

There’s no doubt that TVA Sports loses money every year. About $20 million. And though those figures date from 2017, the company has indicated that the situation hasn’t changed since then.

The $60 million a year TVA spends on its NHL contract is a big reason for that. But so is the $50 million a year difference between the subscription fees paid to TVA Sports and RDS. Cutting that down even just by half would put TVA Sports back in the black, though increasing the fees paid by Bell TV customers alone probably wouldn’t be enough to do so.

You could argue that Quebecor overpaid for its NHL rights. You could argue that it gambled on the performance of a single NHL team — the Montreal Canadiens — which has disappointed since 2014. You could argue that Quebecor had high hopes that it could get an NHL franchise in Quebec City (and the associated broadcast rights) that would have driven subscriptions and viewers to TVA Sports. You could argue that the quality of TVA Sports’s programming just isn’t good enough. And you might be right on each count. But that doesn’t change the fact that TVA Sports could go under, and that would mean less competition and fewer sports being broadcast in French in Canada.

Bell: RDS has more sports than TVA Sports

Sports properties of RDS vs. TVA Sports (Bell graphic)

This graphic included by Bell in its submission to the CRTC lists sports properties whose Canadian French-language rights are owned by each network. We can quibble about some stuff that looks repetitive, like listing the CFL and the CFL’s Grey Cup separately, but it’s clear that RDS has more in number.

On the other hand, the number of properties isn’t the only indication of value. Getting rights to the Tour de France, Formula E and the Ryder Cup is nice, but doesn’t compare to the NHL playoffs in terms of importance to Quebec viewers. And RDS acquired many of these rights because it lost the NHL contract and needed more content to keep viewers subscribed.

TVA: Bell gets an unfair share of subscription revenue among French-language specialty TV channels

Share of subscriber revenue for French-language services (TVA chart)

It’s surprising to see that even though TVA is a much bigger player in Quebec, Bell receives more than twice the subscription revenue for specialty services. Is that unfair?

It depends. Bell gets tens of millions of dollars a year each from its older specialty channels (the ones it bought from Astral Media): Canal Vie ($23M), Canal D ($21M), Vrak ($19M), Z ($12M), and Cinépop ($10M). That’s on top of its two biggest services, RDS ($124M) and Super Écran ($51M).

Quebecor’s biggest subscription draws are TVA Sports ($75M) and LCN ($18M). Beyond that, the other channels get under $10 million a year.

On a per-subscriber basis, there’s also a difference. The five Bell specialty channels listed above, plus Investigation (which launched after the Astral acquisition) average 77 cents per subscriber per month. The Quebecor channels (excluding TVA Sports and LCN but including Évasion, which it recently acquired) average 52 cents.

But the flip side is that the Bell channels spend a lot more money on programming. Vrak has its own drama series. Canal Vie and Z invest heavily in reality shows. Canal D has documentaries. And TVA’s specialty channels still make money. TVA Sports is the only one with a negative profit margin. With the exception of Moi & Cie, which is only slightly in the black, the remaining TVA specialty channels had pre-tax profit margins between 18% and 43%, which are quite healthy and about the same range as Bell’s channels.

TVA: Bell channels like Vrak have wholesale rates far too high just because they’re old

TVA’s biggest apparent gripe with the way the CRTC arbitrates carriage disputes is that it uses historic rates as a criterion. TVA argues that this discriminates against new services and discourages innovation.

It has a point. Even some former CRTC commissioners like Michel Arpin (though he used to work for TVA) have said that focusing on historic rates only perpetuates the status quo. But it’s also only one of many criteria used by the commission in its arbitration process.

TVA: The Bell channels’ former monopoly status was a licence to print money

This argument holds the road a bit less well. It’s true that genre exclusivity, a former policy that said you couldn’t launch, say, a new kids channel if one already existed, protected specialty channels from direct competition. But in the early days of cable TV, that was hardly a licence to print money. Through the 1980s, these channels struggled to make money. Many didn’t survive, like C Channel and Life Channel. The 1990s were more successful, which led to a gradual lifting of that exclusivity. The channels that have survived are generally healthy (though not all, just ask V about MusiquePlus). But they won’t be for long if they don’t keep up their competitiveness.

Bell: Quebecor uses its media outlets as propaganda tools

This is one of those things that feels true but hasn’t been definitively proven. It’s certainly true that Quebecor media outlets tend to cover a lot of things that the parent company likes to talk about, and investigative journalists focus a lot on Quebecor’s perceived enemies (Radio-Canada, Bell, La Presse/Power Corporation, Exo), but we don’t have a smoking gun of Péladeau personally ordering any journalist to cover a story in any particular way. Even Radio-Canada’s Enquête could come up with only some circumstantial evidence.

It could be just as likely that people who work for Quebecor take it upon themselves to spin stories a certain way because they feel a sense of loyalty to their employer.

Also this is pretty rich coming from Bell, which has a similar issue. As Péladeau pointed out at the hearing, it was Bell that had to fire the head of Bell Media, Kevin Crull, after he interfered with its news divisions’ coverage of a CRTC decision. And try being a local CTV station that chooses not to cover Bell Let’s Talk Day.

Mouth-breathers on Twitter: Good riddance. TVA suxxx.

Sports fans are passionate, and a lot of very involved sports fans are passionate about how their sports are presented to them. But most people don’t really care about the quality of the on-screen graphics or the play-by-play announcers or analysts presenting the games to them. They just want to watch the games.

And as much as many people say they would be happy to see TVA Sports disappear and for dozens of people to lose their jobs, they probably wouldn’t be too happy with the outcome. TVA Sports provides competition for RDS, and that competition puts pressure on both to improve their offering (though it also puts upward pressure on the cost of broadcasting rights). Before TVA Sports, not all Montreal Impact games were televised. TVA also brought in less popular sports in French, and when it took NHL rights away from RDS, RDS had to respond by acquiring more programming to replace it.

The bottom line is that the emergence of TVA Sports led to an increase in the amount of sports content available in French. And while the NHL will always find a home, some other sports could disappear from the air if TVA Sports goes under.

More claims to analyze? Let me know and I’ll give it a shot.

See also:

6 thoughts on “Bell vs. TVA Sports: Breaking down the arguments

  1. Dilbert

    TVA’s arguments would be a lot more compelling if they were not also a near monopoly player with Videotron. You only have to go and look at how long it took them to pickup HD versions of English channels versus how quickly they picked up HD versions of their own channels to understand how the system works.

    Here’s a real claim: What would each of the cable systems do if they didn’t have ownership bias in hand? What would it be like if Bell and Videotron didn’t control the distribution systems? What would the distribution systems do when freed from the natural bias of the parent company? Would TVA Sports be a viable product that consumers would pay 20% more than they do now to get? Would Videotron and others do the same if it were not for their ownership situation?

    Each one of those points you discussed change if Bell didn’t own the system.

    Now I will say this: TVA’s argument that they paid more for the NHL so they should be allowed to raise prices to match is silly. They can ATTEMPT to raise their rates,but they are limited by what the market will bear. Their failure to live within their means should not be the fault of the consumer.

    Reply
  2. Johnny Ringo

    The coverage of that story by Québecor’s LCN and TVA is a shame by any journalistic standards, even TVA’s…. The stories are one-sided, they only mention the facts that shine a good light on PKP and Québecor, select the clips that fit their propaganda and “forget” to tell important facts that shows why Bell might have a point and when Québecor might have crossed the line…

    I’m not saying either side is right or wrong, that’s not for me to judge; but having anchors and reporters making “reports” that are so biased they’re laughable by anybody that follows that story is incredibly shameful in my view. I can’t believe respected people like anchor Sophie Thibault accept to tell one-sided stories that sound like a PR release approved by the management… Where is their journalistic integrity?

    Oh, it’s true, Québecor opted out of the Conseil de Presse du Québec… I guess it’s because they’re just “sometimes” real press… as long as it doesn’t involve stories about their parent company.

    Reply
  3. Anonymous

    This is all hilarious. I laugh because I simply use a Over the Air TV antenna to get TV. For free.

    This mess was created by the CRTC. And government in general by sticking their noses where they do not belong. They allowed these two to own way to much under a false narrative that this would protect Canadian owned industries. End result, too much control in the hands of too few companies. Which favour their own stations over the next great mega owned group. And forget about the little guy corporation. They’re already on their knees to these mega group corporations.

    Let them eat each other. And in the process have them bulk at the CRTC’s communist rules thinking they can control what the Canadian public should, or shouldn’t have access to. They all deserve each other. Enjoy the gladiator fight. I am.

    And by the way. Just for this week-end, I’ve counted 5 different NHL play-off games on the air for free. Those games are on CBMT-TV (6.1) CBC, and WPTZ-TV (5.1) NBC.

    Yes, those games are all in English. So, I can see that some francophones prefer to watch the games in french. But, watching a game is not very complicated. The information supplied does not require much. Did the puck go into the net. That’s all you need to know to watch. And to a further point. No french language NHL games will be aired for free over the air as long as francophones continue to pay for these specialty sports channels. Cut the cord. Then maybe Quebecor will be forced to start placing some games on their CFTM-TV (10.1) TVA.

    Do it the old fashion way. Get ratings. Then sell commercial spots. Make a profit.

    Reply
    1. Fagstein Post author

      Let them eat each other. And in the process have them bulk at the CRTC’s communist rules thinking they can control what the Canadian public should, or shouldn’t have access to.

      So you think the CRTC is “communist” but also think the government should intervene more to prevent media companies from consolidating?

      Cut the cord. Then maybe Quebecor will be forced to start placing some games on their CFTM-TV (10.1) TVA.

      Without the subscription revenues from TVA Sports, Quebecor doesn’t have nearly enough money to pay for the rights to NHL games. If TVA Sports goes under, the most likely scenario is it getting out of the NHL rights contract and those rights eventually going back to RDS.

      Do it the old fashion way. Get ratings. Then sell commercial spots. Make a profit.

      The numbers don’t back that up as a possibility. When you add in all the games broadcast on CBC and Citytv as part of Hockey Night in Canada, Sportsnet still makes more money with subscription revenue than with advertising. With the increase in the price of sports rights, there’s no business model in which advertising alone can pay for it. Which is why CBC lost the national NHL rights to Sportsnet.

      Reply
      1. Dilbert

        Chicken and the egg problem here. The price of sports rights is increasing because of the subscription revenue ready to be collected and handed over, and no other reason. Hockey would likely still be on CBC if it wasn’t for that income.

        The CRTC has created the problem by allowing subscription revenue to far exceed cost of providing the service, and encouraged (aka required for the most part) packaging that has consumers paying subscription money for channels they don’t watch very often or at all.

        Think about why the rights are so expensive, and then you understand the problem.

        Reply

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