Torstar sold for $52 million — will entrepreneurs fix its business model?

The Toronto Star’s new prospective owners, Jordan Bitove, left, and Paul Rivett (photo: Nordstar Capital)

Since news broke late Tuesday that the Toronto Star’s parent company had agreed to a sale to a pair of investors for the equivalent of $52 million, lots of people have been looking at the political angle, convinced that either:

(a) because the new owners had made donations to Conservative parties (including Maxime Bernier’s leadership campaign), Toronto’s last left-wing paper would become a right-wing one like the rest; or

(b) because they had tipped former Ontario Liberal premier David Peterson as its vice-chair, the paper would become more entrenched as the Red Star so-liberal-its-actually-communist propaganda machine.

In reality, neither is true. In the short term, at least, the Star (and its other newspapers, the Hamilton Spectator, the Waterloo Region Record, the St. Catharines Standard, the Niagara Falls Review, the Welland Tribune, the Peterborough Examiner, Sing Tao and all of the Metroland community papers) will stay the same. The last thing a new investor wants to do is scare off a loyal customer base.

That’s not to say that political allegiances, whether real or imagined, aren’t a problem. It’s uncomfortable, not to mention demoralizing, when journalists are told they can’t participate in protests or express controversial opinions when their bosses openly donate money to political parties and/or used to work for them.

But more important than ensuring its apparent impartiality is ensuring its survival. Torstar as a whole was sold for $52 million. Its 63-cent buyout offer is a premium on its current share price, but a tiny fraction of Torstar’s value before the internet hacked away at its business model. In 2003, Torstar was worth up to $30 a share.

By comparison, Postmedia bought out the Canwest newspapers in 2010 for $1.1 billion, out of bankruptcy protection. Postmedia bought Sun Media in 2015 for $316 million. TVA bought Transcontinental’s 14 magazines for $55.5 million in 2015. Two years earlier, Quebecor sold 74 community newspapers to Transcontinental for $75 million. In 2007, Quebecor’s Sun Media bought Osprey Media (20 dailies and 34 weeklies) for $575 million.

Is Torstar really worth less than all of these? Unfortunately, yes. Because the newspaper business model has collapsed, especially over the past 15 years.

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For my newspaper, 15 years feels like a lifetime

It was 15 years ago today that I walked into the offices of The Gazette, got trained on how to use their software, and began my career as a professional copy editor.

More than a third of my life has been spent employed by this newspaper. And in that time, I’ve never wanted to do anything else, because there’s always something new.

In the past week, as I’ve been doing some pandemic-related cleaning up of old stuff, I went through some old issues I had lying around from years ago, and it amazes me how much this newspaper has changed in that decade and a half.

Of course, I’ve worked with many people who would tell stories about the good ol’ days of hot type, constantly-crashing computer systems, typesetters, darkrooms, presses in the building, managers working late with ashtrays on their desks and alcohol inside them. But those were long before my time, and those times changed mainly because of technology.

In the past 15 years, though, it’s the business that has changed the most. The revenue side of the newspaper business model has crumbled away, and years of cutbacks have forced a much more efficient newsroom that focuses on its core mission to the detriment of the rest. Meanwhile, the demands of an increasingly online readership (and the hope that digital revenue will take over from print before the business collapses) have meant more resources being focused on digital platforms that didn’t exist back then.

To give you an idea of how things have changed, I figured I’d give you a tour of The Gazette in May 2005.

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Media News Digest: COVID, Canadian Jewish News shuts again, NNAs name wrong winner

Hi there. It’s been a while. Might want to sit down for this one, because it’s a bit long.

News about news, COVID-19 edition

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CRTC approves Radio Classique 99.5 sale to Leclerc, conversion to pop music station

Montreal radio listeners who tune to 99.5 FM to hear classical music will soon have to find another source for those runes. On Friday, the CRTC announced it is approving a sale of CJPX-FM from Radio Classique to Leclerc Communication, which will turn it into a pop music with the same WKND brand it uses in Quebec City.

Radio Classique’s other station, CJSQ-FM 92.7 in Quebec City, will remain a classical music station, but I wouldn’t count on it surviving for long now that its big brother has been sold off. Radio Classique is also maintaining its online streaming.

The sale is valued at $4.89 million, with Leclerc having to pay an additional 6% of that value to go to independent funds per the CRTC’s tangible benefits policy.

Leclerc, which tried the same thing with CKLX-FM 91.9 in 2018 (a deal that failed when the CRTC said it couldn’t also buy CHOI Radio X in Quebec City), said it was happy with the decision, and will convert 99.5 to WKND “in the coming months.”

UPDATE (April 28): The CRTC has published the rationale behind the decision. It says there’s no diversity of voices concern since one independent owner has been replaced with another, and “the entry of Leclerc would maintain musical diversity in Montréal, although the musical offering would differ from that currently broadcast by the station.” It also noted that the station had not been profitable since 2014, and other broadcasters (Radio-Canada, Stingray and SiriusXM) also provide classical music programming, though none are on analog FM.

CRTC approves Bell’s purchase of V

In a decision released Friday afternoon, the Canadian Radio-television and Telecommunications Commission announced it has approved the acquisition of the V television network by Bell Media, filling one of the few remaining holes in Bell’s multi-platform empire.

The V network’s five owned-and-operated stations (it also has three affiliate stations that aren’t affected by the transaction) will become part of the Bell group as of Sept. 1, and have new conditions of licence, including an incremental increase to the amount of local programming and local news they are required to broadcast:

2020-21:

  • All stations: 5 hours local programming and 2.5 hours locally reflective programming per week

2021-22:

  • CFJP-DT Montréal and CFAP-DT Québec: 8.5 hours local programming and 4.25 hours locally reflective programming per week
  • Other stations (Trois-Rivières, Saguenay, Sherbrooke): Same as 2020-21

Bell has committed to exceeding those requirements.

The CRTC has also increased Bell’s requirements for Canadian programming, which were 35% for its French channels (RDS, Canal Vie, Vrak, Canal D et al) and 10% for V, up to 40% to for the combined group.

For Programs of National Interest (mainly expensive scripted programs), which became a point of contention in this proceeding, the CRTC has sided with critics that said Bell should be forced to keep it at 18% for the entire group instead of averaging the group between the 18% for its existing French-language channels and the 10% that V was previously subject to.

The CRTC calculated tangible benefits at $3.1 million, split between the Canada Media Fund (60%) and the Bell Fund (40%). The latter, a certified independent production fund, will spend the money solely on French-language initiatives.

Bell welcomed the decision, without giving any specifics on its plans. The company told the CRTC it would expect to get newsrooms back running at the V stations by next January, and those newsrooms would be independent from those run by CTV.

The acquisition also includes Noovo.ca, which is V’s online video hub and whose change of ownership does not require CRTC approval.

The specialty channels Elle Fictions (formerly MusiquePlus) and MAX (formerly Musimax) remain under the control of Maxime Rémillard and with the same minority shareholders including the Caisse de dépôt, Investissement Québec and the Fonds de solidarité FTQ. Another CRTC decision regroups them as their own separate group, whose name is to be determined.

UPDATE (May 7): Quebecor has filed notice in court that it may appeal the decision, once the CRTC releases its reasons.

15 YouTube channels to binge away your quarantine

April 1 is normally a sacred day here. But considering the circumstances, pushing out a bunch of misinformation didn’t seem like a fun thing to do for me, even if we could probably use some entertainment. Instead, I’ve compiled a list of YouTube channels that I regularly watch, that I hope you’ll enjoy too, and will be not only entertaining but also educational as we all stay home and do our parts to keep each other healthy.

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Quebec’s regional dailies go weekly as COVID-19 devastates news media

The Coopérative nationale de l’information indépendante, the group that took over the six regional dailies formerly owned by Groupe Capitales Médias, has decided to suspend daily print editions and keep only the Saturday edition of each of those newspapers as they face a sudden disappearance of commercial ad revenue.

Affected are Le Soleil in Quebec City, Le Droit in Ottawa/Gatineau, La Tribune in Sherbrooke, La Voix de l’Est in Granby, Le Nouvelliste in Trois-Rivières and Le Quotidien in Saguenay.

They’re also laying off 143 workers, almost half their staff, temporarily during this crisis.

And no refunds “for the moment” because they don’t have enough staff to handle that.

This, less than a month after the group said it expected to be profitable in two years.

It’s just the latest media outlet to have to make drastic measures as COVID-19 causes traditional advertisers to pull their ads in what BuzzFeed’s Craig Silverman calls a “media extinction event.”

Among the dramatic changes in Canada:

If the crisis continues over the long term, the situation is likely to get worse.

It’s a perfect storm of problems:

  • The crisis itself has put increased pressure on news outlets, particularly television and radio, to increase coverage
  • Absences due to sickness or self-isolation measures
  • Event advertisers pulling ads because there are no more events to advertise
  • Local businesses pulling ads because they’re closed
  • Online advertisers opting out of placing ads on pages related to the outbreak
  • Fewer newsstand sales of newspapers because of those closed businesses
  • Less subscription revenue because newspapers and TV channels have considered themselves morally obligated to provide COVID-19 coverage for free
  • No more sports or arts to drive audience numbers

There are some effects working in the other direction — higher audience for news content, some virus-related government advertising — but the impact on the bottom line is very negative.

Governments have acknowledged this, and in Quebec at least, we may see some additional direct financial assistance to the media. Unifor is calling for emergency measures from the federal government, and it looked like they listened, with Justin Trudeau announcing new measures would be coming, but that turned out to be false.

So for now, the guillotine continues to fall day after day.

UPDATE: J-Source has mapped out how the COVID-19 pandemic has affected media across the country.

CBC suspends local TV newscasts amid COVID-19 outbreak

Updated April 15 with some 11pm newscasts returning.

Local news is vital. It provides an essential service, especially in times of emergency. People rely on local broadcasters to provide them up-to-the-minute information told by local journalists.

So what does the CBC do during an unprecedented public health crisis? It shuts it all down.

The public broadcaster announced Wednesday that effective immediately it is “consolidating” its TV news coverage, and replacing the 6pm and 11pm local newscasts at all of its stations (except CBC North, which provides news in Inuktitut) with CBC News Network.

According to a memo sent to staff this morning, the decision was made because of a lack of staff at CBC’s Toronto Broadcast Centre, which handles master control (why it has a lack of staff is not explained), as well as “much stricter newsgathering protocols.”

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Radio ratings: Virgin fails to catch up, CJAD in long-term decline

Numeris has released its top-line PPM ratings data for Nov. 25 to Feb. 23.

The numbers for Montreal show little change from the previous quarter, or the past few years, really, with CJAD at the top among anglophones and CHMP-FM 98,5 ahead among francophones.

This lack of change is bad news for Virgin Radio 95.9, which spent a lot of effort promoting its new morning show hosted by Vinny Barrucco and Shannon King. We’re two full quarters into this change and The Beat still has twice the audience of Virgin. The sacking of program director Mark Bergman (who’s now at The Beat) and Freeway and Natasha haven’t moved the overall numbers.

Meanwhile, down the hall at CJAD, the long-term trend continues downward. In 2015, the average minute audience overall (averaged over 24/7) was 15,000. Now it’s around 12,000.

The Beat, CBC, CHOM and TSN 690 have kept about flat over that time, and haven’t shown any major change this winter.

On the francophone side, Rythme FM is continuing to re-establish itself as the dominant music station after facing more competition from Rouge, and 98,5fm is holding off Radio-Canada.

Horn-tooting

Meanwhile, in Toronto, TSN 1050 finally beat Sportsnet’s 590 The Fan with its morning and afternoon shows (among men 25-54 anyway), which Toronto Sports Media notes has a lot to do with how unstable The Fan’s lineup has been.

Media News Digest: Les Affaires goes monthly, local journalism jobs, Elysia Bryan-Baynes retires

News about news

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How Canadians can watch Super Bowl LIV with American ads (the 2020 guide)

Letter from CTV to TV providers, provided to me by a helpful source

The free ride is over. Thanks to a Supreme Court ruling that the CRTC had overstepped its authority in the way it created an exception to simultaneous substitution rules, CTV will once again be taking over the U.S. feed for the Super Bowl on Sunday for Canadian cable and satellite TV subscribers.

And that means Canadians will be looking for loopholes to get around those rules. So here they are.

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CBC looking for new host for Quebec AM

Susan Campbell won’t be returning to the Quebec AM host chair.

Listeners of the CBC Radio One show Quebec AM, which is the morning show for most of Quebec outside of Montreal and the Gatineau region, have been wondering for a little more than a year now when its host Susan Campbell will be coming back. At the end of 2018 she left for an unspecified medical issue, she wrote in a Facebook post last March. At the time she said her doctor recommended she extend her leave to at least the fall.

Unfortunately, she’s not coming back, CBC announced to listeners in December. Last week, the broadcaster posted a job for the permanent host of Quebec AM (technically a one-year contract, which is how CBC hires hosts these days), based in its Quebec City studio. The deadline is Feb. 6.

The CBC wouldn’t comment in detail on what is essentially a personnel matter, but did say Campbell will be staying with CBC Quebec when she returns from her medical leave.

“We’re excited about her next role, but we’re not ready to announce it just yet,” says managing editor Helen Evans, who clarified that it was Campbell’s decision to make this change.

Campbell herself didn’t have anything to add, and hasn’t spoken much about her leave despite being active on social media.

Campbell has been the host of Quebec AM since 2007, when she joined previous host Tim Belford, who was her co-host out of Sherbrooke until his retirement in 2011.

BTLR panel report sides with much more regulation of online media

We can talk about making Netflix charge GST, or phasing out ads from the CBC, or the various proposed changes to telecom policy that will have a huge financial impact for the industry but be largely invisible to end users, but the real headline out of the Broadcasting and Telecommunications Legislative Review Panel report released on Wednesday is this: A big expansion of government regulation in media.

I’d say this wasn’t a surprise looking at the backgrounds of the panel members, but that would be unfair. The panel was made up of legal experts with experience all over the industry, including with telecommunication providers who would be largely against these kinds of additional regulatory burdens. And, frankly, it was a surprise that they would push for this much additional regulation.

Certainly, going boldly in the other direction wasn’t an option. The terms of reference that guided the panel made it clear that the government hasn’t changed its objectives in terms of getting the industry to promote Canadian content, ensuring diversity and accessibility, protecting local news and the CBC, and ensuring that additional costs won’t be assumed (directly) by the consumer. If you have issues with those objectives, take it up with the government, not the panel.

And in any case, those 97 recommendations are in the hands of that same federal government, and it will be up to them to decide which of those recommendations to follow and which to ignore. Those recommendations that are less politically popular should get filtered out at that stage, as well as those that would be too disruptive to take the political risk.

The recommendations are summarized in various news stories about the report (CBC, Globe and Mail, Wire Report, iPolitics, Cartt.ca, The Logic, Global News, Postmedia, Toronto Star)

Here are some highlights of what the panel has proposed:

Streaming and online media

  • Make all online media subject to government oversight. Not just Netflix, but Facebook, Google, Apple, even news media websites. While they would not have to be licensed by the CRTC, the larger ones would have to at least register (and have many of the same obligations), and report confidential information. (A suggested order would make this apply only to those with more than $10 million in Canadian revenue a year.)
  • Require “curators” (media providers with editorial control over their media) to devote a portion of their content budgets to Canadian programming. (Or impose a levy where such a quota is inappropriate.)
  • Require “aggregators” and “sharers” (those without editorial control) to give a portion of their Canadian revenues to the Canadian system, including news.
  • Make foreign streaming services subject to sales tax. Quebec and Saskatchewan already do this at the provincial level, and Canadian streaming services are already subject to this, so it was kind of a no-brainer.
  • Allow the CRTC to collect data (including recommendation algorithms) from media producers and publish that data in aggregate form.
  • Require “media content undertakings” to devote portions of their catalogues to Canadian content and ensure a certain prominence to Canadian content, including in things like app stores.
  • Monitor and if necessary intervene in large media companies’ use of “Big Data” that may have privacy implications for Canadians.
  • (Carefully) establish liability for digital providers for harmful content distributed using their systems, while protecting freedom of expression.

CBC/Radio-Canada

  • Phase out all advertising within five years.
  • Set up a five-year funding guarantee for the CBC instead of having it set its budget based on parliamentary appropriations that can change with every federal budget.
  • Add “taking creative risks” to CBC’s mandate.
  • Remove specific references to radio and television from CBC’s mandate.
  • Move away from the CRTC licensing CBC’s individual services

Internet service providers

  • No new ISP tax. The panel recommended against the idea of taxing internet service directly to support Canadian media.
  • Require the CRTC to, if they deem it necessary, implement “measures to improve affordability for marginalized Canadians from diverse social locations.”

Telecommunications

  • A much larger role for the CRTC in establishing rules for how telecoms do business with each other and interconnect.
  • Give the CRTC power over “passive infrastructure” like street furniture to make it easier for telecom companies to install equipment.
  • More power to the CRTC to regulate access to telecommunications infrastructure inside large apartment and condo buildings to ensure competition.
  • Require the CRTC consult municipalities before granting permission to install telecom facilities.
  • Expand the CRTC’s jurisdiction to cover all “electronic communications services” being provided in Canada, regardless of if they’re Canadian-owned or have a presence here.
  • Direct disputes over tower sharing to the CRTC.

News media

  • Expand the federal journalism tax credit to include broadcast media.
  • Require sharing and aggregation websites like Facebook and YouTube to provide “links to the websites of Canadian sources of accurate, trusted, and reliable sources of news with a view to ensuring a diversity of voices” and require “prominence” of such links.
  • Require social media platforms abide by regulated terms of trade that balance “negotiating power” with news producers so news producers are compensated for their content being shared online.

The CRTC

  • Rename the commission the Canadian Communications Commission (which sounds a lot like a “Canadian FCC”).
  • Give the commission more powers to do market research and regulate proactively rather than based solely on industry applications.
  • Allow the commission to issue conditional and interim broadcasting decisions, fine broadcasters, and issue ex parte decisions where warranted.
  • Reduce the maximum number of commissioners to a chair, one vice-chair and seven other members, down from the current 13 total, and have all members based out of the Ottawa region.
  • Create a Public Interest Committee of experts that would “provide advice as part of the decision-making process.” The panel cites the OFCOM Consumer Panel in the U.K. as a model.
  • Create and fund an accessibility advisory committee.
  • Allow sharing of confidential information between the commission and the Competition Bureau as well as the Privacy Commissioner.
  • Synchronize rules related to powers and procedures between the telecom and broadcasting side.
  • Establish a firm 120-day deadline to review a decision when asked through an appeal by a party to it.
  • Strengthen rules that provide funding for public interest interventions in CRTC proceedings.

Production funds

  • Combine the Canada Media Fund and Telefilm Canada, which finance TV and movie production, respectively.
  • Redirect cable and satellite companies’ required contributions to the Canada Media Fund be redirected to certified independent production funds, like the Bell Fund, Fonds Quebecor, Shaw Rocket Fund etc.

Devices

  • Make it illegal to “operate devices, equipment, or components to receive unlawfully decrypted subscription programs” online (borrowing from the anti-satellite-piracy law).
  • Make the minister of industry responsible for ensuring “communications devices and their operating systems respect security requirements, protect users’ privacy, and incorporate accessibility features.”

That’s a lot. Even if there are exemptions for small businesses, this new regulatory regime would cover a large part of the online industry. And if these new laws and the regulations that stem from them aren’t very carefully implemented, there could be a lot of undesired side-effects, including many online businesses blocking out Canada because they don’t think it’s worth going through the regulatory burden.

And even those who will participate because there’s so much money at stake (like Netflix) will certainly balk at some of the regulatory obligations like submitting their algorithms to audits. When the CRTC tried to get some basic information out of Netflix as part of its Let’s Talk TV proceeding five years ago, Netflix flat-out refused, and the commission had no power to force the company to comply, so it just gave up. Stronger laws could change that (especially if other countries have similar laws), but expect a lot of resistance.

There’s also a lot unclear about how this will affect those currently licensed by the CRTC. The proposal would change the objectives of the Broadcasting Act, and (though this isn’t laid out explicitly) remove the requirement that Canadian broadcasting be Canadian-owned. That could have serious implications if, say, it allows Bell and Corus to be bought by American media giants.

The federal government has said it plans to have legislation by the end of the year. I look forward to seeing how much of this radical change it has the stomach for, especially in a minority parliament.

Bell makes Crave bilingual, opening another front in its war with Quebecor

I regret to inform you that Bell and Quebecor are at it again.

The latest skirmish? Bell’s announcement that it is launching a French version of its Crave streaming service, or more accurately making its existing Crave service bilingual. This adds a third player to the (paid) Canadian French-language TV streaming market, joining Radio-Canada’s Tou.tv Extra and Quebecor’s Club Illico.

That sounds pretty simple, and generally good news for the market. Annoying for Quebecor, obviously, to have a new competitor, but hardly something they can complain about.

Except at the same time, Bell is doing with its Super Écran pay TV channel what it did with The Movie Network in 2018: Integrating it into Crave and forcing TV providers into a new deal to get access to Super Écran’s on-demand content for their subscribers. (Super Écran will, thankfully, keep its branding though, and be referred to as a Super Écran add-on to Crave.)

Bell has reached such deals with some providers, but not Videotron, which is calling foul because Bell has shut down Super Écran Go, through which Videotron customers subscribed to Super Écran could access its content online.

The 2018 Crave-Videotron war didn’t last too long, but it needed a $100-million lawsuit to settle. And Bell and Quebecor aren’t exactly great at negotiating these days.

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Quebecor’s shifting arguments against Tou.tv

It will come as no surprise to you that Quebecor and Canada’s public broadcaster are not the best of friends. Quebecor’s controlling shareholder and CEO, Pierre Karl Péladeau, has complained about it many times in the past. (He also complains about La Presse, Bell, the Quebec Liberal Party, the Quebec government and others.)

This week, Quebec’s largest telecom and media company filed a complaint with the CRTC demanding that it order CBC/Radio-Canada to shut down its Tou.tv Extra streaming service. Not all of Tou.tv, just the $7/month premium version that charges for premium content.

I examine the application in this article for Cartt.ca subscribers. In short, Quebecor is arguing that:

  • As a public broadcaster, it’s improper for CBC/Radio-Canada to charge for access to content paid for by taxpayers, and goes against its mandate.
  • Since it licenses some content from other broadcasters (Télé-Québec, V, Canal Vie, TV5 and others), it is a de facto TV provider and should be licensed as such, including obligations to spend 5% of its revenue on Canadian programming funds.
  • Its deal with Telus giving Telus’s customers free access to Tou.tv Extra is an illegal undue preference and against the rules for digital media broadcasters.
  • CBC’s last licence renewal in 2013 included a note from the CRTC that said it does not charge for access to its streaming service (Tou.tv Extra launched in 2014), which Quebecor argues is a de facto condition of acceptance.

Quebecor lays it on pretty thick in the application, saying CBC/Radio-Canada is “short-circuiting the Canadian broadcasting system with taxpayer money” and “creating two-tier public television: enriched content, exclusives and offers first to the better off, and regular content and reruns to the masses.”

In a procedural letter, the CRTC says that issues related to CBC’s mandate should be dealt with in the CBC licence renewal proceeding, which is currently under way. Other issues of fairness can be dealt with in the context of an “undue preference” proceeding, which it will examine.

I could point out some of the obvious counter-arguments to Quebecor’s argument (Tou.tv Extra does not offer live streaming of cable channels, only some of their content on demand; there is no condition of licence requiring it to be free; it’s basically the same model as Quebecor’s own Club Illico; the deal offered to Telus was offered to others as well including Videotron, who choose not to take it; even if there is undue preference, it does not mean Tou.tv Extra needs to cease its operations), but what struck me today as I was doing some Google searching is a post I wrote 10 years ago just after Tou.tv first launched, when Péladeau complained about it then. Here’s a paragraph I excerpted from an open letter he wrote:

Furthermore, the CBC has launched the Tou.tv website without consulting the industry, a move that jeopardizes Canada’s broadcasting system by providing free, heavily subsidized television content on the Internet without concern for the revenue losses that may result, not only for the CBC but also for other stakeholders, including writers and directors.

So, in 2010 Péladeau argued that Tou.tv threatened the broadcasting system by not charging a fee.

And in 2020 Péladeau argues that Tou.tv Extra threatens the broadcasting system by charging a fee.

You have to give this to Péladeau: He’s got quite the ability to argue. It must be fun working in his regulatory affairs department.