ARCHIVED - Broadcasting - Commission Letter to Torstar Corporation Alleging Breaches ofSections 21(3) and 9 of the Broadcasting Distribution Regulations Against SouthmountCable Limited
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LetterOttawa, 31 May 2000
Our File: CCB#990707CC52L
Mr. David C. Wetherald and
Mr. J.D. Campbell Re: Complaint by Torstar Corporation Alleging Breaches of Sections 21(3) and 9 of the Broadcasting Distribution Regulations Against Southmount Cable Limited Dear Mr. Wetherald and Mr. Campbell: On 14 July 1999, Torstar Corporation ("Torstar") filed a complaint against Southmount Cable Limited ("Southmount"), alleging that Southmount breached section 21(3) of the Broadcasting Distribution Regulations ("the Regulations") by distributing an exempt programming service controlled indirectly by Rogers Cablesystems ("Rogers"), The Shopping Channel ("TSC"), while not providing access to an exempt programming service of Torstar or any other party. In addition, Torstar alleged that Southmount has conferred an undue preference on Rogers, and subjected Torstar to an undue disadvantage, in contravention of section 9 of the Regulations. Torstar, the parent company of Torstar Electronic Publishing, operates an exempt programming service known as Toronto Star Television ("TSTV") which is distributed on various Toronto-area cable systems. Torstar has requested access to the Southmount system located in Hamilton, Ontario. Southmount has refused this access, and at the same time, continued to distribute the exempt programming service, TSC. Positions of Parties In distributing TSC, while denying access to any third party exempt undertaking, including TSTV, Torstar alleged that Southmount conferred an undue preference on Rogers in that: i) its exempt programming undertaking, TSC was distributed by Southmount while no third party undertakings were distributed; ii) it was permitted to reach viewers and potential subscribers in the area served by Southmount with its shopping service while Torstar was denied the opportunity to reach viewers with its similar type of service; and iii) it was permitted to pursue legitimate business interests in the area served by Southmount while third parties were denied such an opportunity. Torstar argued, among other things, that it was subjected to an undue disadvantage, in that it was denied the opportunity to: i) distribute its exempt programming undertaking, TSTV, while no third party undertakings were distributed by Southmount; ii) reach viewers and potential subscribers in the area served by Southmount with its shopping service while Rogers was permitted to do so with a similar type of undertaking; and iii) pursue legitimate business interests in the area served by Southmount. Southmount responded that it is not granting an undue preference in its distribution of TSC. Further, Southmount does not have an interest in any services that are, or could be, distributed by Rogers. Southmount stated, among other things, that it began distributing TSC in 1987, ten years before TSTV came into existence. Southmount maintained that its relationship with TSC is completely at arms length, with no common ownership between Southmount and Rogers. Further, Southmount noted that it provides no services to the Rogers companies and these companies provide no services to Southmount. As part of the Commission's process, TSC was provided with an opportunity to comment and Torstar was given an opportunity to reply. In commenting, TSC argued, among other things, that TSC and Southmount are two separate companies, each operating independently of each other. TSC stated that there is no arrangement for Southmount to carry TSC so that Rogers, TSC's sister company, could, in turn, carry one of Southmount's services. TSC noted that Southmount does not produce or offer any service that could be carried by any other cable operator. The Commission's Decision Southmount's Compliance with Section 21(3) of the Regulations The Commission notes that section 21(3) of the Regulations is limited to circumstances where the distribution undertaking in question, or its affiliate, has an ownership interest, directly or indirectly, in the exempt programming undertaking. Given that Southmount has no ownership interest in TSC, section 21(3) does not apply. Southmount's Compliance With Section 9 of the Regulations In Public Notice CRTC 1997-150, dated 22 December 1997, the Commission indicated that the following circumstance could constitute an undue preference or disadvantage:
The Commission noted that, for example, two cable companies and their affiliates, or two telephone companies and their affiliates, would be of "similar type". TSTV, owned by Torstar, is an "independently-owned exempt programming service". TSC, on the other hand, is owned by Rogers Communications, which is the parent company, and therefore an affiliate, of Rogers Cablesystems. Since Southmount is a "similar type of entity" to Rogers, in terms of carriage status for Southmount, TSC is considered to be cable-owned, rather than independently-owned. The Commission notes that in situations where a licensee distributes services of an exempt programming undertaking in which a similar type of distribution undertaking has control of 15% or more of the exempt undertaking, there is no automatic requirement for the licensee to make an equal number of analog channels available for the distribution of the services of other exempt programming undertakings. Such a requirement could be imposed, however, where there is evidence of undue preference or undue disadvantage. Based on these facts, the Commission considers that Southmount has, in carrying TSC, and not distributing TSTV, subjected Torstar to a disadvantage. However, the test under section 9 is not merely whether there has been a preference or disadvantage but whether that preference or disadvantage has been undue. The underlying policy concern in this context is that distributors may co-operate with each other in the distribution of exempt services in which they have an ownership interest, to the undue disadvantage of third party exempt services. For example, where a major cable distributor distributes an exempt service owned by another major cable distributor, in exchange for preferential treatment for its own exempt service or a specialty service, undue preference or undue disadvantage concerns could clearly arise. There is no evidence on the record of this proceeding demonstrating that this type of co-operation between Southmount and Rogers has taken place. Southmount does not have an ownership interest in any programming services. In the circumstances, the Commission has concluded that Torstar has not been subjected to an undue disadvantage and that Southmount has not conferred an undue preference on Rogers and accordingly is not in breach of section 9. In accordance with Commission policy, all correspondence relating to this matter will be placed on a public examination file. Sincerely,
Ursula Menke cc: Rael Merson - The Shopping Channel |
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