ARCHIVED - Telecom Commission Letter addressed to Peggy Tabet (Quebecor Media Inc., on behalf of Sun News Network)

Ottawa, 6 August 2014

File No. 2014-0260-2

By email

Peggy Tabet
Senior Director, Regulatory Affairs
Broadcasting
Quebecor Media Inc., on behalf of Sun News Network
tabet.peggy@quebecor.com

Pamela Dinsmore
Vice President, Regulatory
Rogers Communications Inc.
pam.dinsmore@rci.rogers.com

Re : Application by Quebecor Media Inc., on behalf of Sun News Network, for Final Offer Arbitration with Rogers Communications Partnership

This letter is to advise the parties that the request by Sun News Network (SNN) to vary the procedure set out in the final offer arbitration process with Rogers Communications Partnership (Rogers) has been rejected.

In this letter, the Commission also sets out revised dates upon which the final offer arbitration is to be conducted. For all other matters with respect to the conduct of this proceeding, please refer to the 22 July 2014 letter from the Commission (“the conduct letter”).

The Request

In a letter dated 22 July 2014, SNN requested that the Commission’s final offer arbitration be modified to include the filing of comprehensive affiliation agreements and to remove ratings performance data from the list of information to be provided in this proceeding (referred to as “tuning or viewership data” in the conduct letter).

With respect to the first, SNN argued that the acceptance of a rate card alone is insufficient and that other matters, such as distribution, channel placement, start date, and contract length will not resolve themselves at the end of this process. Accordingly, it requested that comprehensive affiliation agreements be filed as part of each party’s final offer in this proceeding.

Secondly, it argued that requesting viewing data seeks to introduce new criteria related to channel ratings, which is inherently prejudicial to SNN. It argued that while a relevant test for a more mature channel, it is an impossible threshold for a new entrant to pass, and should not be admissible in these proceedings.

The Response

Rogers submitted that both demands by SNN should be rejected.

Rogers noted that it has an existing affiliation agreement and that other matters that were addressed in its affiliation agreement with SNN, including distribution, start date, channel placement and contract length, have not been identified by SNN as problematic or in need of amendment or have been marginal issues. Rogers further submitted that expanding the scope to include comprehensive affiliation agreements is inconsistent with the scope of final offer arbitration and inconsistent with the Commission’s framework for the distribution of Category C national news specialty services.

Rogers submitted that removing ratings performance data is inconsistent with Broadcasting Distribution Order CRTC 2013-735, as two of the eight factors identified by the Commission require the Commission to consider ratings performance data in establishing a wholesale rate.

Determinations

Scope of the proceeding

The Commission considers that final offer arbitration is an effective dispute resolution tool when used for disputes that are exclusively monetary and otherwise meet the criteria for dispute resolution set out in paragraph 4 of Information Bulletin 2013-637. The Commission is of the view that other forms of dispute resolution, such as mediation or expedited processes, are more effective tools to deal with non-monetary matters.

As such, the Commission considers it appropriate to retain the current scope of this proceeding as set out in the conduct letter, i.e., to determine the appropriate wholesale rates for the distribution of SNN by Rogers, on the basic service and on a discretionary basis and denies SNN’s request that the parties file comprehensive affiliation agreements as final offers.

The Commission notes that, consistent with Broadcasting Regulatory Policy 2013-734 and Broadcasting Order 2013-735, the existing affiliation agreement between Rogers and SNN remains in force and that any rates determined in this final offer arbitration process will supersede those contractual clauses with which they are in conflict.

Tuning or viewership data

The Commission notes that the Code of conduct for commercial arrangements and interactions, set out in Appendix 1 to Broadcasting Regulatory Policy CRTC 2011-601 set out that:

Where applicable, negotiating a wholesale rate for a programming service based on fair market value should take into consideration the following factors:

1. historical rates;
2. penetration levels and volume discounts;
3. the packaging of the service;
4. rates paid by unaffiliated BDUs for the programming service;
5. rates paid for programming services of similar value to consumers;
6. the number of subscribers that subscribe to a package in part or in whole due to the inclusion of the programming service in that package;
7. the retail rate charged for the service on a stand-alone basis; and
8. the retail rate for any packages in which the service is included.

These same factors were reiterated by the Commission with respect to the wholesale rates for Category C news specialty services (in Broadcasting Order 2013-735).

The Commission considers that tuning or viewership data can assist in assessing a service’s relative value and quality to consumers, as set out in factors e) and f) above. The Commission further considers that consideration of this data will not be prejudicial to SNN because it will have an opportunity to make submissions regarding how the data should be interpreted and applied in the circumstances. The Commission can then give it the appropriate weight based on the record of the proceeding. Accordingly, the Commission denies SNN’s request that tuning or viewership data be excluded from the scope of this proceeding.

Revised filing dates for documents

The following dates shall replace those specified in the conduct letter:

• The Commission requires that, by 11 August 2014, the parties each file their final offers with the Commission.
• On 15 August 2014, once Commission staff has confirmed that the offers respond to the identified disputed matter, Commission staff will forward to each of the parties a copy of the other party’s offer.
• To complete the record, Rogers is also required to provide the additional information specified in the conduct letter, by 15 August 2014.
• To complete the record, Quebecor Media Inc., on behalf of SNN, is also required to provide the additional information specified in the conduct letter, by 15 August 2014:
• By 20 August 2014, the parties may file observations on the other party’s final offer with the Commission, serving the other party.

Mediation

The Commission changes the dates for mediation set out in the conduct letter, to the week of 25 August 2014 to 29 August 2014.

Sincerely,

[Original signed by]

John Traversy
Secretary General

cc. Kory Teneycke, SNN, kory.teneycke@sunmedia.ca
David Purdy, Rogers, david.purdy@rci.rogers.com

Date modified:

2014-08-06