Broadcasting Commission Letter Addressed to Various Parties
Ottawa, 24 May 2018
Vice President, Content and Distribution, Regulatory Affairs
Bell Media Inc.
Vice President, Regulatory Affairs
Shaw Communications Inc.
Re: Dispute regarding the proposed repackaging of Investigation Discovery
This is with respect to the Notice of dispute filed by Bell Media Inc. on 10 April 2018 regarding a proposed repackaging of Investigation Discovery by broadcasting distribution undertakings (BDUs) owned and operated by Shaw Communications Inc.
Bell stated that the proposed repackaging would significantly reduce the service’s number of subscribers, which would have a material impact on its continued success. Bell also argued that carriage and packaging should continue until the parties negotiate a new agreement.
In its 12 April 2018 response, Shaw argued that there is no dispute since the parties are subject to a valid affiliation agreement that permits changes to the packaging of Investigation Discovery, and that was negotiated with full knowledge and understanding of the new framework that would govern the distribution of discretionary services like Investigation Discovery. Shaw also stated that Bell has failed to identify any Commission policy or regulation that would be breached by Shaw’s repackaging proposal.
In reply, Bell argued that Shaw has not provided justification for virtually dropping Investigation Discovery over any other programming service carried by Shaw, resulting in an undue disadvantage to the service. This statement was not followed up by an application alleging undue preference.
Section 12(1) of the Broadcasting Distribution Regulations (BDU regulations) and Section 14(1) of the Discretionary Services Regulations permit one or both parties to a dispute concerning carriage or terms of carriage of a programming service to refer the matter to the Commission for dispute resolution.
Section 15.01 of the BDU regulations requires that, during a dispute between a BDU and a programmer, the BDU continue to distribute the programming service at the same rates and on the same terms and conditions as it did before the dispute (the “standstill rule”).
Under the standstill rule, Shaw is required to distribute Investigation Discovery at the same rates and on the same terms and conditions as it did before the dispute, until the parties resolve their dispute or the Commission issues a decision concerning this unresolved matter.
The Commission’s dispute resolution regime is designed to ensure a healthy and dynamic wholesale market in which negotiations are conducted fairly and in good faith. The standstill rule was put in place to level the field during negotiations between programmers and distributors and to ensure that Canadians are not deprived of services while BDUs and programmers dispute carriage or terms of carriage. At the same time, the Commission has stated that the standstill rule should not be invoked lightly.Footnote1
The Commission has indicated that it is prepared to intervene where it finds that parties are acting in an anti-competitive manner, stating that such targeted intervention may be necessary to ensure a healthy, dynamic retail market that maximizes consumer choice and flexibility and provides Canadians with access to a diverse range of programming.Footnote2 Such intervention may be particularly important where there is an imbalance in negotiating power.
Analysis and Determinations
Having reviewed the terms of the affiliation agreement, the Commission concludes that Shaw is within its rights to repackage the service. Further, there is no specific or compelling public policy reason for the Commission to intervene since there is no imbalance in negotiating power in this case. This is a commercial dispute between two large, sophisticated, vertically integrated companies about a service that has no access rights or packaging privileges, based on an agreement that was signed with full knowledge of the framework governing the distribution of discretionary services.
Nonetheless, the Commission notes that Shaw may not have fully justified its proposed repackaging to Bell and would encourage the parties to continue their conversation.
Accordingly, while encouraging the parties to continue to communicate, the Commission closes the dispute, thus ending the standstill.
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