Broadcasting - Commission Letter addressed to Brian Cuff (Wildbrain Television) and Paul Beaudry (Cogeco Connexion inc.)
Ottawa, 11 August 2021
Mr. Brian Cuff
Vice President, TV Distribution & Strategic Partnerships
Mr. Paul Beaudry
Vice-president, Regulatory Affairs
Cogeco Connexion Inc.
Re: Part 1 Application (2021-0039-5) by WildBrain Television regarding the distribution of Family Channel, Family Jr and CHRGD by Cogeco Connexion Inc.
This letter concerns the DHX Television Ltd. (operating as WildBrain Television) (WildBrain) on 19 January 2021, alleging that Cogeco Connexion Inc. (Cogeco) is in violation of the Broadcasting Distribution RegulationsFootnote1 (BDU Regulations) and the Wholesale CodeFootnote2.
The purpose of this letter is to establish additional process with a view to providing the applicant and respondent a further opportunity to resolve their outstanding issues in a collaborative way. This letter does not set out the Commission’s determinations with respect to the matters alleged in the application or dispose of the arguments raised by the parties.
In particular, as set out further below, the application is hereby suspended and the applicant and respondent are required to participate in staff-assisted mediation.
WildBrain asserts that, owing to Cogeco’s decision to cease the distribution of WildBrain’s English-language services (Family Channel, Family Jr. and Family CHRGD [the Services]), and related actions, Cogeco has:
- Subjected WildBrain to an undue disadvantage, and conferred an undue preference on its main Canadian competitor, Corus Entertainment Inc. (Corus), in violation of section 9(1) of the BDU Regulations;
- Committed a violation of its standstill obligations under section 15.01 of the BDU Regulations; and,
- Failed to propose carriage terms based on the fair market value of the Services, and thereby committed a violation of the Wholesale Code.
WildBrain requests that the Commission direct Cogeco to continue to negotiate for the carriage of the Services through staff-assisted mediation for 30 days. WildBrain further requests that the Commission mandate Cogeco to participate in final offer arbitration (FOA) to establish the terms for continued distribution of the Services, in the event that an agreement is not reached through staff-assisted mediation.
Cogeco requests that the Commission dismiss the application, arguing that WildBrain has not been subjected to an undue disadvantage and no undue preference has been shown to other services. In its view, the performance of the Services supports Cogeco’s decision to discontinue their carriage and WildBrain is attempting to rely on the standstill rule to secure a de facto access right. It further argues that, as it continues to distribute the Services at the same rates, and on the same terms and conditions, as it did before any dispute, it is fully compliant with its regulatory obligations.Footnote3
Commission’s Analysis and Determinations
Both the Broadcasting ActFootnote4(the Act)and the Commission’s regulatory framework recognize the potential for tension between competing interests and the need to balance these diverse concerns. For example, the commercial interests of programming services will sometimes conflict with those of distribution undertakings, and these conflicts may impact upon the interests of other participants in the broadcasting system including content producers or Canadian viewers seeking access to a diverse range of quality programming.
Where disputes arise, the Commission’s dispute resolution regime, enacted pursuant to section 10(1)(h) of the Act, is designed to ensure a healthy and dynamic wholesale market, and maintain a level playing field during negotiations so as to lead to outcomes that serve the public interest and advance the objectives of the broadcasting policy for Canada.
However, the Commission generally expects parties to make reasonable efforts to resolve their disputes before bringing such matters to the Commission for disposition.
In the present case, which both the applicant and the respondent correctly characterize as a dispute, the record of the proceeding suggests that the issue is primarily about the carriage and terms of carriage. As a consequence of this, as the parties also recognize, the standstill rule has been engaged. Footnote5
In the Commission’s view, the record also demonstrates that there has been insufficient constructive engagement between the applicant and respondent seeking to resolve the dispute. Of course, such engagement will not always be possible, or appropriate. Further, the Commission’s policy framework and previous decisions recognize that there will be circumstances in which distribution undertakings may legitimately cease distribution of programming services. In the present case, however, the Commission considers that it is appropriate and that the public interest would be better served by affording these parties a further opportunity to resolve their outstanding issues themselves.
Consequently, in the circumstances of this case, the Commission is not prepared to rule on the merits of the application until there is further engagement between the parties.
Rather, the application will be suspended, and WildBrain and Cogeco are required to participate in mediation assisted by Commission staff as provided for under the Commission’s dispute resolution framework, in order to attempt to resolve their outstanding issues. No specific time period will be attached to this requirement, as such a condition would not be conducive to full and open engagement.
In the event that this mediation resolves the issues between the parties, then the Commission would simply close the application. However if, after a reasonable time and despite the efforts of the parties, mediation does not result in a resolution, either party may file a request with the Commission to reopen the proceeding at which point the Commission may rule on the merits of the application or render a decision on any other unresolved matter, such as whether the standstill rule should continue to apply.
The Commission notes that this direction to engage in mediation is specific to the circumstances of the case and may not be appropriate in every case. The purpose of this direction is not to force the parties into any particular resolution; it is rather to facilitate open and collaborative dialogue. While parties can call on the Commission to facilitate the resolution of complaints, in the context of negotiations, the Commission is of the view that parties should endeavour to resolve their disputes bilaterally or with the help of staff-assisted mediation prior to seeking Commission intervention. The Commission also cautions that this letter should not be interpreted as an indication that the Commission prefers the submissions of either party.
Based on the foregoing, the Commission acknowledges that a dispute exists between the parties concerning the carriage and terms of carriage of WildBrain’s programming, as indicated by them in their submissions. The Commission hereby suspends the Part 1 application filed by WildBrain, and, in accordance with subsection 12(4) of the BDU Regulations and subsection 14(2) of the Discretionary Services Regulations, Footnote6 directs the parties to participate in mediation with Bernard Montigny, Senior Director, Alternative Dispute Resolution. Commission staff will be in touch shortly with both parties to establish dates.
The Commission notes that the standstill rule remains in place until such time as the parties resolve their dispute or the Commission renders a decision on any unresolved matter.
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