Montreal: Broadcasters have filed angry letters of protest with the CRTC against Videotron, claiming the cable operator has contravened section 9 of the Broadcasting Distribution Regulations by ‘arbitrarily and unilaterally’ reducing affiliation payments by as much as 50% and more.

Written complaints filed with the commission against Montreal-based Videotron, a Quebecor Media company, have been sent by CTV Specialty Television on behalf of affiliates The Sports Network and Discovery Canada; CTV Specialty and affiliate Reseau des Sports; Astral Television Networks on behalf of pay-TV service Super Ecran; and CHUM Television on behalf of Star!, MuchMoreMusic and Learning and Skills Television of Alberta, the former Canadian Learning Television.

The broadcasters want the CRTC to rule on the complaints and order Videotron to pay the balance owed to affiliates under contracted agreements.

CRTC spokesman Denis Carmel says the commission sent a letter to Videotron on July 11 asking it to respond to a July 9 letter of complaint from CTV Specialty president Rick Brace. The CRTC has asked Videotron to reply by July 25 and told CTV Specialty it may provide additional comments, if any, by Aug. 1.

In a July 9 letter to the CRTC, Brace says Videotron’s reduction in payments will cost TSN and Discovery ‘$4 million per year in total wholesale fees.’

Brace says Videotron, which services 1.3 million households and 100,000 commercial customers, first ‘threatened’ to cut affiliation payments to TSN and Discovery by 50% in a letter dated March 15, 2002.

In its letter, Videotron said it is entitled to make the reduction because of alleged practices of ‘undue preference’ by DTH competitor Bell ExpressVu, including the claim, ‘Bell ExpressVu (BEV) invoices only once for a subscriber who possesses multiple digital decoders located in different residences.’

TVA Group-Videotron service Le Canal Nouvelles has also filed a complaint with the CRTC against BEV.

A 10-day notice

In a series of letters to Star!, MuchMoreMusic and the former CLT, Yvan Gingras, Videotron senior VP, finance and administration, says because there is only one subscription charge by BEV for households with many BEV set-top boxes and/or for subscribers with multiple households, ‘BEV is not paying you [MuchMoreMusic] a wholesale fee for each home being provided with your programming service. For example, the effective rate of the wholesale fee paid to you by BEV is 50% of what it should be in the case of a household with two homes.’

Videotron has invoked the ‘Most Favored Nations’ clause in its affiliation agreements with the broadcasters, claiming it has the right to replace the contracted agreements with the ‘more economically favourable terms’ used by BEV.

Videotron advised its supplier affiliates they had 10 days to demonstrate they had ‘done everything possible to stop that BEV practice’, that the affiliates had contracted clauses in their agreement with BEV against the billing practice, and thirdly, that the affiliates were actively pursuing BEV for wholesale fee payment for each serviced home.

Videotron’s letter to Star! and CLT included a cheque for the reduced amount based on what it claimed are the conditions of agreement between Star!, CLT and BEV – in effect, an assumption 100% of BEV subscribers have/had more than one decoder.

Brace’s letter says, ‘Rather than filing a complaint and properly submitting this matter to the jurisdiction of the Commission, Videotron has chosen to take the law into its own hands. Videotron has assumed the alleged practices to be proven and imposed penalties on third parties.’

Astral Television Network president John Riley says Videotron violated a six-year-old agreement by reducing affiliate payments to Super Ecran by 15% in December 2001 and January 2002 and by 20% in February 2002.

A letter to the CRTC signed by RDS president and CEO Gerry Frappier and Brace says ‘Videotron is using RDS like a hostage’ in its competition with BEV and that affiliate payments by Videotron to RDS in early 2002 had been reduced by 62%. Elsewhere, RDS claims the reduction has been as high as 68%.

RDS says Videotron’s action will ‘annihilate’ the service.

Meanwhile, Bell Globemedia and Quebecor Media have filed rival lawsuits in Quebec Superior Court over access cost to subscribers and related issues.

In a separate complaint filed with the CRTC, Videotron alleges BCE is cross-subsidizing its phone and DTH services. BCE followed suit by pulling an estimated $10 million in advertising from Quebecor Media.

In a November 2000 letter to Look Communications, another broadband carrier, the CRTC stated it has the jurisdiction to ‘intervene in disputes where relevant contracts exist. However, interventions of this sort should take place only in compelling circumstances so as to achieve the objectives set out in the Act.’