Family Channel owner Wildbrain and BDU Cogeco are locked in a lengthy carriage dispute, with Cogeco threatening to drop Family Channel, Family Jr and CHRGD from its BDU offering if a resolution is not reached.

According to documents filed by WildBrain with the CRTC, negotiation of a new carriage agreement began in April 2020. Since that time, both sides have been unable to reach an agreement. Cogeco notified WildBrain of its intention to drop the suite of Family channels from its BDU platform in October.

WildBrain says Cogeco’s actions represent a violation of the Wholesale Code (which provides a framework for fair negotiations between programming services and BDUs), the standstill agreement (which ensures Canadians don’t lose access to channels during disputes between BDUs and programming services) and gives undue disadvantage to the Family services.

If Cogeco were to drop the Family services, it would have a “substantial” financial impact on the channels’ operations, according to WildBrain, including a loss of subscribers and ad revenues, making it increasingly difficult to respond to broader market challenges such as competition of over-the-top services. The move would also affect WildBrain’s ability to invest in Canadian programming, it argues.

WildBrain insists the issues between the parties are economic in nature and therefore should be resolved under the Wholesale Code.

In its letter to the CRTC, WildBrain has asked for the regulator to determine that Cogeco has breached its regulatory obligations, and to order Cogeco to participate in final offer arbitration so that terms of a renewed agreement can be reached.

Cogeco countered that WildBrain’s filing is “entirely without merit” and requested that the Commission dismiss the application “in its entirety.”

The BDU also argued that Wildbrain’s application relies on a “faulty interpretation” of the Wholesale Code “in an attempt to impose on Cogeco the obligation to continue negotiations for the continued carriage of the Services, despite Cogeco’s clear intention to terminate the distribution of the Services.”

While WildBrain argues that its Family channel services perform well in comparison to other kid-focused offerings, Cogeco says its decision to terminate the distribution of the channels is “based on sound commercial reasons,” including low viewership and “significant content duplication on third party platforms.”

According to data supplied by Wildbrain, Cogeco’s footprint encompasses 1.7 million households and 150,000 businesses in Canada. It has 619,000 cable subscribers and more than 800,000 internet subscribers.

Independent broadcast groups argue unfair treatment

Independent broadcasters like WildBrain have argued for a number of years that the large BDUs have disproportionate leverage over them when it comes to negotiating carriage agreements.

According to an intervention filed by the Independent Broadcast Group (IBG), the Commission’s decision on WildBrain’s application has direct implications for other independent discretionary services that rely on the Wholesale Code. IBG says that, in the first years after the introduction of the Let’s Talk TV framework in 2016, non-mandatory independent discretionary services have experienced a more than 20% decline in overall revenues, whereas discretionary services owned by vertically integrated companies have experienced a revenue increase.

“This points to the need for the Wholesale Code to be vigorously enforced – to ensure BDUs follow its plain meaning. If the Wholesale Code is not enforced it cannot meet its objectives of supporting a fair playing field and ensuring the continued diversity and innovation in the system represented by the independent sector,” read IBG’s intervention.