Broadcaster

Star Choice "seeks to avoid regulatory and contractual obligations"

10/14/2003

OTTAWA - In its very best attempt to perhaps be diplomatic, the Canadian Association of Broadcasters said in its submissions to the CRTC over DTH license renewal hearings, "the CAB and its members have generally had a more positive relationship with ExpressVu that with its competitor Star Choice."

In fact, the relationships experienced between Canadian broadcasters and specialty service operators with the Shaw Communications-owned Star Choice have sometimes been quite testy. The CAB has therefore asked that the Commission renew Star Choice's license for just three years, rather than the full seven year term.

In a September 16th letter to the Commission, the CAB bypassed secretary general Diane Rhéaume altogether and sent a letter directly to CRTC chairman Charles Dalfen over Star Choice's "abuse of administration process."

A July 16th decision from the Commission (2003-258) said that Star Choice must add certain small market broadcasters to its lineup by no later than December 31st, 2003.

Star Choice has since applied for a delay to that portion of the decision, until the launch of its new satellite, Anik F2, sometime in 2004.

The CAB wants immediate Commission action on Star Choice's request - it wants it denied - saying that "in requesting an amendment to a condition of licence that was imposed less than two months ago, Star Choice is using the Commission's licence renewal proceeding to delay its obligations to effect the distribution of small market, independently owned television stations pursuant to Decision 2003- 258," says the CAB letter.

"Given that the Commission will only hear Star Choice's application beginning October 20, 2003, and assuming it will only be in a position to render a decision by January 2004 at the earliest, Star Choice will have succeeded in delaying the launch of small market independently owned stations regardless of the Commission's final determination of the issue."

As well, in its interventions sent to the Commission, the CAB is so upset by the conduct of Star Choice during its last license term, it has requested a three-year, rather than the usual seven-year license term for the DTH company.

"The CAB is extremely concerned with many of the actions of Star Choice over its first licence term," reads its submission. "On a number of occasions during the first licence term, Star Choice has sought to avoid its regulatory and contractual obligations."

Specifically, the CAB cites the complete lack of structural separation it sees between Shaw Cable and Star Choice. Under Star Choice's condition of license, there is supposed to be some corporate insulation between the two large BDUs.

"The most recent version of the conditions of licence addressing the matter of structural separation for Star Choice is contained in Decision CRTC 2002-84 (Decision 2002-84). These conditions of licence state that Star Choice must '… maintain independent sales, marketing and customer service functions and staff for its DTH undertaking.,'" reads the CAB intervention. "They also direct the DTH operator to '… require all sales, marketing and customer service staff, as well as all staff involved with the negotiation and/or administration of affiliation agreements with programming services, to comply with written procedures established by the licensee designed to ensure that any confidential information… pertaining either to product or service offerings of the DTH undertaking or to its affiliation agreements with programmers will remain confidential.'"

According to the CAB, Star Choice has not adhered to these rules, pointing out in its submission that "Canadian programmers are still required to negotiate carriage for both Shaw Cable and Star Choice with the same individual; Star Choice has unilaterally adjusted wholesale fees to match the fees paid by Shaw Cable; Canadian programmers are told that Star Choice decisions must be approved by the top two senior Shaw executives; and Star Choice proposals are provided on Shaw Cable letterhead."

Another bone of contention for the CAB was its fruitless negotiations with Star Choice when it came to agreeing on payment to local broadcasters when satellite companies add a second set of U.S. 4+1 signals.

"In 2000 the CAB wished to obtain from Star Choice subscriber information that would be given to an independent third-party auditor on a confidential basis in order to help effect payment of monies received from Star Choice for the carriage of a second set of US 4+1 network signals. It took the CAB almost one year to conclude an understanding under which such information would be provided. In contrast, the CAB was able to negotiate a similar undertaking with ExpressVu almost immediately," reads the CAB's TV board intervention.

"The CAB made every effort over a fifteen month period to reach a new agreement with Star Choice that would avoid the need for program deletion. However, without explanation, Star Choice withdrew from the negotiation process in July 2002. The CAB continued its good faith negotiations with ExpressVu and was successful in concluding an agreement the following month."

Without such an agreement, broadcasters are within their rights under the regs to demand program deletions from that extra set of 4+1s.

Star Choice would not sign the same agreement, says the CAB, "leaving television broadcasters with no alternative but to request program deletion in accordance with the Broadcasting Distribution Regulations," says the CAB submission. "Star Choice did not respond to these legitimate requests, and in fact advised television broadcasters on October 8, 2002 that it '…will not carry out the deletions requested.'"

The CAB has also taken issue with the five high definition channels which Star Choice has created for its customers. Star Choice sources content and puts together an HDTV package on five different channels - and it's a practice in the CAB's view that makes the DTH company an unlicensed programming undertaking.

"The CAB submits that Star Choice is violating the exclusive rights that the broadcaster has acquired to exhibit that programming," says the CAB submission, and "submits that the Commission should direct Star Choice to discontinue its actions with respect to the creation of dedicated HDTV channels.

During the hearings beginning October 20th, CRTC Commissioners may have some interesting questions for Star Choice executives.

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