Supreme Court of Canada Declares Proposed CRTC “Value for Signal” Regime Ultra Vires

The Supreme Court of Canada has brought to an end a long-running debate concerning the jurisdiction of the Canadian Radio-television and Telecommunications Commission to establish a regime requiring cable companies to negotiate with and pay broadcasters for the retransmission of their broadcast signals.

On December 13, 2012, a 5-4 majority of the SCC ruled that such a regime would not only exceed the powers granted to the CRTC in the Broadcasting Act, but would directly conflict with specific provisions in the Copyright Act and would unlawfully create a new type of copyright. As a result, the SCC held that the CRTC did not have the jurisdiction to implement the regime.

In 2010, the CRTC sought to introduce a so-called “value for signal” regime whereby television broadcasters could choose to negotiate with broadcast distribution undertakings (“BDUs”) (such as cable and satellite companies) for compensation for the retransmission of their signals. Where compensation could not be agreed upon, the proposed regime gave broadcasters the right to prohibit retransmission of their signals, effectively “blacking out” their programs from being viewed by a BDU's subscribers.

During public consultations concerning the proposed value for signal regime, however, questions were raised concerning the CRTC's jurisdiction to implement such a regime. The BDUs claimed that a value for signal regime would impermissibly conflict with specific provisions in the Copyright Act.

The CRTC referred the question of whether it had jurisdiction to the Federal Court of Appeal.

In a decision rendered in February 2011, a majority of the Federal Court of Appeal concluded that the proposed regime was within the mandate conferred on the CRTC by the Broadcasting Act, and that it did not conflict with the Copyright Act. The BDUs sought leave to appeal to the Supreme Court of Canada and leave was granted. In determining that the proposed regime was ultra vires, Justice Marshall Rothstein, writing for the majority (joined by Chief Justice Beverley McLachlin and Justices Louis LeBel, Morris Fish, Michael Moldaver), found that:

(i) the CRTC's jurisdiction under the Broadcasting Act could not be interpreted as authorizing the proposed regime;

(ii) the Broadcasting Act had a primarily cultural aim, and although Parliament could be presumed to have given the CRTC the power to achieve its cultural objectives, the creation of exclusive control rights was too far removed from Parliament's intended core purposes and from the powers specifically granted to the CRTC under the Broadcasting Act;

(iii) even if jurisdiction to implement the proposed regime could be found within the Broadcasting Act considered in isolation, the regime must also be considered as part of the interrelated statutory scheme that includes the Broadcasting Act, the Copyright Act and the Telecommunications Act; and

(iv) where a conflict arises between the Copyright Act and subordinate legislation enacted by the CRTC, the Copyright Act must prevail.

In this case, the majority agreed with the BDUs that the CRTC's value for signal regime would create an impermissible conflict with the Copyright Act and, in particular, s. 21 and s. 31 which address, respectively, the rights of broadcasters in their signals and the retransmission of dramatic or artistic works carried in signals.

Justices Rosalie Abella and Thomas Cromwell (joined by Justices Marie Deschamps and Andromache Karakatsanis) dissented. They found that the value for signal regime was merely an extension of the current retransmission regime, and that nothing in the Copyright Act prevented the CRTC from enacting such a scheme.

The minority reasoned that the Broadcasting Act conferred broad powers on the CRTC to regulate and supervise the Canadian broadcasting system and all of its participants, including the BDUs. Because the proposed regime was linked to several of the policies in the Broadcasting Act, the minority found it to be within the CRTC's broad regulatory jurisdiction. The only remaining issue was whether “unavoidable conflict” with the Copyright Act invalidated this conclusion. In the minority's view, no such conflict existed, as neither s. 21 nor s. 31 of the Broadcasting Act exempted BDUs from any licensing requirements that the CRTC chose to impose.

Neil Finkelstein, Steven Mason and Daniel Glover of McCarthy Tétrault LLP represented the appellant Cogeco Cable Inc.

Gerald Kerr-Wilson and Ariel Thomas of Fasken Martineau DuMoulin LLP represented the appellants Rogers Communications Inc. and TELUS Communications Company.

Kent Thomson, James Doris, Sarah Weingarten and Maureen Armstrong of Davies Ward Phillips & Vineberg LLP represented the appellant Shaw Communications Inc.

Benjamin Zarnett, Robert Malcolmson, Peter Ruby, Julie Rosenthal and Monique McAlister of Goodmans LLP represented the respondents Bell Media Inc. (which was formerly CTV Globemedia Inc.), Newfoundland Broadcasting Co. Ltd. and V Interactions Inc.