Following legal proceedings that stretched out over seven years,
Quebecor Media Inc. welcomes with great satisfaction yesterday's
Quebec Superior Court findings blaming Bell TV (formerly Bell
ExpressVu) in judgments stemming from lawsuits brought on by
Videotron Ltd. and TVA Group Inc. charging that Bell TV had failed
to protect its satellite television distribution signal against
piracy.
"We are glad to see the Superior Court condemn Bell for
resorting to illegal means that weaken its competitors and for
having failed to meet its obligations to protect rather than
undermine the integrity of the Quebec and Canadian broadcasting
sector. Unfortunately, we once again find that Bell is willing to
use any means necessary to reach its ends and put more money in its
pocket, regardless of the good governance and corporate social
responsibilities that behoove a company of Bell's size. It appears
inconceivable that a company that benefited for decades from being
a monopoly could have resorted to practices so detrimental to the
rest of the broadcasting industry as to be condemned by law," said
Pierre Karl Peladeau, president and CEO of Quebecor, Quebecor Media
and Sun Media Corporation.
In judgments in two connected cases, the Honourable Justice Joel
A. Silcoff ordered Bell TV to pay close to a million dollars to
Videotron and TVA Group after concluding that Bell TV committed a
serious fault by not taking the appropriate measures at the
opportune time to prevent the illegal decoding of its satellite
television signals, even though it knew the extent of the piracy of
its system and had the required technology at its disposal to end
it:
Excerpts from the judgment read as follows:
(716) For the foregoing reasons, the Court concludes that
BEV((1)) : (i) was fully aware of the serious breaches of its
existing CAS((2)) and the consequent damages of such breaches to
itself and others, (ii) had the available technological and
administrative means available to address this problem and (iii)
failed to act in a timely manner to rectify the situation.
(717) Its efforts to address the serious breaches of its CAS in
an effective and timely fashion were ineffective and neither
prudent nor reasonable.
(726) It cannot be disputed that BEV was well aware that this
was happening and that damages were being caused as a direct and
immediate consequence of its failure to adequately secure its
signal. Initially, it chose to ignore the gravity of the problem.
It then unduly delayed taking appropriate measures to rectify the
situation until well into May 2004 when final approval of the
necessary funding to perform the card swap was obtained. The full
swap-out was only completed in July 2005 (...).
(1) Bell ExpressVu
(2) Conditional Access System: System giving conditional access
to TV signals carried by Bell ExpressVu devices.
In its ruling, the Superior Court also clearly establishes that
senior Bell managers knowingly communicated false data to the CRTC
related the piracy rate of its TV distribution system and the
efforts to end it, while knowing full well the true extent of the
problem.
Excerpts from the judgment read as follows:
(392) Frank((1)) "does not recall" ever having seen the January
13, 2003 Report on Counterpiracy. It defies all logic and
credibility that he would have been kept in the dark as to the
findings and recommendations of this critical analysis, especially
in light of his professed openness and transparency in reporting on
this issue to the CRTC.
(...)
(395) Frank testified that in the preparation of his various
reports and letters addressed to the CRTC he worked in a "collegial
manner" with those responsible and knowledgeable such as
Snazel((2)), Gavaghan((3)), Casavant((4)), Ishankov((5)) and
others. Before releasing these reports and letters, those
responsible for the relevant information "signed off" on the
information emanating from their particular department or area of
responsibility.
(1) Chris Frank, Vice-President of Regulatory and Government
Affairs, Bell and Bell ExpressVu
(2) Terry Snazel, Vice-President of Technology, Bell
ExpressVu
(3) Ian Gavaghan, Vice-President and General Counsel, Bell
ExpressVu
(4) Jessica Casavant, Director of Systems Integration and
Digital Technology, Bell ExpressVu
(5) Alexander Ishankov, Manager of the system administration -
Conditional Access Group, Bell ExpressVu
"We must deplore such a lack of respect towards the laws and
institutions that are supposed to protect our broadcasting system.
We wish for the CRTC to look into this matter and to take all
appropriate measures under the circumstances," added Mr.
Peladeau.
Bell puts forth considerable efforts to obtain a virtual
monopoly of French specialized channels through the acquisition of
Astral Media, that would give it 8 of the 10 most popular French
specialized and pay TV channels, as well as 67% of the audience and
80% of ad revenues in this market. In the Canadian market, in both
languages, over 41% of monthly subscription fees paid by
specialized channel viewers would go to Bell, as would 45% of these
channels' advertising revenues. Of the 51 specialized and pay
channels that would be controlled by Bell as a result of this
transaction, 28 are genre-protected and 30 are must-carry channels
in their respective markets. The situation is equally problematic
in radio, where Bell would own 117 radio stations across the
country, while also exerting total control over all specialized
music television channels.
"We call on the CRTC to refuse to approve this transaction on
the basis that Bell's business practices do not meet the ethical
standards expected from a company that has the privilege to exploit
broadcasting services through licences granted by the CRTC for the
benefit of all Canadians. If such practices were to go
unsanctioned, Canadians' slowly eroding confidence in its
regulatory authorities would only be further undermined. It is
essential for anyone concerned with a healthy and competitive TV
industry to take a look at these judgments and oppose Bell's
takeover of Astral. Only by staying vigilant and by denouncing
Bell's unacceptable practices by all possible means will we be able
to prevent it from recreating the monopolistic model it relied on
for so long," concluded Mr. Peladeau.
A full version of the Superior Court judgment can be found in
the Quebecor Fact Check section of our website at
www.quebecor.com.
About Quebecor Media Inc.
Quebecor Media Inc. is a subsidiary of Quebecor Inc.
(TSX:QBR.A)(TSX:QBR.B), one of Canada's most important holding
company operating in the telecommunications and media businesses.
With more than 16,000 employees, Quebecor Media Inc., through its
subsidiary Videotron Ltd., is an integrated communications company
engaged in cable television, interactive multimedia development,
Internet access services, cable telephone services and mobile
telephone services. Through Sun Media Corporation, Quebecor Media
Inc. is the largest publisher of newspapers in Canada. It also
operates Canoe.ca and its network of English and French language
Internet properties in Canada. In the broadcasting sector, Quebecor
Media Inc. operates, through TVA Group Inc., the number one French
language general interest television network in Quebec, a number of
specialty channels and the SUN News English language channel.
Another subsidiary of Quebecor Media Inc., Nurun Inc., is a major
interactive technologies and communications agency with offices in
Canada, the United States, Europe and Asia. Quebecor Media Inc. is
also active in magazine publishing (TVA Publishing Inc.), book
publishing and distribution (Sogides Group Inc. and CEC Publishing
Inc.), the production, distribution and retailing of cultural
products (Archambault Group Inc. and TVA Films), video game
development (BlooBuzz Studios, L.P.), DVD, Blu-ray disc and
videogame rental and retailing (Le SuperClub Videotron Ltd), the
printing and distribution of regional newspapers and flyers
(Quebecor Media Printing Inc. and Quebecor Media Network Inc.),
news content production and distribution (QMI Agency),
multiplatform advertising solutions (QMI Sales) and the publishing
of printed and online directories, through Quebecor
MediaPages(TM).
Contacts: J. Serge Sasseville Senior Vice President, Corporate
and Institutional Affairs Quebecor Media Inc.
514.380.1864serge.sasseville@quebecor.com
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