Quebecor Media Inc.
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Quebecor Media Inc.

July 24, 2012 14:57 ET

Videotron and TVA Lawsuits Against Bell TV: The Superior Court Condemns Bell in Connection with the Piracy of its TV Distribution System

MONTREAL, QUEBEC--(Marketwire - July 24, 2012) - 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 Péladeau, 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. Péladeau.

Bell puts forth considerable efforts to obtain a virtual monopoly of French specialized channels through the acquisition of Astral Média, 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. Péladeau.

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 Québec, 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 Vidéotron 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™.

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