Crude Oil ( ) Brent Crude ( ) Natural Gas ( ) S&P 500 ( ) PHLX Oil ( )

From BNN:

After years of complaints, television viewers who want to see flashy American Super Bowl ads are getting their way, as a federal regulator is promising to ban broadcasters from swapping in Canadian commercials during the big game.

Each year, the volume of complaints to the Canadian Radio-television and Telecommunications Commission (CRTC) swells around the Super Bowl. Viewers gripe that the multimillion-dollar ads aired in the U.S. for the football spectacular are replaced on Canadian TV sets with lower-budget local pitches promoting domestic shows and products.

No more.

Starting with the Super Bowl at the end of the 2016 NFL season (played in early 2017), and each year after that, broadcasters will be banned from using simultaneous substitution for the game, CRTC chairman Jean-Pierre Blais said in prepared remarks for a speech delivered Thursday morning in London, Ont. “Simsub,” as it is often called, allows networks such as CTV and City to swap their own signal and ads in place of an American feed, where the same show airs at the same time, generating substantial ad revenue.

The new ban applies only to Super Bowls, but it promises to have ripple effects across the broadcasting and advertising industries. The idea of wanting to watch commercials might seem laughable to some, but research has shown that in the U.S., some viewers tune in as much for the flashy advertising as the game itself.

That’s because they’re some of the most extravagantly produced ads all year. The $4.5-million (U.S.) advertisers reportedly paid this year for 30 seconds during the big spectacle is only part of it: much more is invested in celebrity cameos and resources devoted to standing out from the Super Bowl crowd.

Consumers do respond. Slightly more than half of Americans who plan to watch the Super Bowl “tune in as much for the commercials as for the game,” according to a 2011 Harris Interactive survey.

At a major hearing into the future of television last September, dubbed Let’s Talk TV, the CRTC mulled the idea of scrapping simsub entirely. But the practice allows broadcasters to make money from the rights they buy for a range of popular American shows, and “it’s unfortunately here to stay,” Mr. Blais said.

“The revenue it generates helps broadcasters create jobs and develop Canadian creative talent,” he said in his remarks. “In other words, it’s too intertwined to remove entirely without upsetting the existing business model.”

That will come as a relief to broadcasters and television distributors across the country, who estimated they would lose anywhere from $250-million to $450-million in annual revenue if the CRTC did away with simsub altogether.

Audiences have also complained of switching issues that put Canadian commercials out of sync with the American feed, which can mean an ad runs long and viewers miss a play from a sporting event. As a remedy, Mr. Blais announced that a Canadian broadcaster that cuts back to an NFL game too late, for example, “could be forced to pay rebates to viewers for its mistake.” And an over-the-air station that makes a similar mistake could lose its simsub privileges for a period of time.

“In this day and age when technology allows us to wear computers, put a Canadarm in space and land a satellite on a comet, I cannot believe that every broadcaster does not have the wherewithal to execute simsub flawlessly,” Mr. Blais said. “There will be no more sleeping at the switch.”

Simsub appears to have irked Mr. Blais for some time. A year ago, he wrote a letter to Rogers Communications Inc., chiding the company’s customer service staff for “simply passing blame onto the CRTC” when responding to complaints about simsub. At Let’s Talk TV, Rogers executive David Purdy apologized to the chairman, acknowledging that “we know that we’ve been offside in the past with some of the remarks made by some of our call centers.”

The impact of the new rules will be felt most acutely at CTV, the Bell Media-owned network that currently has Canadian rights to the Super Bowl. (Bell Media is owned by BCE Inc., which also owns 15 per cent of The Globe and Mail).

During last fall’s Let’s Talk TV hearing, Bell Media president Kevin Crull said that simsub generated some $40-million in revenue from CTV’s live events programming alone. He also said the Super Bowl – the biggest stage in North American television – is “essential to our business” because it allows Bell to promote other shows, including Canadian programs.

That could all change now. At the hearing, Mr. Crull suggested that without simsub to protect CTV’s ad revenues, it would have little reason to bid for Super Bowl rights in the future.

“If I broadcast the Super Bowl and it was also broadcast on NBC, I would have very few viewers,” he told the CRTC.

There is good reason to believe that, given the choice, a large number of Canadian viewers will opt for a U.S. feed of the game: there is pent-up demand here. According to Google Inc., Canadians seek out American commercials online: there have been more searches for “super bowl commercials” in Canada than in the U.S. for five years running.

Mr. Blais also used his speech to announce two other decisions:

  • Over-the-air (OTA) signals, which provide a dwindling but vocal segment of Canadians free access to between five and 15 channels using a digital antenna, will continue to be supported as they have been. Some broadcasters, including Bell and the CBC, wanted permission to shut down their OTA transmitters and charge distributors a fee to carry the channels, saying the business model for local TV is suffering. The CRTC considered the idea but disagreed, saying Canadians had overwhelmingly responded that it is too soon for such a step. Mr. Blais decried recent budget cuts to local television stations, noting that “an informed citizenry cannot be the sacrificial offering on the altar of corporate profits or deficit reduction.”
  • The CRTC sided with complaints that Bell and Vidéotron, the television arm of Quebcor Inc., were giving their customers “undue preferences or advantages” by allowing subscribers to watch television through mobile TV apps without it counting against users’ wireless data caps. The regulator ordered that the practice be stopped, affirming its support for “an open Internet.”

But the changes to Super Bowl broadcasts will undoubtedly draw considerable attention.

CTV charged between $170,000 and $200,000 for 30 seconds of airtime during the Super Bowl this year, depending on when advertisers bought in, according to sources. That’s up slightly from roughly $160,000 last year. And it is a significant premium even on the prices for ads in other shows – even big-event programming such as the Academy Awards – because of the ratings the game draws. Roughly 8-million people on average tuned in last year in Canada, making it the most-watched program of the year.

Decisions on a number of other issues arising from Let’s Talk TV are expected in the coming months.


In response to the CRTC’s announcements, Bell Media, the country’s biggest media company and the owner of BNN, put out the following statement via email:

“We are extremely disappointed of course. The government is damaging the future of local television in Canada while rewarding U.S. corporations over home-grown companies. Sure viewers will get to watch Wells Fargo ads in the Super Bowl instead of RBC, or Target and Wal-Mart instead of Canadian Tire. But those advertising dollars will go directly to American companies instead of Canadian content creators and broadcasters. Canadian companies will also have a diminished opportunity to market their products to Canadians watching U.S. ads for products they probably can’t buy. It’s a troubling approach for a Canadian regulator to take.”

“The Bell Mobile TV decision is a shock. Bell has led the world in mobile TV and we’ve worked to keep the price low. More than 1.5 million Bell mobile TV subscribers across Canada responded to that kind of innovation and affordability. There’s a hint here that the government believes Bell Mobile TV delivers only Bell Media content. They should know we offer mobile TV content from all of Canada’s leading broadcasters in English and French. Bell Media content accounts for only about 20% of Bell Media TV programming.”