20 bogus arguments about the CRTC and Super Bowl ads

With less than three weeks to go until Super Bowl LI, the rhetoric is heating up about a decision made by the CRTC two years ago to end simultaneous substitution during the Super Bowl, now that it’s about to finally come into effect.

There’s good reason for this. Simultaneous substitution is worth $250 million to the Canadian television industry, according to one estimate, and substitution for the Super Bowl alone — the most watched program on Canadian TV every year with an average around 7 million (plus another 1 million on RDS) — is worth $18 million a year to Bell Media, which owns the Canadian rights through 2019. There’s a huge financial interest for Bell to keep fighting this.

And so the decision is facing an appeal by Bell Media, though the court declined to stay the decision in the meantime, so it remains in force pending a decision.

Ever more desperate, Bell Media, the NFL and other allies in the fight appealed to the government directly, lobbying them to engage in creative manoeuvres to overrule the CRTC. The government appears disinterested in stepping in to overturn a populist decision by a supposedly arm’s-length regulator.

In the arguments for and against the decision, from interest groups, newspaper columnists and others, there have been a lot of good points and a lot of poor ones made. Those who want to oversimplify this issue have taken plenty of logical short cuts that can lead casual observers to incorrect conclusions.

Here are some of the arguments used by both sides that I’ve heard over the past few weeks (in some cases I’ve included links to those who have used them or implied them), and why I think those arguments are invalid.

1. Only 100 Canadians are against simultaneous substitution during the Super Bowl

(Mirko Bibic, Terence Corcoran, Bell Media, Kevin O’Leary). It’s brought up by several opponents to the CRTC decision, usually in a mocking way. This number is based on an estimate, which in turn is based on the number of formal complaints to the CRTC about simultaneous substitution, in 2013. The commission said it received 458 simsub complaints that year, and about 20 per cent were about substitution during the Super Bowl. The idea that only 100 Canadians want access to U.S. ads is ludicrous. A look at the transcript of public forum comments from the CRTC’s Let’s Talk TV hearing makes it clear opposition to simsub is much higher than that. Simultaneous substitution is among the most common complaints to the CRTC (at least for things within its jurisdiction) and those complaints go up during the Super Bowl.

Unfortunately we don’t know how many Canadians are against simsub or in favour of the CRTC’s decision, because there has not been any polling done. The closest thing we have is a public survey that shows about half of Canadians would choose simsub over two worse options: paying more for U.S. feeds, or blacking out U.S. feeds when carrying the same programming.

2. The CRTC has ordered CTV to broadcast U.S. ads

(Terence Corcoran, Deadspin). This tends to make it into headlines more than the opinion pieces themselves, but it leads to Canadians thinking that the commission is forcing the U.S. ads onto Canadians. In reality, the decision allows Canadians the choice of feeds: An American feed with U.S. commercials, or a Canadian feed with CTV’s ads.

3. Canadians have a right to see U.S. ads without censorship

Freedom of speech doesn’t mean freedom of convenience. The ads are on YouTube if you want to watch them (assuming the U.S. advertisers choose to put them there, which they almost universally do). And if a Canadian broadcaster wants to air them, they’re free to do so. But freedom of speech doesn’t trump copyright law.

4. This decision violates copyright law

It doesn’t. Section 31 (2) of the Copyright Act makes a specific exemption for retransmission that respects the Broadcasting Act.

More fundamentally, the framework that allows U.S. signals to be rebroadcast in Canada is what goes against the spirit of copyright in Canada. The U.S. network stations (ABC, CBS, NBC, Fox and PBS) that are rebroadcast here have no control over their distribution, and don’t even give permission for it (some have tried unsuccessfully to revoke it). The laws allowing their distribution come from the early days of cable TV, when cable operators captured U.S. stations over the air and redistributed them. It continues to exist, even though few other countries would allow such a similar system, because Canadian consumers would protest if anyone tried to get rid of it.

5. Canadians shouldn’t have access to U.S. ads because they’re irrelevant and don’t have to comply with our laws

(Bell MediaAssociation of Canadian Advertisers). There are several problems with this argument. First of all, Canadians have plenty of legal ways to access U.S. ads. Not only do they get access to them online, or through ads that are integrated into programming, but several American television channels are authorized for distribution in Canada, including CNN, A&E and Spike. There has been no effort from the industry recently to try to regulate what ads can appear on those channels.

6. This decision is unnecessary because Canadians can watch the U.S. ads on YouTube (some even before the game)

It’s true, but it’s also irrelevant. A lot of Canadians watch the Super Bowl in gatherings, and it’s an inconvenience for them to go to a computer at each commercial break to play ads on YouTube. And more fundamentally, the existence of a workaround does not make the problem non-existent.

7. The government should not be allowed to interfere in a private contract

(Bell Media legal argument). The CRTC has not nullified or voided any part of the contract (which we have not seen because it is not public). But if the contract works under the assumption of simultaneous substitution, that’s just that, an assumption. Neither the government nor the CRTC are parties to an agreement between Bell Media and the NFL, and therefore should not have to be bound by its terms. Similarly, the CRTC shouldn’t be required to wait until the existing agreement is over. Allowing this as a precedent would encourage contracts that have infinite terms or find other ways to bind the government unfairly. As the CRTC states in its decision: “no one has a vested right in the continuance of a regulatory regime as it exists at a given moment.”

8. If only CTV offered added value this wouldn’t be an issue

There are major sporting events where both Canadian and American feeds are available, and Canadians generally choose the former. They include the NHL Stanley Cup Final and the Olympics. But those are generally the exceptions, either because it’s one of the few sports where the Canadian network offers better coverage, or because it’s a sport where Canadians are participating and we prefer a home-grown perspective.

This doesn’t translate to the Super Bowl, where no Canadian teams participate and where CTV/TSN doesn’t have the means to create its own broadcast — it certainly wouldn’t be able to create one that rivalled the U.S. version. So stuck with the U.S. game feed and battling against the popular U.S. commercials, CTV doesn’t have much room for added value. Bell Media tried encouraging Canadian advertisers to make big-budget Super Bowl ads that would be exclusive to the Canadian feed, and it got some takers, but it didn’t succeed well enough to repeat the experiment. The additional value to a few Canada-exclusive ads isn’t enough to counter the loss from U.S.-only ads people want to see.

9. The CRTC made this decision without warning

The commission made clear during the Let’s Talk TV proceeding that simultaneous substitution was on the table, and that it was considering either eliminating it entirely or just getting rid of it during live events (live sports and award shows, mainly) because those cause more problems. In a working document released in 2014, the commission proposed those two options and asked people to comment on them. And the possibility of ending simsub for the Super Bowl was reported in the media at the time.

10. This is a power trip by CRTC chairman Jean-Pierre Blais

(Howard Law) Blais gets a lot of credit and blame for the actions of the commission. But when it comes to making decisions on policy, he has only a single vote. In the Let’s Talk TV case that led to a policy against simsub during the Super Bowl, there was a panel of five commissioners: Blais, vice-chair of broadcasting Tom Pentefountas, and commissioners Candice Molnar, Stephen Simpson and Yves Dupras. All of them had a vote. And though we don’t know what happened in their private discussions, there were no dissenting opinions in the decisions later reached, which means all five of them either agreed with the decisions or didn’t disagree strongly enough to want to voice that opinion.

11. Broadcasters are hypocrites for calling for more CRTC intervention while complaining about regulations

(Michael Geist). Ask Canada’s major media and telecom companies whether they think the CRTC should cease to exist, and all of them will say no. They know very well that a regulator is necessary to ensure an even playing field, both in telecommunications and in broadcasting. There are plenty of areas where they want more flexibility, like with specialty television channels or commercial radio formats, but that doesn’t mean they want to go laissez-faire free-market on everything. They all know the regulated system is what fills their bank accounts. One thing they generally don’t like, though, is uncertainty. Especially for things they invest a lot of money in, like wired and wireless networks, and big-money rights contracts.

12. The CRTC made this decision because it doesn’t like boring Canadian Super Bowl ads

(Colby Cosh). The decision says nothing of the sort. It relies on comments received from the public, not the personal opinions of the commissioners. Then again, commissioners are human, but I don’t think newspaper columnists have any special insight into their personal opinions on the subject.

13. Simultaneous substitution is bad for Canada’s broadcasting system

A favourite of the anti-sim-sub crowd is the fantasy that, removed from the chains of simultaneous substitution, CTV and other Canadian networks would thrive by producing their own original programming. The fantasy has no basis in reality. Canadian networks don’t have anything close to the budget of American networks, and so their primetime comedies and dramas won’t get anywhere near the same budget or revenue. (Plus they’d have to compete with those same hit U.S. shows that have the benefit of a much larger promotional budget.) And without the revenue from selling ads off foreign programming, the Canadian networks would be well in the red. Even with all the government mandates, tax credits and direct funding, Canadian television generally isn’t profitable.

Yes, Canadian networks would be free to create their schedule how they want instead of being handcuffed by the placement of their acquired foreign shows, but there’s still enough room on their schedules for Canadian content. Once again, the amount of money lost in the system because Canadians aren’t watching Canadian channels would be much higher than any potential gains.

14. If only Canada’s broadcast laws were more like American laws we wouldn’t be stuck in this mess

If you think things are better in the U.S., you might not be paying attention. U.S. stations have fee-for-carriage, where cable companies have to pay money to carry local stations. They have contract disputes that lead to blackouts, even for local stations. Such blackouts aren’t allowed in Canada thanks to CRTC rules. There’s even a similar distant-signal scheme to protect local territorial rights to a network program. You don’t have that much more freedom in the U.S. than here.

15. Everything worked fine with simultaneous substitution and the CRTC is ruining it

Simultaneous substitution is a band-aid solution and comes with a bunch of problems. It doesn’t cover people who receive U.S. stations over the air. It doesn’t cover people who live outside of markets with over-the-air stations (local stations can request simsub only for the area they serve, outside of that it doesn’t apply). It doesn’t cover specialty channels. It doesn’t cover ads that are part of programming, including things like product integration or promo announcements made by announcers during a game.

It’s also worth noting one of the reasons that the CRTC made this exception: Canadians told them that the Super Bowl commercials are part of the programming. Simsub rules work under the assumption that programming and commercials are separate, mutually exclusive things. The popularity of Super Bowl ads puts that into question, and the commission came down on the side of allowing that programming through without forced substitution. It wrote: “by not being able to view the U.S. commercials, Canadians are deprived of an integral element of the event.”

16. The CRTC should wait until after the federal government’s review of Canadian content before making these kinds of changes

(Unifor). This argument also came up in a recent proceeding related to major broadcasters’ licence renewals. As the chair of the commission said, the CRTC can’t simply stop doing its job and wait until a political consultation is complete.

The Super Bowl ad decision will cost millions of dollars to the Canadian broadcasting system. But it’s a decision that will give more choice to Canadians that have been demanding it. It is neither obviously a good decision nor obviously a bad one. Let’s acknowledge that as we debate it.

17. We pay to subscribe to U.S. networks, so we should get them unfiltered

Despite how your cable TV company charges you for access to channels, the U.S. stations get no money from you in exchange for your right to watch them. The cable company doesn’t even need their permission to retransmit them. The fact that we get access to them at all is because of several exceptions to copyright and broadcasting laws that specifically allow them, and those same laws impose things like simultaneous substitution.

18. This is a slippery slope that will lead to the end of simultaneous substitution

Simsub may end up eventually going away for several reasons, but this decision by itself won’t be one of them. One of the key justifications for the decision by the CRTC here is that for the Super Bowl, the ads form part of the programming. No other event has anything close to the same status when it comes to the ads. If the CRTC wants to end simsub for the Oscars, or primetime dramas, or daytime programming, either some other event needs to develop the same public demand to watch the commercials or some other reasoning needs to be developed.

19. This decision violates NAFTA

(Terence Corcoran) NAFTA says nothing about simultaneous substitution. Television broadcasting is covered under “cultural industries” which according to Annex 2106 is subject to the rules in place under the earlier Canada-U.S. Free Trade Agreement. Article 2006 of the CUSFTA has provisions about rebroadcast of television programming that require copyright owner’s consent, but in the case of free-to-air programming (such as the main networks) they apply only to non-simultaneous or altered transmissions. Nothing in either agreement prohibits cable companies from offering a live, non-altered Fox feed, or prohibits the CRTC from regulating it as it sees fit (subject, of course, to other Canadian laws like the Broadcasting Act).

20. The NFL can make up its lost revenue by charging the U.S. networks more because ads on U.S. border stations will cost more

Maybe, but the big problem with this argument is that Canada and the United States have different systems for measuring audience, and cross-border viewing isn’t measured directly. Plus, companies like Verizon, T-Mobile and private health insurance providers have no interest in paying more to reach Canadians.

Other analysis worth reading

7 thoughts on “20 bogus arguments about the CRTC and Super Bowl ads

  1. Ron

    I avoid all the BS brought on by Bell Media and the CRTC. On Super bowl Sunday I get out my digital antenna and pick up the US feed from Plattsburgh. I have been doing this for years and my guests really appreciate it.

    Reply
  2. dilbert

    “A favourite of the anti-sim-sub crowd is the fantasy that, removed from the chains of simultaneous substitution, CTV and other Canadian networks would thrive by producing their own original programming. ”

    Sorry, gotta throw a flag on the play, 10 yard penalty for “creation of a strawman argument where none is needed”.

    The problems of business end of simsub is pretty simple: The cost of the programming is in no small part set by the existence of simsub itself. Bell pays a significantly higher price for American programming because it can simsub and get all of the audience. The downside is pretty much all of the income generated in this manner ends up getting shipping off to the US, and does not stay in Canada. At best, Bell (and other broadcasters) extract a slim margin.

    The bad side is that the income is advertising dollars. That means Canadian companies are paying for ads which are then used to feed US companies. The outflow of money is significant.

    Remember that Bell and the other companies pushed the CRTC hard to allow them to add extra ad time into every show (and still consider it simsub) so that they can afford to pay for the programming. That is really an insane situation.

    Ending simsub would (of course) significantly change the landscape. One thing for sure, the Canadian channels would suddenly have to compete on “like for like” basis with the US channels, and not be able to chop up programming, remove next episode trailers, jam in more ads, and generally offer an inferior product anymore. They would not have an instant audience just by writing a check to a US network. They would instead have to show that their product (or their presentation of the same product) is in some manner better. Better picture quality? Better time (show it earlier, later, or on an alternate day)? Incorporate social media?

    The networks wouldn’t thrive doing anything if they continue to offer the second rate products that they offer now. People want to end simsub because they are tired of not getting the whole show, get bombarded by the same three CTV ads over and over again, putting up with things that end too quickly, get chopped up, and may end before the end of the show.

    If the networks don’t thrive, who really cares? Honestly the idea of “Canadian” content is a joke when the system runs almost entirely on simsub content from the US. If the point of having Canadian networks is to serve Canadians in some sort of unique way, and they are unable to do that, then what is the point? We can receive the US channels and watch them and get all of the same things minus the Canadian news – for which we have the CBC.

    Time for the networks to buck up and accept that their gravy train is coming into the final station and after that, they are going to have to find some other way move forward.

    Reply
  3. Richard G

    My issue is the hypocrisy of the CRTC is choosing to revoke simulcast for just this single instance . If it is a bad idea ,fine ,revoke it . If it’s fine ,keep it . Just don’t be a fraud by picking this one instance to show how tough you can be on Bell .

    Reply
    1. dilbert

      The Super Bowl is a high profile test of sorts. The CRTC is looking to see the public reaction, and also to see what the true effects are on CTV when it comes to ad dollars and the profitability of the whole situation. Enough Canadians were willing to spend the money to get an OTA antenna working to catch the Super Bowl from the US, or willing to go to a bar or similar that offered the “US” version. The CRTC is a slow, cumbersome, and often stupid organization, but even they realized that the public has been rising up against the implications of sim-sub.

      My guess is that the CRTC will move at some point in the next 12 months to set up a timetable to wean the Canadian networks off of simsub and get them back to a more reasonable business model in serving Canadians.

      Reply
      1. Fagstein Post author

        My guess is that the CRTC will move at some point in the next 12 months to set up a timetable to wean the Canadian networks off of simsub

        My guess is that won’t happen. The CRTC just completed a long review of TV policy and isn’t about to jump into it again so quickly.

        Reply
  4. Angry Old White Guy

    The Super Bowl is a TV show. It is a “piece” of intellectual property – copyright belongs to the National Football League. They’ve licensed their piece of intellectual property in Canada, under pre-existing laws. Under international copyright laws the Superbowl is no different than Saturday Night Live, This is Us, The Big Bang Theory, or any other (copyrighted) sporting event. How then can a gov’t agency decide that hundreds of pieces of intellectual property merit copyright protection, via sim sub, while only one (Super Bowl) does not. That’s the “bogus” argument of the CRTC. And to be frank there was no transparent public (legal) process to revoke the copyright protection under simsub. CRTC Chair Blais and his colleagues changed the law because of less than 100 letters…mainly written by people who did not have the faintest idea of what the law is…or how copyright protects owners of intellectual property. Besides Simsub was fought for by the Mulroney Gov’t and enshrined in the Free Trade Act and NAFTA and it’s one of the rules of the road that everyone in the broadcasting business and production business adheres to. If you want to change the rules, then you go through a proper legal process. That was not followed in the present case.. The “inconvenience to football viewers” argument is of no legal merit. Whether you like or hate Bell, the larger issue at stake is the consistent treatment of intellectual property.

    Reply
    1. Fagstein Post author

      How then can a gov’t agency decide that hundreds of pieces of intellectual property merit copyright protection, via sim sub, while only one (Super Bowl) does not.

      Because that’s what the law says. If the law didn’t provide a specific exemption for it, NBC, CBS, ABC and Fox would not be carried on Canadian TV providers at all.

      Besides Simsub was fought for by the Mulroney Gov’t and enshrined in the Free Trade Act and NAFTA and it’s one of the rules of the road that everyone in the broadcasting business and production business adheres to.

      It was actually enshrined in the Canada-U.S. Free Trade Agreement and then carried over into NAFTA. But the agreement’s text doesn’t require simultaneous substitution. It only restricts the altered or non-simultaneous retransmission of cross-border signals that were originally free over the air. Rebroadcasting Super Bowl commercials doesn’t apply so long as the Super Bowl is on a free-to-air network. And in any case, NAFTA binds the government, not the CRTC directly.

      Reply

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