It’s a decision that surprises me somewhat, though it’s consistent with the more populist pro-consumer approach taken by chairman Jean-Pierre Blais: simultaneous substitution, the rule that allows Canadian TV stations to force cable companies to replace U.S. network feeds with their own when they air the same program simultaneously, will be eliminated — only for the Super Bowl, and only as of 2017.
It’s weird to make an exception for a specific event, but the Super Bowl really is an exception. It’s the only time during the year when people actually want to watch the U.S. ads, and every year it’s the most common complaint the commission gets from consumers.
But this decision comes at a cost. Bell Media pays big money for NFL rights. We don’t know how much, or how long those rights are for (it was a “multi-year” deal signed in 2013), but we do know that the Super Bowl had 7.3 million viewers on CTV last year, and the Globe and Mail says the network can charge up to $200,000 for a 30-second spot during the game. With about 50 minutes of commercial time available, that’s several million dollars in revenue at stake. (UPDATE: Bell puts it at about $20 million for each year until its contract runs out in 2019.)
It’s hard to say what the fallout of this will be. Bell Media buys NFL rights as a package, so it’s not as simple as saying they’ll just give up rights to the Super Bowl. And the rest of the season, including the January playoffs, are still subject to substitution, and that still means a lot of money for the network.
Some people have suggested that CTV could get creative as a way of keeping viewers. Offering value-added content, or getting Canadian advertisers to improve their ads. The network has certainly tried the latter, but the economics just don’t work in its favour. A national Super Bowl ad in the U.S. costs 20 times as much as it does in Canada, which means advertisers’ budgets are 20 times higher. And as for value-added content, CTV can’t compete with the big U.S. networks. Plus, this whole exemption is so that we can watch the U.S. ads. How does CTV show the game and the U.S. ads and find space for its own advertising without cutting anything off?
Medium-term, it will be interesting to see how this changes the economics of NFL rights. Will Bell get a discount on its next deal (or does it have a clause that gives it a discount on this deal if it extends beyond 2016)? Will the U.S. network broadcasting future Super Bowls have to pay more to the NFL because their ads make it into Canada now? And will that result in higher rates on the U.S. broadcast?
Or will any of this even matter in a few years when we stop watching linear TV the way we used to?
Quality control — and red tape
For the rest of the year, the CRTC decided it would put in place measures to punish broadcasters and providers who screw up substitution, resulting in Canadians missing programming. We don’t care about the U.S. ads during these times, but we do care if Saturday Night Live comes back late or the Oscars cut out early.
Blais said the commission would adopt “a zero-tolerance approach to substantial mistakes” which sounds like an oxymoron. Broadcasters who make mistakes could lose the rights to substitute programs in the future. Distributors who make mistakes would be forced to provide rebates to customers.
Those both sound great, but how do you manage such a system? The CRTC suggests it would be done through its usual complaint resolution process:
To ensure procedural fairness to all broadcasters and BDUs, the Commission’s findings on such matters will be determined on a case-by-case basis and in the context of a process during which parties will have an opportunity to present any explanation for the errors, including whether the errors occurred despite the exercising of due diligence by a broadcasting undertaking.
In other words, if you lose 30 seconds of a Saturday Night Live sketch, you’ll have to complain to the CRTC, who will then launch a proceeding asking the two sides for comment. The broadcaster and the distributor will proceed to blame each other, and a few months later issue a decision that might result in three cents getting deducted from your next cable bill.
This sounds like an awful lot of red tape and extra work for everyone involved.
In its other decision on local television today, the CRTC said it would not allow local TV stations to shut down their over-the-air transmitters while retaining all the privileges of local stations, such as simultaneous substitution and local advertising. To emphasize the point, Blais gave his speech in front of large TV receiving antennas that consumers can use (but most are unaware of) to get local stations for free.
Beyond a takedown of arguments by Bell and the CBC, there isn’t much to this decision. It essentially keeps the status quo intact. But the CRTC says it will look more closely at the issue of local programming when it reviews its community television policy in the 2015-16 year. The scope of this review will be expanded to look at local TV in general, and the implication is that the commission may get more serious about forcing local TV stations to be more local.
Kevin O’Leary says this decision is “completely insane”, for what it’s worth, saying the CRTC is working against Canadians and Canada is like North Korea or Cuba. You know, his usual understated style.
Michael Hennessy of the Canadian Media Production Association looks at the downside of this decision for the industry, both directly and indirectly.
Diane Wild of TV Eh? says the CRTC should eliminate simsub entirely so Canadian broadcasters are encouraged to create their own content.
Michael Geist defends the decision, pointing out that simultaneous substitution is on the out anyway and the Canadian television industry is already too reliant on the government.
Meanwhile, Bell apparently sought a private meeting with the commissionners to get them to reverse their decision, a request the CRTC turned down.
And at Cartt.ca, suggestions that this could be the beginning of the end of vertical integration in Canada.