Supreme Court overturns CRTC order banning ad substitution during Super Bowl

After three years of Canadian cable TV subscribers having access to American ads during the Super Bowl, we’ll be going back to the previous system after all.

On Thursday, the Supreme Court of Canada ruled that the CRTC exceeded its authority when it issued an order that required cable and satellite TV companies to not substitute U.S. feeds with Canadian ones during the Super Bowl, in response to demands from Canadians to be able to watch the U.S. Super Bowl ads.

The 7-2 decision explicitly leaves open the possibility that the CRTC could use its authority under other sections of the Broadcasting Act to possibly reach the same result. The most obvious way would be under article 4(3) of the Simultaneous Substitution Regulations, which state that the CRTC can declare a condition whereby simultaneous substitution would not be in the public interest, and prohibit it accordingly.

But that won’t happen before the next Super Bowl less than two months away.

Specifically, the court found that article 9(1)h of the Broadcasting Act, the same article that allows the CRTC to require TV distributors to include certain channels in their basic packages and collect fees from every subscriber for them, “does not empower the CRTC to impose terms and conditions on the distribution of programming services generally,” and since the order the CRTC issued in 2016 does not require these companies to distribute the Super Bowl, its wording is invalid.

The article states that the CRTC may “require any licensee who is authorized to carry on a distribution undertaking to carry, on such terms and conditions as the Commission deems appropriate, programming services specified by the Commission.”

The majority found that this wording can’t be stretched to give the CRTC a bunch of powers it doesn’t say it has. The CRTC can order providers to carry certain channels, but that’s not what the Super Bowl order does.

This is notably the third time that an order issued under article 9(1)h has been rejected for this reason. Previous orders invalidated the CRTC’s “value for signal” regime that would have required providers pay for local TV stations, and a requirement for TV providers to abide by the Wholesale Code.

The court did not make decisions on other arguments, such as whether the CRTC has the power to regulate individual programs, or whether the CRTC’s order conflicts with the Copyright Act.

The two dissenting judges found that Bell and the NFL had not met their burden to prove that the CRTC decision was unreasonable, and generally deferred to the CRTC and its expertise in interpreting the section of the Broadcasting Act it was citing. It also found the CRTC’s decision was not invalidated by the Copyright Act.

The decision probably only accelerates a process that was coming anyway, as the Canadian government had already agreed as part of negotiations on a new trade agreement with the U.S. and Mexico to overturn the CRTC’s order.

And, of course, there are still other ways to watch the U.S. Super Bowl ads.

15 thoughts on “Supreme Court overturns CRTC order banning ad substitution during Super Bowl

  1. JP

    The CRTC has plenty of time to deal with the issue, and could eliminate sim sub entirely, under several other sections of the Broadcasting Act.

    Reply
    1. Fagstein Post author

      The CRTC has no interest in eliminating simsub generally, since doing so would have a negative effect on the Canadian broadcasting industry with no appreciable benefit.

      Reply
      1. JP

        True. It is regrettable that the entire system hasn’t been overhauled to mandate fees to networks for carriage on cable and satellite, in exchange for the networks voluntarily giving up simsub. Distributors should have a combination of tax incentives and other changes to offset the new costs. The CRTC should also cancel a significant number of unnecessary broadcast licences, and ending mandatory coverage of limited interest standard definition only channels.

        Another idea based on the blank recording media fee, would be an option for cable subscribers to pay a premium for a block of US channels in the local time zone, that would never simsub, ever. A portion of collected fees would be divided among the networks, based on share of US program rights, to offset revenue losses.

        Reply
        1. Fagstein Post author

          It is regrettable that the entire system hasn’t been overhauled to mandate fees to networks for carriage on cable and satellite, in exchange for the networks voluntarily giving up simsub.

          The CRTC tried to implement a “value for signal” regime to force cable companies to pay for local TV stations, but that was overturned by the courts. It would require a change to the Broadcasting Act. There was no discussion of giving up simsub, and any simsub ban would be very unpopular with the industry, since it would deprive it of funding.

          The CRTC should also cancel a significant number of unnecessary broadcast licences, and ending mandatory coverage of limited interest standard definition only channels.

          Which broadcasting licences are unnecessary? And what “limited interest standard definition only channels” have “mandatory coverage”?

          Another idea based on the blank recording media fee, would be an option for cable subscribers to pay a premium for a block of US channels in the local time zone, that would never simsub, ever.

          During the Let’s Talk TV proceeding, the CRTC asked about the possibility of paying an extra fee for non-simsub U.S. channels. It didn’t seem to be that popular. Frankly, besides during the Super Bowl, Canadians don’t really care that much about where the ads come from.

          Reply
          1. Eamon Hoey

            The Supreme Court’s overturns CRTC order banning ad substitution during the Super Bowl is indicative of a deeper problem in CDN Television Broadcasting. The business model is broken and needs a significant transformation to achieve what want and will watch. We do not need a legal solution to the many issues within the regulatory structure. Rather CDN TV needs a major rethink. Canada has a regulatory structure that is ill suited to the 500 channel universe. Maybe we just move everything into a Netflix business model. We could also abandon the whole idea of regulation. The Gov. could stop all subsidies to CBC and Radio Canada and leave it to consumers to decide the subscription channels they want. The CRTC’s powers could be limted to establishing carriage rates for package providers.

            Reply
            1. Fagstein Post author

              Canada has a regulatory structure that is ill suited to the 500 channel universe.

              Arguably the problem is that Canada’s regulatory structure is too focused on the 500-channel universe in an era where everyone has their own channel.

              The Broadcasting Act definitely needs to be modernized. The only problem is that no one is entirely sure how to modernize it.

              Reply
              1. Eamon Hoey

                Steve You missed the point. I was not suggesting a revision of the Broadcasting Act. Rather we abandon the current regulatory model entirely. Let consumers decide what they want to subscribe to and pay for. Give the consumer the “Freedom of Choice”.

                The consumer would decide what he/she wants to purchase by way of entertainment. CBC, Global, CTV, Netflix, Disney, HBO etc. All become content providers.

                The sole role of the CRTC would be to adjudicate the carriage rates charged by carriers (Rogers, Bell, Telus, etc.) to entertainment providers to carry their programming over their networks. The consumer is at the center of the business model rather than the CRTC and lefty policy makers. The CRTC no longer needs to have hearings to determine who can and cannot provide content. It removes 90% of the complexity of our current model centered on regulation rather than what satisfies the consumer.

                Why should we continue to assume that Canada’s deep state needs to determine content and balance the various interests of Canada’s Broadcasting industry. My business model eliminates the need for subsidies to CBC, the Weather Network etc.. Let the market decide rather than the Rideau bureaucrats.

                In sum, I am proposing a competitive business model built on providing consumer choice. Drain the swamp of Canadian Broadcasting Industry’s self interest which currently delivers a questionable level of quality programming.

          2. JP

            The CRTC tried to implement a “value for signal” regime to force cable companies to pay for local TV stations, but that was overturned by the courts. It would require a change to the Broadcasting Act. There was no discussion of giving up simsub, and any simsub ban would be very unpopular with the industry, since it would deprive it of funding.

            Reference re Broadcasting Regulatory Policy CRTC 2010-167 and Broadcasting Order CRTC 2010-168, 2012 SCC 68 (CanLII), [2012] 3 SCR 489:

            [7] As a solution, the CRTC seeks to implement what it terms a “value for signal regime”. This regime would permit broadcasters to negotiate with BDUs the terms upon which the BDUs may redistribute their signals.

            A broadcaster who participates in the value for signal regime would forego all existing regulatory protections, including… …the right to require a BDU to delete a non-Canadian program and substitute it with the comparable program of the broadcaster, where the two programs are simultaneously broadcast and retransmitted by the BDU.

            I am glad I have use of my friend’s cabin across the border in Washington State, where I can watch TV uncontaminated by Canadian interference.

            Reply
    1. Fagstein Post author

      Can Bell sue the CRTC ? (I understand you are not a lawyer).

      It depends what you mean by suing the CRTC. It can appeal CRTC decisions to the federal court, which is what it did in this case. If you’re talking about suing the commission or individual commissioners for damages, such a lawsuit is unlikely to succeed unless you could show some intentional malice.

      Reply
  2. Eamon Hopey

    Canada’s deep state gets knocked back by the Courts – Wonderful! Terrific decision we need more of the Supreme Court decision limiting the regulatory powers (CRTC) of the deep state. Regulators have been left to define the powers given to them by Parliament, in this case the deep state (CRTC) went well beyond its authority granted to it .

    Reply
  3. Deborah Bee

    So we’re basically stuck with the same boring ads that are on now.
    I remember watching the Super Bowl 10± years ago, and the network kept showing the same Budweiser commercial. Sometimes back-to-back. I must’ve seen that ad at least 15 times.

    Reply
  4. Anonymous

    As much as I don’t like what Bell Media does, and how it handles its media properties, I’m glad somebody did something about the CRTC’s over reach. And I do believe a lot more needs to be looked into about other CRTC decisions.

    Reply
  5. Steve

    That’s a shame. Now most will be forcefed the same boring five commercials over and over again.

    I’ll be enjoying the US broadcast on Hulu. Everyone to my place!!!

    Reply
  6. Pingback: How Canadians can watch Super Bowl LIV with American ads (the 2020 guide) | Fagstein

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