Do you know that prior to 2 years ago, you couldn’t watch the Superbowl complete with those amazing Superbowl commercials in Canada.  Before that, you had to wait, maybe catch them online, or the next morning on a local newscast.  I know, it seems like ancient history.  In our thirst for entertainment and information that is widely available “on demand”, we are testing the limits of a terrestrial television system designed decades ago.

The Supreme Court of Canada has agreed to hear the case of Bell Media/CTV and the NFL as it relates to the CRTC’s decision to exempt the Superbowl broadcast from the rules of “simultaneous substitution”.  Called ‘sim-sub’ for short, it is the practice of blocking of US commercials on Canadian TV channels and in their place substituting national and local Canadian commercials. It’s been around since the rise of cable delivery in our country as a way to protect the exclusive licenses that Canadian TV companies have when they purchase the rights to a US network program and air it in Canada. These revenues help offset the cost of local news operations which generally are resource-heavy, low-margin, and in some cases, heavily subsidized programs.

In 2016 the CRTC made an exception to the sim-sub rules, allowing cable & satellite companies to dispense with the practice for Superbowl. Only the Superbowl. Why? Because the CRTC received tons of complaints for years from people who wanted to watch the big budget US Superbowl ads but couldn’t because the Canadian broadcast was full of ads for Tim Horton’s. You know what I mean.

This is in the news now because the Supreme Court of Canada has agreed to hear the case being made by CTV and its parent company Bell Media, along with the NFL.  They make very good points relative to policy and regulations around this long-standing practice. They negotiated a long term deal with the NFL based on buying the “exclusive rights” to the game and paid big money.  And then the CRTC changed the rules.

Here’s some background.  The Canadian TV system works, complete with its local newscasts and Cancon rules worked because for years, revenue was generated and profits derived largely by purchasing Canadian rights to first-run US network programs and broadcasting them, generally in primetime, in “simulcast” with the originating US station.  You know… you think you’re watching Lucifer on FOX 28 KAYU only to realize you’re watching CTV when a commercial break comes on.  You’re a bit confused, then the show ends and suddenly you’re watching FOX 28 again.  No, it’s not you.  It’s the system.  This practice protects the Canadian TV station’s exclusive rights by blocking all other signals and inserting the Canadian channel over top of them.

Still with me? Ok… now in the case of the Superbowl, the system changed with no apparent warning.

The Superbowl is widely watched, but its for the commercials, as evidenced by the many complaints the CRTC received every year. In their zeal to satisfy the masses and quell the complaints, the Commission in effect  sacrificed CTV’s exclusive right to broadcast the game in Canada, and killed their ability to recoup the massive rights fees they’ve paid.   

What happened next? The Superbowl arrived on a variety of US cable channels, complete with the must-see commercials. And CTV, the only company that actually paid for the exclusive rights to broadcast the program in Canada, was out of luck.  The Superbowl was featured on a number of channels and CTV’s audience took a beating. The value of their commercials went down considerably.  Why? Because of the US channels with the high-budget US ads. The tsunami of production value, A-list talent and of course, those Budweiser horses proved irresistible.

So off they all go to the Supreme Court to sort it out.  Bell Media will surely argue that the loss of revenue from a show like Superbowl directly impacts the funds available to create local newscasts, pay staff, and generate profit for shareholders.

Bell said in a statement it is pleased that the Supreme Court will hear the appeal:

“We look forward to advancing our argument that a broad range of Canadian creators, producers, advertisers and businesses have been negatively impacted by the original decision.”

So what do you think? Is watching US commercials in the Superbowl more important than preserving the regulatory framework that protects our local over-the-air TV system across the country? Because the two really are inextricably linked. By eroding the ability for a Canadian program rights-holder to recoup their investment, as the CRTC did by  making an exemption of Simsub rules for Superbowl broadcasts, it strikes right to the heart of funds available to produce local news programming.

So now the greater question is just how important is local TV in today’s world of digital communication, on demand viewing, tablets, phones, PVR’s, and social media? Audiences and revenues for local Canadian TV stations have been under increasing pressure for years, and few cities realize this more than Red Deer.

While not related to Superbowl advertising, the one local TV station here closed its doors and quit broadcasting in 2009. When it closed, I’m told by a former Commissioner that not a squeak was heard at the CRTC from this local community- not a letter or comment. So was the station even missed? Many will remember (or not) when it was for a short period of time called E! Entertainment, all in an effort to find inexpensive programming.  Ultimately it didn’t work.   CKRD, RDTV, E!, CHCA- it had many aliases, but ultimately struggled to drive enough revenue to continue operating.  That was 9 years ago, and many of the factors that led to its closure have only accelerated since then.

Do you watch local TV news from the remaining stations in Edmonton and Calgary? Are these institutions still important, or would we all rather just watch US commercials and US TV shows and say goodbye to the notion of local TV news programming here in Canada? How have your habits changed? Do you care? Because you really can’t have it both ways for very long.

Lloyd Lewis is President of Todayville, INC.  He was VP/GM of CTV Edmonton from 2005-2015 and GM of RDTV Red Deer from 1997 to 2000. He worked in the local television industry for 35 years.