Controversial choices loom as TV border skirmish escalates

“Why can’t we see the Super Bowl ads?” That’s the big question that arises in Canada early each year, as NFL fans on this side of the border come to terms with the fact that they won’t be able to see the spectacular (and spectacularly expensive) ads that air during the biggest U.S. sporting event of the year.

That question about whose ads we get to see lies at the heart of an escalating border skirmish that could bring the future of easy Canadian access to U.S. network television into question.

As the CRTC, the Canadian broadcasting regulator, points out on its web site, it comes down to a matter of programming rights.

Forty years ago, Canadian broadcasters were incensed with the actions of several U.S. TV stations that had their transmitters south of the border, and purchased their programming rights there, but had studios and sales staff in Canada to produce and sell ads during programs for which a Canadian station had supposedly purchased the exclusive local rights.

Eventually, the CRTC announced a new policy called “simultaneous substitution”, or “sim-sub”, which would require cable companies to carry the Canadian signal on both channels if the same program aired on both a Canadian and American station simultaneously.

The Canadian stations were delighted with the results, one 2009 study estimating that “sim-subbing” added about 40 percent to a Canadian station’s audience when airing a U.S.-made program in prime time. It also sent the most aggressive “border pirates” reeling: the Texas-based owner of KCND, an ABC affiliate with its transmitter in North Dakota but studios and sales offices in Winnipeg, quickly sold the station to Canadian investors in 1975, who relaunched the station on this side of the border as CKND (now Global Winnipeg). KVOS, a CBS affiliate serving Vancouver from a transmitter in Washington State, survived; but eventually had to leave CBS and become an independent station to get around the sim-sub problem, and is now little more than a repeater for a Seattle station.

The regulators at the CRTC, who have an “arm’s length” relationship with the politicians but must occasionally show some sign of paying attention to public opinion nevertheless, have made noises recently about possibly getting rid of the sim-sub rules so that Canadians will be able to see the Super Bowl ads.*

In a consultation exercise launched this week, the CRTC asked Canadians how they would feel about U.S. stations being “offered in an optional package and local stations would receive money from the additional subscriber fees to cover the lost advertising revenue” as an alternative to sim-subbing.

In addition to placating Super Bowl viewers, this idea could deal with one aspect of a looming Canada-U.S. trade dispute.

In a Feb. 14 letter to the Office of the U.S. Trade Representative, a coalition of U.S. TV stations urged the American government to confront Canada over “failure to provide adequate and effective protection for the intellectual property rights (IPR) of American television stations redistributed in Canada” and “Canada’s ongoing denial of fair and equitable market treatment that causes harm and damage to American television stations owners and employees”.

Part of the coalition’s letter included an insistence that Canadian cable and satellite operators cease the “unauthorized modification” of U.S. signals caused by sim-subbing, the practice that causes Canadian viewers to see lacklustre Canadian ads during the Super Bowl.

Bell Media, the owner of CTV, Canada’s largest private TV network, as well as many cable channels, takes a different view. Not only do they want sim-subbing to continue, they want to expand it.

In fact, a Bell Media spokesperson even suggested a few months ago that U.S. networks be given the boot completely from Canadian cable and satellite systems:

BCE Inc., Canada’s largest broadcaster, would support the establishment of broadcasting rules similar to those of the United Kingdom, where American channels cannot be aired and broadcasters can license and air shows exclusively, the company said.

“Canada is the only country in the world where American channels are freely carried by cable and satellite distributors, dramatically impacting the value of the exclusive programming rights Canadian broadcasters purchase. Allowing U.S. networks freely into Canada causes massive market disruption. We would be supportive of such a system as seen in the U.K.,” Scott Henderson, a spokesman for BCE division Bell Media, said in an emailed response to questions.

[ . . . ]

Hendersen [sic] said Bell Media would also support a system of “non-simultaneous substitution,” which would expand the existing regime so that the signal is replaced even when the shows are played at different times. No matter when it airs, distributors would be required to substitute the U.S. broadcast signal with the Canadian broadcaster’s signal, including its advertising, where the Canadian broadcaster has the Canadian rights to the program.

Other broadcasting groups shied away from Bell’s aggressive ideas: a Rogers spokesperson was non-committal; a Telus spokesperson was firmer, suggesting that Bell’s position “doesn’t seem realistic”.

Sometime in 2014, the CRTC will begin consulting with the Canadian broadcasting industry on the future of sim-subbing. Regardless of whether they roll back or expand the practice, they will face a backlash from either broadcasters who feel that their business model is being undermined or from a public that won’t like the idea of paying for what they’ve long received at no extra (visible) charge.

To be making that decision while a Canada-U.S. trade war over property rights rolls on in the background, with the possibility that Canadian cable and satellite operators might have to enter into contentious negotiations with U.S. stations to continue using their signals, suggests that the CRTC will be feeling the heat indeed.

* – That is not the only way in which the CRTC has found itself aggravated over the sim-sub policy. After reading a Twitter exchange in which a Rogers Communications representative faulted the CRTC for the inability of Canadian viewers to see U.S. commercials during the NFL playoffs, a “dismayed” CRTC chairman Jean-Pierre Blais fired off a tart letter reminding Rogers that substitution is only done at the broadcaster’s request; suggesting that broadcasters educate the public about a policy that was created on their suggestion “rather than simply passing blame onto the CRTC”; and ordering Rogers to “provide a report outlining the training your customer service representatives receive on this issue”.

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About theviewfromseven
A lone wolf and a bit of a contrarian who sometimes has something to share.

2 Responses to Controversial choices loom as TV border skirmish escalates

  1. @YWGger says:

    I was always curious about Canadian feeds overriding the US channels for the same program and how that came to be, never got around to researching it. Thanks, this was interesting and informative.

    In terms of people being upset they don’t get to see the US Super Bowl television ads, that is becoming quite a moot point given the ever increasing amount of people with internet access. Simple stuff… go to Youtube, the ads will all be there! Or even better, do a search for blog posts or entertainment op-eds of “best 2014 super bowl ads” and one can find many pages listing the ‘best’ ads with links or embedded videos.

  2. theviewfromseven says:

    Thanks!

    It is funny how it’s often the smallest things that cause the most turmoil.

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