Are the Academy Awards next? U.S. Super Bowl commercials in Canada test future of CRTC ad policy

It's a long-standing Canadian Super Bowl tradition: tuning in to the big game, but being shut out from the big-budget, star-studded U.S. commercials.

That changes this year as a Canadian Radio-television and Telecommunications Commission (CRTC) policy banning the simultaneous substitution of Canadian ads over U.S. ones during the big game comes into play for the first time. 

It's a one-event exception from the regulator's 45-year-old policy and gives Canadian viewers the choice of the familiar ads on CTV or the U.S. ones on Fox during the game on Sunday. 

But amid the marketing hype, the move has also sparked an ongoing legal challenge and intense cross-border lobbying efforts as experts and advertisers warn that the end of Super Bowl ad substitution could lead to bigger changes in how we view television in Canada.

Under scrutiny

Sunday's game can be seen as test event for life without ad substitution as the practice becomes increasingly out of date in a media world where on-demand viewing and streaming services are growing more popular, says Michael Geist, a law professor at the University of Ottawa.

"Its value is diminishing over time," said Geist. "It's still valuable without question but less so because fewer and fewer people are watching programs where [it] comes into play." 

• NFL alerts Trump to fight with CRTC over Super Bowl ads
• Budweiser Super Bowl ad takes direct aim at anti-immigrant furor
• Appeal court to hear Bell Media challenge of CRTC ban on Super Bowl ad substitution

The ad substitution helps keep Canadian ad dollars in Canada and is widely estimated to generate more than $200 million annually for domestic broadcasters.

The CRTC says although it received only about 100 formal complaints from last year's game, ad substitution has historically been among its biggest sources of viewer frustration. While relatively few viewers take the time to follow the formal complaint protocol, the CRTC says it sees many people express their feelings through less formal means like social media. 

Fans were upset at missing out on the U.S. ads and at the repetition of Canadian ads, many of which they'd seen several times in the months before, with some ads airing upwards of five times during the approximately 3½-hour sports broadcast. 

The CRTC is also cracking down on substitution mistakes — technical errors that result in the Canadian feed rejoining the broadcast too late, sometimes missing on-the-field action as a result.

Upset advertisers

The Super Bowl routinely attracts a large audience, with the 2016 game drawing an average of 7.37 million viewers on CTV.

While no one knows for sure how many viewers will opt to stick with the Canadian feed this year, rights holder CTV and those who advertise on the broadcast are clearly worried about their newly split audience.

"When you don't have that predictability, it makes it very hard to make investments," said Ron Lund, president and CEO of the Association of Canadian Advertisers, adding that performers, sales staff and other creative talents could feel the economic impact. 

This week, Bell cited regulatory challenges including the ban on Super Bowl ad substitution after announcing a series of staff layoffs.

Canadian companies typically can't afford the reported $5-million US price tag for a 30-second spot on the American broadcast, and without substitution they're excluded from the biggest date on the TV calendar, something they fear could happen with other high-profile events including the Golden Globes, Grammy Awards and the Oscars 

"Is it the Academy Awards next?" Lund said. "What other things are going to be carved out of a policy that was designed to protect the broadcaster's rights?"

Legal battles

CTV along with the NFL has been fighting the CRTC's ruling in court for more than a year. 

In late October, the Federal Court of Appeal allowed an appeal of an earlier court ruling that upheld the substitution ban, but denied a stay of the ruling until the case could be heard.

That's not scheduled to happen until Feb. 7, two days after the Super Bowl and too late for CTV and advertisers. 

Barring a late reversal, the federal government has shown little interest in overruling the CRTC's decision.

Even U.S. politicians including former presidential candidate Marco Rubio have expressed their concern over the decision. The NFL has said the issue is on the radar of the new U.S. administration of President Donald Trump.

Geist, though, isn't buying it, pointing out that the U.S. for years accused Canada of stealing its TV signals through the ad substitution.

"While the concern of Marco Rubio and the NFL for Canadian culture is touching, I don't think anyone's under the illusion that that is their real concern."

Rather, Geist says that the league is concerned about the value of its Canadian TV rights, which would likely take a hit without the ad substitution given the split audience between Canadian and American feeds. 

Changing face of broadcasting

He adds that getting rid of the substitution could force Canadian broadcasters to increase their Canadian content rather than simply turning to the U.S. as a source of programming, something he says turns Canada's TV stations into de facto affiliates of U.S. networks. 

"That's not good news for Canadian news and programming that starts to move all over the schedule based on what takes place in the U.S." 

The networks and advertisers warn that the end of the ad substitution would leave their businesses in unsustainable positions.

"This is the starting point as we move to reconsidering both the benefits and cost of that policy," said Geist