Bad news for sports fans is good news for advertisers

With less than a month until Super Bowl LIV, football fans are looking forward to the big game. In a playoff season that has seen some serious upsets (The Patriots going down to the Titans sure surprised me), the Supreme Court of Canada’s recent decision in Bell Canada v. Canada (Attorney General), 2019 SCC 66 added another variable for Canadian sports fans to consider.

Even the least football-conscious Canadians are probably aware that, along with the championship game, one of the Super Bowl’s major draws is the panoply of high-profile, exciting, and very expensive commercials that accompany the game. However, any Canadians that have tuned in to watch “The Big Game” for the last 40 years likely had to bear with the disappointment of bog-standard Canadian Tire and Tim Horton’s commercials. The spectacular American advertising bonanza was nowhere to be seen thanks to the phenomenon of “simultaneous substitution.”  If you’ve never heard the term before, don’t worry. The Supreme Court provides a simple explanation:

Simultaneous substitution is a process by which a television service provider temporarily deletes and replaces the entire signal of a distant (usually national or international) television station with the signal of another (usually local) television station that is airing the same program at the same time. … For example, if the Canadian Broadcasting Corporation (“CBC”) owns the exclusive broadcasting rights for a specific event (e.g. the Academy Awards), it can request that the signal of an American station airing that event (e.g. a station of the American Broadcasting Company) be replaced with a CBC station’s signal. The result is that local viewers will see the CBC’s broadcast of that event — with the same content as the U.S. broadcast but with different commercials — when tuning in to either station.[1]

Bell, the Appellant in the case, has held the exclusive right to broadcast the Super Bowl in Canada since 2013 and has made full use of simultaneous substitution to ensure that Canadian ads are played to Canadians, regardless of whether they are watching CTV or FOX.

Following a public consultation that overwhelmingly opposed simultaneous substitution, the Canadian Radio-television and Telecommunications Commission (the “CRTC”) decided to ban simultaneous substitution during the Super Bowl under s.9(1)(h) of the Broadcasting Act.

While football fans may have applauded this change, Bell, at risk of losing serious advertising revenue, sought to appeal the CRTC’s decision. Following a Federal Court of Appeal decision upholding the CRTC’s original decision, Bell appealed to the Supreme Court of Canada. In late December, the Supreme Court finally handed back a decision.

Unfortunately for football fans, the Supreme Court’s decision quashes the CRTC’s decision and re-allows Bell to simultaneously substitute Super Bowl LIV’s commercials. The Supreme Court’s decision ultimately came down to an interpretation of s.9(1)(h) of the Broadcasting Act, on which the CRTC had based its order. The court held that s.9(1)(h) empowered the CRTC to order television service providers, such as Bell, to carry specific channels and attach conditions to those orders, but it did not grant the CRTC the power to attach conditions to how the service providers managed those channels. In effect, s.9(1)(h) could only force Bell to include certain channels in their services, but couldn’t attach terms to the content shown on those channels.

While the Supreme Court dashed Canadians’ hope of seeing multi-million dollar Super Bowl commercials this February, it did leave open the possibility that the CRTC might be able to re-introduce a modified version of the decision for future years. The Supreme Court made sure not to close the door on the possibility that the CRTC could ban simultaneous substitution of future Super Bowls under a different statutory power.

In the end it looks like Canadians watching the Super Bowl next month should expect to see more of the same Canadian ad content as usual. However, there still may be hope for future years if the CRTC decides to pursue a modified ban.