Broadcasters feeling no impact from CRTC’s elimination of local advertising limits

National broadcasters CBC and CTV say a CRTC decision that removed all limits on over-the-air television advertising has had little-to-no impact on their advertising models. In a broadcasting public notice delivered on May 17, 2007, the CRTC determined that it would eliminate the limit on advertising for over-the-air television, effective Sept. 1, 2009. Half a year later, both broadcasters have not changed their advertising levels. For the CBC’s part, over-the-air advertising remains at about 12 minutes per hour. “I'd say we always seek an appropriate balance between our revenue and our programming needs, and of course those of our audiences,” Jeff Keay, a spokesman for the CBC’s English services, wrote in an email. Broadcasters have suffered from a significant drop in local advertising revenue in recent years as audience fragmentation and new platforms—such as Google—compete for advertising dollars. CTV spokesman Scott Henderson similarly said by email: “The decision has had little effect for CTV and its viewers.” Global Television did not respond to requests for comment. “It’s a real delicate balance of programming and advertising and I think that both radio and television stations struggle with this,” Jerry Chomyn, director of broadcast media at Humber College, told The Wire Report. “On the one hand they want to maximize their ability to generate revenue, but there’s a tipping point that you don’t want to cross.” Chomyn said he suspects that the CRTC viewed the broadcasters as mature enough as an industry to determine that tipping point, and broadcasters were given the flexibility to increase advertising if they needed to. “The public will be the final judge of whether there are too many commercials on any given program by tuning in or tuning out,” Chomyn said. CTV’s Henderson noted that, “We are very aware that more ad time could clutter the viewing experience.” Henderson added that there are few opportunities to change advertising models because show formats tend to be “very standard when it comes to amount of commercial time within a program.” Sheridan Scott, a partner and communications expert with Bennett Jones LLP in Ottawa, told The Wire Report, “The last thing you want to be doing is to be cutting out programming in order to insert advertising.” Scott said Canadian broadcasters are often constrained by programming and often cannot increase advertising even if they want to. This is especially true when networks like CTV buy programming from other countries such as the United States, for which programs have set amounts of advertising. In its decision to remove the advertising limit, the CRTC had determined that “increasing audience fragmentation” and competitors such as specialty channels had eroded advertising for local over-the-air channels. According to Statistics Canada, in 2008, revenues for private conventional television totaled $2.1 billion. That represented a 1.8 per cent drop from 2007, the industry’s largest annual decline in 30 years. The same year, specialty and pay television segments enjoyed operating revenue gains of 6.5 per cent and 11.8 per cent, respectively. According to the CRTC’s public notice to increase the over-the-air advertising limit, digital specialty services rely on subscriber revenues, through cable or satellite packages, for more than 80 per cent of their total revenues. The commission also noted that all of the large English-language broadcast groups—CTV, Canwest Global and CHUM (now owned by CTVglobemedia)—support the introduction of a fee-for-carriage on cable and satellite companies to carry free, over-the-air signals. “I suppose the fee-for-carriage would supplement the cash revenues, but it’s almost a different issue,” Chomyn said. Scott said fee-for-carriage offers a simpler solution for broadcasters because it is a guaranteed stream of revenue. It offers more certainty than the sometimes unstable dependence on advertising.

Broadcasters feeling no impact from CRTC’s elimination of local advertising limits

Broadcast | February 9, 2010

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