Bell Media ‘extremely disappointed’ by Super Bowl simsub decision

The CRTC said Thursday that it would prohibit the use of simultaneous substitution for the Super Bowl, but would otherwise keep the practice in place, in an approach BCE Inc.’s media division spokesman Scott Henderson called “troubling.” The rights to the event are currently held by Bell Media. In an emailed statement, Henderson said that “we are extremely disappointed of course. The government is damaging the future of local television in Canada while rewarding U.S. corporations over homegrown companies.” The decision was part of the regulator’s Let’s Talk TV process on the future of television. According to the CRTC, simultaneous substitution is currently worth about $250 million to the industry. Henderson would not specify how much the practice is worth for the Super Bowl specifically. During the Talk TV hearing in the fall, Bell Media president Kevin Crull said the value of simultaneous substitution for live events accounts for up to $40 million every year for Bell’s CTV network, which broadcasts the Super Bowl, and the value of simultaneous substitution overall is “in excess of $450 million annually.” On Thursday, Henderson could not specify how long Bell’s contract for the rights to the Super Bowl runs, though he said it is “beyond 2017,” the year when the CRTC’s new rule will come into effect. In December 2013, the company said it expanded an existing agreement to provide coverage of the National Football League in Canada, which included the Super Bowl. Bell said last February that the 2014 game was the second-most watched Super Bowl ever in Canada, with an average audience of eight million people. Henderson said that while viewers will be able to watch American advertisements, “those advertising dollars will go directly to American companies instead of Canadian content creators and broadcasters.“ Gord Hendren, president of Charlton Strategic Research, said in a phone interview that for Bell, “the first hit would be in terms of direct ad revenue. The second implication would be that they’re now showing U.S. ads in place of being able to promote their own programming.” He added: “there’s no monetary benefit put on that, but that’s one of the real values of a broad-based event like the Super Bowl. It draws a large audience, so it’s an excellent opportunity to promote other programming.” The decision will also reduce the value of Super Bowl rights in Canada, because now the broadcaster's ads will not be seen by those tuning into the U.S. feed, Hendren said. The CRTC had considered eliminating simultaneous substitution completely, but during the hearing, companies such as Rogers Communications Inc. and Bell urged the commission not to do so. CRTC chairman Jean-Pierre Blais said in a speech in London, Ont. on Thursday morning that while viewers dislike simultaneous substitution and the CRTC receives many complaints about the practice, “it’s unfortunately here to stay for the time being.” “At our hearing last fall, the evidence clearly showed that the revenue it generates helps broadcasters create jobs and develop Canadian creative talent. In other words, it’s become far too intertwined to remove entirely without upsetting the existing business model,” Blais said. Referring to the exception for the Super Bowl, Blais said: “Canadians have told us loud and clear: the advertising is part of the spectacle associated with that event.” He also said there would be a “zero tolerance” approach to “substantial” mistakes. “If, for example, a Canadian broadcaster cuts back to an NFL game late and causes viewers to miss a play, it would be forced to pay rebates to viewers for its mistake. If an OTA station makes the same error, it could lose the privilege to request simsub for future broadcasts of major live events, such as the football game, for a period of time,” Blais told the audience. Richard Paradis, president of media consulting firm Groupe CIC, said in a phone interview that the CRTC’s decision not to eliminate simultaneous substitution for conventional TV is “a win for broadcasters.” “It’s clear from the decision today that they understood that it implies a lot of potential loss of revenue for Canadian productions,” he said. Broadcasting consultant Kelly Lynne Ashton noted that the loss of revenue for Bell Media for the Super Bowl will also mean less revenue for Canadian programming. “Is it worth it when you look at the revenue that Bell Media is going to lose from that?” she asked. She said that it will have a significant impact on a company that "is a fairly significant supporter of Canadian programming. ... It’s all tied to revenue, so if revenue goes down, the support goes down.” Ferne Downey, national president of the Alliance of Canadian Cinema, Television and Radio Artists (ACTRA), said in a press release that the “decision regarding simultaneous substitution balances the wishes of Canadian audiences with the vital need to continue to support the Canadian broadcast system." In its decision, the CRTC also specified that it would prohibit simultaneous substitution on specialty channels. CRTC spokeswoman Celine Legault clarified in an email that “simultaneous substitution of special services is a relatively recent activity and is only being done on a very limited basis, so there should be little impact on these services. Examples would be TSN and Sportsnet.” The CRTC also said Thursday that broadcasters would not be able to use simultaneous substitution if they shut down their over-the-air transmitters. In its consultation document, the CRTC had said it would consider allowing local television stations to eliminate their transmitters. During the Talk TV hearing, Bell said OTA transmitters should be shut down, as did CBC/Radio-Canada, while Shaw Communications Inc. said that wasn’t a step that needed to be taken yet. On Thursday, Blais said that in response to the CRTC’s proposal, “Canadians reacted, quite vociferously, and told us that the time had not yet come.” “Holding a licence to operate a local television station comes with certain privileges. For example, cable and satellite companies must include the station in their basic package of channels and stations can request simultaneous substitution. Our decision today sends a strong message to anyone thinking of shutting down their transmitters that, in doing so, they would be forfeiting their privileges,” Blais said. In the decision, the CRTC said that these “privileges are a recognition that local programming is expensive to produce and that the amount of money spent on local programming by conventional television broadcasters is significant.” It referred to numbers from Numeris showing that 8.1 per cent of Canadians access TV over-the-air, and to statements from Bell during the hearings stating that operating transmitters makes up less than one per cent of the its local TV operating costs. Hendren said the cost of operating transmitters “is the cost of doing business,” and noted it’s always been an obligation. “When you look at it overall, compared to all their revenue, it probably is a very small cost. But in today’s world, they’re trying to eliminate costs in every area they can,” he added. He said he doubts many companies would eliminate over-the-air transmissions if it means they lose mandatory carriage on basic and simultaneous substitution. “On a broad brush thought, it seems that the cost would be much greater in terms of the alternative,” he said. Paradis said “they’ll make business decisions, and they’ll have to consider their situation in terms of the regulatory environment, and it’ll be a case-by-case decision.” Rogers spokeswoman Patricia Trott said in an email Thursday that the company is “pleased” simultaneous substitution is not being eliminated, and the company is participating in an industry working group on simultaneous substitution. “Despite already having a very low error rate (less than one per cent), we’re committed to working through any issues and ensuring customers see the content they want without interruptions,” she said. She added that Rogers has “always said that keeping over-the-air TV is the right thing to do for Canadians,” but that local TV needs to be financially sustainable, and that “we hope the CRTC moves forward with more flexible programming regulations in their full decision on Let’s Talk TV and upcoming review of local programming.” Shaw and CBC declined to comment on the decision Thursday. Ashton said in a phone interview that because the CRTC is releasing its Talk TV decisions in installments, “we don’t really see the full picture until they’re done.” “This raises more questions for me than it answers,” she said, such as whether the CRTC’s other Talk TV decisions will also be geared toward consumers. “Is this going to be reoccurring theme through all of the decisions?” she asked. In his speech Thursday, Blais noted that OTA transmission may only be relevant for so long. “The future of television lies more toward viewer-centric, on-demand models than the scheduled broadcasts such as those provided by over-the-air television,” he said. The CRTC’s simultaneous substitution decision struck a similar note, saying that because of the changing rights market and the multiple platforms viewers can now use to watch content, “the Commission foresees a day when this regime may no longer be necessary or will be significantly less valuable for the support of Canadian programming.” Blais noted Thursday that while the way Canadians watch television is changing, and that the CRTC must maintain the traditional TV system, or the “old bridge,” while the “new" bridge, or on-demand, mobile and online viewing, is being put in place. “As these viewers change their habits, as providers innovate, traffic will migrate away from the old bridge and onto the new one. Eventually, it will stop flowing altogether over the old bridge, and we can tear down that structure. But for the next few years, we will need both,” he said. — With reporting by Anja Karadeglija at akarad@thewirereport.ca and editing by Derek Abma at dabma@thewirereport.ca

Bell Media ‘extremely disappointed’ by Super Bowl simsub decision

Broadcast | January 29, 2015

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Bell Media ‘extremely disappointed’ by Super Bowl simsub decision

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