The Federal Court of Appeal has dismissed Bell Media's appeal of a regulatory edict that bars the company from substituting its own television feed and advertising for the U.S. signal during the Super Bowl.
BCE Inc.-owned Bell, which has the Canadian broadcast rights to the National Football League Championship game, has been fighting the ruling from the Canadian Radio-television and Telecommunications Commission (CRTC) for almost three years.
The company has complained bitterly about the policy – which banned simultaneous substitution, or "simsub," during the Super Bowl starting in 2017, preventing Bell from running Canadian ads on U.S. stations that air in Canada. As a result, it said the change in policy led to a 39-per-cent decline in its audience for the game this year and a drop of $11-million in advertising revenue.
The NFL also sought relief from the court, as did an array of creative groups and advertisers, who argued the decision harms the Canadian production industry. The CRTC said it was responding to complaints from Canadian viewers who felt they missed out on the true Super Bowl experience by not seeing the expensive U.S. ads, although critics contend they are easy to find online and usually released before the game.
Bell was granted leave to appeal in November, 2016, and the appeals were eventually consolidated into one proceeding. A three-member panel of the Federal Court of Appeal heard the case in Toronto in October and delivered the ruling on Monday. The panel ruled that the CRTC decision was reasonable, and rejected an argument that it conflicts with the Copyright Act.
Justice David Near, writing for the court, said he has some sympathy for the arguments Bell and the other appellants raised.
"There is a certain irony that legislation that has the protection of the Canadian broadcasting industry and its employees as one of its important objectives is being used to allow for the broadcasting of American ads during the Super Bowl to the apparent detriment of the Canadian industry and its employees," he wrote, according to a copy of the decision obtained by The Globe and Mail.
However, Justice Near continued, the Broadcasting Act sets out "disparate objectives" and it is the CRTC's job to "decide how best to balance competing policy objectives relating to broadcasting in Canada." He concluded it was not for the court to substitute its view for that of the CRTC.
It is not clear yet whether Bell will appeal – spokesman Scott Henderson said the company is considering all its options – but still hopes for change via another avenue: In August, it asked the CRTC to reverse the policy. Ian Scott took over as the regulator's chairman in September, a few months after the five-year term of Jean-Pierre Blais expired.
Mr. Henderson noted on Tuesday that the court deferred to the CRTC's judgment, saying: "We hope the regulator will take a close look at the clear impact of its decision on Canadian broadcasting and all those who work in the industry. A broad range of Canadian creators, producers, unions and advertisers are asking the CRTC to prevent further damage by rescinding its decision."
CRTC spokeswoman Patricia Valladao said the court confirmed the regulator made no errors in its ruling, which was part of the "Let's Talk TV" set of regulatory decisions the CRTC released in 2015.
Ron Lund, CEO of the Association of Canadian Advertisers, which was one of the appellants, lamented the ruling as "the start of the dismantling of the simsub system which is really the underpinning for our broadcast system in Canada."
For advertisers "it also represents unique Canadian audiences that we no longer can reach," he said.
Bell Media has been selling ads for February's Super Bowl at prices based on the assumption it would have simultaneous substitution again and could guarantee the biggest audience possible in Canada by swapping the CTV feed and its Canadian ads over the U.S. broadcast here. Broadcasters sell ads based on the expected size of the audience: Last year, when Bell found out its request for a stay on the CRTC's decision would not be granted, it had to revise that audience estimate downward by about 35 per cent.
It may have to revise its estimates again unless it can secure a review or reversal of the decision with the CRTC. Bell has said that for the 2017 game, a combination of those lower ad prices and fewer spots sold contributed to the drop in ad revenue for the Super Bowl, which was down 60 per cent from the 2016 broadcast.
In an interview with The Globe in August, Perry MacDonald, senior vice-president of English television and local sales for Bell Media, said the company is prepared to adjust its prices if necessary next year.
With a report from Susan Krashinsky Robertson