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A CRTC decision blocking Bell from simultaneously substituting its own advertising over the U.S. Super Bowl broadcast starting in 2017 resulted in a 60-per-cent decline in ad revenue over 2016.

Ezra Shaw/Getty Images

As it sells ad airtime for next year's Super Bowl, Bell Media is setting prices on the assumption it will once again be able to swap in the CTV television feed – and Canadian ads – over the U.S. big game broadcast in Canada.

BCE Inc., which owns Bell Media, has been fighting an order that prevented that signal swapping – known as simultaneous substitution or "simsub" – starting with the game last February. That change was the result of a 2015 decision from the Canadian Radio-television and Telecommunications Commission, stating that simsub would no longer be allowed in broadcasting the Super Bowl beginning in 2017. The rationale for the decision, according to the CRTC, was that the Super Bowl is an unusual case where viewers actually want to see the flashy ads that come out of the United States. But Bell, the NFL and representatives of Canada's advertising industry have argued against the ruling.

The ad sales strategy is the same one that Bell pursued last year. At the time, it had already taken its fight to the Federal Court of Appeal, and also asked for a stay of the simsub change – selling ads on the assumption the stay would come through. That did not happen, though the court granted Bell leave to appeal in November, 2016. The issue is still before the courts. Earlier this month, Bell filed an application asking the CRTC to overturn its ruling.

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Broadcasters sell ads based on estimates of audience size, often based on previous performance, as in the case of the Super Bowl. When the stay did not come through last year, Bell revised its prices downward by about 35 per cent, based on its audience-loss forecast for the big game compared with the previous year. Should its efforts to overturn the simsub decision this year fail, it will have to do so again.

"The pricing was revised, which obviously contributes to delivering less revenue. And we also sold less inventory because of it," said Perry MacDonald, senior vice-president of English television and local sales for Bell Media.

Though Bell does not specify the number of available ad slots that it sold, or by how much that number dropped, the company has said that the combination of lower prices and fewer sales led to an $11-million decline in Super Bowl advertising revenue for this year's game, a 60-per-cent drop compared with the 2016 broadcast.

The game in February drew an average audience of 4.47 million on CTV, CTV Two and TSN – a 39-per-cent drop from the 7.32 million people who tuned in on CTV alone the previous year.

It's difficult to know exactly how much of this decline can be attributed to Canadian viewers migrating to the U.S. Super Bowl feed, which was on Fox this year; ratings measurement firm Numeris says it does not track all of the Fox stations on the Canadian dial and, following the game in February, it would not share any data from those it did track. However, the audience drop differed significantly from Canada's French-language market – ratings for the game on RDS were relatively stable compared with last year – and in the United States, where ratings declined less than 1 per cent.

As with many of its other programs, Bell begins selling ad bundles for the upcoming NFL regular season, playoffs and the Super Bowl after its "upfront" presentations each June and through January, subject to availability. The bulk of the ads are sold on a national network basis, with some additional inventory set aside to air regionally or locally only. As with other programs, the portion of ads available nationally compared with smaller markets depends on advertiser demand.

There is no single price for a Super Bowl ad, according to ad buyers, because marketers who commit to larger deals – buying a bundle of ad time through the season, for example, or signing on to a larger sponsorship of the broadcast – would negotiate prices reflecting their purchase commitment. It also depends on where in the game the ad airs. But generally speaking, in recent years Bell has commanded $150,000 to $190,000 for 30 seconds during the Super Bowl broadcast, with prices rising closer to the game, according to sources. With price adjustments required this year, Bell lost tens of thousands of dollars for every national network ad.

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In addition to price adjustments, in some cases Bell also offered "make-goods" in the form of ad space in future programs to make up for the lost audience.

"Advertisers are being very supportive of our position," Mr. MacDonald said of the sales discussions this year, adding that Bell is prepared to make adjustments again if necessary.

"These are long-valued relationships that we have with advertisers and their agencies. We're going to ensure that they get what they paid for."

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