Super Bowl Ads, Eh?

By Drew Hargrove

The Super Bowl is one of the most watched television events of the year. Millions of people all over the world tune in to watch this annual spectacle. In 2016, 114.4 million Americans tuned in,[1] while 8.3 millions Canadians enjoyed the affair.[2] Of course, with this many viewers, there is an argument to be made that the commercials are the best part of watching the Super Bowl. This, as one can imagine, comes at a price for the company seeking to advertise. It has been reported that “[i]n 2010, Super Bowl ads were selling for about $2.5 million for a 30-second spot. This year, Fox is reportedly asking for $5 million to $5.5 million. That is at least double the cost in just a few years.”[3]

One of the major issues surrounding the Super Bowl is advertising rights; especially in countries other than the United States. One perfect, close-to-home example of this is in Canada. American commercials have traditionally been blocked in Canada. In 2016, however, the Canadian Radio-television Telecommunication Commission (“CRTC”) reversed this long-standing rule, allowing for American commercials during the Super Bowl in Canada (and only the Super Bowl).[4] In its decision, the CRTC called these advertisements an “integral element of the event.”[5]

You can imagine the uproar, but humor me. The first offended party is, naturally, the host of Canadian companies who wish to advertise during one of the most watched events of the year. Their voice was probably best represented by Bell Media Inc. (“Bell”). Bell paid millions for an exclusive license to broadcast the big game in Canada, and the media company has these rights until 2019.[6] This allows Bell to “sell ad space to Canadian companies that want to get ads in front of a massive Canadian audience.”[7] Bell’s main argument is that “American companies will now get that exposure without paying an extra dime, . . . adding [that] Canadian companies won’t reach their audience and Canadian consumers won’t see advertisements for products and services they can actually buy.”[8]

In addition to Bell, the other big entity that chastised (well, at least appealed) the CRTC decision was the NFL. The NFL’s argument is also fairly simple, as the NFL just wants to keep U.S. advertisements out of Canadian airwaves; that, and should the CRTC ruling stand, the current agreement between Bell and the NFL would lose about $13.6 million per year.[9] This loss represents revenues that are generated from local Canadian companies.

One of the most interesting aspects of this decision is the direction in which Canadian advertising rights are headed. As noted above, the CRTC decision only applies to Super Bowl advertisements. Does this mean there will be a push to allow American advertisements in other major events, such as the Stanley Cup Finals or the Academy Awards? Will this bring more change in Canadian entertainment laws? These advertisements are a major tool to help fund Canadian television. As noted in Bloomberg, “[f]orcing domestic ads onto U.S. shows in effect funds the production of Canadian shows. And no show, or ad time on it, is more popular in Canada than the Super Bowl.” There are even more complicated issues to consider that this blog post doesn’t get into, such as how this slippery slope could affect streaming services like Netflix, or how a renegotiation of the North American Free Trade Agreement could throw a wrench into the CRTC decision.

The battle is still raging. Bell’s first appeal was denied in September, as the policy regulation had not been finalized. In November, however, a Canadian federal appeals court granted leave to appeal.[10] Now, “Bell is urging [Canadian Prime Minister] Trudeau to intervene by using an executive power for only the second time in Canada’s history.”[11] The act cited by both the NFL and Bell is Section 26(2) of the Broadcasting Act, which allows “allows cabinet to direct TV feeds in case of ‘urgent importance.’”[12]

It might prove useful to follow this struggle. This is more than just a greedy sports league going after every penny it can get its hands on. The areas of concern regarding intellectual property that are addressed in this blog post may shift gradually or rapidly; these are, after all, turbulent times, and intellectual property rights for Super Bowl advertising between the United States and Canada may just be the tip of the iceberg. It will be interesting to see not only how the Appeals Court rules, but where the next domino falls in advertising rights for other television programs.

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[6] Supra note 4.

[7] Supra note 5.

[8] Id.

[9] Supra note 4.

[10] Bell Canada v. Attorney General of Canada, Can. Fed. C.A., A-33-16, leave to appeal granted, 1/11/16

[11] Supra note 5.

[12] Id.