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To:

Danielle May-Cuconato
Secretary General
Canadian Radio-television and
Telecommunications Commission
Ottawa, Ontario
K1A 0N2

Subject:

Broadcasting Notice of Consultation CRTC 2016-37, Call for comments on a

proposed distribution order prohibiting simultaneous substitution for the
Super Bowl (BNC 2016-37) Intervention

Dear Ms. May-Cuconato,

BCE provides the following Intervention regarding the proposed distribution order with
respect to simultaneous substitution for the Super Bowl (the Order). Certain information in this
Intervention is being filed in confidence with the Commission. [1]
This information is
competitively-sensitive, confidential, commercial information concerning our service costs,
operations and confidential negotiations. The release of this information would provide
competitors with invaluable information on our costs and negotiation strategies that would not
otherwise be available to them, and which would enable them to develop more effective
business strategies. The release of this information would thus prejudice our competitive
position and future negotiations resulting in material financial loss and causing specific direct
harm to our business. An abridged version of this Intervention is being provided for the public
record.
1.

The Commission's decision last year to prohibit simultaneous substitution for the Super
Bowl was astonishing. No party, including consumer groups, advocated for it in the public
proceeding that led to the decision and so the consequences were not fully explored. We have
since shown that the CRTCs decision will increase the losses of struggling local television
stations by tens of millions of dollars, making it more likely that stations close. At the same time,
it will freeze Canadian companies out of the biggest advertising event of the year and hand free
advertising over to their American competitors. It will also prevent Canadian programming from
being promoted to the biggest television audience of the year. The decision may have
generated headlines for the CRTC in February but most informed stakeholders have decried it
as bad public policy for Canada and a clear overreaction to a small number of complaints. The
2.

1]

This information is filed in confidence pursuant to section 39 of the Telecommunication Act and Broadcasting
and Telecom Information Bulletin CRTC 2010-961, Procedures for filing confidential information and requesting
its disclosure in Commission proceedings, dated 23 December 2010, as amended in BTIB 2010-961-1, dated
26 October 2012 to reflect the directives in Telecom Regulatory Policy CRTC 2012-592, Confidentiality of
information used to establish wholesale service rates.

BCE
Mirko Bibic
Floor 19
160 Elgin Street
Ottawa, Ontario K2P 2C4
Telephone: (613) 785-0615
Facsimile: (613) 560-0472
bell.regulatory@bell.ca

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vast majority of Canadians agree with that.1

The decision is not only wrong, it was arrived at without the necessary regard for
procedural fairness, it is unreasonable, and it is the result of the Commission acting outside its
jurisdiction. BCE has twice been granted leave to appeal on these grounds by the Federal
Court of Appeal, and the NFL has also been granted leave to appeal. In these circumstances it
would be inappropriate for the Commission to issue the Order before the final outcome of each
appeal is known.
3.

In the Notice of Consultation the Commission invited comments on the proposed

distribution order (i.e., the wording and structure of the Order) but has not requested comments
on the policy merits of prohibiting simultaneous substitution for the Super Bowl, its jurisdiction to
do so, or the appropriateness of proceeding by way of an order pursuant to section 9(1)(h) of
the Broadcasting Act (the Act). By way of background, we nevertheless provide brief comments
on the cultural and economic impact of the decision. We would be pleased to expand on these
and provide additional evidence in a proceeding to consider the merits of such a decision. We
also provide comments on procedural fairness, reasonableness, and jurisdictional issues that
we submit preclude the Commission from issuing the Order.
4.

Background
Pursuant to an agreement with the NFL, we have exclusive Canadian broadcast rights to
certain NFL games, including the Super Bowl, for a term that extends beyond the
implementation of the Commission's decision. #
5.

# It also gives us the right to sell and substitute Canadian advertising

for American commercials, which we exercise by relying on the simultaneous substitution rules.
We pay #
# dollars for these rights.2
In its decision last January the Commission found that simultaneous substitution is
necessary to allow Canadian broadcasters to "fully exploit and monetize the programming rights
they have acquired, to the benefit of their overall investment in the production of Canadian
programming."3 Despite this finding of fact, in a single paragraph, with effectively no review of
evidence, the Commission singled out the Super Bowl and arbitrarily decided to prohibit
simultaneous substitution for that one program beginning in 2017. 4 That is during the term of
our existing agreement. The Commission indicated it would issue amendments to the
Broadcasting Distribution Regulations to implement this decision.5
6.

We sought leave to appeal and in May of last year the Federal Court of Appeal granted
us leave. One of the grounds was that the Commission did not have the authority to implement
7.

# Field in confidence with the CRTC

1

Nanos Research, National Survey on Broadcasting Policy Summary Report (March 2015), available at
http://www.nanosresearch.com/sites/default/files/POLNAT-S15-T635.pdf (69% of Canadians say it is more
important to them personally to support Canadian broadcasters that pay for Super Bowl broadcast rights
compared to 20% that say it is more important to them to watch the US commercials; just 9% of Canadians think
that 100 complaints to the CRTC is enough to support the decision compared to 75% who think 1,000 or more
are necessary and nearly half who think 100,000 or more are necessary).

See our response dated 19 September 2014 to undertakings received from the Commission in the
proceeding initiated by Broadcasting Notice of Consultation 2014-190.
Broadcasting Regulatory Policy CRTC 2015-25, Measures to address issues related to simultaneous
substitution, dated 29 January 2015, paragraph 14.
Ibid, paragraph 22.
Ibid, paragraph23.

4
5

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such a decision using its regulation-making powers. Subsequently, the Commission stated that
instead of amending the regulations it would implement the decision by 9(1)(h) order, effectively
admitting that it did not have the power to implement it by regulation. 6 Section 9(1)(h), however,
also does not provide the necessary authority the Commission still cannot do indirectly what it
could not do directly. Accordingly, both, we and the NFL sought leave to appeal the new
Commission decision. The Commission then issued this Notice of Consultation. Since then the
Federal Court of Appeal has again granted us leave to appeal and the NFL has also filed for and
been granted leave to appeal. Clearly there are serious issues of procedural fairness,
reasonableness, and jurisdiction raised by the Commission's decision and proposed Order.
Cultural Impact of the Decision
The Commission's decision, if it is implemented, will have a significant negative impact
on both local television stations (including the availability of professional local news in markets
across the country) and the promotion, discoverability, and funding of Canadian content.
8.

As the Commission has seen in its recent hearing on local and community television,
local TV stations are in a precarious financial position. Private conventional TV has lost money
in eight of the last ten years, with total losses exceeding $900 million over that time. 7 These
stations are limited to advertising as their single revenue stream and this decision directly
attacks that one revenue stream. It will increase the losses incurred by our local television
stations by tens of millions of dollars. Currently, our local television stations together employ
2,000 Canadians and 12 are located in markets where no other local station operates.
9.

It is also well known that promoting Canadian programming, so that it can be discovered
by Canadians, is increasingly important to the Canadian broadcasting system. Each year,
Canadian programs benefit from the unique opportunity to be promoted to an unusually large,
broad television audience through millions of dollars in free promotional airtime during the Super
Bowl. For example, even though the broadcast was again sold out, this year we ran 21 spots as
promotions for Canadian programming including Letterkenny (addressing discoverability for
original Canadian programming on our CraveTV service), MasterChef, Orphan Black, Saving
Hope, Bitten, Jade Fever, news programming, and others. Together these promotions had a
commercial value of more than $3 million. This support for Canadian programming is additional
to any regulatory obligations and will be entirely lost as a result of the decision. It is ironic that
the Commission would prohibit the use of a significant and proven discoverability tool at a time
when it is convening "discoverability summits" to try to identify such tools in order to enhance
awareness of Canadian programming.
10.

The Super Bowl also directly contributes millions of dollars to the funding of Canadian
productions through Canadian program expenditure (CPE) requirements, all of which will also
be lost.
11.

Economic Impact of the Decision

The ability to advertise effectively to potential consumers drives economic activity across
a broad range of industries in Canada. The Super Bowl is likely the most important advertising
platform of the year. It provides Canadians companies an incomparable opportunity to achieve
mass reach with a highly engaged audience. Both large companies operating across Canada
and small local businesses operating in a single market like Saint John, Thunder Bay, or Yorkton
take advantage of this opportunity. The Commission's decision essentially makes it impossible
12.

Broadcasting Information Bulletin CRTC 2015-329, Simultaneous substitution errors, dated 23 July 2015,
paragraph. 17.
CRTC, Conventional Television - Statistical and Financial Summaries (totals exclude the Local Programming
Improvement Fund, which has since been discontinued).

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for them to continue to do so. Among the Canadian advertisers for our sold-out broadcast of the
most recent Super Bowl were, to take just a few examples:

National advertisers such as BMO, Chartered Professional Accountants,

Mackenzie Investments, President's Choice and PC Financial, Scotiabank, Sun
Life Financial, Wealthsimple, The Keg, and Tim Hortons.

Local advertisers such as Crystal Clear Imprints in Yorkton, Saskatchewan; Feifel

Broadbent Gualazzi LLP in Sault Ste. Marie, Ontario; Gondola Pizza in Winnipeg,
Manitoba, and northwestern Ontario; Gordon Stirrett Wealth Management in
Halifax, Nova Scotia; MacNeil Motors in Martensville, Saskatchewan; Moneta
Pub & Grub in Timmins, Ontario; the Nova Scotia Teachers Union; Sas-Kam
Sportsman in Kamsack, Saskatchewan; Sydney Chiropractic in Sydney Nova
Scotia; and Western Pizza in London, Ontario.

Freezing those advertisers out would be problem enough but the decision also results in
American companies being given advertising in Canada for free, as their commercials would be
automatically carried up from the US broadcast without any obligation to pay for the airtime and
impressions. In some cases that free advertising will give an unearned advantage to the
American companies over their Canadian competitors. For example, Wal-Mart and McCafe
would get free advertising while Canadian Tire and Tim Hortons are frozen out, as their only
option to reach the Canadian market would be to pay significantly higher US network rates to
run advertisements that would primarily reach the US market and only incidentally reach the
Canadian market. Similarly, large multinationals and small businesses in US border markets
would get free advertising while hundreds of Canadian small businesses in border markets that
are trying to compete with them would be frozen out. In all cases, this undermines the
competitiveness of the Canadian economy and harms prospects for growth and increased
employment.
13.

The advertising imported to Canada may also be misleading or irrelevant to Canadians

because it comes from companies that do not operate in Canada (such as Target), feature
products and services that are not available in Canada, or feature products that are only
available in Canada at a significantly higher price or on significantly different terms. Similarly,
some of the ads likely will not comply with Canadian advertising standards or will be illegal
under Canadian laws and regulations relating to products such as tobacco, pharmaceuticals,
gambling, or alcohol.
14.

Procedural Fairness
The duty of fairness owed by an administrative agency such as the Commission to those
that could be affected by its decisions includes providing adequate notice. In this case the
Commission did not give adequate notice of either the potential outcome of its decision (i.e., that
it would prohibit simultaneous substitution specifically for the Super Bowl) or the fact that it
would impose a burden of proof on those supporting the continued application of the
simultaneous substitution rules.
15.

In the case of a decision that could affect a person's rights, privileges or interests, as the
decision to prohibit simultaneous substitution for the Super Bowl undoubtedly does, the
Commission is required to give notice of the possible outcomes and an opportunity to present
evidence and arguments and respond to them. 8 The only outcomes for which notice was
16.

Brown and Evans, Judicial Review of Administrative Action in Canada (Toronto, Ont.: Carswell, 2013, 2014)
at paragraph. 9:1100-9:1200; Lakeside Colony of Hutterian Brethren v. Hofer, [1992] 3 S.C.R. 165 at 195-96; and
Canadian Radio-television and Telecommunications Commission Rules of Practice and Procedure, SOR/2010-

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arguably provided here were maintaining existing rules, eliminating simultaneous substitution
entirely, or eliminating it for all live event programming. The decision did not reflect any of these
outcomes. Accordingly the Commission did not have evidence regarding the impact of the
decision, its competitive neutrality, or even the Commission's jurisdiction to implement it. This
lack of evidence is reflected in the fact that no evidence or submissions were discussed by the
Commission when the decision was made.
Courts have described it as "grotesquely unfair" to fail to give parties prior notice of an
alleged burden of proof.9 Nevertheless, the Commission informed those supporting the
continued application of existing simultaneous substitution rules of their alleged burden of proof
for the first time only when it announced its decision.10
17.

Both of these significant departures from the duty of procedural fairness owed to BCE
and other participants in Commission proceedings undermine the underlying decision on which
the Order is based. The Order should therefore not be issued.
18.

Reasonableness
The decision to prohibit simultaneous substitution for the Super Bowl is unreasonable
because it is contrary to Canada's broadcasting policy and the history and purpose of the
relevant provisions of the Act, based on an irrelevant consideration and on the imposition of a
burden of proof that does not exist, and is unsupported by any relevant evidence.
19.

The Supreme Court has held that the Commission must act both pursuant to a specific
power given to it in the Act and in furtherance of the broadcasting policy set out in the Act.11
The policy includes safeguarding, enriching, and strengthening the cultural, political, social and
economic fabric of Canada; requiring each element of the system to contribute appropriately to
the creation and presentation of Canadian programming; and requiring broadcasting distribution
undertakings (BDUs) to give priority to the carriage of Canadian programming services and in
particular local Canadian stations. That is exactly what simultaneous substitution has done for
decades and continues to do, as the Commission itself found.
20.

This policy is reflected in section 9(1)(h) of the Act, which far from the proposed use here
was introduced "to establish a legislative basis for requiring that distribution undertakings give
priority to carrying Canadian stations and networks" given the potential role of cable companies
as "gate keepers" and the impact on Canadian broadcasters of the distribution of American
networks.12 As the Supreme Court has said, section 9(1)(h) "could, for example, allow the
CRTC to require the BDUs to distribute to Canadians certain types of programs, arguably,
because they are deemed to be important for the country's cultural fabric." 13 This would be
consistent with the Act's focus on "the cultural enrichment of Canada [and] the promotion of
Canadian content."14
21.

9
10
11

12

13

14

277, s. 21(1),
Canadian National Railway v. Winnipeg (City) Assessor, 1997 CarswellMan 367 at paragraph. 13 (C.A.)
Broadcasting Regulatory Policy CRTC 2015-25 at paragraph. 14.
See Reference re Broadcasting Regulatory Policy CRTC 2010-167 and Broadcasting Order CRTC 2010168, 2012 SCC 68, [2012] 3 S.C.R. 489 at paragraphs. 14-33.
See e.g. Sixth Report to the House of Commons of the Standing Committee on Communications and
Culture, pages. 36:76-36:77 and Department of Communications, A Clause-by-Clause Analysis of Bill C-136
(August 1988), commentary on section. 9(1)(h).
Reference re Broadcasting Regulatory Policy CRTC 2010-167 and Broadcasting Order CRTC 2010-168,
2012 SCC 68, [2012] 3 S.C.R. 489 at paragraph. 31.
Reference re Broadcasting Regulatory Policy CRTC 2010-167 and Broadcasting Order CRTC 2010-168,
2012 SCC 68, [2012] 3 S.C.R. 489 at paragraph. 32.

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The Commission's decision, however, does precisely the opposite it gives priority to
American stations over local Canadian stations that own exclusive broadcast rights and
supports the dissemination of American advertising despite the significant financial damage it
does to local television in Canada and Canadian programming. This is directly contrary to the
mandate Parliament has given to the Commission and undermines the simultaneous
substitution regime that Canada fought hard to win in the negotiation of the North American Free
Trade Agreement. An order pursuant to section 9(1)(h) of the Act cannot be issued for this
purpose.
22.

Rather than focusing on its mandate, the Commission based its decision on an irrelevant
factor: the fact that a very small number of Canadians had indicated that they preferred to
watch American advertising on the Super Bowl. Such a factor is not reflected anywhere in the
broadcasting policy that is required to guide the Commission's decisions. In any event, more
robust empirical evidence indicates that most Canadians disagree with the Commission's
decision.15 Moreover, anyone who wants to see the American advertisements can do so easily
on the Internet, typically in advance of the game. A decision based on an irrelevant factor is
unreasonable.
23.

The Commission also based its decision on a purported burden of proof imposed on
broadcasters and BDUs that supported the long-standing simultaneous substitution rules.
Nothing in the Act or elsewhere imposes or implies such a burden. It is untenable to
characterize a policy that has been an integral part of the broadcasting system applicable to all
stakeholders for more than 40 years as an "exception." If there is any burden it would be on
those supporting the issuance of an order that creates an exception for one program broadcast
by one licensee from the generally applicable Canadian broadcasting policy (requiring the
prioritization of Canadian signals) and regulations on which all stakeholders have long relied.
Again, basing a decision on a burden of proof that does not exist is unreasonable.
24.

Decisions of an administrative body like the Commission must be justifiable and

defensible in light of the evidence. The evidence before the Commission here overwhelmingly
demonstrated the importance of simultaneous substitution to the health and sustainability of the
Canadian broadcasting industry, as the Commission itself found, and there was no evidence
that simultaneous substitution for the Super Bowl was not meeting the same policy objectives.
For all these reasons the underlying decision is unreasonable and the Order should not be
issued.
25.

Jurisdiction
Even if the Commission had followed the required process and the underlying decision
were reasonable, it would not have the necessary jurisdiction to issue the Order. Simply put,
the Commission does not have the power pursuant to section 9(1)(h) of the Act to engage in
unlawful administrative law discrimination, impose retrospective regulations and interfere with
vested rights, or contradict the generally applicable regulations.
26.

An administrative body such as the Commission cannot draw a distinction that is not
authorized by its enabling legislation.16 The Order singles out the Super Bowl and subjects only
that program, and the one licensee that broadcasts it, to a prohibition on simultaneous
substitution while all other programs and licensees of the same class continue to benefit from it.
As mentioned above, after we were first granted leave to appeal the Commission acknowledged
that it cannot do this pursuant to its regulation-making power and proposed to do it instead
27.

15

16

Nanos Research, National Survey on Broadcasting Policy Summary Report (March 2015), available at
http://www.nanosresearch.com/sites/default/files/POLNAT-S15-T635.pdf
R v. Greenbaum, [1993] 1 S.C.R. 674 at 686 and Forget v. Quebec (Attorney General), [1988] 2 S.C.R. 90 at
105.

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pursuant to section 9(1)(h) of the Act.17 However, section 9(1)(h) of the Act does not allow the
Commission to do indirectly what it could not do directly. It simply authorizes the Commission to
require a BDU to carry "programming services specified by the Commission," in order to support
Canadian services and address the potential role of a cable company as a gate keeper. The
substance of any order must relate to carriage of a Canadian service and not the treatment of a
particular program like the Super Bowl on an American service. The Order amounts to unjust
administrative law discrimination that is outside the jurisdiction of the Commission.
The Commission also lacks the jurisdiction to regulate retrospectively and interfere with
vested contractual rights, which it is purporting to do by applying the Order to rights under our
existing contract with the NFL.18 As the Commission knows, our contract for the Super Bowl
extends beyond February 2017 and expressly contemplates simultaneous substitution, which is
central to our rights and benefits under the agreement. A power to interfere with vested rights or
regulate retrospectively is not implied simply because the Commission considers it in the public
interest; it must be necessary for the Commission to carry out its mandate. Nobody, including
the Commission, has suggested that is the case here.
28.

In any event, section 9(1)(h) of the Act can never grant the Commission jurisdiction to
issue an order that expressly contradicts the generally applicable regulations requiring BDUs to
carry out simultaneous substitution, as the Order does in this case. 19 As a matter of law, those
regulations remain binding on the Commission and BDUs and, as Supreme Court and Federal
Court of Appeal have made clear, they supersede any order the Commission might make
pursuant to section 9(1)(h) of the Act.20 Accordingly, if the Commission did purport to issue the
Order BDUs would have to carry out simultaneous substitution anyways, as the Commission
never has jurisdiction to issue a section 9(1)(h) of the Act order that contradicts standing
regulations. This is simply a reflection of the rule of law.
29.

Should the Commission require any additional information, we would be pleased to

provide it upon request.
30.

17

18

19

20

Broadcasting Regulatory Policy 2015-513, Regulations to implement policy determinations regarding

simultaneous substitution, dated 19 November 2015 at paragraph 26 ("powers to make regulations pursuant to
section 10 of the [Broadcasting Act]are to be exercised with respect to all licensees or classes of licensees."
See e.g. Bell Canada v. Amtelecom Limited Partnership, 2015 FCA 126 at paragraphs. 17, 18, 20-21;
Dikranian v. Quebec (Attorney General), 2005 SCC 73 at paragraphs. 30, 32, 37-38, 49; Gustavson Drilling
(1964) Ltd. v. M.N.R., [1977] 1 S.C.R. 271 at 282; and piciers Unis Mtro-Richelieu Inc., division conogros v.
Collin, 2004 SCC 59 at paragraph. 46.
Simultaneous Programming Service Deletion and Substitution Regulations, SOR/2015-240, s. 4(1) ("a
licensee that receives a request referred to in section 3 must carry out the requested deletion and
substitution").
Capital Cities Communications Inc. v. Canadian Radio-Television & Telecommunications Commission,
[1978] 2 S.C.R. 141, 1977 CarswellNat 553 at paragraph. 47 and French v. Canada Post Corp., 1987
CarswellNat 224 at paragraph. 13 (F.C. T.D.), aff'd 1988 CarswellNat 1011 (F.C.A.) at paragraph. 1

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Yours truly,
[ Original signed by M. Bibic ]
Mirko Bibic
Chief Legal & Regulatory Officer and
Executive Vice President, Corporate Development
*** End of Document ***