BUSINESS

4 Ways a change in CRTC Substitution Rules Will Affect Canada

01/29/2015 03:04 EST | Updated 03/31/2015 05:59 EDT
TORONTO - Canadian TV viewers, perhaps as early as next year, will finally get to see those U.S. Super Bowl ads they've been clamouring to watch for years, but industry experts say the rule change by regulators could have ripple effects.

The Canadian Radio-television and Telecommunications Commission said Thursday that it will officially ban the substitution of Canadian advertisements over American TV signals starting with the Super Bowl being played in 2017.

However, the ads might be seen in Canada as early as next year if rights holder Bell Media gives the OK.

For now that decision is restricted to the big game, but industry analysts say it opens up a series of new challenges that could impact the country's broadcast industry, which is already facing pressure from streaming video alternatives and defecting advertisers.

Other changes that could develop from the fallout of the CRTC's decision on the Super Bowl:

MORE PRESSURE ON AD RATES

Advertisers could push Canadian TV networks to lower how much they charge for a Super Bowl TV spot, arguing that more Canadians viewers are tuned to the U.S. feed.

The big game is one of the most lucrative annual events for broadcasters in Canada.

This year, CTV charged between $170,000 and $200,000 for a 30-second advertisement on the Super Bowl, according to figures confirmed by a source close to the network.

CANADIAN COMPANIES MAKE TV A LOWER PRIORITY

National advertisers like Tim Hortons, grocery chains and the Canadian banks will get less bang for their advertising buck on television, which could push them to look for alternatives.

"They will take the money and put it into social advertising — be it Twitter, Facebook or Instagram — and tap into streams of people engaged in the Super Bowl at that moment," suggested Kaan Yigit, an analyst at Solutions Research Group.

"Those advertisers are already experimenting with a migration of their dollars out of TV. We don't have to give them new reasons."

TODAY THE SUPERBOWL, TOMORROW THE OSCARS?

While the CRTC says changes to substitution rules only affect the Super Bowl, analysts suggest the door is open for other major live events, like the Oscars and Grammy Awards.

"If they start picking and choosing what are (considered) high-profile broadcasts, it could have a more negative impact," said Dave Heger, a telecommunications analyst at Edward Jones in St. Louis.

While the Oscar commercials don't compare with the hype around the Super Bowl, a growing number of U.S. advertisers have warmed to the awards show as a way to plug new products.

Samsung often picks the Oscars as the launch pad for its biggest campaigns, while both cosmetics companies and automakers traditionally round up celebrities to appear in new commercials made for the event.

ROGERS GETS MORE SWAY

Holding the Canadian broadcast rights to National Hockey League games for 12 years will give Rogers Communications the upper hand in negotiations with advertisers who want to reach viewers on a national scale every week.

Rogers has already tied up long-term branding deals with Scotiabank and other big companies like Canadian Tire and brewer Molson, but other advertisers could wind up forking over more money to lock-in viewers.

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