Simultaneous Substitution on Cable TV and Satellite

Or "Why can't I see the U.S. commercials in the Super Bowl?"

U.S. television programs, and particularly drama, comedy and entertainment programs, have always been vital components in the schedules of Canadian commercial broadcasters. This quality programming, popular with advertisers, has always provided healthy revenue margins, and has helped to subsidize the production of the expensive domestic programming required of Canadian broadcasters as a condition of license.

The first Canadian commercial television stations licensed in the 1950s were CBC affiliates. In 1960 the then Board of Broadcast Governors (BBG) granted licenses for commercial stations in each of the major markets to provide an alternative service to the CBC. They began broadcasting in 1961, and all of them acquired Canadian rights to American programs. As a significant proportion of the Canadian population lived close to the US border, about 30% of Canadians could choose to watch Wagon Train, Bonanza or Gunsmoke either on a Canadian station or via a signal out of one of the many U.S. stations close to the Canadian border.

Antennas in Canadian cities bordering the U.S. were all trained to the south. Toronto viewers wanted to be able to see the programming of Buffalo N.Y. stations WGRZ-TV (NBC), WBEN-TV (later WIVB-TV) (CBS) and WKBW-TV (ABC). Montreal viewers looked to Burlington for CBS’s WCAX, to Plattsburgh N.Y for NBC’s WPTZ-TV, and to Mount Washington, New Hampshire for ABC’S WMTW-TV, whose studios were actually located in Poland Springs, Maine. London, Ontario residents watched the signals coming from CBS affiliate WFBG-TV, NBC’s WICU-TV and ABC’s WJET-TV in Erie, Pennsylvania. While the major U.S. Network affiliates in Detroit blasted clear signals into Windsor, Ontario, the situation was a little different, because the Detroit stations had the clout with their respective networks to prevent the sale of popular US network series to the Canadian Windsor station CKLW-TV.

To the west, KCND in Pembina, North Dakota was garnering a majority of its commercial revenues from Canadian advertisers aiming at the Winnipeg market, as was KVOS-TV in Bellingham, Washington doing so from the Vancouver market. According to Barry Berlin in his book “The American Trojan Horse”, by the early 1970s no less than 23 US border stations were drawing substantial advertising dollars out of Canada, with six stations, including the three Buffalo network affiliates, getting around 40% of their gross revenues from Canada, and sharing between $15,000,000 and $18,000,000 a year from Canadian advertisers.

One way Canadian broadcasters in border markets dealt with this competitive situation was by broadcasting these shows in advance of the US broadcasts (‘pre-release’), in the hope that they would at least do better by showing these programs first. But then the advent of cable offered a new challenge, but with it a new opportunity.

The challenge came because, by the early 1970s, cable television (known as CATV, or Community Antenna Television) was beginning to proliferate across Canada, and with it came the further diminution of the value of the exclusive right obtained by a Canadian station to an American program. Viewers in markets far from the U.S. border could also now watch the same US programs on either a Canadian or a US channel, thanks to the CRTC allowing cable operators to bring in distant signals by microwave. . This was prompting Canadian advertisers to buy even more time on US stations seen in Canada, a revenue outflow which was only stemmed to some degree when the Canadian Government introduced legislation limiting the degree to which these purchases could be claimed as business expenses for tax purposes.

The opportunity came in 1972 when, in response to pressure from Canadian broadcasters, the Canadian Radio-Television Commission (CRTC), introduced regulations allowing television broadcasters to ask the larger cable system operators to delete incoming US program signals where a local broadcaster owned the Canadian rights to the identical program or program episode, and substitute the Canadian signal. Thus, a Canadian tuning in to watch an American program, on either the US or the Canadian channel, would see the Canadian version, with the Canadian commercials.

Later, as direct-to-home satellite systems were licensed in Canada, virtually all Canadians were able to have access to programming from all the US Networks, as well as many speciality channels. Before long, simultaneous substitution became a requirement on these satellite services also.

For Canadian television licensees, simultaneous substitution helped preserve the "logic of license". It was, however, imperfect. Anyone living close to the US border, who had a good antenna, could pick up U.S. signals with no substitution. Some Canadians went to the so-called “grey market” and bought satellite dishes from the U.S. And annually, thousands of viewers to the Super Bowl would protest that simultaneous substitution prevented them from seeing the spectacular commercials produced each year by American advertisers for exposure in this highly-rated event.

Secondly, and more importantly, with all Canadian broadcasters buying dozens of hours of US programming every year, it was inevitable that not every one of those programs could be scheduled in the identical time period as its US telecast. Prerelease offered some advantage, but significant numbers of viewers were still lost by the Canadian program rightsholders to American stations - and American advertisers.

The CRTC and the CAB have had this problem in mind for possible future action, but for the foreseeable future, Canada will remain the one country in the world where ownership of the "exclusive rights" to a US program for a foreign station's market doesn't mean getting total exclusivity.

Pip Wedge - updated February, 2006