The CRTC is immediately lifting advertising time limit requirements for discretionary television services to position them to better compete with online platforms.
The move is in response to a 2020 application from Quebecor Media, on behalf of TVA Group, asking for the removal of the advertising time limit of 12 minutes per clock hour on its discretionary services. The commission moved to lift time limits for conventional services in 2007.
TVA argued that with only discretionary services subject to an advertising time limit, foreign online platforms are unduly benefitting as they capture a growing share of advertising revenues. TVA’s application suggested removing the limit for discretionary services would help restore healthier competition, specifically in the French-language market, while injecting ad revenue back into the Canadian broadcasting ecosystem.
TVA additionally argued that some of the most popular French-language programs are produced locally at higher cost, saying full use of advertising space would allow it to better support the production of those programs and make them more profitable. TVA further cited CRTC data indicating profitability of discretionary and on-demand services increased in the English-language and bilingual markets between 2016 and 2020, while it decreased in the French-language market.
The CRTC announced Tuesday, it is removing advertising time limits for all discretionary services immediately, but retains the requirement that they must not broadcast any paid advertising other than paid national advertising, unless otherwise authorized by the commission. It’s also removing the limit on local advertising of six minutes per clock hour imposed on third-language discretionary services. The commission is additionally lifting the limit on local advertising of six minutes per clock hour imposed on discretionary services that broadcast local programming, as long as they continue to solicit local advertising only in markets where they broadcast local programming.
Intervenors concerned about cord-cutting, discount wars
While the Public Interest Advocacy Centre (PIAC) and the Independent Broadcasters Group (IBG) suggested the commission should wait for the modernization of the Broadcasting Act before removing advertising time limits, the commission said those regulatory changes will take years to implement. Pelmorex, parent company to The Weather Network, also cautioned that the increase in total advertising inventory could reduce advertising rates and lead to an ad spend migration to large vertically integrated broadcasters at the expense of some independent broadcasters. PIAC went further to assert that more advertising could lead to more “cord-cutting.”
“…it is clear that Canadian advertisers are increasingly using the Internet (regardless of the type of advertising placement, including “video” advertising placements) to more precisely target their campaigns and that the advertising revenues in linear television shows a downward trend,” stated the CRTC decision. “In light of the above, the Commission considers that, while discretionary services are still doing well (by remaining profitable overall) at this time, they nonetheless face significant competitive challenges in terms of audience and advertising revenues from online platforms.”
The CRTC decision suggests that in light of cord-cutting trends, it’s in broadcasters’ best interest to not significantly increase the number of ads aired throughout the day.
“The Commission considers that removing the limit would give broadcasters greater flexibility in allocating advertising minutes,” the decision states. “However, the Commission considers that it will be in broadcasters’ best interest to use this flexibility cautiously, seeking to strike a balance between maximizing advertising revenues and the interests of subscribers, in order to ensure subscriber retention against competition from online platforms.”
The CRTC is inviting licensees to file an application to modify their specific condition of service to reflect the changes.
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