Opinion
US Superbowl commercials or local news – what’s more important to you?

Do you know that prior to 2 years ago, you couldn’t watch the Superbowl complete with those amazing Superbowl commercials in Canada. Before that, you had to wait, maybe catch them online, or the next morning on a local newscast. I know, it seems like ancient history. In our thirst for entertainment and information that is widely available “on demand”, we are testing the limits of a terrestrial television system designed decades ago.
The Supreme Court of Canada has agreed to hear the case of Bell Media/CTV and the NFL as it relates to the CRTC’s decision to exempt the Superbowl broadcast from the rules of “simultaneous substitution”. Called ‘sim-sub’ for short, it is the practice of blocking of US commercials on Canadian TV channels and in their place substituting national and local Canadian commercials. It’s been around since the rise of cable delivery in our country as a way to protect the exclusive licenses that Canadian TV companies have when they purchase the rights to a US network program and air it in Canada. These revenues help offset the cost of local news operations which generally are resource-heavy, low-margin, and in some cases, heavily subsidized programs.
In 2016 the CRTC made an exception to the sim-sub rules, allowing cable & satellite companies to dispense with the practice for Superbowl. Only the Superbowl. Why? Because the CRTC received tons of complaints for years from people who wanted to watch the big budget US Superbowl ads but couldn’t because the Canadian broadcast was full of ads for Tim Horton’s. You know what I mean.
This is in the news now because the Supreme Court of Canada has agreed to hear the case being made by CTV and its parent company Bell Media, along with the NFL. They make very good points relative to policy and regulations around this long-standing practice. They negotiated a long term deal with the NFL based on buying the “exclusive rights” to the game and paid big money. And then the CRTC changed the rules.
Here’s some background. The Canadian TV system works, complete with its local newscasts and Cancon rules worked because for years, revenue was generated and profits derived largely by purchasing Canadian rights to first-run US network programs and broadcasting them, generally in primetime, in “simulcast” with the originating US station. You know… you think you’re watching Lucifer on FOX 28 KAYU only to realize you’re watching CTV when a commercial break comes on. You’re a bit confused, then the show ends and suddenly you’re watching FOX 28 again. No, it’s not you. It’s the system. This practice protects the Canadian TV station’s exclusive rights by blocking all other signals and inserting the Canadian channel over top of them.
Still with me? Ok… now in the case of the Superbowl, the system changed with no apparent warning.
The Superbowl is widely watched, but its for the commercials, as evidenced by the many complaints the CRTC received every year. In their zeal to satisfy the masses and quell the complaints, the Commission in effect sacrificed CTV’s exclusive right to broadcast the game in Canada, and killed their ability to recoup the massive rights fees they’ve paid.
What happened next? The Superbowl arrived on a variety of US cable channels, complete with the must-see commercials. And CTV, the only company that actually paid for the exclusive rights to broadcast the program in Canada, was out of luck. The Superbowl was featured on a number of channels and CTV’s audience took a beating. The value of their commercials went down considerably. Why? Because of the US channels with the high-budget US ads. The tsunami of production value, A-list talent and of course, those Budweiser horses proved irresistible.
So off they all go to the Supreme Court to sort it out. Bell Media will surely argue that the loss of revenue from a show like Superbowl directly impacts the funds available to create local newscasts, pay staff, and generate profit for shareholders.
Bell said in a statement it is pleased that the Supreme Court will hear the appeal:
“We look forward to advancing our argument that a broad range of Canadian creators, producers, advertisers and businesses have been negatively impacted by the original decision.”
So what do you think? Is watching US commercials in the Superbowl more important than preserving the regulatory framework that protects our local over-the-air TV system across the country? Because the two really are inextricably linked. By eroding the ability for a Canadian program rights-holder to recoup their investment, as the CRTC did by making an exemption of Simsub rules for Superbowl broadcasts, it strikes right to the heart of funds available to produce local news programming.
So now the greater question is just how important is local TV in today’s world of digital communication, on demand viewing, tablets, phones, PVR’s, and social media? Audiences and revenues for local Canadian TV stations have been under increasing pressure for years, and few cities realize this more than Red Deer.
While not related to Superbowl advertising, the one local TV station here closed its doors and quit broadcasting in 2009. When it closed, I’m told by a former Commissioner that not a squeak was heard at the CRTC from this local community- not a letter or comment. So was the station even missed? Many will remember (or not) when it was for a short period of time called E! Entertainment, all in an effort to find inexpensive programming. Ultimately it didn’t work. CKRD, RDTV, E!, CHCA- it had many aliases, but ultimately struggled to drive enough revenue to continue operating. That was 9 years ago, and many of the factors that led to its closure have only accelerated since then.
Do you watch local TV news from the remaining stations in Edmonton and Calgary? Are these institutions still important, or would we all rather just watch US commercials and US TV shows and say goodbye to the notion of local TV news programming here in Canada? How have your habits changed? Do you care? Because you really can’t have it both ways for very long.
Lloyd Lewis is President of Todayville, INC. He was VP/GM of CTV Edmonton from 2005-2015 and GM of RDTV Red Deer from 1997 to 2000. He worked in the local television industry for 35 years.
Business
The Digital Services Tax Q&A: “It was going to be complicated and messy”

A tax expert on the departed Digital Services Tax, and the fiscal and policy holes it leaves behind
It’s fun, and fair, arguing whether Mark Carney “caved” in suspending the application of Canada’s Digital Services Tax to revive broader negotiations with the Trump administration. But I figure there are other dimensions to this issue besides tactics. So I got in touch with Allison Christians, a tax law professor at McGill University and the founding director of the Canadian Centre for Tax Policy.
In our talk, Christians discusses the policy landscape that led to the introduction of the DST; the pressure that contributed to its demise; and the ways other countries are addressing a central contradiction of the modern policy landscape: without some kind of digital tax, countries risk having to impose costs on their own digital industry that the overwhelmingly US-based multinationals can avoid.
I spoke to Christians on Friday. Her remarks are edited for length and clarity.
Paul Wells: I noticed in your social media that you express inordinate fondness for tax law.
Allison Christians: You will not find a more passionate adherent to the tax cult than me. Yes, I do. I love tax law. Of course I do. How could you not? How could you not love tax law?
PW: What’s to love about tax law?
Christians: Well, tax law is how we create our country. That’s how we build our society. That’s how we create the communities that we want to live in and the lifestyle that we want to share with our neighbours. That’s how: with tax law.
PW: I guess the goal [of tax policy] is to generate the largest amount of revenue with the smallest amount of grief? And to send social signals while you’re at it. Is that right?
Christians: I don’t think so. Tax is not about raising maximum revenue. Tax is about deciding what society you’re trying to build and what portions of that society need to be made public, and what can be left to private interests which then need to profit. So we have decided in Canada, as a country, that basic minimum healthcare cannot be a for-profit enterprise. It has to be a public enterprise in order to make sure that it works for everybody to a certain basic level. So tax is about making those decisions: are we going to privatize everything and everyone pays for their own health care, security, roads, insurance, fire department etc. And if they can’t pay, then too bad? Or are we going to have a certain minimum, and that minimum is going to be provided in a public way that harmonizes across the communities that we have. And that’s what tax is about. It’s not about extracting revenue at all. It’s about creating revenue. It’s about creating a market. It’s about investing in a community. So I just object to the whole idea that tax is about extracting something from me, because what tax is doing is creating a market for me to be able to thrive. Not just me, but all of my neighbours, as well.
PW: Let’s jump forward to the events of the past couple weeks. Were you surprised when the Prime Minister suspended the Digital Services Tax?
Christians: I think “surprise” is probably too strong of a word, because nothing any political leader does to cope with the volatility of the United States would surprise me. We are dealing with a major threat, a threat that is threatening to annex us, to take our resources, to take our sovereignty, to take our communities and rip them apart and turn them into a different way of being. And that’s a serious threat. So nothing would surprise me in response to that. Disappointed, of course. But not disappointed in our Canadian response. More disappointed in the juggernaut that Trump has been allowed to become by his base, and that they’re pulling the rug out from under everyone that’s cooperated with the US agenda for decades, including us.
PW: What’s your best understanding of what the Digital Services Tax was designed to accomplish? And is it unusual as taxes go?
Christians: So to understand this, you really have to be a policy wonk, which isn’t much fun. So I’m gonna give you an example that might make it clear from the perspective of Canada. Why we might have a Digital Service Tax or might want something like it.
I want to preface this by saying that the Digital Service Tax is by no means the only way to do the underlying things we want to accomplish. Certainly other countries have been collecting DSTs and have been collecting billions of dollars, and US companies have had reserves for paying that Digital Service Tax. So we just left money on the table. But let me try to explain why we want to do the thing without getting too “tax nerdy” on you.
So I’m sure you can come up with the one Canadian company that’s streaming content on television or on digital devices.
PW: Crave?
Christians: Yeah, that’s the one. Crave is owned by Bell Media and is a Canadian company. And Crave pays taxes in Canada. Crave has to compete against Netflix, which does not have to pay tax in Canada. Netflix just simply doesn’t have to pay the same way that Crave does unless we force them to pay. Crave has to compete with US and foreign content streamers. We may get to a point where we can get Netflix to collect some sales tax on the GST, for example. But if Netflix itself stays out of Canada, physically, but it’s still getting all those customers that otherwise Crave would have access to, then Crave is at a structural disadvantage.
Now tell me which Canadian provider competes with Google.
PW: I can’t think of one.
Christians: Exactly. There isn’t one. How are we supposed to get a homegrown competitor when our competition simply does not pay taxes, and any one we would grow here in Canada has to pay tax here? So we have to understand the Digital Service Tax as simply our response to the fact that we normally do not tax a company unless they are physically located in Canada. But now we’ve got to go into this digital space and say: you’re still here, even if we can’t see you and talk to you, you’re still here. You’re doing something in our market. And that’s what the Digital Service Tax was trying to deal with.
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PW: Now, how are companies likely to respond to this Digital Services Tax? It seems to me the likeliest outcome would be that they would pass those costs on to their customers.
Christians: Yes, that is what companies have said they would do. Google talked about passing those costs on to the customers. And their customers obviously are advertisers. I want to point out that advertisers in Canada used to advertise in local newspapers and media. Now they advertise on Facebook, owned by an American-headquartered Company, Meta. Right now, they advertise on those foreign platforms, so we don’t have those advertising dollars here. Advertisers might have had to pay the Digital Service Tax if Google, or whoever, had passed it on to them. I think it’s fair to say, that Canadians advertising on those foreign platforms would have faced a gross-up to cover that tax.
PW: So, the net effect is that it just becomes more expensive for Canadian consumers. I’ve seen it argued that all this tax would have succeeded in doing is making Netflix more expensive.
Christians: Okay, that’s possible. I mean, that assumes the supply is totally elastic: you can increase the price of Netflix, and people will still pay it indefinitely. Right? So that’s the assumption in the short term. But the long-term assumption is that Crave becomes more competitive — because its competitors are paying the same tax that it is paying. The Crave subscription price may or may not respond, but if you put pressure on the foreign service providers in the same manner that’s on the Canadian providers, it might cost more, but we’re also getting the tax.
PW: I believe the Prime Minister, in an interview with the CBC said that he was thinking of getting rid of this thing, anyway. [The quote I’m reaching for here is: “Look, what we did this week is something that I think we were going to do anyways, in the end, for the deal.” At 1:07 in this video. — pw] Why do you think he would have been leaning in that direction? And do you think that absent a Truth Social post by President Trump, he actually would have gotten rid of the thing?
Christians: I can’t speculate too much about the politics of this, because I’m not talking to many of the people that make policy, but I know the complaints about the DST, and I don’t dispute them. It was going to be a complicated tax to collect and it was going to be messy in terms of compliance. There’s a lot of uncertainty around the tax and I know there’s always an enormous amount of pressure to reduce all taxes. There’s always going to be that segment of society that sees taxes being thrown down the drain and not as an investment in the society that we want to live in.
American companies are famous for investing their money on lobbying and not in taxes. They spend their money convincing us that it would be bad for us to tax them, and they can spend a much smaller percentage of their money on lobbying and get us to believe that narrative. And the narrative is that somehow, if we tax Google, Google will go away and we won’t be able to use it. That Google won’t innovate. It’s nonsense, but it’s a story that resonates nonetheless. Was Prime Minister Carney pressured to get rid of the DST? Undoubtedly. And maybe he personally thinks there’s a better way to tax these companies than with an excise tax. I don’t fault him for thinking that. I have even written that there are better ways for Canada to collect this tax than the Digital Services Tax.
PW: I’m going to want you to tell me about these other ways. But I assume that if a Canadian government attempts any of these other ways, then the companies we’re talking about know that all they have to do is hit the Trump button and the pressure will be right back on.
Christians: That’s correct. There are a couple of [alternatives to the DST]. We could, like some other countries have done, redefine the types of income that we subject to withholding taxes in Canada. It’s a complicated technical idea, but basically any payments that go from our advertisers to Google, we could impose a withholding tax simply by expanding a couple of definitions in the Income Tax Act that would then carry over into our treaty. Now, people will push back on that, and say that you’re changing a deal, and people will object to that. And we can have an argument about that, but that possibility exists. That withholding tax is the most straightforward way to do this and we should probably already be thinking about it.
Another one that’s kind of fun, which I really enjoyed learning about when I came to Canada, is Section 19 in the Income Tax Act. So, Canadian advertisers are paying Google now, instead of a Canadian newspaper. Well, Section 19 basically says that whenever someone makes a payment for advertising to a foreign, non-Canadian media, that payment’s not deductible.
Now that provision seems to violate Free Trade rules because it changes, depending on who you make the payment to. But it’s a provision in law. The US objected to it when we adopted it by imposing a reciprocal tax on US advertisers paying Canadian outlets, which doesn’t seem to bother anybody.
PW: But the application of that will be very asymmetrical, right?
Christians: Yes, for sure. And I’ll tell you what the Canadian media noticed when we started paying for digital newspapers online: that they’re not subject to Section 19 — only print and traditional media are subject to this denial of deduction — and Canadian media advocated for this denial of deduction for online publications as well.
All you have to do is look at the wording of Section 19 — and you don’t even have to change the words — and all of a sudden all those payments to Google are not deductible. But if the payments were to Crave, they would be deductible, and if they are to the Globe and Mail, or other Canadian companies, they would be deductible. That is a different kind of advantage for the Canadian competitor that’s a little less susceptible to Trump’s understanding, and a little less susceptible to the politics that surround the Digital Services Tax. But it’s technical. You have to explain it to people, and they don’t believe you. It’s hard to understand it.
PW: Theoretically a two-time central-bank governor could wrap his head around it.
Christians: Yes, I think he could fully understand it, for sure. You’re absolutely right. Will he want to do it, though? I just don’t know.
PW: You said that there are other jurisdictions that continue, today, to successfully tax the web giants. Who are you thinking of?
Christians: Well, Austria’s been doing the Digital Service Tax since the beginning. The UK has the Diverted Profits Tax that they’ve been using. Australia has one that’s been enforced. Austria stands out because I think it was 2017, in Trump’s 1st term, and it was part of a group that Trump threatened to retaliate against, but they just quietly kept going and they’re still collecting it. Part of the narrative is that we, Canada, came too late to the DST party. We just weren’t part of that initial negotiation. We came in too late, and then it was too obvious, and people were able to isolate us from the pack.
PW: My understanding is we’re looking at a hypothetical $7.2 billion in revenue over 5 years. And that represents a shortfall that’s going to have to be found either in other revenue sources or in spending cuts, or in greater debt. Aside from the DST, do you think Canada could use a general overhaul of its tax code?
Christians: Always. Yes, absolutely! Taxes are funny, right? Because they come into every single political battle, and what ends up happening is that politicians treat the Tax Act and the tax system as a present-giving machinery, and not as a clear policy deliverance system.
I am, every day, surprised at how complicated the Canadian tax system is. It’s way too complicated. You can’t even fill out your own tax return in this country. You’re going to make mistakes because it’s just too ridiculously written. It’s too confusing. It’s too messy. So it’s time to take another look. But you need a commission [like the 1962 Carter royal commission on taxation]. You need to be bipartisan. You need to spend money on that. You need to think that the things that you do have long-term effects, and this takes political courage. And basically it requires upsetting a bunch of people and resetting things, and we just might not be at the right time politically to be doing that because people feel vulnerable to volatility from abroad. So it may not be the time to push that.
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