From Macleans:

The Ottawa Citizen reports that, as of Sept. 1, the CRTC has given the networks carte blanche to run as many commercials as they want—a major change from the old regime, which capped the amount of time that could be devoted to ads at fifteen minutes per hour.

You can’t really fault the CRTC for this, in my opinion. The networks have probably been wailing and gnashing their teeth for years about wanting more ad revenue, and I’m not sure it’s in the CRTC’s mandate to say no. The interesting part is how TV networks (here and in the US) are reacting to competitive threats, and what it’s going to mean for TV viewers.

Let’s think through the scenarios. Today, from a critical perspective, the original programming airing on cable is orders of magnitude better than what’s on network TV…smarter, funnier, more culturally relevant and disproportionately (in terms of shows produced and certainly audience ratings). The network shows that do seem to aim higher suffer from poor ratings and the constant threat of cancellation. It’s reached the point that (as the same Macleans writer mentioned a few weeks ago) Emmy producers have openly admitted that they’re annoyed at having to spend time celebrating shows chosen for excellence rather than popularity.

Why does this matter?

Well, one of the first things any marketing or strategy student will learn in business school is Michael Porter’s Five Forces model. The basic idea is that any industry has five primary forces weighing on it: bargaining power of suppliers, bargaining power of customers, the threat of new entrants to the industry, the threat of substitute products and competitive rivalry within the industry. As these forces increase an industry becomes less attractive to those trying to make a buck inside it. This is not a complex model and is really just a starting point of analysis, but it’ll suit our purposes.

The TV industry in recent years has certainly been getting more pressure, mainly from two places: substitutes and new entrants. Substitutes are numerous, but the internet has been the most significant. Not only does it take eyeballs away from the TV, but it represents an unusual substitute in that it lets you watch TV’s content, but in a way that doesn’t contribute to their established revenue stream. New entrants have been a serious problem as well. It was one thing that the cable networks were showing documentary content and HBO was the only other original programming they faced, but the success of HBO shows — especially The Sopranos — changed that. Suddenly HBO was a powerhouse, and hit shows started coming from the likes Showtime, F/X and more. Even AMC produced a hit with Mad Men.

So what does an industry do when faced with pressure like this? They have, as far as I can see, two options.

First, their lobby group will ask the regulatory agencies — the CRTC, in this case — to lift bans on how much ad time they can run in a show, so they can shore up their own ad revenues. This is a limited solution, though; networks know they’re trying viewer patience with too many ads. It’s worth noting as well that it’s not just networks doing this: I’m pretty sure HBO has never made an episode of Entourage that ran more than 21 minutes. In any case, DVRs are killing this revenue stream slowly but surely. Product placement is the only place left to go for the networks.

Second, the individual companies will try to beat each other into submission, which is healthy. They’re pretty good at this, but a few years ago CBS hit paydirt with a hail mary tactic — Reality TV — and turned itself from a dog into a star. Soon every other network followed suit. However, in so doing the industry has, in my opinion, put itself into a massively divergent path from what regulatory bodies probably hope for. I think they’ve spurred the move toward official two-tier television.

We’re already well on our way, of course. Year after year critically acclaimed shows air on cable, while networks air theirs for a season or two and then let them die. Network execs want shows that have a good bottom line. Two keys there: lots of ad revenue and low production costs. That spells reality TV…absolutely loaded with product placement, cost virtually nothing to produce and can be churned out season after season with no time off needed for writing. So how do you maximize your audience for reality TV shows?

“Nobody ever went broke underestimating the taste of the American public.”  -H.L. Mencken

Ya go lowbrow, that’s how. Witness More To Love. Google it, I can’t even bother to link to it. Between shows like that, or Married By America, or Flavor Of Love we’re coasting toward Mike Judge’s vision of America’s top TV show being Ow, My Balls! wherein the stars just get hit in the nuts over and over again. Sound ridiculous? Sure it does, but remember…Jackass. Even cable channels like A&E or TLC, not long ago, would show thoughtful programming. Now A&E is the perpetual Intervention network and TLC long ago gave itself over to nonstop House Porn.

This is, of course, no different than any other form of entertainment. Most music is radio filler; only a small percentage of what’s produced today will be remembered ten years five years 9 months from now. Movie theatres are packed for the same easy shit every weekend, but few of those movies are considered art. More than half of all paperback books sold each year are romance novels. In each of these cases there’s no real divide between what I’ll call the ‘junk’ and the ‘art’. Typically the more adventurous product is turned out by smaller labels/studios/publishers, but that’s transparent to the customer. Books cost what books cost, as do CDs or iTunes downloads, as do movie tickets. Some subtle demand-based pricing notwithstanding, you don’t pay more to see No Country For Old Men than you do to see Meet The Spartans, just as you don’t pay more for a paperback copy of A Moveable Feast than you do for a copy of The Celestine Prophecy.

And that’s the key difference we could see now: network TV — traditionally considered free, notwithstanding cable or dish provider fees — is moving steadily toward a schedule full of moronic programming rife with product placement. Meanwhile, the only channels producing shows that can be classified as art will cost dramatically more. Infinitely more, if you really do have free network TV today. So the customer wouldn’t just be paying for premium content. They’d have to pay if they’d like to watch television that doesn’t insult their intelligence. For something as heavily regulated as television (when regulation implies/compels some level of interest in the public good) to allow those kinds of tiers would be odd, to say the least.

If the FCC were to drop the distinction between network and cable TV, the situation might reverse itself. Assuming they don’t, though, networks have huge operations to fund and will be forced to keep putting profitable programming on the air. And you know what that means.

Watch your balls, everybody.