Entertainment & Media Law Signal : Canadian Entertainment Lawyers for Licensing, Intellectual Property & New Media Matters

In response to a steady increase in the number of complaints from Canadians over loud ads, the regulator of broadcast television in Canada, the Canadian Radio-television and Telecommunications Commission (“CRTC”), on September 13, 2011, announced that broadcasters must control the loudness of TV commercials by September 1, 2012. A CRTC news release included the following statement from then Chairman Konrad von Finckenstein:

“Broadcasters have allowed ear-splitting ads to disturb viewers and have left us little choice but to set out clear rules that will put an end to excessively loud ads. The technology exists, let’s use it.''

Just a few short months later in December, 2011, the CRTC published draft regulations for comment requiring Canadian broadcasters to ensure that both programs and ads are transmitted at the same volume. This means viewers will no longer have to reach for the remote when programming switches to commercial messaging. The regulations require Canadian broadcasters and distributers, who are also responsible for maintaining the volume of programs, to adhere to the technical requirements set forth in ATCS Recommended Practice A/85: Techniques for Establishing and Maintaining Audio Loudness for Digital Television, which provides standards for measuring and controlling television signals in order to manage audio fluctuations between programming and commercials. The Recommended Practice is published by the Advanced Television Systems Committee, the internationally recognized body that sets technical standards for digital television.

The final regulations were published by the CRTC on May 8, 2012, and come into force on September 1, 2012. In a May 8 CRTC press release Leonard Katz, Acting Chairman of the CRTC, confirmed that these regulations “bring us a step closer to our goal of eliminating loud TV ads” and “provide relief to viewers.”

Amendments implementing the above requirements were made to the Television Broadcasting Regulations, 1987, the Specialty Services Regulations, 1990, and the Broadcasting Distribution Regulations.  

The amendments will not necessarily affect the ability or desire of viewers to fast forward through commercials altogether. However, as of September 1, 2012, the date when broadcasters will need to ensure commercials are received at an even volume in relation to their programming counterparts, Canadians may find they no longer need to reach for the remote in between breaks in programming to control unmanageable fluctuations in television loudness.

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 While advertiser’s traditionally spend a significant amount of money, effort and time to protect their brands from the potential negative implications of aligning with scandalous celebs, Charlie Sheen’s bad boy image and controversial behaviour seems to have been exactly what attracted advertiser’s Fiat and DirecTV to the star.

Advertisers pay huge dollars to tie their products or services to successful celebrities and athletes in order to create, alter or reinforce a particular brand image that aligns with and leverages the personality, image and success of the celebrity.  But what happens when the celebrity behaves badly? How does a brand save itself from the negative effects of the association? The answer: a “morals clause”. Morals clauses recognize the potential negative effects that a star’s off camera activities can have on the brand with whom the star is associated. To guard against this risk, the morals clause gives the advertiser the contractual right to terminate an endorsement deal in the event the celebrity engages in certain offending conduct or behaves in a manner that would reflect poorly upon the individual’s character, and, by association, that of the brand.

Morals clauses were initially introduced in the early 1920’s (allegedly following the scandal of silent film comedian Roscoe "Fatty" Arbuckle) in Hollywood studio agreements with their contracted actors. Morals clauses were also initially employed in agreements between major sports leagues and their athletes (e.g., Babe Ruth). Today, morals clauses are ubiquitous in talent and endorsement agreements. Morals clauses can be drafted broadly to apply to behaviour that may shock, insult or offend public morals or decency, or which may bring the actor (and the brand by association) into public hatred, contempt, or disrepute, or behaviour that is simply embarrassing or inconsistent with the image of the brand (e.g., alcohol abuse or extramarital affairs).  Others, however, usually following significant negotiations, can be more specific allowing contractual cancellation only in certain instances. For example, if the celebrity is convicted of a crime (e.g., dog fighting or sexual assault) or is involved in a scandal alleging particularly offensive conduct such as drug abuse, pornography or domestic violence. Without a morals clause, advertisers may still attempt to protect their image by pulling any advertising featuring the star and by deciding not to renew a contract upon its expiration. However, without a morals clause, and depending on the terms of the arrangement, advertisers may still be required to pay hefty sums to the engaged talent following a scandal despite publically distancing the brand from the talent. 

While we do not know the specific details of these separations, morals clauses likely played a part in sponsorship cancellations following these high profile celebrity scandals.  In 2005, after images surfaced of Kate Moss apparently using cocaine, Kate was publically dropped by Burberry, Chanel and H&M.  Following the 2008 Summer Olympics, images of Michael Phelps allegedly smoking marijuana resulted in cereal maker Kellogg's dropping its Frosted Flakes endorsement deal with Phelps and claiming that “Michael's most recent behavior is not consistent with the image of Kellogg”. Similarly, after the scandalous extramarital affairs of Tiger Woods surfaced in the media in 2009, global consulting giant Accenture was the first of many brands to end its sponsorship with the world’s most famous golfer claiming that he was “no longer the right representative for its advertising”. For these and other celebrities whose naughty behaviour has landed them in the public eye, it is likely that any endorsements they attract from now on will be subject to broad non-negotiable morals clauses that protect the advertiser’s ability to easily terminate the endorsement arrangement… Or will they?

What happens where the scandalous activities or rebellious image of a particular celebrity is exactly what the brand wants to leverage? Bad idea or simply brilliant marketing? The latter according to Fiat and DirecTV, two brands that have recently engaged bad boy Charlie Sheen as the star in their new ad campaigns. Charlie Sheen, no stranger to negative publicity, has received significant media attention for drug use, domestic abuse, prostitution and generally strange behavior. While such behavior may be severely off-putting for some, Sheen has received a bit of fan fare for his crazed antics including his “winning” tirades, references to drinking “tiger blood” and his “violent torpedo of truth” tour.  These antics have resulted in parodies on YouTube, a roast on Comedy Central and now, television commercial deals with at least two major brands. In fact, it seems like Fiat and DirecTV are relying upon just that kind of questionable behavior to improve the brand image of their respective products and services.

In the Fiat “House Arrest” commercial, Charlie Sheen aggressively drives a Fiat inside his mansion, which is full of partying guests and beautiful models. Sheen emerges from the vehicle with a visible ankle monitor claiming “I love being under house arrest. What do I get for good behavior?” The DirecTV “Platoon” commercial cautions against the perils of choosing cable TV, which decision results in unhappiness and, subsequently, a series of bad decisions leading the main character down a nasty spiral where he meets Sheen at a Turkish bath house and ends up playing out a scene from Platoon with Sheen. The brand comedically cautions against such bad decision making and states “Don’t reenact scenes from Platoon with Charlie Sheen. Get rid of cable and upgrade to DirecTV”. While brands typically avoid aligning their products and services with controversial celebrities with negative public images, and even take significant steps to negotiate contractual outs in the event of bad behaviour, these brands have embraced the rebellious, out-of-control bad boy that is Charlie Sheen just when we thought we’d seen enough of him. For Fiat, the edgy, bad boy image of Sheen may help give the vehicle maker a more rebellious, rule breaking and fun image than it currently occupies in the minds of consumers. DirecTV’s approach relates the bad decision of engaging in Sheen’s world with the bad decision to choose cable instead of DirecTV.

Whether either of these partnerships will pay off is yet to be determined.  One can assume, however, that the agreed upon morals clause between Charlie Sheen and the respective advertisers, if any, is not reflective of those traditionally enshrined in commercial endorsement deals. Perhaps a reverse-morals clause was even considered.

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On Feb. 23^rd, Stephen Colbert included an integrated sponsorship on The Colbert Report. Colbert refers to these product integrations as brand-funded requests from the network and this most recent “Sponsortunity” was brought to you by Nabisco’s “Wheat Thins” crackers. Colbert goes on to satirically discuss the product and the brand’s ‘important’ role in our everyday lives based on a directional memo provided by the brand. While viewer’s may have been ‘cracking’ up over the broadcast some of the references may have had Nabisco execs tuning out.

Colbert refers to an “actual memo” he received from the makers of Wheat Thins for the purposes of the sponsorship, which details what the role of the Wheat Thins brand is (and is not) and provides instruction for how he should (and should not) interact with the product on the show. Colbert quotes from the memo sarcastically referencing the importance of Wheat Thins in our lives as the “snack for anyone who is actively seeking experiences” and that “Wheat Thins keep you on the path to, and proud of, doing what you love to do no matter what that is…” For example, “driving kids to practice, watching a movie” and “arson”, as added by Colbert. He goes on to discuss further descriptions in the memo, including that “Wheat Thins are not a creator of isolated, un-sharable experiences; they are a connector of like-minded people encouraging sharing”. And Wheat Thins are “not an exclusive or exclusionary brand” so, as Colbert jokes, “blacks, jews get in here!” In addition, Stephen reads from the memo that the Wheat Thins cracker brand is “not a crusader or rebel looking to change individual paths (or the world)”. The memo further goes on to caution against showing over consumption and requests that Colbert not show (as in a bowl), or eat, more than the recommended serving size of 16 crackers. This leads Colbert to obnoxiously stuff 16 crackers in his mouth at one time and then, in a rebellious move, to attempt to add a 17^th cracker, which results in the broadcast cutting out citing “technical difficulties”. The scene is followed by a ‘fauxpology’ – an apology made to appear as though it was either network or brand-mandated but which is clearly incorporated into the sketch as a continuation of the brand mockery.  The skit is likely to be perceived as nothing more than a good natured jab at the brand for its attempts to control the parameters of the sponsorship. For all execs participating in branded entertainment, however, it is also a good reminder of the potential pitfalls involved in engaging in product integrations.

Product placements in film, television and other entertainment vehicles are not uncommon. They come in many different forms, from passive product placement, where products can been visually seen or are referred to in commentary or dialogue, to active integration and usage by the hosts and/or characters of the entertainment program. A classic and well known example of product integration is Coca-Cola’s product placement on American Idol where large Coca-Cola branded glasses are shown prominently placed in front of each judge and from which the judges drink (presumably a Coke product) for the duration of the show.  Product integrations provide another avenue by which brands can reach consumers, and they can be enormously successful (e.g., Reese’s Pieces in E.T.; Ray Bans in Risky Business; Mini Cooper in The Italian Job). On the flip side, however, they also bring certain inherent risks and additional concerns.  There is no specific model for product integrations. Brands may pitch to have their product included in a particular program or the producers may (with or without permission) include a brand as a fundamental element of the script and/or character development.  Product integrations are secured in a number of ways. For example, they can be paid for by the brand, the products themselves may be offered in a barter exchange for inclusion in the program without any payment, or the placement may be provided at the producer’s cost – this usually occurs when the inclusion of the product is an essential element of the plot or will add some value to developing the strength of a show’s character.

With traditional advertising, the advertiser has complete control over the messaging, content and placement of the advertisement. This includes what is said about the product, when it is said, and how and when the product is used (or not used). In contrast, product placement deals (depending on the particular arrangement between the brand and the producer) usually require at least some relinquishment of control over these factors. Too much control can cause the integration to appear opportunistic and transparent, which may degrade the authenticity and creativity of the programming and alienate viewers. On the other hand, having no parameters over the use of the product may backfire resulting in the product being used in a derogatory or inappropriate manner, which can have a significant negative impact on the value of the brand and, ultimately, the bottom line.  So, regardless of whether it’s an integration in online, film or television, or the genre is live action, comedy or drama, or the program is scripted, unscripted, news or reality-based, brands engaging in product integrations must participate in a bit of a balancing act between relinquishing control and taking on risk.

The parameters of the agreed upon deal are usually governed by contract. Typically speaking, however, product integration contracts will include a bar against injunctive or equitable relief, so that any claim a brand may have for a violation of the terms of the integration will be limited to an action for damages and the show will continue to be marketed, sold and distributed without alteration or removal of the offending product integration.

Colbert’s presentation of Wheat Thins in the “sponsortunity” segment appears to be an example of a brand’s failed attempt to limit or control the form of the integration.  That said, Wheat Thins must have been comfortable assuming the risk of Stephen Colbert himself. Anyone who has ever watched The Colbert Report knows that Colbert doesn’t often do what he’s told. Colbert ends the segment by saying “join me next time when I will read the memo from someone else who gave me money.”

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On Wednesday, February 22, the same night as the film’s red carpet premiere, Astral Media removed 38 of Goon’s movie posters from Toronto city bus shelters after the City of Toronto received numerous complaints. The Goon posters in question show Canadian actor Jay Baruchel making a sexually suggestive gesture with his fingers and tongue. Other posters for the film featuring co-stars Liev Schreiber and Seann William Scott are still standing.

According to the Globe & Mail, the film’s distributor Alliance Films says that “outdoor advertiser Astral Media was told to rip down the signs from transit shelters Wednesday after the city apparently received numerous complaints about the sexually suggestive pictures”.  According to Alliance the posters have been up for two weeks.  However, Elyse Parker of Toronto’s transportation services says it was not the city that made the decision to remove the posters. According to her, “staff contacted Astral after they received at least one complaint Tuesday from a city councillor’s office. Astral took down the posters without further discussion with the city.”

This isn’t the first time that advertisements for the Canadian hockey comedy have come under scrutiny. Commercials for the film were also reportedly prohibited by the World Junior Hockey League from airing during the championship game due to violence and its association with the sport of hockey. No doubt due in part to significant media coverage over the level of violence in hockey today and the recent deaths of NHL hockey players.

If the city of Toronto has received complaints, one can expect that Advertising Standards Canada (“ASC”) will too. ASC is Canada’s self-regulatory body that administers the Canadian Code of Advertising Standards (the “Code”), which sets the criteria for acceptable advertising in Canada and forms the basis for review and evaluation of consumer, trade and special interest group complaints. With limited exceptions, the Code applies to all advertising of products and services in any medium in Canada.  In this case complaints would likely fall under Clause 14 “Unacceptable Depictions and Portrayals” which sates that: 

Advertisements shall not:

(a) condone any form of personal discrimination, including that based upon race, national origin, religion, sex or age;

(b) appear in a realistic manner to exploit, condone or incite violence; nor appear to condone, or directly encourage, bullying; nor directly encourage, or exhibit obvious indifference to, unlawful behaviour;

(c) demean, denigrate or disparage one or more identifiable persons, group of persons, firms, organizations, industrial or commercial activities, professions, entities, products or services, or attempt to bring it or them into public contempt or ridicule;

(d) undermine human dignity; or display obvious indifference to, or encourage, gratuitously and without merit, conduct or attitudes that offend the standards of public decency prevailing among a significant segment of the population.

If the advertisement were found to be in violation of Clause 14 of the Code, ASC would likely determine that the poster was degrading to women and/or offended standards of public decency prevailing among a significant segment of the population.  A significant number of complaints received and pursued by ASC each year fall under this provision.  If ASC agrees that the advertisement raises a valid issue, it will notify the advertiser of the complaint. Depending on the nature of the complaint, the advertiser will either respond directly to the consumer or to ASC.  If the consumer or ASC is not satisfied with the response, the matter may proceed to the Standards Council (the "Council"), an independent review body made up of volunteers from across a number of sectors (e.g., legal, marketing, media, etc.).  If the Council upholds the complaint, the advertiser is asked to amend or withdraw the ad. If either side disagrees with the decision, an appeal may be requested.  Council findings on upheld complaints are published in ASC’s Ad Complaints Reports (the “Report”). Note that if an advertiser withdraws or modifies the ad appropriately before the Council hearing, the advertiser’s identity will not be disclosed in the Report.

While the advertisements have been removed in Toronto this wouldn’t prevent the ASC from receiving complaints and/or determining that the posters violated the Code.

Goon is set to open this Friday, February 24th.  

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The Alliance of Canadian Cinema Television and Radio Artists (“ACTRA”) claims that Labatt breached its obligations under the National Commercial Agreement (“NCA”) by hiring non-union actors and paying non-union wages in its “Flash Fans” commercial that recently aired during the Canadian broadcast of the Super Bowl. ACTRA negotiates the terms of the NCA with the Institute of Communication Agencies and the Association of Canadian Advertisers, of which Labatt is reportedly a member.

The “Flash Fans” commercial features hundreds of fans (reports suggest at least 600 fans were involved) surprising two unsuspecting Ontario recreational hockey league teams during a recent pick up game just outside Toronto. At one point during the game, the fans rush into the arena screaming and cheering alongside mascots and cheerleaders; at the same time live announcers come on calling the plays and a hidden jumbotron along with a plethora of Budweiser advertising is revealed. The flash fans bring with them the energy usually reserved for professional league play.

The commercial was created for Budweiser Canada by Labatt’s New York agency Anomaly, a part of MDC Partners Inc. network of agencies. As an American advertising agency Anomaly is not a signatory to the NCA. Generally speaking, ACTRA does not have jurisdiction over non-signatory agencies and advertisers, who are free to create non-union productions, hire non-union talent and negotiate talent fees on an individual basis outside the obligations set forth in the NCA or any other collective performers agreement. Like agencies and advertisers, once they become members of the union, ACTRA talent is prohibited from participating in non-union productions. There is, however, no prohibition on non-union talent being engaged in a non-union production.

The issue in this case lies in whether or not Labatt is a signatory advertiser to the NCA. The allegations by ACTRA rely on this being the case. In an ACTRA release issued Feb. 10, Heather Allin, ACTRA Toronto president said “[i]t’s an embarrassing day for Labatt when they’re caught exploiting everyday folks in their multi-million dollar television ads. We are shocked that Labatt, with whom we have a long-standing business relationship, would undermine their agreement and hire workers for much less than industry-standard pay.”  Likely complicating the situation are reports (by ACTRA) that Anomaly has produced a number of union-compliant commercials for Labatt in Canada in the past year.

Had the commercial been produced as a union production, Labatt would have been obligated to pay each performer in the spot, including the hockey players, ACTRA union wages. According to a Feb. 14 article in the National Post, ACTRA claims the hockey players are owed “at least $3,215.15 each, with an extra $537.85 given to players who appeared in short follow-up interviews”.  Similarly, while members of the crowd reportedly would have likely received a cash rate of $11 per hour under the agreement, prominent crowd members may have qualified for a “principal performer” fee of $3,753. Instead, members of the flash mob were reportedly paid $150 a piece and the hockey players were rewarded with a private Super Bowl party.

Labatt has responded to the allegations by calling the commercial “a spontaneous event rather than a traditional, scripted television advertisement.” They draw attention to the fact that the visceral responses of the real life players would not have been possible or may not have been as authentic under scripted circumstances. Anomaly’s approach in producing the ‘event’ has proven successful with over 3.5 million views on YouTube. As to whether or not a similar campaign would be as successful using actors, it is difficult to tell. One would have to recreate the entire event, which as we know would cost the ‘King of Beers’ a small fortune.

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