Speaking Notes for Hubert T. Lacroix, President and Chief Executive Officer, CBC/Radio-Canada, to the Empire Club of Canada

February 26, 2009

Creating a Space for Canadian Voices in a Chaotic Media Landscape

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Thank you for the opportunity to speak to you today.

I am indeed the head of CBC/Radio-Canada which makes me everyone's favourite whipping boy. Well, in this city, maybe not. Maybe I’m number 2, right behind Justin Pogge.

When I arrived at CBC/Radio-Canada in January 2008, I thought that I knew a lot about the public broadcaster. But then, I discovered this:

CBC/Radio-Canada brings Canadians programming when, where and how they want it ― on 29 services and multiple platforms ― television, radio, the Internet, satellite radio, digital audio, and a recording label.

In addition to offering its services in English and in French in five time zones, the national public broadcaster also provides coverage in eight Aboriginal languages, in eight international languages for new and aspiring Canadians, and nine languages via our worldwide radio network.

29 services. Now, be honest. How many of you here, in this room, really knew that this was the scope and the diversity of our services?

So, how have I spent my first 14 months? I have been listening. It’s been a priority.

I wanted to talk to as many people as possible, from both inside and outside of CBC/Radio-Canada, and so I criss-crossed the country, visiting 16 of our stations, meeting thousands of our employees and having conversations with opinion leaders in those communities, and listened to a wide range of views about how we’re doing and where we need to go.

And let me tell you, everyone has an opinion…

Before suggesting why you should care about CBC/Radio-Canada and the fate of your national public broadcaster, I’d first like to talk a bit about some of the common perceptions and, frankly, misconceptions, that came up regularly in many of these conversations.

In English Canada, the three most common myths I run across are these:

The recent changes to CBC Radio 2 are off-mandate and are an example of how we have lost our way;

CBC Television is not distinctive; and,

We receive plenty of money from the Government to fulfil our mission and should not be crying out for more.

First myth: The recent CBC Radio 2 changes are off-mandate:

As most of you know, over the past year, we’ve redeveloped the schedule for CBC Radio 2. Used to be almost all classical music. It isn't anymore.

Our goal was to make the network more relevant to more Canadians while maintaining our strong commitment to classical music. We wanted classical music to share the airwaves with all genres of Canadian music.

Why did we make these changes?

While our relatively small share was stagnant – few people were listening to CBC Radio 2 – our existing audience was aging rapidly. Much more rapidly than the Canadian population. New audiences were not coming. This was not sustainable over the mid-term.

We had a problem: we needed to attract a broader cross-section of new listeners.

So, we asked ourselves: what is the mandate of CBC Radio 2?

Let me read you a quote from the minutes of a 1983 CBC/Radio-Canada Board meeting describing what CBC Radio 2 should be about:

“Programming will largely concentrate on Canadian fare featuring extended pop concerts, jazz and folk festival material. [It will] provide a mechanism for discovering, developing and promoting talent which otherwise might not be heard…”

And that is exactly what we have set out to do with our recent changes.

CBC Radio 2 now exists to showcase and promote Canadian music; it’s that simple!

Contrary to what some critics have said, we have not removed classical music from our schedule. The most-played single genre of music is classical.

And by opening up the airwaves, we have, in the past year, been able to go out and record 760 live concerts across the country – 261 of them classical – the rest consisting of all musical flavours imaginable.

Some long-time listeners have been upset about these changes and, boy, did I hear from them; but many others have embraced the changes. 

We are not more “commercial” but no longer sound all classical; we haven’t abandoned classical music and we’re not off-mandate.

And, by the way, as a person who has had season tickets to the Montreal Opera for decades, who really likes jazz and enjoys all sorts of different genres of music, I as a listener, really like the new CBC Radio 2.

Myth # 2: CBC Television is not distinctive. It's just like the private broadcasters.

In my opinion, this issue boils down mostly to the flack we catch because we air Wheel of Fortune andJeopardy! in the early evening.

Why do we do this? The fact is, that it costs ten times more to make one hour of high-quality Canadian programming like The Border than it does to buy Wheel of Fortune — and that these game shows generate a significant profit that we can then pour back into producing Canadian programming.

Further, Jeopardy! attracts over a million viewers each evening, and we carry many of those viewers into our entirely Canadian 8:00 to 11:00 p.m. prime time, thus increasing the impact and the revenue of our Canadian programs.

Are we the same as the private networks? No way. First, we’re the home of Canadian content; no other network even comes close… 

CBC Television is by far the leading broadcaster of original Canadian content.

Here are some examples of what only WE do:

21 hours of Canadian programming a week in regular prime time. That compares to about seven hours for the privates.

In the last four years, we increased by 38 per cent our investment in Canadian dramas and comedies. Our investment now represents $135 million.

We created a made-in-Canada reality segment with shows like Dragon’s Den, Canada’s Next Great Prime Minister and Test the Nation.

Both Jay Leno and George Stroumboulopoulos do Coldplay and Al Gore, but only George does June Callwood and Kim Campbell and Elizabeth May and Gordon Lightfoot and Craig “Free the Children” Kielburger and Deepa Mehta.

Whether it is Bo on the Go!, Chilly Beach or My Goldfish is Evil!, we commission more developmental, commercial-free, child-focused programming than anyone else in Canada.

We understand the issues we face as a country. In the last fall season, 14 per cent of CBC Television’s prime time was dedicated to original current affairs programming. Canadian issues and international events from a Canadian perspective. That compares to four per cent for CTV and 0 per cent for Global.

If you are in the Great North, who else is going to provide a local perspective on the news and the weather in the Inuktitut language? We are not only distinct; we’re essential in eight Aboriginal languages and we assert Canada’s sovereignty over the North.

For a long time, people have said that Canadians wouldn’t watch Canadian programming. We’re proving them wrong. The fact is, we air great shows that nobody else would run.

And here’s what’s really funny. I sometimes hear some say that we should go back to the golden days of CBC Television — the 70s and 80s. The irony is that in those years, our prime-time television schedules, in both English and French, were riddled with Dallas, I Dream of Jeannie, Marcus Welby, M.D., Mork & Mindy and the like.

In 1981, CBC Television held a significant place in Canadian broadcasting with 22 per cent of the prime-time share – yet only about half of our prime-time schedule was Canadian. We had only one all-Canadian night during the entire week.

How times have changed. CBC Television’s regular prime-time schedule is now 100 per cent Canadian between 8:00 p.m. and 11:00 p.m. every night of the week.

The bottom line: no one else does what CBC Television does. We are distinctive.

On to my third most-common myth. We receive plenty of money from the Government to fulfil our mission and we should stop acting like a cry-baby with respect to funding.

In a perfect world, would we need Jeopardy! profits to help fund our Canadian programming? No.

So, how much funding do you think we receive?

Hands up all of you who think their personal annual contribution to CBC/Radio-Canada is more than $100.

Hands up everyone who thinks that it’s more than $200. How about $300?

In fact, it is $34 per year. Less than a dime a day… 

Now multiply your monthly cable bill by 12 and compare. Cable bill amount on one side, $34 on the other side.

Our Government appropriation is a little over $1 billion, and we generate about $600 million of additional revenue from commercial activities of one kind or another, with the largest part coming from advertising (about $340 million).

In these times, I am getting asked: why do you need advertising revenues while the BBC relies entirely on public funding and France’s public broadcaster is moving in that direction? Why can’t you do the same?

In a 2007 study, the Nordicity Group Ltd. found that among 18 Western nations, Canada had the fourth-lowest level of public broadcasting funding per capita. $34. 

The BBC receives $124 per Briton, and funding in France, which was $65 per citizen in 2007, will increase to $77 under the French government’s plan to withdraw advertising from France Télévisions. And they both operate in a single language.

The Canadian Government would thus have to more than double CBC/Radio-Canada’s funding to match France’s per capita funding — and almost quadruple it to match BBC funding.

I’m sure that you get the picture. For us to continue delivering to Canadians our services, we have to rely on television advertising revenues to add to our Government appropriation to balance our budgets.

Now that I’ve dealt with some myths, let me talk to you a bit about our reality: CBC/Radio-Canada is performing remarkably well.

Other conventional broadcasters are facing stagnant or shrinking audiences, yet CBC Television’s audience share in prime time has risen to 8.9 per cent this season — an increase of 1.5 points in just two years.

CBC Television, and that means Canadian programming, is now the number two English-language television network in the country.

The Télévision de Radio-Canada audience share is at a robust 19.8 per cent in prime time, continuing the increase from last year.

Our radio services are also enjoying historic highs: a combined share of 14.1 per cent for CBC Radio and of 19.4 per cent for Radio de Radio-Canada.

Our websites are getting four million visitors monthly.

And audiences are downloading close to two million of our podcasts every month.

This new interactive relationship with audiences is central to how a public broadcaster will meet its mandate in the coming decades. And there is a real thirst for this interactivity. Last March, we launched a membership feature on CBC.ca, which allows Canadians to interact with our content and with each other online. By year-end, we had almost a quarter million members making a total of 1¼ million comments.

This past week, we had more than 90,000 viewers streaming live to their computers every aspect of President Obama’s visit to Ottawa. That is in addition to the 350,000 viewers on CBC Newsworld, the six million page views on CBC.ca, and the unprecedented participation in blogging and uploading of user-generated content.

The truth is, if you go back 40 years, you will not find a time when all of CBC/Radio-Canada’s main services were succeeding and fulfilling their mandate so effectively.

However, we are facing extremely difficult financial times. Because of the current economic crisis, we are forced to fundamentally examine what we do and what we can be. Bottom line: we can’t be all things to all people.

In essence, our unique role is to protect and promote democracy and Canadian culture.

We must help Canadians form their own opinions based on unbiased factual information;

We must help build a strong sense of identity and nationhood by telling Canadian stories in a Canadian way; 

We must provide an outlet for the expression of Canadian culture everywhere in the media landscape.

In practical terms, how are we pursuing this mission? 

There are four principle characteristics to the CBC/Radio-Canada of the future:

We must be a content company. Don’t think of us anymore as simply a radio or television broadcaster.

We will always be the home of Canadian programming.

We will be an undisputed leader in reaching Canadians on new platforms.

We will be deeply rooted in all regions of our country.

The best example I can give of this vision in action is from our coverage of the 2008 Beijing Olympic Summer Games. We augmented our extensive television and radio coverage by launching the most robust online Olympic experience in Canadian history.

Our websites featured 13 broadband video streams with thousands of hours of live and on-demand event coverage (the first time Canadians could watch the Olympic Games live on their computer screens).

Through a partnership with Bell, Bell Mobility subscribers could receive live streaming video and on-demand highlight packages of CBC and Radio-Canada Olympic Games coverage throughout the day.

CBC Sports’ Olympics site generated more than 46 million total page views over the course of 16 days, and averaged more than two million page views each day, as Canadians viewed a total of 3.2 million live streams and 1.7 million on-demand streams of Games coverage.

Our Olympics coverage is an example of the first three characteristics of the future CBC/Radio-Canada; the fourth characteristic is being deeply rooted in all regions of the country.

One thing I have heard loud and clear in my conversations with Canadians is that they all want us to have a stronger presence in the regions.

Striking the right balance will be difficult, especially with seriously constrained resources.

However, we’ve been making a concerted return to the regions in both the English and French markets.

We’re committed to becoming better-rooted across the country, from coast-to-coast-to-coast. It will happen, it must happen for us to fulfil our role as the public broadcaster, although I’m not yet sure how, how quickly, and in which format with the kinds of financial pressures we are facing today.

A content company, the home of Canadian programming, and a multimedia leader with an increasing presence in the regions — that’s where I hope to take your national broadcaster in the next four years.

But will we make it?

Ultimately, the answer to that question is up to us as a society. With the rise of globalisation and its inherent challenges, do you want, or do you feel you need, 
a reliable, credible and trusted source of homegrown content? And if so, who will provide it and how will we pay for it?

These questions have become especially pressing over the past months.

Like just about every other sector of the economy, we and other conventional broadcasters are facing a financial crisis.

As the economic downturn began affecting North American companies last August, advertising spending began to dry up. In our case, we are projecting a revenue shortfall of $55 to $60 million for the year ending March 31, 2009, with no recovery whatsoever in sight in 2009-2010. This represents a 7 per cent drop from the previous year’s actual results.

Canada’s main private television networks have all announced major layoffs. Canwest Global has had to put its E! network up for sale, and even CTV put a local station up for sale this past week and announced the closing of two more yesterday. Both conventional, private broadcasters have called for the CRTC to reduce their obligations, placing even more pressure on the question of who will provide Canadians with Canadian programming.

In the case of CBC/Radio-Canada, significantly scaling back our spending since last August will allow us to barely break even for this fiscal year.

But these measures will not be sufficient for the future.

If we are to maintain our strategic momentum, we must protect, to the extent possible, our key assets – our people and our programs – but we too will be looking at reducing our services in the new fiscal year.

Yes, we do have access to a Government appropriation of a little more than one billion dollars but we also have a mandate and a footprint like no one else.

And, unlike all of our competitors, CBC/Radio-Canada has no access to the capital markets or to commercial borrowing. Private broadcasters have the financial flexibility that comes from their sources of capital. In a cyclical downturn, they can effect some changes by smartly managing their balance sheets and lines of credit.

As a Crown Corporation, CBC/Radio-Canada has no access to this type of borrowing so, when we lose a dollar of revenue, we must cut a dollar of expenditure or postpone the expenditure to next year in order to balance our budget. Contrary to what you read in The Sun newspaper chain, we are not begging for more money. We are trying to manage ourselves out of the current economic mess. To do that, we need the cooperation of Government. 

We have asked government to help us with some financial flexibility. How could that be done? The government could authorize a line of credit that we would, of course, be required to repay on a timely basis. Or the government could agree to bring forward our appropriation so that we can, in effect, borrow money from our level of appropriation in future years in order to pay downsizing costs in 2009-2010, and then reduce proportionally, over several years, the level of future appropriation.. Another option would be to authorize the sale of some of our assets to fund our cash flow, not the best of management practices, but one that we need to consider. All of these options cost the government no more dollars than those they would normally invest in CBC/Radio-Canada. 

But, even with increased flexibility, we will still face difficult challenges. We estimate our advertising revenue next year will remain over $60 million behind our budget for the current fiscal year; this despite increases in market share in both English and French television services. Our miscellaneous revenue – commercial revenue from sources other than advertising which amounts to about $250 million annually – will also come under pressure. Expenses related to improving the quality of our programming are fixed and will rise this year by $50 to $60 million. And a combination of government funding reduction, changing regulatory requirements, the gap between Treasury Board salary funding and actual increased salary costs and aging infrastructure will also increase pressure by $15 to $25 million. Simple belt-tightening will not overcome these challenges, we will need to go much farther.

We will, of course, look at every option to increase our revenues to minimize the impact on our programs and our people but the most effective measures, like (a) downgrading or selling parts or the whole of some of our TV or Radio services, (b) increasing the advertising we accept on the air, or (c) shrinking our geographic coverage of the country by consolidating local stations, would change the very nature of our service to Canadians. Nonetheless, these are some of the scenarios we are analyzing in the next days as we finalize our plans for our next fiscal year which starts on April 1, 2009.

As you will have read this morning, there are reports that the Prime Minister’s office has said there will be no extra money for CBC/Radio Canada. And I actually agree with that in the current environment. But as I have explained, I am not looking for extra money. What I am looking for, as the President of CBC/Radio-Canada appointed by this government, are the same tools that others in the industry have to manage the taxpayers’ investment in Canada’s largest cultural institution through this unprecedented period. I have asked for a meeting with the Prime Minister to explain the impact of this decision will have on our services. I will also continue to work collaboratively with the Minister of Canadian Heritage and his Department to protect Canada’s cultural assets. I talked to the minister yesterday and have a meeting scheduled with him next week.

Like many other CEOs in these times, I am facing choices very different from those I had hoped to face when I accepted this job. The distance between what I think CBC/Radio-Canada should become and the stark choices I have laid before you is very large. But that is where we stand at the moment.

Again, I say: we can’t be all things to all people. We simply don’t have the resources, nor should we. We must focus where we can be most effective: content company, Canadian programming, leader in new media, deeply rooted in the regions.

I’d like to leave you with a final question. In a world of infinite media choice, do you think that this country needs CBC/Radio-Canada?

Canada is a vast nation of widely dispersed regions, each with unique characteristics and needs.

At the same time, Canada is also becoming increasingly ethnically diverse: visible minorities already make up almost 50 per cent of the populations of Vancouver and Toronto.

So what brings an increasingly diverse nation together? What helps Canadians learn from and about one another?

This is the unique role of the national public broadcaster.

CBC/Radio-Canada reflects a diversity of voices and perspectives, helping Canadians form their individual, social and political identities.

It helps counter the risk of social diversity becoming fragmentation and isolation. We offer a unique public space where Canadians can connect with each other, the country and the world.

Our content helps audiences understand and participate in what it means to be Canadian.

And by giving us a way to learn about and from one another, it enriches our democratic and our cultural life; it is, in fact, essential.

Not bad for $34 per Canadian per year, is it? Think about this as we petition the Government to provide us with some financial flexibility.

Thank you.

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