Speaking Notes for Hubert T. Lacroix, President and CEO, CBC/Radio-Canada, to the Standing Committee on Canadian Heritage

April 27, 2009

Public Broadcasting in Canada: Seeing Our Way Through Tough Times

(Please check against delivery)

Mr. Chairman, Members of the Committee, it was almost a year ago that I appeared before your Committee to tell you about CBC/Radio-Canada’s plans and priorities. 

I spoke about my three priorities (my three Ps): our people, our programs and the need to push forward strategically.

Those priorities haven’t changed, but our environment has become substantially more complicated.  The collapse in television advertising in the past six to eight months has taken huge chunks out of the operating budgets of Canadian broadcasters, both private and public.  The Corporation is no exception.

The need for everyone to cut costs to face this reality is affecting the ability of broadcasters to continue to provide the levels of service Canadians have come to expect.  This is especially true of local broadcasting.

I’m not here to blackmail you.  In fact, I’d rather like to start off with one of my deepest convictions.  CBC/Radio-Canada must remain firmly rooted in the regions.  We play a pivotal role in the social, cultural and democratic life of this country, and we cannot do that unless we’re in Canadian communities.  This is how we ensure that the issues and challenges people face in one community are heard and shared by people living across the country.  That identification with the lives of people in other communities is the very essence of a national identity, the very essence of our mandate.  And it will remain a priority for us as long as I am President and CEO of CBC/Radio-Canada.  I am not here to threaten to pull out of the regions.  I do want to say something loud and clear, however, so that you realise it: how effectively we deliver these services to Canadians across all the regions is determined in large part by our funding structure and the scope of our mandate.  I am here to talk about that today.

How do we fund our mandate?  Yes, CBC/Radio-Canada receives just over a billion dollars a year from taxpayers.  Every one of the broadcasters and the cable companies that has sat in these chairs over the last couple of weeks referred to it. Every time one wants to challenge our access to additional Government or CRTC funding initiatives or wants to throw rocks at our services, one starts with our Government appropriation.  But, these broadcasters and cable companies conveniently fail to remind you, in their respective presentations, that CBC/Radio-Canada also has a mandate, directly from the Broadcasting Act, that no one else has ― to provide an incredible range of programming and services to Canadians across the country, across six time zones, in two official languages.

And with a third of our total budget coming from commercial sources, we now have a lot fewer dollars to fulfil this mandate, than we did when I was last here, less than a year ago.

We have had to make some hard choices over the past few months, and I do not like what I have had to do.  There was simply no way we could address a projected shortfall of $171 million without affecting all of our services, including our regional services.

But you should know that, as we tried to balance our budget, regional broadcasting was protected disproportionately to the rest of the Corporation.  For CBC, spending on regional services represents 38 per cent of the total budget, yet the regions are bearing 20 per cent of the total cuts.  For Radio-Canada, regional services represent 18 per cent of the budget and are bearing 14 per cent of the cuts.  And we kept our geographic footprint pretty much intact.

This was the choice we made  ― to cut somewhat deeper at the network level so that we could protect, as best as we could, the regions.  Does that mean that I am happy about taking seven people out of Sudbury, or six people out of Sydney, or seven people out of Windsor?  Absolutely not.  We are taking smart, dedicated, passionate employees out of these stations, and our services will be affected.  And to give you just a small glimpse of what that impact will be, let me quote from an e-mail which I received from one of our employees who works on the Information Morning show out of CBC Cape Breton.  I think that I can't say it better than Nicole MacLennan did, so I won't try.  I will simply read a few sentences from her e-mail.

…my heart breaks for the CBC and the loss that Canada has not yet realised it will sustain. 
…I am so deeply saddened that I can see a day when no one will tell the story of the 10-year old girl in a tiny community in Cape Breton who took it upon herself to clean up the garbage at a local picnic area because she was worried about the deer walking "barefeeted" in the meadow, no one will hold forums and generate discussion about issues that matter to communities that are bleeding people, no one will give the "tiny cogs" 
a voice.

If we had more resources or if the measures we have taken generate some flexibility that can be sustained or if our commercial revenues bounce back and hold, I would like to put people and dollars back into the regions: as I said, our connection to the regions of Canada is an important part of our mandate.  There have been a lot of rumours over the past few weeks that the Government is considering some form of support for local broadcasting.  I’m afraid I don’t know much more about those rumours than you do.  But, what I can tell you is that we would welcome any immediate financial support from Government so that we could strengthen our regional presence and reinvest in the regions.

But there is a larger problem.

The business model on which conventional television ― both public and private ― is based, is no longer working.  It hasn’t been working for several years.  The current economic crisis has only accelerated what was already a steady decline in the value of television advertising.

For CBC/Radio-Canada, the current economic challenges are particularly frustrating as they come at a time when our services are enjoying tremendous growth and popularity with Canadians.  We have more information on that in our submission which we sent to you last week.

These successes are increasingly at risk because of a funding model that is no longer sufficient to provide all of the services Canadians want from their public broadcaster.

Part of the solution lies in support for things like first-run, prime-time Canadian programming that is original, of high quality, and broadcast on a whole host of platforms.  These concerns are the focus of the recently announced Canada Media Fund.  It will be important to stay on course with these directions throughout the Fund’s guideline development process.

Another part of the solution lies in allowing conventional broadcasters access to fee-for-carriage ― the same subscriber fee revenue specialty channels have enjoyed for years.  As we stated repeatedly to the CRTC, we believe that fee-for-carriage should be tied to specific priorities the Commission feels are a priority ― like improved local services ― and it should be included in a broadcaster’s conditions of license.

One thing that may help is the CRTC’s Local Programming Improvement Fund (LPIF).  It is a small fund, given the challenges that all local stations are facing, but we believe that if it remains focused on smaller markets and is based on each broadcaster’s track record in investing in specific communities, that the LPIF will mean better local services.  When the CRTC set up this fund, it made sure that CBC/Radio-Canada would be fully eligible because it recognised the importance of our local program contribution and the challenges that we face in financing this programming.  It concluded that the public interest would be best served by ensuring that the Fund were used to improve and enhance our local programming offering.  We agree.  For CBC/Radio-Canada, access to this Fund is vital and will allow us to improve and enhance our local programming in eight English-language and 12 French-language stations.

These are solutions that would assist all conventional broadcasters ― public and private.  For the public broadcaster, however, there is something else: we need a new contract with Canadians, a Memorandum of Understanding that would clearly lay out Canadians’ priorities for their public broadcaster and the resources necessary to fulfil those objectives.

Without that clarity, we must focus on finding in the commercial market the missing resources we need to operate all of our services, but without the flexibility available to commercial broadcasters.  The current economic crisis demonstrates the problem.

Unlike other broadcasters, CBC/Radio-Canada has no access to capital markets or to commercial borrowing: there isn't a single dollar of debt on our balance sheet.  In an economic downturn, it means that the Corporation cannot use a line of credit to lessen the impact of a decline in revenue and smartly manage itself out of a slowdown.  That means that for every dollar of revenue lost, the Corporation must immediately cut a dollar in order to balance its budget in the same fiscal year.

By freezing spending and slashing costs, we were able to balance our books for the year ending March 31, 2009.  But for 2009-2010, facing an estimated $171 million shortfall, we simply couldn’t balance our budget without making deep cuts.

I announced a reduction of 800 positions across the Corporation.  In addition, we are proceeding with plans to try to generate $125 million in additional resources through the monetisation of some of our assets.  Selling assets to balance your budget, selling assets in fact to pay for your downsizing costs and your severance obligations, is not the best of management decisions, but we have no other choice.

Some programs therefore had to been eliminated; our staff in many stations has been reduced.  As a backdrop to these cuts, we’ve attempted to protect certain key priorities as much as possible: including keeping radio advertising-free, enhancing new media, and protecting our regional footprint, maintaining our distinctive Canadian programming, and our cross-cultural initiatives..

I’m not happy about what we’ve had to do, and I know that a lot of Canadians are worried about the effect of cuts on services in their respective communities.

We have been working closely with our employees and unions to develop ideas to reduce the impact of these cuts on our services and our people.  These past few months have shown me, once again, that our employees are the most important asset we have, and that we need to do everything in our power to keep them working for us.  Each individual is important to us, and each of these people should receive credit for delivering distinctive, nation-building programming day after day in an unstable, shifting and difficult environment.  Every one of these people is deserving of our respect and support.

The choices we have made and must continue to make are necessary to ensure that we remain relevant and effective in fulfilling our mandate under the law.  All of our decisions have been guided by three key principles.

First, the Corporation must continue to focus on becoming a content company rather than a simple broadcaster.  That means offering audio, video and text content on multiple platforms.

Second, CBC/Radio-Canada will strive to remain the most important creator and distributor of Canadian content across all platforms that Canadians use.

Third is the commitment I spoke of earlier ― the desire to remain deeply rooted in Canada’s regions.

We are no longer just a broadcaster with separate television, radio and Internet media lines.  We are an integrated content company.  Let me give you an example.

During the last Federal Election, we broadcast Election analysis, profiles and reports on radio and television, but on the Internet Canadians could get much more: from streaming of video and audio to in-depth riding-level profiles and results from an interactive map.  A Reality Check site put the candidates’ promises and statements to the test. A Voter Toolkit provided specific information as to where and how Canadians could vote.

The Internet allowed the public broadcaster to be the public forum: thousands debated local issues in forums set up for every riding ― there were over 
10,000 comments posted in these areas of the site alone.  En ligne, Citoyens linked Francophones across the country in a political discussion about the issues.  Canadians asked questions directly to political candidates and they posted thousands of their own photos and videos.  We had over a quarter of a million postings to our sites as Canadians debated the issues.  That’s political engagement.

On Election night, our websites were another source for up-to-the-minute Election results.  CBC.ca’sCanada Votes website had close to four million page views on Election Day alone.  Radio-Canada’s website had the third-heaviest traffic day in its history.  That reach even extended beyond our borders.  Over 10,000 people watched live streaming of our Election coverage from outside of Canada.

All of this was in addition to our audiences on radio and television.  That is how we reach Canadians today.

But with the resources we have, we need to make some choices.  We need to balance our priorities.  How much of our resources should be dedicated to regional programs?  How much should we spend investing in new platforms and new technologies?  These are only two of the difficult questions we must solve in an environment of diminishing resources as we realise that we can't be everything to all.

And, there are larger, more strategic questions.  In the current broadcast environment, is it a good time to consider eliminating advertising on CBC and Radio-Canada television?  If so, where would the revenue necessary to replace advertising come from?  What kind of long-term solution would the Government then consider to ensure that we could still deliver the services Canadians want if we didn't have access to our commercial revenues?

These questions underscore for me the importance of the Memorandum of Understanding, as proposed by my predecessor, Robert Rabinovitch, and endorsed by this Committee in its review last year of CBC/Radio-Canada’s mandate.  I believe that that proposal is now essential, and even vital, to the future of public broadcasting in Canada.  I am prepared to commit to negotiating it.

In the meantime, I can assure you that we will manage the resources that we have as effectively as possible.  We will hold true to the priorities and principles I have described, and we will focus on continuing to provide the programs and services Canadians expect, the best way we can.

I would be pleased to hear your thoughts about the challenges we face, and will try my best to answer your questions.  Thank you.

Search highlight tool