Speaking Notes for Hubert T. Lacroix, President and CEO, CBC/Radio-Canada, at the CBC/Radio-Canada Annual Public Meeting

September 23, 2009

CBC/Radio-Canada Annual Public Meeting (PDF - 250 Kb)

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Thank you, Tim.

Over the last 18 months, I have come to understand that there are a couple of key facts about CBC / Radio-Canada that should be common knowledge, but still are not.

More than TV and radio

Firstly, CBC / Radio-Canada has become much more than just television and radio. We now offer audiences a comprehensive range of services, from television and radio to the Internet and satellite radio, from digital audio to streaming video on mobile devices, and more.

We are pioneers in new services and platforms because we are committed to giving Canadian audiences the content what they want, when and how they want it.

Let me show you what I mean.

[Cue video, which is framed in $34/year]]

I hope that you saw there a national public broadcaster that helps bring an increasingly diverse nation together, a broadcaster that is a mainstay of Canadian culture and democracy, one that reflects our nation’s diversity.

$34 per capita/year:

34 dollars a year. This translates into less than 10 cents per day. A lot of people I’ve spoken to had no idea what they pay for CBC/Radio-Canada.

Consider the yearly cost of your cable service. I pay $187/month, which translates into over $2,000 a year, whereas I pay only $34 for all the services in English and French CBC/Radio-Canada provides to me on television, radio, the Internet, my iPod and mobile phone.

So how does $34 a year compare to other Western countries? In a recent study, the Nordicity Group found that among 18 Western nations, the average annual funding for the national public broadcaster was $76 per person. Canada ranked 15th out of the 18 countries, even though we function in two official languages and across six time zones.

A year of paradox: unprecedented success despite financial crisis

2008–2009 was a year of paradox: on the one hand, we had unprecedented success. On the other, we faced a daunting financial crisis and some extremely difficult decisions.

While other conventional broadcasters were struggling with their audiences, CBC Television achieved an 8.6 per cent share in prime time, beating one of its competitors' predominantly American prime-time schedule. CBC Television is now the second-most-watched network in Canada.

Télévision de Radio-Canada maintained its prime-time market share of 19.1 per cent for the television season, despite competitors’ many reality shows and the plethora of specialty channels in its environment.

Our radio services never had better ratings: a combined share of 14.1 per cent for CBC Radio and of 19.4 per cent for Radio de Radio-Canada.

This strength carries over into our non-conventional services; for example, in 2008–2009, our Internet sites drew visitors monthly two million podcast downloads every month.

Yet, despite this success, we still had to stare down and deal with a serious financial crisis. Why?

Simply put, we and other Canadian conventional television broadcasters depend on advertising revenues that were steadily declining even before the global economic downturn hit in mid-2008.

Our forecasts showed that continued weakness in advertising revenues, combined with contractual cost increases and other financial pressures, meant that we would be faced with a shortfall against budget of approximately $171 million for 2009–2010.

I’ll let Suzanne Morris, our Vice-President and Chief Financial Officer walk you through the numbers in a few minutes.

For my part, suffice it to say that our only option was to substantially reduce our staffing levels and our programming.

Cuts guided by key priorities

Our choices were very difficult. Although painful, they were guided by our three key priorities: People, Programs and Pushing Forward.

Our people

To protect our people, we tried to contain the number of layoffs as much as possible. Every single job was important to us. Still, we had to eliminate 800 positions across the country to reduce our cost structure.

The need to cut positions was especially discouraging because we have made progress in the last few months on what has been for me a personal priority – building stronger and more collaborative relationships with our people, our employees and our unions.

Since I arrived at CBC/Radio-Canada, we’ve wanted to change the way we interact with and talk to our staff. And we’ve made great strides, having successfully renewed five of our six collective agreements, including one with the Canadian Media Guild before the contract expiry date. I salute the union leaders for their courage and willingness to engage in these discussions with us and improve the way we all communicate.

Our programming

We also tried protecting our programming in three ways as we were implementing cuts.

First, we limited their effects on our regional broadcasting by targeting 82 per cent of the cuts to our English and French national networks and corporate services. This allowed us to keep our regional footprint intact across the country.

Second, we committed to keeping our English and French radio services commercial-free and did not increase the amount of US programming in our television schedules.

And third, we committed to maintaining our strategic investments in new platforms and services.

But our financial situation demanded that some programs had to be cancelled, and that some others be scaled back.

Pushing forward: Maintaining our strategic direction

The cuts we made have perhaps slowed but have not stopped our progress towards becoming an even more relevant and dynamic national public broadcaster. Our strategic direction for the future has three pillars.

First, rather than being a broadcaster with separate and discrete media lines, we are becoming a content company in which everyone collaborates and shares resources to generate deeper, richer content. Canadian content that, as per our mandate: informs, enlightens and entertains.

Second, we must deliver that content across all media platforms. We are making our content available to audiences whenever, wherever and however they want it.

Take a show like Q, for example. You can catch it on CBC Radio One or Sirius, or you can watch it on TV’s bold. You can also get it by regular or video podcast, or interact with the show on YouTube, Twitter, Facebook or MySpace.

Or consider Tout le monde en parle. What started as a TV show already has a Web component and will soon have a radio show that will allow people to discuss what they’ve just seen and heard. So you see, it’s not about dumping content on all platforms but creating new content that builds on itself across platforms.

Third among these pillars is our ongoing commitment, as a public broadcaster, to remain deeply rooted in Canada’s regions. Our connection to the regions is an essential part of our mandate.

Toward a sustainable future

In all, we have achieved remarkable success with our programming despite a constantly changing broadcasting environment and in light of failing ad revenues.

Yet I am compelled to report that, unless we are able to develop a sustainable financing model in the near future, CBC/Radio-Canada’s ability to fulfill its mandate will be seriously at risk.

We have only two primary sources of revenue: our parliamentary appropriation and our advertising dollars, and both are on the decline in real dollars.

Recent initiatives from the CRTC and the Government will help address some of the challenges that all conventional broadcasters face. The new Canada Media Fund, for example, should offer increased support for first-run, prime-time Canadian programming that is original, of high quality, and broadcast on a host of platforms. And the CRTC’s Local Programming Improvement Fund (LPIF) will mean better local services.

Another part of the solution will fall into place when the CRTC examines the proposal to permit conventional television broadcasters to negotiate compensation from cable and satellite companies for the value of their signals – revenues that specialty channels have received for years. We welcome the government’s recommendation last week that these discussions need to focus more on the interests of consumers and Canadians than on those of competing media empires.

Currently, Canadian cable companies pay in excess of $300 million a year to U.S. cable channels that aren’t required to produce any Canadian content. Yet, they pay nothing to local Canadian television stations where the money is needed most… while still charging customers for the service.

We have asked the CRTC to rebalance the system. It is a regulated market, and last year cable and satellite companies reported $2 billion in profits, whereas in the year before the financial meltdown, conventional broadcasters had aggregate profits of only $8 million. We believe you deserve a fair system – one that will protect local programming and stations – and without the cable and satellite companies once again passing the costs on to you, the consumer.

It can’t be said enough just how important stable funding over more than one year is to CBC/Radio-Canada. Success can’t be achieved if we must constantly worry most about cash flows, meeting payrolls and paying suppliers. In such conditions, how are we to establish our strategic plan?

Truly, as I stand here today, to think of what CBC/Radio-Canada could achieve with adequate, stable and long-term funding is very exciting. In a media landscape that’s both chaotic and exciting, never before have Canadians felt such a strong need to see themselves – their lives, their values and their realities – shared and reflected. Now there’s a leadership role the public broadcaster is perfectly suited to play: helping to usher in a social and technological revolution across Canada that puts Canadian voices at the forefront. I believe that this is what Canadians expect from CBC/Radio-Canada, and it’s also what they deserve from us.

I’d now like to ask Suzanne to walk us through CBC/Radio-Canada’s financial context.


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