Notes for a speech by Hubert T. Lacroix, President and CEO of CBC/Radio-Canada, to the Canadian Club of Toronto

October 21, 2009

(Please check against delivery)

(This speech was addressed to a predominantly francophone audience.)

Ladies and Gentlemen,

Good day. Thank you for being here.

Thank you for giving me the chance to explain what your public broadcaster has gone through over the past 12 months and the challenges that still lie ahead.

In March of this year, I announced to our employees and to the whole country that CBC/Radio-Canada had to cut 800 jobs to make up a budget shortfall of 171 million dollars for the fiscal year from April 1st, 2009, to March 31st, 2010. The past few months have been neither easy nor pleasant, but we did what we had to do.

Things are a bit better today. With nearly three quarters behind us, our revenue lines are holding against our start-of-year projections, our recovery plan is just about completed, and if we get from Government and Parliament the final approvals we need to sell some of our assets, it looks like we’ll be able to balance our budget for our year ending March 31, 2010.

But we continue to face significant financial challenges, since we’re still coping with a broken business model for conventional television in Canada, just as we’re experiencing one of the most profound transformations in the history of our industry.

On one hand, Canadians expect us to keep all of our “old” services, but on the other, are urging us to continue delivering new ones on multiple platforms, from Internet and satellite radio, to digital broadcasting, to streaming audio and video on mobile devices, and much more. We have a duty to provide services that meet the demand and expectations of Canadians.

By the time you leave here today, I hope I’ll have made it clear to you exactly what we’re up against.

Now take a look at just a glimpse of what we offer.

What you just saw is what we managed to produce for the fall season that just got underway. Truly a small miracle, since this is our offering (i) after taking out the 171 million dollars from our budget; (ii) after absorbing additional costs of nearly 50 million dollars to cover the severance payments resulting from these cuts and other pressures; and (iii) after taking steps in the final months of 2008 to counter the brutal and precipitous drop of around 60 million dollars in our ad revenue.

On the Radio-Canada side, 86.3 per cent of the cuts were absorbed by the national network. That’s why (i) we had to cancel national television and radio shows like Le match des étoiles and Vous êtes ici; (ii) we slashed the budgets for many of the shows that survived, such as Une heure sur terre; and (iii) our schedule now has more reruns.

Although the vast majority of the cuts occurred at the network level, the regions did not emerge unscathed. The lunchtime newscasts in several regions, such as Ottawa-Gatineau, have been eliminated. In Ontario, on radio, we replaced L’Ontario aujourd’hui and Les arts et les autres withMaisonneuve en direct, a national phone-in show that will allow French speakers from across Canada to exchange views; it will air live out of Sudbury starting next Monday. And, as you know, we’ve also converted our Windsor station into a production centre.

And I haven’t even touched on what we had to do to our English Services, which were hit equally hard. At the end of the day, no service was spared.

But CBC/Radio-Canada has maintained its infrastructure and thus its presence in all areas of the country where it had one. We chose not to close any stations when making these cuts, since I believe that the public broadcaster must be deeply rooted in the regions in order to fulfil its mandate.

And yet, despite these pressures, our programming has held up. Nearly 22 million Canadians watch us, listen to us, and use our services every week. I thank you for your loyalty, ladies and gentlemen: it’s greatly appreciated.

Rebalancing the system

We’re now starting to look forward again. Recent initiatives from the CRTC and Government are helping to make this job a bit easier. Initiatives like the new Canada Media Fund and the Local Programming Improvement Fund.

In Ontario, Radio-Canada is now looking at producing television news seven days a week, thanks to the Local Programming Improvement Fund. And because our operations are now more integrated than ever, this reinvestment in weekend news production will enhance our content offering on all of our platforms. I’ll come back to this, shortly.

While these are encouraging steps in the right direction, they do not solve the fundamental problem currently affecting our industry: the broken financial model for conventional television. If we don’t find a solution to this problem, CBC/Radio-Canada will continue struggling to fulfil its mandate in the medium term.

Starting November 16, 2009, the CRTC will be holding public hearings to examine the proposal to permit conventional television broadcasters, like CBC/Radio-Canada, to negotiate compensation in order to receive fair value from cable and satellite companies for our signals.

This is the third time that the CRTC has examined this issue.

I’ll try to explain to you what it’s about as simply as I can, because it’s an issue that affects all of you in this room – and one that you can even write to the CRTC about on your own, if you wish.

Most of us pay cable and satellite companies to receive a package of channels that include a mix of local conventional stations, like CBC, TVA, Global, and CTV, and specialty channels, like TSN, The History Channel, or The Movie Network.

As far as you’re concerned, when you watch television in your home, you have purchased and paid for all of these channels and funded their content, right? Well, not quite. And therein lies the issue.

Cable and satellite companies pay a fee for every signal they carry and send you, for all of the specialty channels you receive, Canadian and American, but pay nothing, absolutely nothing, for the signals provided by local stations. These signals, like the one for the CBC or Radio-Canada main network, are intercepted by distribution companies for free and then billed to you at a premium.

This is what I mean: I, for instance, pay $187 a month for my cable bill. Yet not a cent of that goes to paying for Radio-Canada’s main network, nor for CTV’s or TVA’s either.

The cable and satellite companies are thus making substantial profits, thanks in large part to this fundamentally unfair arrangement.

Last year, these companies reported operating profits of approximately two billion dollars. Their margins – more than 30 per cent in 2008 – are higher than those of the oil and gas industry. Private conventional broadcasters, on the other hand, posted profits of barely eight million dollars, all together, for a profit margin of less than one per cent. And that was before the financial meltdown.

No surprise, then, that a few weeks ago CTV decided to shut down CKX-TV, its local station in Brandon, Manitoba, after the second buyer in the past three months withdrew its offer to purchase, citing that its business model was no longer valid.

We’ve therefore joined forces with other conventional broadcasters to make sure that these issues are understood by the Canadian public. And, for the record, we strongly believe that consumers shouldn’t have to pick up the bill that would result from negotiations between conventional networks and distribution companies.

Incidentally, we’re pleased that the CRTC recently announced that it would be holding additional public hearings to focus on the impact that these deliberations could have on consumers.

There doesn’t seem to be enough competition in the television distribution sector: maybe it’s time to start thinking about regulating cable and satellite rates again – rates that have risen at four times the rate of inflation in the past five years!

$34 per capita/year: less than 10 cents per day

“But, Lacroix,” I am regularly told, “you’re already receiving over a billion dollars from Government. Isn’t that enough? Aren’t you simply asking for more hand-outs? Why are you complaining?”

It’s true that we receive an important amount from Government, and this important amount allows us to deliver many of our services – services that private broadcasters cannot or will not provide – because no business model would justify the investment.

Need I mention that this is the case for the vast majority of our services in official-language minority communities?

But let me present this billion dollars to you in a different light.

A lot of people I talk to have no idea what they pay for CBC/Radio-Canada and its 29 services.

Thirty-four dollars per Canadian – which you saw in our video just now – that’s what it costs.

These 34 dollars per citizen represent our Parliamentary appropriation, and total approximately $1.1 billion.

But did you also know that our annual budget is 1.7 billion dollars and that we generate nearly 600 million dollars in revenue, including about $350 million in ad revenue? This money allows us to make up the difference between our Parliamentary appropriation and the cost of the services we provide to you.

Remember that I just told you that I pay $187 a month, which translates to over $2,000 a year. All of the services that CBC/Radio-Canada provides to me, in English and in French, on television, radio, the Internet, my iPod, and mobile phone cost me only $34 a year. I invite you to make the same comparison.

You now might be wondering: how much is given to other public broadcasters around the world? In a January 2009 study by the Nordicity Group, Canada ranked 15th out of 18 major nations. This study also found that average annual funding for public broadcasting was $76 per person.

Thirty-four dollars per Canadian for CBC/Radio-Canada: that’s less than half the average of these 18 countries.

Around the world

These reflections on our financial situation have led me to take a closer look at the discussions currently under way in a number of countries about the role of public broadcasters and how they are funded to fulfil that role.

In Australia, the government will be investing an additional 167 million Australian dollars over three years to give the Australian Broadcasting Corporation the means to meet those broadcasting requirements that are not met in Australia by the commercial sector or which have been abandoned by private broadcasters.

This new money will be invested in (i) high-quality drama series to reflect Australian culture and identity; (ii) a local, national and international news service that delivers content on every platform; and (iii) a hyperlocal Web 2.0 strategy based on the current local radio network to create a sort of public forum facilitated as much by Australians as the ABC itself.

What I find fascinating in this Australian example, as in others from France and Spain, is the reasons for which other countries are rethinking public-broadcaster funding models..

In almost every case, those governments understand that, far from losing relevance in the current media landscape, public broadcasters have become even more essential to encouraging a diversity of voices, to promoting the values of their countries, and to providing access to the tools citizens need to participate in a democratic society.

Our strategic directions

The same goes for us. To better meet the needs of Canadians in this new world, our strategy for developing into a “total media organisation” is based on three main principles:

  • We must be a content company and the home of Canadian programming.
  • We must be the undisputed leader in reaching Canadians on new platforms.
  • We must remain deeply rooted in all regions of the country.

No matter what the platform, we are and we must be the foremost creator and broadcaster of Canadian content. That’s critically important, because in an environment of overwhelming media choice, no one else in the world or in Canada does what we do.

In Ontario, Radio-Canada has reporters throughout the province, from Hearst to Toronto, from Sudbury to Hawkesbury, from Kingston to Windsor, who produce news items in French on stories that concern you, matter to you, and discuss your realities. Who else does that?

Among other things this season, Radio-Canada is producing reports on key Ontario personalities for national broadcast as part of C’est ça la vie. This week, in fact, we’re presenting a series of profiles on young Franco-Ontarians, called Jeunes leaders, for radio and the Web. Plus, our teams are now putting the finishing touches on an eight-episode television series on cinema produced on the heels of the Toronto International Film Festival.

Our second guiding principle is to be the undisputed leader in reaching Canadians on new platforms.

Take Tout le monde en parle, for example. Originally a television program, Tout le monde en parlealready had a presence on the Web and now there is a radio program that gives listeners an opportunity to immediately comment on what they have seen and heard. The idea is not to reproduce the same content on each platform, but to create new content that grows and develops from one platform to the next. That is our vision of the future of the Corporation and the future of the public broadcaster that is transforming itself into a total media organisation.

Our third principle is to be deeply rooted in all regions of the country. It’s no coincidence that 86.3 per cent of the cuts to Radio-Canada were absorbed by the national network. We wanted to protect our presence in the regions and we’re still there in all of the places we were, previously.

Our decision to convert the Windsor station into a production centre wasn’t an easy one for us, but we made it in light of two fundamental factors. Our financial situation, which is essential. And our overall multiplatform offering in Ontario, which includes strategically maintaining our ability to continue developing services for the Franco-Ontarian community.

Today, Windsor’s French-speaking community can pick up regional radio shows produced in Toronto, just like their counterparts in Penetanguishene or Kingston, for that matter. These programs report on the Ontario, national and international scenes. But in Windsor, with three employees covering local events, we also provide local news, weather, press digests, and arts and community calendars in specific slots on CBEF, weekday mornings at 6:35 a.m., 7:37 a.m., and 8:34 a.m. – in other words, in prime time. And we continue to reflect Windsor affairs on all of our platforms.

I can assure you that your national public broadcaster takes its leadership role very seriously, making sure that you continue to see yourselves – your lives, your values, your realities – shared and reflected in a media environment where your voice might otherwise get lost.

Never before has there been such a strong need for us to play that leadership role. At CBC/Radio-Canada, we embrace the responsibility and are ready to deliver.

Search highlight tool