Notes for a speech by Hubert T. Lacroix, President and CEO of CBC/Radio-Canada, to the Vancouver Board of Trade

December 3, 2009

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Ladies and Gentlemen,

Welcome. Thank you for being here.

It’s always a pleasure to come out to beautiful Vancouver. I'm a runner and, amongst all of the great things your city has to offer, I must tell you that you have one of the best cities in the country in which to run.

But I did not come to Vancouver to simply enjoy a run in Stanley Park. I came to celebrate the opening of our newly renovated, state-of-the-art, CBC/Radio-Canada Broadcast Centre, located just a few blocks from here.

I’ve been in my job for almost two years now. During that time, I’ve made a point of traveling to as many places in this country as I can to meet with as many Canadians as I can, the people we all work for. It’s vital for me to get a pulse on what’s happening in the different communities, and I can’t get that by sitting in my office. It’s one of the main reasons I’m out here today.

In my many conversations with Canadians, I’ve come to understand that there are a couple of key facts about CBC/Radio-Canada that should be common knowledge, but still are not.

The first thing I want you to know is how far we’ve come in 75 years, pioneering new services and new platforms in our constant pursuit to meet your evolving media needs. We are definitely not the same old CBC/Radio-Canada.

Today, we offer you a comprehensive range of services, from television and radio to the Internet and satellite radio, from digital audio to streaming video on mobile devices. We give you the content you want, when and how you want it.

Let me show you what I mean.

$34 dollars a year video.

The last few seconds of our video bring me to the second thing that you really should know about us: all of our services in total cost $34 per Canadian per year.

Let me put that into context. I pay $187 a month to my cable service provider, which translates into over $2,000 a year. Now, think about your bill, and then consider that all of the services that CBC/Radio-Canada offers you and me – on television, radio, the Internet, satellite, iPod and mobile devices, in two official languages, eight aboriginal languages, and across six time zones – cost us less than three dollars a month. I am definitely biased, but will still suggest to you that you have there a pretty good value proposition.

The breadth of our services becomes all the more impressive when you compare what Canadians pay for public broadcasting compared to other citizens around the world. In a 2009 study, the Nordicity Group found that among a sample of 18 major countries, average annual funding for public broadcasting was $76 per person. Canada ranked 15th – third from the bottom.

“That’s fine, Lacroix,” you might say. “But you still receive a billion dollars from Government and that's a lot of money.”

It’s true that we receive significant funding from Government – $1.1 billion annually, to be precise, out of our $1.7 to $1.8 billion dollar budget. And yes, that’s a lot of money. But it’s money that allows us to deliver many services that private broadcasters cannot or will not provide – and often to deliver them to parts of Canada where nobody wants to broadcast any signal at all, because no business model would justify the investment.

This is where the national public broadcaster has a unique role to play. CBC/Radio-Canada’s goal is not to generate profit. Our mandate is to be the most important creator of distinctive content that informs, entertains, enlightens, and reflects the Canadian experience.

We have staff located in 74 communities from coast-to-coast-to-coast to reflect the full range of Canadian voices and perspectives, and in 14 locations internationally to help the country see the world through Canadian eyes.

We are the only broadcaster providing commercial-free radio via ten distinct radio, satellite and online services.

And we invest more in the production of Canadian television programming than all of the other conventional broadcasters combined – $670 million last year alone.

The home of Canadian Content

CBC/Radio-Canada has been a pillar of Canadian culture and society for nearly 75 years. It was created to fulfil an important need – to make sure that Canadians had a voice in the media landscape.

Which brings me to another important point. I hear a lot of people pining for the supposed golden age of CBC/Radio-Canada. An age when everything we did was relevant, compelling and Canadian. Here is the reality: that golden age is now.

Let me prove it to you. Let’s look at a couple of slides together.

Here’s a look at CBC Television’s prime-time schedule in 1981-1982, 7:00 to 11:00 pm. The line above tracks our market share from 1976 to 2005. Red, like the colour of our flag, is good on this slide because it indicates Canadian programs; blue indicates foreign programming. Our lineup included, at that time, M*A*S*H*, Three’s Company, Dallas, Mork and Mindy, Happy Days, All in the Family, and the list goes on. Great shows, sure, but definitely not Canadian.

Fast-forward 15 years to 1996-1997. No more blue. This was the season that CBC moved to fully “Canadianise” its schedule. But our ratings suffered as a result, dropping 11 points from our previous slide. This schedule wasn't compelling and Canadians stopped watching.

Six years later, in 2002-2003, we had stayed the course with respect to our commitment to Canadian programming – Mr. Bean and Disney on Sunday are the only foreign shows here – but our ratings continued their decline to a near all-time low of 6.7 per cent. Canadians were simply not watching.

In fact, this slow decline speaks volumes to what we think is one of the most important cultural challenges facing English Canada: English-Canadians have historically preferred watching foreign programming to their own. Which explains the following slide.

These are the latest fall schedules at CTV and Global. Again, red means Canadian and blue means foreign. You should also know that private broadcasters must broadcast US network shows in Canada at the same time that they are shown in the US to maximise their ad revenues; this is called, in our jargon, simultaneous substitution. They cannot, as a result, broadcast Canadian programs between 8:00 and 11:00 pm when Canadians are watching television the most, because of their commitment to US programming.

Let’s compare that to what CBC is doing this fall.

CBC is the only television broadcaster that has the capacity and the commitment to air Canadian entertainment programming when Canadians can actually watch it. But that doesn’t mean we have to accept that Canadians won’t watch us. We believe that if you present great Canadian programs, Canadians will watch.

Unprecedented success

In fact, CBC Television has convincingly reversed its downward ratings spiral over the past five years, while remaining wholly committed to Canadian programming. For example, Heartland, Rick Mercer Report, Hockey Night in Canada, and Dragons’ Den are all drawing million plus audiences regularly. And between 1.5 and 2 million Canadians per week followed Battle of the Blades.

In 2008-2009, CBC even beat, for the first time, Global's predominantly American prime-time schedule to become the second-most-watched network in Canada.

CBC’s latest big move is the renewal of its news operations, the most significant change ever undertaken by CBC News. Over 1,000 people have been reassigned in the process. It is the result of the single, biggest audience research project in CBC’s history. Many of the changes we instituted were pioneered right here in BC. Canadians told us what they wanted and we listened.

I’m very proud of what we’ve accomplished.

CBC Television is not the only service enjoying terrific success right now.

Télévision de Radio-Canada has maintained its position in prime time, despite its competitors’ many reality shows and the plethora of specialty channels in its environment.

Our radio services have never had better ratings and the strength of these conventional services carries over to our Web services.

In 2008–2009, our Internet sites drew six million visitors and provided over two million podcast downloads every month.

The $171 million shortfall and the recovery plan

But as successful as we’ve been and are, these are not easy times. CBC/Radio-Canada faces many daunting challenges, both in the immediate and in the longer terms. What we’ve managed to do over the past 18 months has been nothing short of extraordinary, considering the financial pressure we’ve been under.

We and other Canadian conventional television broadcasters depend on advertising revenues to survive: in our case, between 40 and 50 per cent of our television budgets depend on them, and those ad revenues have been on a steady decline since well before the global economic downturn hit us in mid-2008. The recession simply accelerated the problem.

So despite the remarkable success of our services, we entered fiscal 2009-2010 facing a $171 million shortfall – an interesting challenge.

To deal with it, we implemented a financial recovery plan. You may already be aware of its consequences. It included the elimination of approximately 800 full-time positions across the Corporation, including 41 here in Vancouver. Then there were the reductions and cancellations to our programming schedule. We also implemented permanent reductions in discretionary spending, and compensation freezes or reductions for senior management. Finally, we had to sell some of our assets to generate cash in order to meet some of our liabilities.

It was a tough year that demanded many difficult decisions and choices. But we are still standing, and standing proud, and it's now time to move forward.

Towards a sustainable future: rebalancing the system

But I don’t want you to get the impression that it’s all smooth sailing ahead.

What we managed to pull off this year is not something we’ll be able to repeat indefinitely. As you can see from the slide here, broadcasting industry revenues – the Blue line – are not keeping up with expenses – the Green line (historical growth rate), the Red line (current level simply adjusted for inflation), and the Black line (just using the 2008 number and plotting it over time) – and the forecast for the next five years is far from encouraging. Whatever line you want to consider, you'll see that there is a funding gap.

As it stands now, conventional broadcasting is no longer viable. Fundamental issues need to be resolved. Unless we’re able to develop a sustainable, long-term financing model, CBC/Radio-Canada’s ability to fulfill its mandate remains seriously at risk.

Recent initiatives by the Canadian Radio-television and Telecommunication Communication (CRTC) and the Government will help address some of the challenges we face. I’m referring here to the new Canada Media Fund and the Local Programming Improvement Fund.

But while these are encouraging steps in the right direction, they do not solve the fundamental problem that plagues the Canadian broadcasting system. That final and most critical part of the solution now rests in the hands of the CRTC.

I’m talking, of course, about value-for-signal. You’ve surely caught wind of it by now.

Bottom line, it's a simple issue, a delicate one to solve, but a simple one. Cable and satellite companies are taking our signals for free and re-selling them to you for a profit. Show me another industry where this happens. It doesn’t make sense. This free-riding has to end.

Now I don’t blame you if you get the impression that this isn’t about you, the consumer, but rather about two industries squabbling publicly over your money. Please believe me when I tell you that it’s much more fundamental than that for us.

Yes, this is a money issue. But, more importantly, it is a culture issue. Television is still the most powerful disseminator of modern culture. It’s imperative that Canadians continue seeing themselves and their lives reflected on television. Local TV really does matter. What we’re doing here in Vancouver, and what Global does and what CTV does, matters. That’s what we’re fighting for.

As it stands now, making Canadian television doesn’t make business sense. Not too many broadcasters will stick with it if the picture you just saw isn't fixed.

Our strategic directions

To remain relevant in the new media world, CBC/Radio-Canada must continue its transformation into a “total media organisation”; that is, a company able to supply content on every platform used by Canadians, at any time, and to allow you to interact with one another.

So here are the key principles that underpin our strategy.

First, we must be the pre-eminent home of Canadian programming. You just saw our schedule. You now know what I mean.

Second, we must be the undisputed leader in reaching Canadians on new platforms. Take a show like Q, for example. You can catch it on CBC Radio One or Sirius Satellite Radio, or you can watch it on our television network bold. You can also get it by regular or video podcast, or interact with the show on YouTube, Twitter, Facebook, or MySpace. 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.

Our third principle is to be deeply rooted in all regions of the country. For that to happen, we have to make it a priority, even when funding is in short supply. And we are. Case in point: only 14 per cent of the cuts we made to deal with our shortfall this year were made at the regional level.

Vancouver: our strategic direction in practice

It helps to be here in Vancouver when explaining our priorities. What we are doing here is our vision of public broadcasting in a new age.

Our new Broadcast Centre is an example of how we reinvented ourselves despite funding challenges. This was a multi-million dollar project that brought a lot of stimulus to the Vancouver economy. We financed it through the sale of real estate assets, and leasing arrangements.

The building – which I strongly encourage you to visit during tomorrow’s open house – was designed for greater interaction between the public broadcaster and the community it serves. It will act as a cultural hub for the city for decades to come.

Inside the building is where things get really exciting. The cornerstone of the project was the integration of our media lines. English and French, news and current affairs, television, radio and the Web, are now all working together in a single newsroom. It’s a model that’s being implemented in other regional centres across the country. It’s a big change and a big deal. It means better collaboration and resource sharing, more efficient news gathering and quicker reaction to breaking stories.

Ultimately, it means better service for Vancouver. Which brings me to the Olympics.

The Olympics

Yes, we’re disappointed not to be broadcasting the Games this winter. CTV’s offer was simply too rich for us to match. But if you think that we’re going to take a back seat as the city and the country hosts the world, think again.

We have plans to make Canada proud. And the CBC/Radio-Canada Broadcast Centre will be at the centre of our programming during those two weeks. Shows on all of our platforms will be broadcasting from Vancouver to showcase the athletes, the city, the people, and the party, in French and in English, for the duration of the Games.

On CBC, Peter Mansbridge will be hosting CBC News: The National from Vancouver for two weeks. Rex Murphy will be here with Cross Country Checkup. Anna-Maria Tremonti is bringing The Current. Jian Ghomeshi will be here with Q. We’ll be recording a series of concerts for Canada Live. WireTap,Canada Reads, The Debaters… all here. The list goes on.

The same will be true at Radio-Canada. The network has a long history of supporting and showcasing our athletes before, during and after the Games, and this year will be no exception. The cultural and social life of the city and the Games will also feature prominently in their programming.

And let’s not forget and Both sites will have special sections that will be updated regularly throughout the games.

These next few months in Vancouver will prove just how valuable CBC/Radio-Canada is to this country.

Just watch us go.

Thank you.

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