Speaking notes for Suzanne Morris, Vice-President and Chief Financial Officer, CBC/Radio-Canada, at CBC/Radio-Canada’s Annual Public Meeting

November 2, 2011

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Good afternoon.

I’m pleased to be here today to provide an overview of CBC/Radio-Canada’s financial results for fiscal year 2010–2011 and to give you a look at how this year is shaping up.

Let’s take a quick look at our financial results from last fiscal year.

  • Total commercial revenues increased by $83 million or 14.6%, mainly due to advertising revenue growth and to a full year of contributions from the Local Programming Improvement Fund (LPIF).
  • The economic recovery last year, our strong program schedules, increased audiences and new media activities lead to the growth in advertising revenue. Revenues generated during the FIFA 2010 World Cup also contributed to the increase.
  • The amount of government funding recognized for accounting purposes increased by $17 million last year due to the timing of transfers between operating and capital appropriations. However, total government appropriations received last year actually decreased by $2.4 million reflecting the absence of salary inflation funding and resulting from a reduction related to cost-containment measures in the 2007 Federal Budget.
  • Operating expense increased $50 million, a 2.8 per cent increase, which was largely funded by incremental revenues.
  • Consistent with our strategic priorities, the increase reflects enhanced programming schedules, increased digital activities (including Tou.tv and, Hockey Night in Canada) and sports agreements, notably FIFA. It also reflects enhanced local television programming funded by the full year of LPIF contributions.
  • The net position for the year was a loss of $25 million, an improvement of $34 million over the previous year and was funded by the proceeds from the sale of long-term receivables in 2009–2010, consistent with the goals of our two-year recovery plan.

Now turning to this year. We were pleased to introduce public quarterly financial reporting this year, enhancing our transparency and accountability to Canadians.

Let’s turn to some key financial operating indicators. In the first quarter, the Corporation saw 8.5% growth in its self-generated revenues due in large part to strong advertising results from the NHL hockey playoffs as well as to higher digital revenues.

Along with this revenue growth, CBC/Radio-Canada’s first quarter operating expenses increased 5.9% over the same period last year, as a result of programming schedule enhancements, and enhanced digital programming consistent with our 2015 Strategic plan. The increase also reflects one-time costs such as coverage of the federal election and the royal visit. We also accelerated depreciation costs on analogue TV assets in anticipation of the August 2011 transition to digital television in Canada.

Although quarter-over-quarter government funding recognized for accounting purposes was 3.6 per cent higher, the parliamentary appropriation will be $2.8 million lower in 2011–2012 compared to the previous year.

Overall we remain on track for this fiscal year. There are, however, a significant number of unknowns lurking on our horizon. For example:

  • CBC/Radio-Canada is among 67 organizations participating in the government-wide Deficit Reduction Action Plan and asked to look at proposals for a 5 to 10 per cent reduction in our appropriation. We won’t know until Federal Budget 2012 next year how this review will affect the Corporation.
  • In this year’s Federal Budget, the Government reaffirmed $60 million in funding to the Corporation for 2011-2012 for Canadian programming initiatives. We have received this funding since 2001 and it continues to be a key enabler of our programming priorities for Canadians under our five year strategic plan.
  • The LPIF contributed $37 million to the Corporation in 2010–2011, which helped fund local television program improvements in smaller population centres. This fall, the CRTC is expected to review the LPIF. Our 2015 strategy relies on the fund to sustain and improve local TV programming, particularly in underserved local markets.
  • Finally, there’s the Canadian and global economies to consider, something we’re watching very carefully, particularly in terms of our advertising revenues. While these increased quarter over quarter in Q1 and we are currently on track to reach our targets for the year, we continue to closely monitor results and forecasts in light of the current climate of economic uncertainty.
  • All that to say the Corporation is confident that it can achieve its 2015 strategic priorities provided that we have stable long-term funding and economic conditions. Should there be a substantial reduction in our sources of funds or revenues, it could create shortfalls which would need to be managed.

Our 2015 Strategycommits us to:

  • pursue revenue growth initiatives, cost improvements, redirect resources to 2015 strategic priorities, and continue examining our assets to extract as much value as we can;
  • further trim our operating costs. We have undertaken a review of our organizational structures, our operating methods and our overall procurement spend for goods and services

By 2015, the Corporation’s goal is to be more financially flexible and agile to fund the core elements that will translate our new strategy into action and to respond to a rapidly evolving media environment. Our goal is to fulfill our commitment to Canadians – to everyone, in every way.

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