Speaking notes for Hubert T. Lacroix, President and CEO, CBC/Radio-Canada, at the IIC Conference

November 28, 2011

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Introduction

Thank you. It's a pleasure to be here.

It’s an important time for public broadcasting.

CBC/Radio-Canada and public broadcasters around the world are embracing the remarkable opportunities that technological advances are bringing us. We are now able to connect more intimately with our audiences, with greater interactivity. These conversations can be one-on-one (a reply or comment posted on our website which triggers a response from us), one-on-several, (a live conversation in a social network on an issue or program, which we are monitoring or facilitating) or one-on-the-world via our multi-platforms (where we multiply the contacts by allowing the audiences to watch or listen or connect on the widget of their choice, whenever they choose to do it).

Mark Scott, Managing Director of the Australian Broadcasting Corporation, calls these environments “town squares,” Mark Thompson, Director-General of the BBC, calls them “public spaces” and I call them “national public places.” We are all referring to these safe havens where citizens can share experience, and communicate to and understand each other.

Public broadcasters are also sharing many challenges – funding, the concentration of media ownership, and the fragmentation of audiences.

Today, I’d like to deliver some of the facts that will help support an informed discussion about public broadcasting and its role within the broader media ecosystem. There's lots of debate about public broadcasting – everything from the call to eliminate advertising to privatizing the public broadcasters which would, in fact, eliminate them.

However, I think that any debate should be one based on fact, rather than anecdotes and impressions.

As you may know, it's CBC/Radio-Canada's 75th anniversary – which is part of the reason why we decided to partner with the IIC to present this Conference. It was actually the idea, many months ago, of Lise Lareau, at the time President of the Canadian Media Guild. We were brainstorming about events that could be held to celebrate our anniversary, and Lise suggested that we elevate the conversation about public broadcasting to another level in order to involve more Canadians, and to start and spark a public debate. I thought that was a great idea and, many months later, here we are.

CBC/Radio-Canada in the media ecosystem

CBC/Radio-Canada's mandate is defined by the Broadcasting Act, which makes it clear that there is a role for both the public and private broadcasters to play in Canada.

In some circles, conversations about us start from this vantage point: CBC/Radio-Canada – which receives $1.1 billion dollars from government – competes against all of the other private sector organizations (CTV, Global and Quebecor) who have to struggle from a position of unfair economic disadvantage, as they claim that they receive no public support.

Sorry. This is a false premise.

All media organizations in the broadcasting ecosystem – CBC, CTV, Global and yes, even Quebecor – benefit significantly from sources like the Canada Media Fund and the Local Programming Improvement Fund, or through direct or indirect regulatory or fiscal advantages, all of which are carefully designed and regulated for specific policy objectives.

Here’s a rarely reported fact – some might even call it an inconvenient truth. Public subsidies and benefits – direct and indirect – that private broadcasters receive rounds out to about $900 million per year.

Before we get outraged and call for all of this money to be contributed to the federal deficit reduction action plan, we have to recognize another rarely reported fact: there is no sustainable purely free-market model that will support a significant home-grown Canadian broadcasting industry. Buying and airing American programming is just too easy and too profitable.

If we want to have not only our popular made-in-Canada shows such as Corner Gas and Michael: Tuesdays and Thursdays, but also the Canadian Football League and Hockey Night in Canada, local stations with local news programs, television coverage of elections – in fact, if we want to have any substantive television outlet for Canadian voices – then, we will need to subsidize the Canadian broadcasting sector. Some might even call that a second inconvenient truth.

The Canadian government, both directly and indirectly, provides substantial public benefits to all Canadian broadcasters whether private or public. In exchange for these public benefits, Canadian broadcasters are required to meet certain service and performance commitments to Canadians. We think that is a good thing. And we, at CBC/Radio-Canada, are proud of the contribution we make to promote Canadian voices.

That is the kind of debate we would love to engage in – instead of much of the current debate that suggests there is a subsidized “state broadcaster” in one corner and unsubsidized “private broadcasters” in the other corner. That is quite simply a false dichotomy.

The current debate about the CBC would be much richer if we acknowledged that the entire Canadian broadcasting ecosystem receives public support, and discussed whether Canadians want to invest in the complete ecosystem to promote their culture and enrich democracy.

The debate around advertising

One of the things we often hear people saying is that, as a public broadcaster, we shouldn’t have ads on our shows. Frankly, when I was originally hired for this job, I thought that no advertising on our networks might be a good idea. But I needed facts to understand the consequences of such a shift and how these dollars could be replaced.

So, we commissioned a study by Nordicity to review what it might mean to eliminate or reduce advertising from our TV and digital services.

Nordicity found that the elimination of ad revenues (assuming that the federal government did not make up that difference in some way) would have a devastating effect on our public broadcaster’s mandate. It would also have a negative impact on Canadian programming, independent producers and for the Canadian economy as a whole.

CBC/Radio-Canada alone invests as much in Canadian programming as all conventional private broadcasters combined ($696 million in broadcast year 2010).

Eliminating advertising dollars from CBC/Radio-Canada’s budget would result in a shortfall of half a billion dollars in our annual budget. This represents a 30% reduction in our budget. Without advertising, our investment in Canadian programming would have to shrink significantly – by about $160M per year – and affect our ability to deliver service to Canadians on all platforms.

As a result, it would be exceedingly difficult for CBC/Radio-Canada to fulfill its mandate. Not only that – the larger broadcasting ecosystem would not achieve the goals set out for it in the Broadcasting Act.

Let me explain.

If we eliminated our advertising, the private broadcasters would gain advertising revenue (though not all of it). However, if we assume that the private broadcasters were to spend their new ad revenues in roughly the same way as they spend their revenues currently (a fair assumption), there would be, across the Canadian broadcasting landscape, a reduction in Canadian content and public benefits.

So the option of eliminating ads on CBC/Radio-Canada turns out to be a bad idea from every possible angle. The study, which we are releasing today, is available on our corporate website.

The debate about privatization

There’s also a lot of noise these days about privatization.

So what would that look like and can we move beyond speculation and ideology and look at it in a more rigorous way?

As it happens, an analysis of the direct and indirect economic value that CBC/Radio-Canada generates was carried out by Deloitte earlier this year. It sheds some light on this very question. The study followed the same methodology used by Deloitte for the BBC and Caroline Thompson, the COO of the BBC, might have an interesting perspective on it in the first panel this morning, for anyone interested.

A privatized CBC would compete more heavily with other broadcasters for ad revenue, commission less Canadian content and spend more money on foreign programming. Right now, our prime time on CBC Television is 82% Canadian content, 88% on Télévision de Radio-Canada. This is significantly more than our private competitors. On radio, we’re between 99% and 100% Canadian content on both the French and English side.

Meanwhile, the economic impact of redirecting CBC/Radio-Canada’s grant back into general revenues is significantly lower than what you would expect. In part, this is because other private broadcasters and media would take a $500 million hit as they faced a new, more commercial competitor. Deloitte’s bottom line is that under privatization, CBC’s contribution to the economy would be $1.3 billion less than it is now.

Conclusions

I offer three take-aways from the points I’ve tried to make this morning.

  1. The more radical proposals for what to do with CBC/Radio-Canada aren’t based on fact or math and would significantly reduce Canadian content.

  2. Looking for an ideologically pure market solution to the broadcasting sector will shrink the space in our media landscape that is devoted to Canadian ideas, stories and expression.

  3. The broadcast system works best when we recognize that all players in it must make a contribution to the goals of the system commensurate with the benefits they derive from the system. That is true of the public and the private players.

Introduction of panels and Caroline Thomson

Both the studies I cited above are available on our corporate website. I hope they can help ground the public discussion about public broadcasting in fact and analysis. I also hope they give you a sense of the Canadian context for public broadcasting and set the scene for our two panels that address public broadcasting this morning.

The first panel, Public Broadcasting Around the World: An International Perspective brings together experts from France, South Africa, Britain, Taiwan and Canada to talk about public broadcasting in their countries and how they've evolved over the last decade. They'll also discuss the values they share, their relationship with government, and how they contribute to the democratic institutions in their countries.

In the second panel, we ask the question Do we still need public broadcasters? What does public broadcasting bring to a media environment of interactivity, social media, mobile devices and citizen journalism?

I want to thank our partner, the International Institute of Communications, and our team here at CBC/Radio-Canada, for bringing experts from around the world to discuss public broadcasting. The time is right.

I'd now like to introduce our next speaker, Caroline Thomson. As the Chief Operating Officer of the BBC, Ms. Thomson is responsible for the BBC's corporate and operational activities such as policy, strategy, communications and distribution. She is also the Executive Director accountable for the BBC's major infrastructure projects, including the BBC’s digital switchover. She also led the BBC's bid for a review of its Charter and the negotiation of licence fee settlements in 2007 and 2010.

Welcome Ms. Thomson.

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