Speaking notes for Hubert T. Lacroix, President and CEO, at the Annual Public Meeting

September 25, 2012

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Hello. Thank you Rémi and thanks to everyone for joining us.

This past year was about our five-year strategy, 2015: Everyone, Every way, and its implementation across the country. It was about being more distinctly Canadian, more regional and more digital.

When we launched Strategy 2015 two years ago, questions were raised about local weekend news and whether we saw that as part of our strategy. Well, here we are two years later delivering new weekend and late-night news on television, radio and online, in places like Edmonton, Ottawa, Montreal, the North, and here in St. John’s.

For you here and for the rest of Newfoundland and Labrador, this has meant growing On Point, a show about local news makers and politics that launched during the 2011 provincial election. Hosted by David Cochrane, who will also be joining us a bit later for our panel discussion, On Point now includes a weekly 20-minute spot on TV and a half-hour radio call-in show on Friday afternoons.

Today we offer Canadians more than 30 services, with content spanning everything from classical music and kids programming to reality television and the performing arts.

Scan our services. As you saw a few minutes ago in our video, you’ll find innovative, multi-platform programming like 8th Fire, a series about aboriginal Canadians that aired on both CBC and Radio-Canada. And #bullyPROOF, about bullying among Canada’s youth, included stories, features and a documentary broadcast over a week on CBC Television, CBC News Network, CBC Radio One, and online. Content and audience discussions were also available on Twitter and Facebook.

We continue to grow our digital services with new Radio-Canada micro websites for Montreal’s North and South Shores. And CBC’s first all-digital service in Hamilton launched in May. We also have two new digital music services, CBC Music and Espace.mu, both generating more than a million audiostreams in their first months.

All examples of the broad range of services and programs that we offer to Canadians.

The ecosystem

However, despite all of our progress, achievements and focus on delivering on the promises set out in Strategy 2015, the public broadcaster continues to face a variety of challenges from regulatory to financial.

The first of these challenges is the very ecosystem in which we operate. Back in 2008, vertical integration was mainly limited to boardroom conversations across the country. The Canadian mediascape was still comprised of many independent companies spread across different media segments. Not anymore.

Today, the vast majority of media content in Canada is controlled by four companies – Bell, Rogers, Shaw and Québecor – who have massive influence on our broadcasting system and dominant market power. Together, they control almost 85% of the entire television market. In fact, these four plus Telus control 83% of all broadcasting and telecommunications revenues.

It’s a level of concentration never seen before. Before Bell’s bid to acquire Astral Media in March, CBC/Radio-Canada was the only national conventional television broadcaster in the country not owned by a cable or satellite company. Now, it’s also the only national radio network not owned by one.

If Bell’s bid to buy Astral Media is successful, Bell would control 36% of conventional TV revenues, according to the CRTC’s latest report. That’s more than twice the amount of its largest competitor. And on the radio side, their control would amount to 31%. To give you some perspective, their next closest competitor is Rogers who holds 14% percent of Radio revenues followed by Corus with 11%. We’re not saying this is bad, or good. We’re simply giving you the facts.

So what do all these numbers mean for Canadians? Well, they tell us that the diversity and range of voices in Canadian media is at stake, and that’s something every Canadian should be concerned about. Despite the almost unlimited quantity and choice of content available, very little of it is Canadian when it comes to English television, and very little of the rest is free from a small number of commercial agendas.

And that’s where public broadcasting comes in.

In this slide, which shows CBC’s, CTV’s and Global’s prime time television schedules from this season, the red blocks are Canadian programming and the blue blocks aren’t. We have shown this slide at previous APMs because this needs to be talked about and understood. This is where we stand out. And we don’t do it because it’s a CRTC requirement in a benefits package imposed on us as a condition close an acquisition. We do it because this is core to our mandate.

Canadian programs cost a lot of money. So why keep producing them? Because a big, diverse, geographically dispersed country that doesn’t have the means to tell its own stories, share its common experiences, debate its issues, doesn’t stay knitted together for long. Television and radio might not be the only means of bringing Canadians together. But they are surely, for now, the most effective and cost efficient ones.

Financial Challenges

The second challenge is financial in nature. That won’t surprise you. Here’s what we’re doing about it.

As most of you know, our appropriations were reduced by $115 million over three years and, when we add-on unavoidable cost increases and the investments required to continue to transform ourselves, our challenge is a budget reduction of $200 million over three years, plus a one-time hit of $25 million for severance.

The CRTC’s decision in July to eliminate support for local television programming by discontinuing the Local Programming Improvement Fund (LPIF) did not give us much time to adjust to the reality of our reduced appropriation, and adds to our financial challenges.

As for the justification of eliminating the $2.17 LPIF charge on my cable bill in order to lower costs for consumers, I’m not sure that it works for me given the fact that I just received a notice from my cable company informing me that that the cost of my cable service is going up by $1.99 a month for the second time in six months. This time my cable company is justifying the increase by stating that it needs the extra $1.99 to cover an increase in the cost of the royalties it pays for its programs and an increase in the cost of its digital equipment.

Improving local service is one of the Corporation’s top priorities, as you’ll remember from what I said at the outset of this presentation. This CRTC decision doesn’t change that. But there’s no question that it will negatively affect overall local television programming in smaller markets.

To date, we’ve put in place a number of other solutions to our financial challenges. We have completely transformed Radio Canada International, to broadcast now only on the web – in French, English, Spanish, Arabic and Mandarin. Shortwave transmission of our international radio service was discontinued on June 24.

We shut down all of our 620 analogue television transmitters – including several here in Newfoundland – on July 31. Unfortunately, in a few places around the province, the shutdown affected more than just antenna users. In August, we were copied on a letter sent to the CRTC by one of Newfoundland’s MHAs (Jim Bennett from St Barbe) stating his concern that some subscribers to Eastlink in Western Newfoundland and Labrador lost access to local CBC programming. We are well aware of the problem and we’re sorry about it. Know that it is only temporary. We’re working with Eastlink and the situation will be resolved in January. We thank you for your patience.

In August, we announced the sale of bold, one of our few specialty channels, and we cancelled the development of three others. We are also reducing the range of programming in music, sports and even news, and are now aiming to decrease our real estate footprint by 800,000 square feet by 2017.

Looking forward to the rest of the fiscal year

The rest of the year will be about our licence renewal hearings that are set to begin on November 19. Canada needs a strong public broadcaster. Canadians now have an opportunity to remind the CRTC of the importance of the Canadian programming we bring to them. It’s been 13 years since our licences were reviewed, making this a critical milestone for the Corporation. While Strategy 2015 sets out our vision for the future of Canada’s National Public Broadcaster, we need a regulatory framework that will enable our progress and allow us to maintain our presence no matter what degree of industry consolidation may happen or how fast technology and demographics might evolve.

So, with that said, I’d like to turn things over to our Vice-President and CFO, Suzanne Morris to discuss our results.

Beyond 2015

Thank you Suzanne. That covers the here and now for the public broadcaster, what we have to deal with and what we have to look forward to in the short-term. But what about longer term? We know that 2015 is just a sign post, and that it’s not far away. While there’s still a lot of work to be done to get us there – and indeed many challenges along the way – we also have to start looking beyond 2015 and planning for it.

The future of media is participatory and collaborative: more about people’s active experience than just the passive consumption of content. Sharing it, interacting and engaging with it. Co-creating and re-recreating it, being a part of it.

The public broadcaster will need to devise new ways that will allow it to be the first place that Canadians think of when it comes to the Canadian experience, Canadian culture, and Canadian democratic life. Anything short of that isn’t good enough.

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