Remarks from Hubert T. Lacroix, President and CEO, for Deputy Minister Seminar: “Transformation at CBC/Radio-Canada”

September 18, 2015

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Good morning, thank you for the invitation to meet with you. A special hello to Daniel, Colleen and Graham, all of whom I have had the pleasure of working with.

These are challenging, fascinating, fast-moving, crazy times.

I don’t need to tell you that technology, and how CBC/Radio-Canada serves Canadians, has been undergoing a radical transformation.

Look at how you now use your own smartphone; the way your kids stream what they want instead of watching TV; the way your departments now manage the real-time, two-way interaction of Twitter and Facebook.

Seventy per cent of Canadians now have a smartphone and fifty per cent have a tablet. Incredible when you realize the iPad didn’t exist six years ago. TV is still the primary source of news for Canadians overall, but for younger Canadians the Internet is twice as important as television. They’re using the news feeds on Apple and Facebook. Facebook now has 1 billion daily active users. The growth of digital has been tremendous. Much faster than we expected. Someday it will mean the end of conventional television. But here’s the thing. Right now, most people still watch television.

Canadians on average still watch more than 27 hours of live television – sitting in front of an actual television - each week. Most of it in the evening during prime time. That’s more than 3 hours every night.

This is the challenge of transformation; how do public institutions move fast enough that they remain relevant and valued by a digital generation, while ensuring they don’t leave some of their citizens behind? And how do they do all this with shrinking resources?

Today I’ll share how we are managing ourselves in this environment.

In 2014, CBC/Radio-Canada launched “A space for us all", its strategic plan towards 2020. We are still creating quality programs for television and radio, but we have completely inversed our model. Instead of being focused on delivering content through TV-first, then radio, the Web and mobile, now our first priority is mobility, then the Web, radio, and television. This is now the filter through which we make decisions on everything we do.

To do this, we had to start by making some tough choices. Our first priority was to stabilize our finances and anchor the strategy in our reality. With our government appropriation shrinking, and ad revenues moving to digital platforms, we had to cut back and rethink some of our services. Cities that once got 90 minutes of suppertime news on television now get either 60 or 30 minutes so that we can provide more digital content throughout the day. We have very few non-news regional programs. We’re getting out of in-house production except for news and radio. We no longer invest in professional sports, although we have made a commitment to Canadian athletes in Olympic sports, and to events that showcase teams representing our country.

We had to let go of a lot of talented people and as you know, that means managing both those who are leaving and those who stay, with sensitivity and respect. There will be up to 1500 fewer employees by the time we’re done.

In the beginning, the plan was not well-received. Many Canadians, including many of our employees, saw it as simply a cutting exercise that would mean only fewer programs, fewer services, and a smaller, weaker public broadcaster. I was attacked for not fighting hard enough for more government funding. People said I was an extension of the government; only there to execute its orders. Some critics even said Canada’s public broadcaster had lost its way. In fact, what is really happening is that, we have been finding ways to reinvent the broadcaster and continue delivering on our mandate.

It hasn’t been easy. But I believe our employees are now starting to see the results of their efforts and sacrifice. We have put ourselves on a more secure financial footing. Our television and radio services are launching new seasons this fall, still focused on high-quality, distinctive Canadian programs, and with a reinvestment of about 20 million dollars from savings into their content – the first time we have been able to do this since 2009. This month, we’re launching enhanced news services specifically for digital and mobile users. We don’t have 90 minutes of local news anymore but we have local inserts every hour all evening long. Our local news will be closer and more relevant - engaging with Canadians all day, on all of the platforms they’re using.

We want to do more, not less.

Our goal is that, by 2020, we will have doubled our digital reach so that 18 million Canadians, one out of two, will use CBC/Radio-Canada’s digital services each month. We also want three out of every four Canadians (up from 1 out of 2) to tell us, in our surveys, that CBC/Radio-Canada is very important to them personally. These are ambitious objectives but I believe they are achievable. They are what Canadians expect of us.

We’re also different in the way we operate. We’re consolidating: streamlining functions like media operations and finance, to name only two. We’ve been implementing a nation-wide real estate strategy where we move from being an owner of real estate to being a tenant in smaller, more efficient and effective spaces that put us in closer touch with the communities we serve. We look for partnerships in everything we do, whether it’s to enhance our coverage of the Olympics or get more of our content to Canadians through Facebook and YouTube. We do this to improve our services, yes. We also do it to free up more resources to invest in content. Frankly I don’t think there is a public broadcaster anywhere in the world that provides more services for less money than CBC/Radio-Canada. Remember, we receive $28 per Canadian for a country with six time zones and two official languages. The average among 18 public broadcasters is $82 per capita.

These are all things we’ve been doing. But it’s not enough. We also need to move faster. We also need to do a better job of demonstrating to Canadians and to Government, the value of investing in public broadcasting. We need to get Government to recognize that the challenges facing the entire broadcasting industry require Government action. And this is not only about us.

Last week, I met with public broadcasters from around the world at our annual meeting, Public Broadcasters International. We’re all facing the same challenges. Our resources have been shrinking, it has forced us to cut, and that has undermined our ability to do the very things that we have been mandated by our governments to do. Then our critics say we are no longer relevant. It is a vicious circle.

I told my counterparts that we, as public broadcasters, have failed to make a compelling enough case for public broadcasting. We have focused on managing each individual challenge, each trade-off, each reduction in our funding, because that is what public institutions are expected to do.

But I recognize, that we public broadcasters, should share in some of the blame. Sometimes, protecting our independence has made us reluctant to provide the kind of transparency expected of all public institutions. Sometimes our very public internal crises and our management of them have damaged our brand, our credibility, and undermined our public support.

But for all our faults, I feel very strongly about the role all public broadcasters can play in their societies. That is why, in the fall of 2016, we will be hosting the PBI meeting in Montreal. I have challenged my colleagues around the world to work together: to pool what we know about the changes happening to our industry, what is working, and what is not: to benchmark our costs and performance with each other: and to share our best ideas and our worst failures to build a global public broadcasting community, a global brand.

I also think, as heads of public institutions, we have a duty to inform the people we serve about the threats we face.

I’ve been talking about a broken revenue model for months now. So have the heads of CTV and Rogers. Jean-Pierre heard this during his Talk TV hearing. The stark truth is that advertising revenue – the lifeblood of the conventional television business (and 20% of CBC/Radio-Canada’s budget last year) continues to move out of television. Conventional English television’s share of total advertising in Canada has dropped by 25% since 1990. In a few days, you’re going to be reading about a more sobering statistic. In the most recent broadcast year which ended in August, advertising revenue for all conventional television dropped another 12%. That’s 200 million dollars gone in one year. This reality is putting at risk the continued existence of Canadian programming. This is not just a CBC/Radio-Canada problem. This is a Canada problem.

We need to develop a new model to meet Canada’s cultural goals for the future.

High quality Canadian programs cannot be made without outside funding: there is no business model for it. The Canada Media Fund has been crucial to the continued existence of Canadian drama on television. The Local Programming Improvement Fund ensured we could invest more in local news in Canadian communities.

Today, the Canada Media Fund is now proposing changes to its funding criteria that could shift resources away from television productions in favor of content for other platforms and for international sales. At stake is $85 million in support for TV programs that are broadcast in prime time on CBC and Radio-Canada. And these kinds of changes are being considered in the absence of an overall strategy; a strategy for how government will meet its public policy objectives with respect to Canadian culture as we transition from a traditional broadcasting model, to the digital age.

I believe the Broadcasting Act’s objectives, fostering Canadian identity and cultural sovereignty, are more necessary than ever. CBC/Radio-Canada ensures there is a public space free from government and corporate interests where Canadians can find out more about themselves and their country. We don’t exist simply to address market failures or to simply “fill the gaps left by commercial broadcasters”. I will never agree to CBC/Radio-Canada being pigeon-holed in that way.

We inform Canadians and we share Canadian stories. That helps build social cohesion. As we watch countries struggling with diverse, multilingual communities, the importance of that role here in Canada should not be undervalued.

But increasingly, I think the crucial role we play is taken for granted. Canadians need to be part of a discussion about whether Canadian stories, Canadian local news, is something that matters to them, and whether they are willing to pay for it. They need to hear what kind of public broadcaster they could have in the future – if they still want one at all.

And we need to decide how to fund it. Without a more robust and stable funding model, all the things we are trying to do will be hostage to the need to cut to manage the financial emergency of the moment. We have long-term obligations and investments in content that we can’t just turn off like a faucet. Other countries are already considering new ways to fund public broadcasting. France and Britain for example are looking at the German model of support through a household fee, in the same way you pay for electricity or water. Canada should at least be prepared to look at this.

That we haven’t been able to have these kinds of discussions is in part a reflection of political realities. Public broadcasting has become a wedge issue politicians use to score points against each other. It’s like a poker game: how you feel about public broadcasting has become a kind of “tell”, a tip off for your political affiliations. It’s unfortunate, because it has prevented an open, public discussion of the challenges faced by the entire broadcasting industry, and what government might do to ensure that the cultural goals of the Broadcasting Act, are met.

So we’re going to try and start that conversation with Canadians, ourselves : A conversation about the changes that are happening in the way Canadians consume content. How can we improve the services we provide to them?

We need to move quickly. We cannot wait for a Royal Commission, a 19-month Parliamentary Committee review, or an overhaul of the 1991Broadcasting Act.

We’ve been managing our transformation at CBC/Radio-Canada in a tumultuous environment, and I think we have made tremendous progress during these difficult times. But the media universe is at a crossroads. This connected environment is opening up new opportunities for engaging with citizens and for sharing culture. But it is increasingly being dominated by giant, commercial, digital players – Google, Facebook, Amazon, Apple and Netflix, and, here at home, by large vertically-integrated BDU’s.

At CBC/Radio-Canada, we want to do more: we see the potential of using our digital platforms to share and engage with Canadians in new ways. We can ensure that there is a space in this new age where Canadian values, stories, and ideas can thrive but we need to engage Canadians, and policy makers to make sure the tools are in place to make it happen. We cannot shrink the public broadcaster to greatness.

Thank you for your time today. I would be happy to take your questions.

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