Speeches and Interviews

November 11, 2002

Strategic Alliances Between Public Broadcasters and Organizations in the Private Sector

Remarks by Harold Redekopp, Executive Vice-President, English Television, at the Public Broadcasters International, Hong Kong, November 11-12, 2002, from "Session 3: New Models for Public Broadcasters - Partnership and Strategic Alliance Part II"

Thank you, Mr. Chairman, and good afternoon, everyone. It's a great pleasure for me to be here.

One of the CBC's eight corporate priorities is (and I quote): "Position the CBC to enhance its ability to fulfil its mandate through selective strategic alliances and partnerships."

I'm going to speak to you briefly today about:

• some of the kinds of partnerships and strategic alliances that the CBC has entered into recently with the private sector
• some of the reasons why we've done this
• and some of the lessons we've learned from doing it.

I'm sure our experiences aren't unique, by any means – so I hope that by comparing notes, we can learn from each other. For that reason, I particularly look forward to the discussion portion of our session today.

First, then, a quick, and by no means complete or exhaustive, overview of some of our various strategic alliances.

I'm focusing here on programming and content partnerships.

Of course, we are actively engaged in turning non-core assets into revenue streams whenever we can by renting, leasing or selling excess capacity, from production facilities and office space, to transmission and distribution bandwidth. We are also looking at outsourcing such things as real estate, transmission and various support services. But these are not the focus of my comments today.

We also have many alliances with other Canadian and international public broadcasters – but I'm focusing today primarily on those with the private sector, and their special challenges and opportunities.

So here are a few examples.

• With other public and private partners, we are co-owners of two specialty services: the Documentary Channel and Télé des Arts. (Until recently, we were partners in a third channel, called Country Canada, but we recently bought out our partners there.)
• We have program co-production or output deals with various Canadian private broadcasters – including conventional networks like CHUM/CITY, as well as specialty channels and production/distribution houses like Alliance Atlantis.
• We also have arrangements for second windows of our programming on a wide variety of other channels.
• In some cases, we make our programming available to other broadcasters at no charge, complete with CBC branding. For instance, our supper hour news show in Saskatchewan is rebroadcast on the provincial educational channel. And we've offered our national news to multicultural broadcasters for translation into other languages.
• We have a major window on the US market through our involvement in an American specialty channel called Newsworld International, with a reach of 13 million subscribers. It was originally a joint venture. We've since sold our stake for a handsome profit, but we still have a program supply contract to provide the channel with most of its content.
• We have quite a few other partnerships built on the core strength of our journalistic activity, including the production of daily in-flight newscasts for Air Canada, and the provision of news content to several Internet and wireless content providers.
• We have entered into content-based alliances with several major Canadian newspaper and magazine publishers, including the Toronto Star, the National Post, Maclean's Magazine and La Presse. They have resulted in joint coverage of major stories like health care and education.
• We have affiliate stations in several English and French markets which are owned by private broadcasters, and which deliver portions of our network schedule to about 15% of Canadians.
• We are involved in several joint marketing agreements, including one for our pay-audio service, Galaxie, and others for a pay-per-view package of hockey games, called Centre Ice, that is delivered on cable and satellite services.
• And we use partnerships for further use of our content, such as the merchandizing of video tapes, audio recordings, and books. That's led to success stories like Canada: A People's History, which topped the book and video best-seller lists for over a year.

Those are just some examples; I'll stop there, because the ones I've mentioned are among the most visible, and the most closely related with our core product, which is our programming content.

Let me turn now to some of the reasons why the CBC is increasingly looking to partnerships with the private sector. I'll start with the policy and regulatory environment.

• From the very beginning, the Canadian broadcasting system has been a classic "mixed economy" model. Our Broadcasting Act says that Canadian broadcasting is "a single system with public and private components."
• In recent years, the federal government has placed increasing emphasis on the role of the private sector in carrying out public policy objectives. Several government initiatives have virtually forced the CBC to partner with private broadcasters.
  • One example is the Canadian Television Fund, which requires us to join with independent producers and other broadcasters in order to access essential production subsidies.
  • Another is our broadcast regulator, the CRTC, which has strongly encouraged the CBC to seek additional channels through partnerships, rather than on a stand-alone basis.

These policies have had many benefits; they have also had some perhaps unintended consequences. Certainly, they have resulted in more public/private partnerships.

Self-interest is clearly part of the CBC's motivation in partnerships. But there's more to it than that. Because, as public broadcasters, we like to think that our self-interest is also in the public interest.

• We enter into partnerships, first and foremost, to enhance our ability to fulfil our mandate.
• We do it to expand the CBC's reach, and to serve as many Canadians as possible.
• We do it to acquire additional shelf space in a world where having just one or two channels is simply not enough.
• We do it to reach new markets, both at home and abroad, and to gain access to new distribution channels.
• We do it also to extend the CBC's brand and reputation.
• We do it to create convergence across multiple platforms, and to access new and necessary competencies.
• We do it to build a broader network of friends, allies and supporters in a competitive, sometimes hostile, environment.
• And we do it for very practical financial reasons:
  • To generate new revenue streams
  • To help offset the cost of programming
  • To save money through economies of scale
  • And to mitigate the risk of new ventures.

So there's no question about it: there are lots and lots of good and valid reasons for a public broadcaster like the CBC to enter into partnerships and alliances with the private sector.

What's important is to assess each new partnership opportunity against these criteria, and ensure that as many as possible of them are advanced by the new venture, while few if any are impeded.

I'm turning now to my third theme, which is some of the lessons we at CBC have learned from some of our recent experiences with public/private sector partnerships.

1. The first thing I would say in this context, is that the public broadcaster and its private sector partners are almost certain
to come to the table with different motivations and different values. There's nothing wrong with that. But what's essential, is to be clear and frank about what each party expects from the relationship, and where the common interest lies.

2. The second thing I'd say, is that the public broadcaster can sometimes be a demanding and even difficult partner.

• We have high standards to maintain, and a reputation to defend.
• We have concerns that go far beyond the bottom line.
• We operate within a sometimes bureaucratic culture and other constraints as a Crown Corporation that can make it difficult for us to assume risk or take business decisions in a timely fashion.

3. The third thing I'd say flows from the second. We public sector people can often learn a lot from our private sector colleagues. They have expertise that can benefit us, and working with them helps keep us on our toes.

Another important lesson, which may seem obvious, is that in the contemporary world of overnight mergers, acquisitions and divestitures – today's partner can be tomorrow's competitor. In fact, today's partner can sometimes be today's competitor, at the same time. So you have to be flexible, adaptable and prudent. Let me give you a couple of examples.

• In English Canada today, the country's two national newspapers are owned by the two major private television networks.
  If you don't think that influences editorial policy and access, think again.
• Here's another case in point. As the Canadian rights holders for the Olympic Games from Sydney in 2000 through Beijing in 2008, CBC / Radio-Canada entered into a partnership agreement with Canada's largest private sports specialty network – The Sports Network / Le Réseau des Sports – to share both production and coverage of the Games. The arrangement specifies full financial disclosure. Since that agreement was signed, TSN has been bought by Bell Globe Media, who also own CTV and the Globe and Mail – which are English Canada's largest private tv network and national newspaper respectively. The working relationship remains excellent, but we are understandably conscious that we are opening our books to the same people who could quite conceivably be one of the key bidders competing against us for the next Olympics contract.

There are a couple of other lessons I've learned from some recent partnership experiences, that I'd like to share with you in closing. They both have to do with two very important and closely related elements: the distinctiveness of the public broadcaster and the important of branding and brand extension.

Given the Canadian policy environment I described earlier, as well as financial realities, CBC Television produces very little in-house dramatic and entertainment programming. It's almost all made by the independent production community, and supported by the Canadian Television Fund. That means that sooner or later, almost all of it appears on other channels. In fact, our most recently concluded output deal, just announced with Alliance Atlantis, will actually shorten the time between the first window of several programs on CBC, and their second window on Alliance Atlantis-owned channels. Obviously, we felt it was a good deal in spite of that concern. But the result is that it's becoming more and more of a challenge to build an exclusive association in the public mind between specific program titles or properties, and the public broadcaster. That's important, because that association is a large part of what defines our distinctiveness and value, and hence drives public support for us as an institution.

The obvious solution to this challenge is to insist on clear CBC branding, whenever and wherever our programming appears. I have been absolutely insistent on this point. But again, it can be a real challenge. For example: the Documentary Channel is a partnership between CBC, the National Film Board and a private company, Corus Entertainment. You can imagine how hard it is to integrate three corporate identities into one on-screen logo.

Our other joint venture with Corus was a specialty service for rural Canadians called Country Canada. When economic circumstances forced Corus to re-evaluate their investment in the channel, the CBC was able to step up to the plate and maintain a service that is perhaps closer to our core mandate and market position than it is to theirs. The CRTC agreed. As of November 1st, the CBC is the exclusive owner and operator of Country Canada, and we are currently in the process of redesigning the program schedule along more clearly positioned public service lines. At the same time, we remain close partners with Corus on several other fronts.

So there are just a few of our thoughts and experiences on the subject of public / private broadcasting partnerships.

In summary, I would say that such partnerships are: increasingly essential, rich with potential, and always challenging.

You cannot avoid them, nor should you – in fact, more and more, we are seeking them out and initiating them.

We value our private sector partners highly. But I would suggest that public broadcasters need to approach these opportunities with a clear sense of their own needs and objectives, and a willingness to walk away if the fundamentals are compromised.

I hope we can follow up on some of these issues in discussion. Thank you very much.