Speeches and Interviews

April 2, 1998

Address by Perrin Beatty to the House of Commons Standing Committee on Canadian Heritage

Perrin Beatty

Thank you, Mr. Chairman, for the opportunity to be here today.

I have with me Louise Tremblay, Senior Vice-President, Resources, and Jim McCoubrey, Executive Vice-President and Chief Operating Officer. We are pleased to respond to your request that we give a brief overview of our corporate planning and to offer some thoughts on the questions you are studying: the impact of new technologies, the evolution of the global economy, and the liberalization of trade.

First, let me describe how far we have come in the last three years and some of the new initiatives we intend to take in the months ahead.

On April 1, 1995, when I joined the Corporation, it was in deep crisis. My predecessor had just resigned in the face of major budget cuts and the government had announced that it would appoint a Review Committee to consider the Corporation's mandate. It has been three turbulent years. During that time, government cuts to the CBC's budget increased substantially, there was a dramatic increase in the amount of competition to established broadcasters and we entered into negotiations with our unions that would have led to our going dark if they had failed. We had to reinvent our program schedules, restructure our organization, and introduce new services and technologies. We made the deepest cuts in the CBC's history, reducing our staff by more than 3,000 positions and overcoming a financial challenge of over $400 million.

It has been an enormously difficult period, and I don't want to minimize the human cost for our employees or their frustration at not having the resources we needed to serve Canadians to our full potential. But we have surmounted these challenges and are entering the new fiscal year stronger, more focussed on our mandate, more confident, and more determined than ever to serve our audiences.

With the government's commitment to stable financing for the next five fiscal years, we have now entered a period of relative calm. There's good reason to be optimistic. We have achieved a corporate turnaround and can now redirect our creative energies into what we do best — broadcasting high quality radio and television — and not on how to prepare for the next round of cuts.

We have come a long way. We have dramatically reduced the cost to Canadian taxpayers, but are also more faithful to our mandate of helping Canadians see themselves and the world through Canadian eyes. Our national schedules are both more Canadian and a more faithful reflection of Canada's regions than ever before in our history. Additionally, our programs continue to win domestic and international competitions. In the most recent Geminis, which took place last month, CBC won more than three times as many awards as our closest competitor.

Although we substantially reduced our staff over the last three years, we did not close one regional station. Some programs were cancelled, while others are now being produced on smaller budgets. I eliminated several vice-presidential positions, sold our headquarters building
here in Ottawa, and reduced head office staff by over half. We introduced new technologies to reduce costs while providing better service. And we are the only Canadian broadcaster to have established a strong presence in new media.

Let me give you some concrete examples of how we have been able to improve service to Canadians at the same time as we have reduced costs.

This February, Franco-Newfoundlanders finally got something they've been asking for more than 10 years. Where they had once received their supperp-hour news program from Montreal, they can now see Moncton's Ce Soir, complete with reports from a journalist based in St. John's — giving the Moncton Ce Soir greater local roots. Radio-Canada has also added reporters in Kapuskasing, and Hawkesbury, Ontario as well as Victoria, British Columbia.

In Radio, we are looking at better ways to serve current audiences and win new ones. With the new $10 million from the Government, with important advances in technology, and by having negotiated the freedom to introduce multiskilling, we can do more than ever before.

Just yesterday, we added a new two-person bureau in Cambridge Bay. The bureau will serve and reflect the Kitikmeot region of the Eastern Arctic, and is part of CBC North's preparations for the creation of the new territory of Nunavut a year from now.

By the beginning of June, we will open new Radio-Canada pocket bureaus in Trois Rivières and Sherbrooke. In June we'll be launching a Radio One bureau in London. Later this year we'll also be opening a new Radio One station in Victoria, the only remaining provincial capital without this basic CBC service. And, to improve reception of our signals, we are moving a number of our radio services to the FM band in Canada's two largest cities. The process has already begun in Montreal, and Radio One will be doing the same thing in Toronto this month.

In January, we dealt with a very different kind of crisis. In response to one of the worst ice storms in a hundred years, we transformed our radio operations in Montreal and in Ottawa into a lifeline service — providing information from how to use a generator to where to find a shelter; from reports on the whereabouts of the Canadian army to thoughtful conversations in the middle of a cold night, perhaps sometimes the most welcome relief of all.

In the Montérégie region we even opened a new radio station to meet the needs of those locked by darkness in the Black Triangle. CBC television provided round the clock information and news bulletins — offering help to those directly affected by the storm, and keeping the rest of Canada up to date on the latest developments. CBC's response to this crisis proved, as it had during the Saguenay and Manitoba flooding, that Canada's national broadcaster plays a vital role in the regions of Canada.

In February, we took our audiences to Nagano, providing the coverage of choice for critics and viewers from all over North America. In the first week, the market share for our English and French television services was an amazing 28.2% and 35.2% respectively. In fact, in the first week of the Games, some 17 million Canadians tuned into our English televison service alone to share in the Olympic spirit. In the wee hours of the night an average of
1.3 million Canadians were glued to CBC television!

And not only was it good, it was also efficient. The CBC's participation in the games was covered by self-generated revenues, and not funded through the Parliamentary appropriation. We provided our coverage for our six services and assisted the Japanese government in supplying host broadcaster services with a staff complement that was between one quarter and one third that of CBS. We broadcast, all television services together, over 600 hours, as compared to 135 hours for CBS. Our immensely popular Olympic web site, in partnership with Bell Canada, gave Canadians and international visitors an opportunity to learn much more about the athletes they were watching.

We are very proud of our coverage of both the Atlanta and the Nagano Games and I am pleased to tell you that Canadians can look forward to the same standard for at least the next decade. As you may have heard recently, the IOC has awarded the next five Olympic Games to the CBC, in partnership with Netstar.

Finally, on another front, we've also embarked on a project to ensure our financial systems remain functional for the year 2000 and to provide the information we need for a more modern, accountable and efficient Corporation. And, this year, for the first time in our history we produced an on-air annual report, which we broadcast to our shareholders from coast to coast.

The Year Ahead

Looking ahead over the next 12 months, we expect a good year. Our Parliamentary appropriation has now been stabilized at $822 million. In addition, we've projected net revenues of about $271 million. There are more details in the handout provided to you, which will show you the breakdown and the evolution of the CBC's budget.

I might simply add as an aside that, although we are a Crown Corporation, we are far from being insulated from the realities of the marketplace. This year, for example, we will generate over $411 million in the market.

I'd now like to outline our main strategic directions for this fiscal year.

First, our television. This year we will be increasing the distinctive nature of CBC English television by continuing to Canadianize our schedules. Going all-Canadian in prime time meant replacing about 200 hours of programming. Canadianizing daytime means replacing nearly a thousand hours of programming.

In the area of French television, we will be introducing several new series, developing some new programs for young people, and increasing the overall Canadian content level.

Common to both English and French television, we will broadcast several new cross-cultural programs, and continue our efforts to maintain a strong regional reflection. With the support of the Canada Television and Cable Production Fund, we will continue to partner with the private sector to produce quality Canadian programs which reflect all parts of Canada.

Most importantly, we are now embarked on producing A People's History of Canada, the most ambitious history project ever undertaken in this country. This coproduction of our English and French television networks will help us mark the millenium, and will be a permanent record of an epic story.

Either by ourselves or in partnership with others, we have applied to the CRTC for six new specialty channels which will provide new instruments we can use to serve our audiences.

Now I would like to mention our priorities in radio.

In the area of French radio, we will increase the number of exchanges between regions, complete the repositioning of its two networks, and develop a national policy for music broadcasting.

On the English side, we will continue to improve service to Canadians by providing information they need when they need it, and to air more new voices on both networks. Both radio services will see the launch of digital radio broadcasting, and we will be looking at additional initiatives to serve new or underserved audiences.

For its part, Radio Canada International has received the assurance of long term funding from the government, which has allowed us to look at how to most effectively present Canada's face abroad.

We will also use new media to serve Canadians more fully. We will add to the number of program sites uniquely designed for the Internet. These sites will cover areas such as news, sports, youth, culture and la francophonie, and we will also develop sites which will offer Canadians the chance to give us feedback — forums and other sites designed to engage and interact with our audiences. In addition, we will continue to use the Internet to promote on-air programs and simulcast on-air content.

The CBC and New Technology

Let me turn now to one of the specific topics the Committee is reviewing. In particular, you have asked us to describe technology's impact on the cultural sector.

Like the citizens of other developed countries, Canadians are engaged in a highly vocal debate about the benefits and costs of new technology. To the optimists, computers and digital technology can miraculously cure most of society's ills. To the critics, these technologies will overwhelm us, leaving us enslaved to our machines like helpless robots.

These days it's hard not to be dazzled, as our machines and appliances get faster, smaller and cheaper, and even vacuum cleaners come with on-board intelligence. Those of us who are interested in preserving Canada's culture need to keep our focus on content, treating technology not as an end in itself, but as a means to an end.

The ever-growing power and ubiquity of the microchip, along with the convergence of computing, communications and consumer electronics have created remarkable new tools for creating and reaching audiences. Some of these, like direct-to-home satellites, are delivering familiar content in unfamiliar ways. Others, like the World Wide Web, are changing how we think about access to information, production values and personal control over content.

Just think of some of the ways in which technology is opening up opportunities:

• The power to communicate is becoming ever-cheaper and easier for individual citizens.

• The rapid decrease in the cost of digital intelligence has allowed enormous amounts of computing power, which was once so expensive that only governments and large institutions could possess it, to flow into the hands of small organizations and individuals. The result is that individuals can have much greater control over all elements of the creative process. 

• Technical constraints on the amounts and kinds of information we can process, transmit and store are disappearing, allowing us to do things that would ave been unthinkable only a few years ago.

• Competitive businesses are replacing regulated monopolies.

• Broadcasting and telecommunications services now offer new choices to their audiences and customers at a record rate.

But the benefits technology brings are not without their costs:

• Modern communications technologies are dissolving national borders.

• They have challenged our cultural sovereignty by making government regulation to protect culture less effective.

• As they present greater choices to our citizens, they also reduce our sense of shared experience.

• They leave many consumers feeling overwhelmed by choice, rather than empowered by it.

• They create unprecedented turbulence in our cultural industries and overthrow many of our heart-felt assumptions about how to finance, make and deliver cultural products.

The central question is, "how should we react to this turbulence?"

Technology is a critical element for our industry. We depend on it for making programs, sending them out over the air, preserving our music and other assets, and reaching audiences in their homes through both traditional and new media.

Additionally, competition, open borders, deregulation and audience fragmentation have shaken our industry. As the range of choices available to audiences grows, conditions get considerably more difficult for broadcasters. Growing competition drives up the cost of program rights, while the audiences broadcasters need to generate their revenues are split into dozens of smaller fragments.

Most importantly, the public broadcaster is particularly sensitive to changes in audience needs, and we must bear the costs of providing services using both traditional and new technologies.

Despite all these challenges, I think new technology brings important advantages to the CBC.

First, new, digital technologies invite a high degree of participation and personalization on the part of the audience. They make a passive media experience much more active and involving. These are the attributes we have always cultivated in our own audiences. As cheap access devices like WebTV become more plentiful, new media will help us strengthen and enrich our relationship with our audiences.

Second, as a country of regions, Canada has always struggled to communicate over great distances and provide a voice to a wide range of communities, including those isolated by geography. Now, public networks like the World Wide Web offer broadcasters a new set of tools
to reach these communities, as well as helping those in smaller localities or operating in a minority language to communicate with like-minded people, wherever they live.

Finally, the new technologies allow us to provide better service at lower cost, for example, they let journalists work in the field closer to deadline, produce their pieces on light and portable equipment, and transmit them to network headquarters more efficiently.

The new technologies facilitate doing our job more effectively, as long as we have a clear understanding of who we are and what our job is. Simply put, we are our programs. Our primary mission is to show Canada and the world to Canadians through Canadian eyes, and we do it through our programs. We have other roles, but telling Canadian stories — in our drama, in our journalism, and in our music — is the most important of them. Technology is the instrument we use to do our job, but it should never be confused with our mission.

I don't want to leave the impression that at CBC we have the new technologies all figured out. One of the paradoxes we face is that we must become masters of many technologies even as we concentrate on the more important issues of creating and distributing content.

Over-the-air, cable, specialty services, discs, Web sites and other delivery platforms like cable modems and ADSL all offer pathways into the homes of our audiences. This cross-media approach is challenging for a conventional broadcaster like CBC, because our major assets and reputation are so closely tied to our main networks. Part of the legacy of old technology is our commitment to the hardware and tools that help us make and distribute the programs.

As we invest in new technologies, we must stay current but be careful of the risks associated with being early innovators in areas like high-definition TV. We led innovation in digital radio, and we are steadily replacing analog links in the TV production chain with digital equipment. It's just a matter of time before the final link between our transmitters and the viewer also becomes digital. But in high-definition TV, which consumes vast quantities of bandwidth and dollars, we should slipstream the Americans, given the huge marketing, programming and technical risks involved. We will let them determine whether a market exists for HDTV, but we will be close behind, watching attentively, and ready to move quickly.

The CBC and Trade Liberalization

A moment ago I mentioned audience fragmentation, a reality broadcasters have had to learn to live with in the 1990s. From the broadcaster's vantage point, it has been a painful learning experience. But of course audiences themselves don't talk about the 'problem' of fragmentation,
and why would they? They are being courted as never before by programmers, delivery providers, consumer electronics companies and regulators, all of who are outdoing each other to bring choice to Canadian audiences.

The irony is that every positive step taken in the direction of increased channel choice seems to reflect a challenge to our policy and regulatory framework for broadcasting. We've just discussed the challenges posed by technology. In some ways, those posed by the whole move to trade liberalization can be even more daunting. While policy-makers and regulators have some control over the introduction of new communications technologies, in the realm of international trade we are dealing with much larger economic and political forces.

I see three distinct developments:

• First, the deployment of NAFTA and other treaties that remove protectionist trade barriers;

• Second, the increasingly aggressive stance taken by Washington on efforts by other countries to preserve their national cultures;

• Third, and perhaps most powerful of the three, an international climate that puts a premium on open competition in the global economy.

NAFTA and other multinational treaties have hastened the decline of protectionist measures and gradually changed thinking about the idea of national cultures. While direct government spending on purely cultural activities may not be at issue, such treaties may call into question a range of other measures, including both indirect subsidies, such as federal spending on broadcast programming, and protectionist measures like the exclusion of many U.S. cable networks.

Successive governments have fought to preserve their right to support culture under international trade law. In the field of broadcasting, they have been largely successful, but it is vital that they continue to be vigilant.

It is important to note that, as a federal institution, the CBC has an added protection against attacks on Canada's cultural policies. If the CBC did not exist, Canadians would have lost one of the few instruments of Canadian culture that remains sustainable under international trade law.

In these matters, it is important to understand the dividing line between culture and cultural industries. Our southern neighbours take a much narrower view of what constitutes culture than do Canadians. Because of the size of the American market and the strength of its cultural industries, it has an enormous advantage over its competitors in a totally unregulated marketplace.

The tide is turning against protectionism in fields closely related to the cultural industries. In early 1997, multilateral agreements were concluded in both the telecommunications and information technology industries. In January 1997 the Information Technology Agreement was concluded to lower trade barriers for equipment vendors and suppliers. A month later, telecommunications services were liberalized under the auspices of the WTO/GATT. A few years ago, such developments would have had little effect on a content industry like broadcasting. But this is the age of convergence — the push for open borders in one sector will inevitably undermine protectionism in all the convergent industries.

Because the new technologies ignore political and geographic boundaries, the interplay between Canada's domestic and international policy instruments is vital. Domestic policies that overlook international conditions can leave Canada vulnerable to politically and economically motivated trade actions by our trading partners.

While the move to open borders threatens many established cultural policies, it is not simply the product of trade economics. Indeed, the inexorable spread of technologies like Direct-to-Home satellite television service has allowed foreign companies to bypass national borders and national regulation, even when satellite "spill" is not part of their formal business plan. The ubiquity and anonymity of the Internet make it even easier to efface national borders.

To be fair, the move to open borders also provides opportunities for Canadian content producers looking to compete internationally. The export records posted by Canada's largest film and television production houses, for example, are impressive. But while we're thinking of the success stories, the CBC would also like to remind the Committee that Canada's very success in the global entertainment business raises some serious problems.

First, let's be clear about the difference between producing television for business reasons, to make a profit for shareholders, and for cultural reasons, to serve the interests of the audience, to foster a sense of what it is to be a Canadian. This difference is reflected in industrial policy on one hand and cultural policy on the other. There is an enormous difference between a conspicuously Canadian program, made for Canadians, and a product made in Canada which camouflages its origin to make it more marketable in other countries.

There's nothing wrong with making money, creating jobs and building prestige for Canada in world film and television markets — far from it. However, the move to open borders will ensure that our cultural industries experience more, not less, competition from foreign services. As a result, there is a real risk that private Canadian broadcasters will eventually find themselves put
out of the profitable business of importing American TV programs for exhibition in Canada. Not surprisingly, many in the private sector have been talking more about the importance of developing Canadian programming as a business, rather than just as a regulatory obligation.

Canada's broadcasting policies have long favoured maintaining private and public broadcasters that are both healthy and active. I am a firm believer that we would be poorer if we were to lose either.

I believe the need for a mixed public-private system will remain at least as great in the future. The protections afforded private broadcasters, such as simultaneous substitution, help generate revenues to cross-subsidize their efforts in Canadian programming. The more these protections are called into question, however, the more important it becomes for Canada to have a public, non-profit-making broadcaster — like the CBC — whose mission is to make culturally significant, conspicuously Canadian program material. Having a healthy public broadcaster is important not only because the protectionist framework that supports the private sector is at some risk, but also because, whatever the outcome of the trade debates, private broadcasters are less likely than the CBC to take chances with unprofitable program genres. That is not a criticism of them; it is simply a recognition that we were created for different reasons and serve different masters.

The activities of profit-making broadcasters, production houses and other such businesses deserve the support of the federal government. But the efforts of cultural institutions like the CBC need a different kind of support, based not on protectionism but on funding through the Corporation's Parliamentary appropriation, as well as through mechanisms like the Canada Television and Cable Production Fund.

What should we be trying to accomplish with these precious taxpayer resources? The CBC sees two vital tasks ahead as we learn to cope with the lessons of open borders and the global economy.

First, we must create more shelf space for Canadian programs. This is becoming particularly important in the broadcasting sphere. Since we can no longer keep out competition, we have to be present in as many places as possible — on the conventional broadcasting dial, in specialty and pay audio services, and in cyberspace, whatever form that may take over the next few years.

Second, we must do everything possible to enhance the quality of distinctively Canadian programming. That will require public money, because this kind of programming is less likely to attract American buyers. Our programs must be of high quality so they can compete on their merits for the Canadian audience. We have no right to expect Canadians to watch or listen to our programs out of a sense of duty.

Given the enormous influence of American television and filmmaking around the world, creating shelf space will not be easy. But the CBC is well suited for the task — provided it has the resources and operating flexibility, such as the ability to increase its outlets in both regulated media like specialty television services, and unregulated media like the web.

Changing Demographics

While we were in the midst of change at the CBC, our country was changing as well. Our major cities are more diverse than ever, and the cities themselves are only getting larger. The population bulge created by the boomers is still there, but right behind are smaller successive waves of young people, with a completely different relation to Canadian culture.

I am proud of the multicultural face of the CBC. From on-air reporters, to people working behind the scenes we have improved the diversity of our representation. In fact, we have just introduced a new twice-weekly program on Radio One called Out Front which celebrates new voices. In specific time slots you can hear the best of world music. But we can't become complacent, especially in attracting younger audiences to the CBC. Their worldview is one that is deeply informed by their own multicultural, and in many cases bilingual experience. I know that we have to do more to be in tune with Canada today.

While our traditional audiences are older than the population as a whole, to be relevant tomorrow we will have to find new ways to attract and maintain younger Canadians. New technology will let us develop new pathways to the 18-35 age group, and we will be looking for new methods to improve our service to this important market.

What Role should the Government Perform?

As I mentioned before, by putting innovative mechanisms in place such as the Canada Film and Television Production Fund, the Government is contributing greatly to the development of a vibrant, exciting Canadian culture. We hope it will also look in this direction to help support other facets of the industry, which are instrumental to the provision of quality Canadian content. A Fund for feature film development production and distribution would assist this genre to flourish. We have already expressed to the Government that we want to see the Canadian feature film become the success story that it deserves to be, and that CBC is more than ready to play its part.

I think that the new media sector would also benefit from such a Fund. New Media markets know no borders. A Fund to foster the creation of conspicuously Canadian, but internationally appealing, new media products would mean that our children could at least stay connected to Canada's rich cultural heritage. Of course such a fund would greatly assist the creation of French-language material and strengthen that emerging industry right here in Canada. As a key producer of French language content, the CBC stands ready to assist the government in
increasing the volume of French material on the Internet, and particularly of material with a Canadian focus.

On another front, the Government in its capacity as regulator must help to sustain our cultural industries during a period of enormous change. For example, it has a vital role to play in the areas of copyright reform and spectrum allocation.

Finally, in the specific case of the CBC, both Parliament and the Government must continue to support its status as a public broadcaster owned by the citizens of Canada. As a journalistic and cultural institution, we have to ensure that audiences have confidence in the credibility and integrity of our programs. Otherwise, our ability to function will be destroyed.

The difference is whether we are perceived as a public broadcaster — an agent of democracy — or a state broadcaster — an agent of bureaucracy. Parliament was very careful to enshrine in law our arms' length relationship to government for that reason. It must continue to support that principle if Canadians are to have a public broadcaster whose journalism and entertainment provide the standard for excellence for the industry in Canada and around the world.

Conclusion

Those, then, are our thoughts on the issues you requested us to address today. The period through which we have just passed has not been easy, but with the vision to see how we could achieve a more secure future and with our employees' courage in accepting change, we have succeeded. In many ways, the challenges for all of us who believe in Canadian culture are the same: we face enormous uncertainty, but, if we have the vision to know where we want to go and the courage to set out on the journey, we will succeed.