Speeches and Interviews

October 24, 2001

Preserving a Distinctive Voice for Canadians

Speech by Robert Rabinovitch to the C.D. Howe Institute, Toronto, Ontario

• Thank you for inviting me today to speak about Canada's national public broadcaster.
• In today's globalized, multi-channel world, public broadcasters are more important than ever.
• More and more, CBC has a role to play in promoting and increasing awareness of Canadian values.
• We need to maintain a public space, a Canadian voice, in a media environment largely dominated by Americans.

But first some background on CBC

• We are unique in the Canadian broadcasting system.
• CBC/Radio-Canada is the only broadcaster providing coast-to-coast-to-coast traditional and new media services in French and in English, as well as in 8 aboriginal languages in the North.
• Our mandate: inform, enlighten, entertain.
• We provide public service broadcasting through radio, television, specialty services and new media.

Television: 

• Two conventional national television networks, one in English and one French.

Radio:

• Four national radio networks, two in English and two in French.

Specialty Services:

• 2 all-news television specialty services: CBC Newsworld and RDI (by the way, RDI does not serve Francophones only. 500,000 Anglophones watch it each week)
• Since this fall, new television specialty services, all in parternship:

• Galaxie our digital audio service: 30 channels of continuous music.
• RCI our international shortwave radio service operating in 7 languages: English, French, Arabic, Russian, Chinese, Spanish, Ukrainian.

New Media: 

• Award-winning Internet sites: 
  cbc.ca 
  radio-canada.ca
• Innovative,interactive sites for youth:
  • Radio 3 comprised of 3 sites: 
    - NewMusicCanada.com 
    - JustConcerts.com
    - 120seconds.com - just won the prestigious
       Prix Italia 
  • bandeapart.fm - integrated with French Radio and Television
• SilenceOnCourt.tv, new multi-media platform dedicated to short films
• CBC/Radio-Canada is also one of the top news provider on wireless.
• We are the first Canadian communications conglomerate - reaching Canadians over 20 platforms.
• We are not separate companies. Today when you watch or listen to news from Afghanistan or Pakistan, you will see an integrated corporation at work. Each journalist reports in both English and French on Radio and Television. In this way, we both reduce costs and enhance the reporting possible from this theatre.
• Rarely has the importance of our role been more evident than on September 11 and the weeks that followed the terrible tragedy.
• That week, Canadians turned to CBC/Radio-Canada in phenomenal numbers, as they usually do in times of crisis and of joy.
• In times of crisis, Canadians want a Canadian perspective on the events.
• They know the importance of having respected Canadian journalists on the scene and around the world to help everyone understand.
• Our coverage has been praised both at home and abroad for its informed, respectful and balanced treatment. The figures speak for themselves.
• On September 11, an average of 1.7 million Canadians were watching CBC Television and CBC Newsworld in prime time, the highest figure among Canadian broadcasters, and ahead of CNN at 1.2M.
• From September 11th to 13th, Radio-Canada and RDI combined reached 75% of Francophones across Canada.
• CBC Television's coverage was broadcast in the U.S. on Newsworld International, C?Span, even the Home Shopping Channel, reaching well over 80 M viewers.
• Radio-Canada' signal was available on TV5 Monde, which quadrupled its audience during these events.
• CBC Radio and French Radio's feed was carried by NPR and Radio France at one point or another.
• Traffic on cbc.ca has more than doubled since September 11, reaching 3.3 million page views last week, for an average length of visit of approximately 23 minutes!
• Canadians can be proud of their public broadcaster.
• Through CBC/Radio-Canada, a Canadian voice and point of view was heard at home and around the world.

Our role in the broadcasting system

• The Canadian broadcasting system is based on a partnership between the public and private sectors.
• The public broadcaster complements the private sector, as it can take risks that the privates cannot.
• But is there really a need for public broadcasting in the new globalized world?
• The answer is yes - the economics of program production dictate a major role for the public sector - to safeguard a Canadian space in the new environment
• A BBC-commissioned study identified several reasons for preserving a strong public sector component in the broadcasting system.
• Among the reasons cited, as an economist I identified most with the concept of market failure - the market alone will not provide the quality of broadcasting that citizens want and need.

As a public broadcaster, our programming priorities are:

• to fundamentally change CBC Television into a clearly distinctive public broadcaster
• distinctive, high-quality programming, on all platforms.
• programming that reflects, serves and originates from all regions, including the North; 
  for example, only CBC 
  - covered all the ceremonies for the creation of Nunavut 
  - covers all provincial elections: Manitoba, 
  New Brunswick
• excellence in children and youth programming
  • increased last year by 35% on ETV 
  • CBC4KIDS: a multiplatform initiative
  • a safe, commercial-free environment for children
• credible, in-depth, independent journalism 
  • focusing on the why rather than the what
• more investigative journalism
  • a true CBC tradition and strength 
  • risky and expensive
• extensive international coverage 
  • offers a distinctive, Canadian perspective on world events
• high impact nation-sharing specials
  • Sydney Olympics
  • A People's History 
  • Homage to Trudeau
• cultural programming 
  Opening Night on CBC Television, two hours of commercial free programming dedicated to the performing arts - into its second season.
• develop new talent 
  since the creation of NewMusicCanada.com, 800 new bands have submitted 10,000 songs
• take risks no one else can 
  Innovation Zone - a new late-night program to be launched in fall 2002 - to showcase new talent and fresh ideas on ETV and the Web

CBC is also strongly committed to being a well-managed company and leveraging its assets to re-invest in programming.

• As such we are examining all non-core activities as potential sources of revenue.
• Our goal: extracting value from "bricks and mortar" to provide resources for content production.
• When possible, we are selling non-core assets: 
  • for example, Newsworld International: invested $10M, sold it for $75M - not a bad return 
  • we have also signed a service contract to provide news and reach new audiences
• Last year we created a stand-alone Real Estate Division to manage our 5 million square feet of property and to generate revenue through selling or renting surplus space.
• So far, the strategy is paying off. We have recently finalized major deals at CBC's Broadcasting Centres in Toronto and in Regina.
• These alone will give us a continuous cash flow of $6M a year - and we have only started. Many more are in the works.
• Last year we put our 2,500 transmitters on the market. Given the technology and stock market meltdown, we could not realize their value.
• Nonetheless, we are committed to optimizing the value of these assets through operating under a new business model.

Partnerships and alliances: key to our future

• Through strategic alliances we will extend our audience reach, optimize our investment, mitigate our risk and create new revenue streams.
• We take pride in the three new specialty television licences launched this Fall: 
  •  artv, partnership with BCE among others
  • The Canadian Documentary Channel, and Country Canada with our partner Corus 
  • all in partnership and all designed to meet our mandate.
• We have reached our first significant agreement with the print media with La Presse, creating a partnership to produce and deliver a new TV/radio guide to 650,000 homes in the Quebec market.
• Working in partnership is an important part of doing business in today's economic climate.
• However, no matter how much money we generate from within, it will not be enough given the scope of our mandate and the economics of producing Canadian programming.

But is there a market for Canadian content?
i.e. Canadian stories for Canadians, about Canadians

• Not only do we believe there's a market - we've proven that the right programming can become a phenomenal success.
• Let's take the example of A People's History. We dedicated over $25 million to develop a bilingual epic series history of Canada.
• No private broadcaster could have taken a risk like that, think about it: 32 hours of documentary programming, broadcast commercial-free over two years
• So far, 15 million Canadians tuned in to the series.
• Two companion books (the English edition already a number-one nonfiction bestseller), videocassettes and DVD's accompany the series.
• Three million pages were viewed on the cbc.ca site last year.
• Educational packages: Videos +Teacher's Guides accessible to 90% of public schools in Canada.
• That's public broadcasting at its finest.
• But the viability of Canadian programming should not be judged only on the strength of special presentations like A People's History.
• CBC has invested steadily in Canadian programming and it has paid off.
• CBC's audiences for Canadian programs in prime time tell the story. Eight out of the Top 10 Canadian Entertainment Series in English in 2000-2001 were on CBC.
• In the same year, nine of the most popular Canadian Drama and Entertainment series on Radio-Canada attained audiences of more than 1 million.
• But not only do we invest in the production and delivery of Canadian programs, we schedule them in prime time, every night of the week, on all platforms.
• The lesson in this is that CBC delivers more Canadian programming than any other Canadian conventional broadcaster and delivers the largest audience to Canadian programming.
• But let's not be naïve. We can do it because we get funding from Parliament and can afford to take more risks. At our core, we are not motivated by making money.
• Our motivation as a public broadcaster is to make quality programming about Canadians for Canadians only. We have the luxury to focus on Canada, its identity and values.
• Private broadcasters must focus on return on investment - ROI or EBITDA. To achieve that, they limit their costs and maximize their revenue.
• When you invest billions of dollars of shareholders money, you have a responsibility to generate an acceptable rate of return for your shareholders.
• And the economics of Canadian programming are not conducive to a good rate of return - the business case just isn't there.
• When you do Canadian programs well - Da Vinci's, 22 Minutes, Air Farce - there is a market, but by private standards it is a limited market.
• Canadian content is costly when you compare it to purchasing American programming, which is in effect dumped. For example:
• Buying the simulcast rights for a one-hour, popular American sitcom costs between $100,000 and $125,000 per hour; the most successful series can generate revenues of $350,000 to $400,000 an hour - that's 3 to 4 times the cost.
• Producing an hour of distinctively Canadian drama can cost more than $1 million per episode; broadcasters pick-up almost a quarter of those costs.
• Yet a successful Canadian drama series can only generate revenues ranging from $65,000 to $90,000 per hour.
• On this basis then, the broadcaster pays $250,000 for Canadian drama, sells a maximum of $90,00 in ads, and therefore loses about $160,000.
• Keep losing money at that rate, and you won't stay in business for long. Yet, for private broadcasters, that's the cost of doing business in Canada.
• The privates and the independents all do good quality programs. But the business-like thing to do for private broadcasters is to import and simulcast American programs, and schedule your Canadian content where it will hurt you the least.
• In the French market, the demand for Canadian content is higher, but the economic reality is the same: it is 5 times more expensive to produce Canadian programming than to acquire foreign or translated American products.
• Given this reality, would it make sense to produce Canadian programming if you didn't have to - that is if it were not part of your condition of licence?
• The answer from a business point of view - and private broadcasters are businesses and investors expect them to maximize the value of their investment - is a resounding NO.

So what do we do?

• Taxpayers pay broadcasters through very significant tax benefits that would be the envy of any industry and through CTF grants to produce Canadian programs.
• Today Canadian taxpayers supply much of the funding for both public and private broadcasters to commission and acquire Canadian programs. Over 50% of the cost is paid by taxpayers directly or indirectly.
• As well, the evidence suggests that these funds are not increasing viewership for Canadian content.
• Although supply of Canadian produced programs has gone up and the number of digital channels has increased dramatically, the viewing of Canadian programs remains constant at approximately 9%.
• More disconcerting, recent CRTC figures show that the private sector's audience share for Canadian programming during prime time has actually been dropping - this, in spite of some commendable offerings.
• In fact, the only English-language outlets whose share of prime time viewing of Canadian programs has gone up are CBC Television and CBC Newsworld.
• Even with tax breaks and subsidies, distinctive Canadian programming is not a viable option for private broadcasters.
• So in order to stay in business, private broadcasters and independent producers must produce programs for export.
• Export means Canadian television ceases to be distinctive and ceases to tell Canadian stories.
• Canadian product becomes indistinguishable from US product.
• In other words, television production becomes an industrial policy not a cultural policy.

Thinking out of the box

• Over the past 43 years of Canadian content regulation, we've seen studies and initiatives of every sort to spur the production and viewing of Canadian programs on private TV stations.
• None of this has increased the viewership of Canadian programming.
• The message seems clear. To put it bluntly even with massive government subsidies the model does not work.
• We must review the role of Canadian content regulation for private broadcasters.
• This idea is not new. Fifteen years ago, a group supportive of Canadian content made a bold and innovative proposal to the Caplan-Sauvageau Task Force.
• Their proposal? Why not limit the demands for Canadian content for private broadcasters, assess their revenues and use these to fund Canadian programs?
• Their proposal was never seriously considered. In fact, it was dismissed as cynical.

Conclusion

• Well, perhaps it is time to start thinking radically again - and not treating innovative suggestions as cynical.
• Maybe the time has come to let the private broadcasters off the hook.
• Maybe Canadian programming would be much better if not everyone had to do it - and those who have to and want to do it get appropriate funding.
• Let's consider whether the time has come to let public broadcasters and private broadcasters focus on what they do best.
• Maybe it is time to be even more radical and to think of new funding arrangements for both the private and public broadcasters.

-If we want the media to create and maintain a Canadian space in the new global economy, then it's time to think creatively outside the box again.

No idea should be dismissed out of hand.

Thank you very much.