Speeches and Interviews

May 16, 2005

Putting Creativity on the Air

Speaking Notes for Robert Rabinovitch, President and Chief Executive Officer, CBC/Radio-Canada, at the NABA Conference, Toronto

Ladies and Gentlemen, good evening and welcome to Canada.

Mesdames et Messieurs, je vous souhaite la bienvenue à cette assemblée générale annuelle de la NABA et au Centre canadien de radiodiffusion, qui est la maison de CBC/Radio-Canada à Toronto.

Toronto is renowned for many things. One of them sits across the street: the CN Tower, the tallest free standing structure on earth, built 29 years ago and the site of CBC/Radio-Canada's first digital transmitters for HDTV.

But on just about every street corner within a mile of us are examples of another intrinsic part of the Toronto landscape. You may have noticed that there are a lot of newspaper boxes in Toronto. This is because Toronto has four major daily English-language newspapers. It is by far the most competitive English newspaper market in North America.

I mention newspapers in welcoming a group of senior broadcasting executives in order to illustrate this network's - and this executive's - perspective on one of the challenges that all of us in broadcasting face.

That challenge is audience fragmentation.

For more than four decades our business model has relied upon 30-second ads and a network's ability to deliver an audience. That model served broadcasters and advertisers well when audiences had fewer entertainment and information alternatives. In those days the networks were the only game in town when it came to providing advertisers with a large, receptive audience.

Today, however, tells a different story. As no less a figure than Bob Jeffrey, CEO of J Walter Thompson, said: "It's a foregone conclusion that network TV will decline if it continues to operate on the same model."

Our audiences have more choice today and more choice means our audiences are shrinking, if not vapourizing in some cases. And when they are watching us, they're employing new technologies to zap those 30-second spots.

As a result, advertisers are turning to those mediums that are siphoning off the next generation of our audience. For 18 - 24 year olds, television is being replaced by video games, the Internet, podcasting and other technologies as the medium of choice. I used to think that video games were just a kid's thing until I read that 16% of men 18-34 count playing video games as one of their favourite leisure activities. What also blew me away was the number of MBA grads I have met that want to go into the videogame business as a career.

The New York-based Interactive Advertising Bureau and Pricewaterhouse Coopers recently reported that Internet advertising revenues rose nearly 33% in 2004 to more than US$9.6 billion, demonstrating that marketers' confidence in the medium is growing. Similarly, advertising within video games - "advergaming" - is expected to grow to more than US$1-billion in the next five years as marketers try to reach those audiences they are no longer reaching through television.

So, is advertising in trouble? As Linda Kaplan Thaler was quoted as saying, 'only if you think of the narrow box advertising has traditionally been in, which is getting on TV or in print.'

But should we be worried? You bet. Does this shift signal the end for television, as we know it? Time and resiliency will determine that answer.

What we are seeing today is similar to the challenge facing newspapers in the 1920s when that voracious new technology called radio arrived in our living rooms. Newspapers were doomed. Forests were saved.

And yet, newspapers are still around. So is radio. So is television. So is that soon-to-be-teenaged technology called the Internet.

So while it's tempting to think that new media and new technologies are predators of traditional media, history shows they aren't. If anything, they can make their predecessors stronger, more nimble and creative, forcing an uneasy and perpetually competitive co-existence between old and new media. This creates a state of perpetual transition.

Whoever said: "When I feel the heat, I see the light," had it right. These days that heat seems to emanate from new technologies challenging us for audience share and hence advertising.

All of us have been on that teeter-totter that says technology is bad because it helps our audiences zap us into oblivion, yet good because it can save us money and perform miraculous technological feats that weren't possible five, even two or three years ago.

There's plenty of examples of both here at CBC/Radio-Canada.

"Good" technology made CBC/Radio-Canada the first network in the world to adopt 8PSK Modulation Technology, which enables us to put up 16 broadcast quality signals on one satellite transponder. This is important when your network comprises radio and television stations broadcasting across 4,000 miles and five and a half time zones of some of the most inhospitable and beautiful land on earth.

"Good" technology allowed us to employ remote production methods to produce the 2004 Summer Olympic Games in Athens and the 2005 ISU World Figure Skating Championships in Moscow. Efficient compression technologies, the availability of low-cost, high-speed and high-capacity optical fibre, and the use of servers with extensive online storage capacity meant, for example, that we could edit and produce the bulk of our Moscow coverage not on location at the event, but at our network production centres in Montreal and Toronto. This approach allowed us to operate with fewer staff and less equipment on location, resulting in significant savings. We are now planning to cover both the 2005 IAAF Games in Helsinki and the 2006 Turin Winter Olympic Games using this remote production model.

"Bad" technology has seen our television audiences gradually decline over the past decade, as they have for virtually every traditional broadcaster. Here at CBC/Radio-Canada, which is Canada's national public broadcaster, that audience decline has been accompanied by a gradual real-dollar decline in both our government funding and our advertising base.

But I think it's time we refocused and reframed the debate about technology.

Because technology has always been a means to an end; for broadcasters, it is always about delivering something faster, better, closer, cheaper, clearer. For audiences, technology is always about doing something faster, better, closer, cheaper, clearer.

And that something, in both cases, is content.

Programming. It's what people count on us for, whether they get that content via their Blackberries (another made-in-Canada technology) or deep in the Montreal subway system, where they can enjoy CBC/Radio-Canada's up-to-the-minute news and information while waiting for their train.

In both these cases, technology delivers the content in bold and lucrative new ways.

Podcasting is another timely example or should we say, the flavour of the month.

Podcasting has been hailed as a saviour of, and a threat to, traditional radio. Here at CBC/Radio-Canada, we have a huge stake in delivering our radio content to audiences in new ways. We're challenged every day to reach audiences who have tuned radio out.

So last December, CBC Radio piloted podcasting with two programs: our perennial hit show about science and medicine, Quirks & Quarks and /Nerd, a weekly audio column that introduces listeners to new technology. /Nerd reaches one million listeners a week on CBC Radio One's national FM network. So how many listen to the /Nerd podcast? About five thousand, which may not seem a lot. But if we look at weekly audience growth, we're looking at 15% growth, which is not insignificant, especially since this audience is made of that much-desired demographic of hip young people who don't make up the traditional CBC audience

As always with the introduction of a new technology, some experts say that podcasting will save radio by making it the audio version of a TiVo or PVR. Other experts say it will kill radio.

But again, though, the debate shouldn't be about 'good' or 'bad' technology, or whether the same technology will save or kill an established medium. The focus of our efforts should be how to use technology to deliver content to our audiences when, where and how they want it.

The same thing is happening in television; technology helps us distribute our existing content in ways that build relationships with new audiences. But technology also lets us create entirely new kinds of content to reach audiences that, may not have had a lot of interest in our traditional offerings.

CBC Television's, ZeD also broke new ground, airing the best new short films, videos, animation, visual art, performance and music in Canada and around the world. Via the ZeD website, viewers could submit their own work for broadcast. Since its launch in 2002, ZeD - whose format is evolving as our needs change - has aired over 3,000 works by emerging and popular artists. Again, 3,000 isn't a big number in any broadcaster's playbook. But 46,000 is a big number. That's the number of young Canadians who regularly meet, collaborate and upload their work via the ZeD website.

I tell you the stories of ZeD on television and of podcasting on radio because they illustrate one of the behaviours that all broadcasters, and public broadcasters especially, will increasingly have to embrace.

And that is a willingness to take risks and be resilient.

With audiences already diminishing and with margins thinner than ever, there's very little incentive to take risks. Indeed, there's a huge incentive to play it safe.

Private broadcasters, who live and die by advertising alone, have to make their audience numbers, in order to make their advertising numbers, in order to make their ROI. Similarly, public broadcasters must generate audiences or risk being labeled irrelevant. But it's not only new technologies and entertainment alternatives that are causing mainline network audiences to drift away, and with them, the advertisers who are now interrupting their enjoyment 16 minutes out of every prime time hour in America. One factor in the slow decline of television is the lack of bold, risky programming ideas.

But it's clear that the rewards of taking programming risks can be considerable.

So who can afford to take programming risks?

Well, public broadcasters can, especially ones like CBC/Radio-Canada. Because we receive close to two-thirds of our annual budget from Canadian taxpayers we have the flexibility to take programming risks that private broadcasters cannot. But therein also lies our greatest challenge. We are charged with a responsibility no private broadcaster would ever attempt - to reflect our nation to its citizens, and our regions and people to each other. To provide audiences with programming they can't find anywhere else.

Our mandate, according to the Broadcasting Act is to enlighten, to entertain and to inform. Oh yes, and to do it in French, English and eight aboriginal languages in the North and with a shrinking budget.

And we do it in the most challenging broadcasting environment in the world. Sitting beside the world's largest media machine is a challenge in and of itself. To ensure that Canadians always have a broadcasting space to call their own requires an adequately funded public broadcaster where Canadians can turn to see their stories and news, all from a distinctly Canadian point of view.

Protecting that space is far from easy, though. Technology challenges aside, securing adequate funding remains one of the key issues facing CBC/Radio-Canada. Let me assure you there are no wealthy public broadcasters, flush with development funds. Just ask the BBC, or ABC in Australia or PBS with a proposed 15% cut in its budget. CBC/Radio-Canada is continually looking for new ways of working, to find efficiencies, savings and revenues, all of which can be invested in programming.

While we have identified $65 million per year in ongoing savings and additional revenue, efficiencies alone are not enough. Indeed, while support of the Canadian public has remained essentially the same or increased, we have over $400 million (in real dollar terms) less today in government funding than we did in 1990.

Some might say that is fine in a multi-channel universe. Most, however, recognize the crucial role of television as one of our most powerful cultural media with respect to communicating the common experiences we share as a nation. One thing is clear: All broadcasters, public and private, must remain relevant if they want to survive.

In order to justify the investment Canadians make in their public broadcaster, it means that CBC/Radio-Canada must provide them with services, stories, perspectives and programs they can't find anywhere else, and we must do it in the most efficient manner possible. That brings us back to the question of taking risks. That's why we try podcasting. That's why we recognized the potential of satellite radio and have teamed up with SIRIUS and Standard Radio to bring this new technology to Canada.

That's why we have the largest Radio and TV newsgathering service in Canada. That's why we have journalists in 70 communities across this country, and in 13 foreign bureaux.

That's why two years ago, Télévision de Radio-Canada, our French television service, launched its repositioning aimed at broadcasting programming that is bold and audacious and that can't be found anywhere else. The results speak for themselves: Tout le monde en parle is number one in the French market, drawing close to 2 million people each week while Les Bougon, a program that looks at the stereotypes surrounding people living on welfare in a humorous way is drawing more than 1.5 million viewers, and this is out of a potential audience of only 7 million. When this show first aired critics said that no private broadcaster would ever take the risk with a program like this. In fact, the show was first offered to private networks. Today the show is so popular that the English networks in Canada and in the U.S. have been in discussions with the show's producers to develop an English version.

But even a willingness to take risks isn't a guarantor of success. Sometimes new programs or new technology platforms will work for us, sometimes they won't. When they do we'll be able to reap not only the revenues, but just as important, the relationships with the audiences that are drawn to this kind of programming.

Do you want the 46,000 generally broke emerging artists who have collaborated on ZeD as your audience? Likely not.

Do we at CBC/Radio-Canada? Absolutely. Because they're citizens, just as much as the other 30 million of us Canadians are. But also because they're the lost generation. They haven't abandoned us; they're just doing a lot of other things: surfing the Internet, playing videogames, using cell phones for entertainment, renting movies, and, if we want to capture the next generation's attention, we've got to be prepared to entertain them. The next generation doesn't hate advertising, they don't hate television. They hate bad ads and bad television. They don't watch TV, except for what they like. And if we provide audiences what they like, when and where they like it, they will keep coming back. Engage them, entertain them, challenge them and they are yours.

So you see, technology isn't our greatest foe. Creativity is. Perhaps the real question, then, is why, in an industry that is built on creativity, this is so difficult a challenge to overcome?

For one, creativity without money will not succeed. The advertising market for free TV is at best stagnant. We must develop new sources of funds if we are to enhance programming choices and put creativity on the air. The advertising industry is not sitting still. In our consumer driven society they must come up with new techniques and means to influence tastes and purchases. We must be their partners. We must look at program sponsorships. We must look at product placement, albeit while protecting the integrity and editorial content of programs. We must look at cross promotion across different platforms and through different means of reaching audiences. We must look at enhanced merchandising to take advantage of brands such as Hockey Night in Canada in our case.

And, I dare say, we must investigate different income streams. Why, for example, can specialty channels such as ESPN generate subscription fees for exclusive products such as NFL football while conventional broadcasters, which generate most of the original programming on television, must give its product for free to cable and satellite operators to use as the backbone of their packages? As the advertising model changes, as technology changes, so too must the financial model change. The Internet learned that free goods do not result in profits and they are changing their offerings and pricing model accordingly.

The wireless companies are not offering new video services because they are good corporate citizens but rather because they can drive demand with these new products, and that drives usage rates and, hence, profits. Now that over-the-air free TV programming is delivered to over 85% of North Americans by cable and satellite, a service for which the public pays a significant fee, is it time to change the payment system and recognize that these are not free goods?

Creativity needs funding. To the extent that the paradigm of advertising paying for programming fails we, conventional broadcasters, must challenge the concept that our programming should be made available to distributors free of charge. We should share in that revenue stream in order to enhance the cash flow needed to finance creativity.

We have an obligation to provide over the air free advertiser supported TV. To the extent that the public chooses to receive its television programming through cable, satellite and other distribution systems for which it is willing to pay a significant fee, surely part of that money should flow to program creation.

In closing, I wish you all a stimulating time at this year's AGM and a pleasant visit to Toronto and to Canada.

Merci. Je vous souhaite à tous et à toutes des échanges enrichissants à cette assemblée générale ainsi qu'un séjour agréable à Toronto.

Thank you.