The peoples' network in trouble?

CBC building on Front Street in Toronto

CBC Tunes Into A New Reality
Craig Offman
National Post
Friday, March 13, 2009

Around two months ago, the CBC had a revealing dust-up with a local paper. On Jan. 19, the Moncton Times and Transcript criticized the way in which Canada's Next Great Prime Minister treated contestant Camille Labchuk.

Though the program forbade contestants with political experience, it permitted the former Green Party candidate to compete, only to disqualify her hours before announcing the semi-finalists. "If this was really reality TV," wrote columnist Rod Allen, "the producers should be playing with their own money rather than yours."

Unable to let this awkward comment go, CBC spokesman Jeff Keay offered up an awkward phrase of his own.

The $50,000 prize comes from advertising revenue, not from taxpayers, he explained - adding that CBC TV is a "publicly subsidized commercial network."

The term might be a tongue-mangler, but it does spell out CBC TV's dilemma - one that has intensified in recent weeks.

As governments and advertisers slash their budgets, critics and supporters both wonder why we need a taxpayer-sponsored broadcaster that buys U.S. programs such as Jeopardy! and the Martha Stewart Show. Shouldn't the Great Canadian Edifier produce more multi-culti shows like Little Mosque on the Prairie? And really, what does the cloying Single Girl add to the public discourse?

A year from now all these eternal beard-stroking questions about Canadian culture might seem quaint: a more apt question might be whether the CBC will fall apart.

As potential layoffs loom and programs are cancelled, union employees are talking as though the end of the CBC is nigh.

Late last month, Hubert T. Lacroix, President and Chief Executive of the CBC, hinted at a more dire scenario in which he'd sell off the TV division.

"We will, of course, look at every option to increase our revenues to minimize the impact on our programs and our people," he told a sold-out crowd at Toronto's Empire Club on February 26, adding that one effective measure would be "downgrading or selling parts or the whole of some of our TV or radio services."

Hoping at the time that the federal government would help cover a $60-million budget gap, Mr. Lacroix might have been speaking out of desperation.

Three weeks later, the situation has worsened.

Last Monday, Ottawa rejected the possibility of a bridge loan or advance on future subsidies. It also turned down the CRTC's proposal to impose conditions on how much domestic broadcasters could spend on U.S. programming, leaving the CBC to face stiffer competition for fewer ad dollars.

"[Canadian] broadcasters have their own business model," Heritage Minister James Moore said.

"They keep their business models going forward as best they can. Far be it for me to second-guess how to run a broadcast network and programming."

The much-heralded "factual programming" department, which was supposed to beef up English-language television's bottom line, also suffered a series of high-profile setbacks in the past two years, beginning with the Gill Deacon Show. Highly publicized and made-over several times over the course of one season, the program was cancelled.

On Tuesday, the network announced it was cancelling Fashion File and ending production on Steven & Chris, the show that took Ms. Deacon's slot.

But it's not just the CBC that is about to hit a wall.

Broadcasters are hurting everywhere. Advertising revenues are plummeting. Networks in Canada and the U.S. are cutting their budgets, shuttering stations and shrinking head counts.
The stock of CBS, the most-viewed broadcaster in the U.S., has dropped 50% in the past two months.

Reliant on advertising, CBC TV faces the same challenges. "They're in the same boat as CTV or Global," said Stephen Tapp, a former top executive at CHUM. "No broadcaster can live the same way they did five years ago."

Public broadcasting is also in major flux.

"Almost everywhere there is a lack of imagination, a failure to articulate what public broadcasting should look like," said Michael Tracey, the author of The Decline and Fall of Public Service Broadcasting. "They don't have a f------n clue."

U.S. public broadcasters such as National Public Radio will lay off 7% of its workforce and PBS's New York flagship is laying off 14%.

Britain's Channel 4, a publicly owned, commercial broadcaster, is teetering on bankruptcy.

Speculation grows that it might merge with the BBC's profitable Worldwide division.

A media professor at the University of Colorado at Boulder, Mr. Tracey said that the CBC and its counterparts have turned to "crude populism" as a way to lure viewers away from speciality channels - or from YouTubing, Facebooking and Twittering away their time.

He also said that they have made the mistake of pushing a brand, which is an increasingly weak approach for a media property.

In recent years, analysts have stressed that viewers are less loyal to channels than to programs, partly because of digital recording and pirated downloads.

"Public broadcasting is not a brand," Mr. Tracey said. "It is an institution."

Last January, Nicholas Sarkozy tried to rescue the dwindling fortunes of his country's own broadcaster.

France Télévisions, which also relied somewhat on ad revenue, has mostly gone public, a transformation that the French president called a "cultural revolution."

Mr. Sarkozy has explained that he wants the revamped service to "rival the quality of the BBC."

Others say he wants to bolster privately owned television channels with the redirected revenue.

The government has scrapped prime time-advertising on the public channels and introduced new taxes on commercial-TV advertising revenue and Internet and telephone providers.

Combined, the measures would raise nearly $1-billion, which presumably would go toward subsidizing the network.

In Canada, the government has not taken any aggressive steps to overhaul the broadcaster.

Two years ago, Robert Rabinovitch, Mr. Lacroix's predecessor, asked Bev Oda - the minister of Canadian Heritage at the time - for a long-term plan, which would have set out the expectations for the public broadcaster and provided the financial means to meet them on a five-year basis. It never happened.

Bolstered by around $600-million in ad revenue, the corporation receives almost $1.1-billion to subsidize its 29 services, including English television, which receives 38% of the funding; its Francophone counterpart takes in 25%.

But as a whole, the CBC remains relatively underfunded.

According to a 2008 study conducted by the media research firm Nordicity Group, the CBC's $34 annual per-capita subsidy is the third-lowest among 18 Western countries - less than half of its French counterpart, which is $77.

The BBC, a state-owned entity, directly taxes its citizens for the service.

The CBC, on the other hand, has to service two language groups across five time zones. Unlike the BBC, which is typically led by a board-appointed media veteran, the CBC is often led by a political appointee. Like most of his predecessors, Mr. Lacroix has never had a top job in a media company. At the same time, he is accountable only to the Prime Minister.

"There is an absence of accountability to the board," said Ian Morrison, the spokesman for the CBC watchdog group Friends of Canadian Broadcasting. "At the same time, there is no arm's-length relationship with the government."

Mr. Morrison suggested a BBC-like model in which the board, composed of TV veterans, nominates the president, who reports back to the board. But he is pessimistic about the possibility. "It's too radical a change. I can't see it happening."

At the same time, radical changes to English-language TV two years ago have not made an overall difference.

Hoping to attract more viewers before primetime, it controversially bought the rights to U.S. game shows such as Wheel of Fortune.

Aiming at a younger, hipper demographic, it developed shows such as the The Border, Intuition and the Douglas Coupland-inspired Jpod. Going more urbane and affluent, it produced the Gill Deacon Show and The Hour.

In primetime, at least, the changes have paid off. The market share during that period has jumped to 8%-9% in the first six months versus the previous season, but the bump hasn't lifted the rest of English TV.

According to the CBC's Jeff Keay, there has been a 2% increase in total viewership over the past three years.

Ad and program sales in the past two years have been flat at $329-million, up only around 2% from 2005. During the same period, the network's costs have increased by 2%. "The best measure of how we're doing is in the primetime slot," said Richard Stursberg, the CBC's executive vice-president of English services. "I'm thrilled with how far we've come."

So far, the CBC has reacted tentatively to its cold, fiscal reality with nip-and-tuck adjustments, cancelling programs while refraining from large-scale layoffs.

But when Mr. Lacroix and his management present a strategy to the board of directors next Monday and Tuesday in Toronto, all that might change.

During his Empire Club address, Mr. Lacroix hinted at a grim future - with or without dismembering the corporation.

According to his talking notes, the CBC might insert more U.S. content into its primetime schedule or shrink its geographic coverage, both of which would weaken the corporation's case as the purveyor of all things Canadian and, in turn, diminish its case for taxpayer money.

Losing government money at such a delicate time would mean even less funding for original programming, already a major cost centre.

Early last year, when advertising was more robust, Nordicity concluded that low ad budgets combined with the expectations of U.S. style-production values create "a poor economic environment for television programming in Canada."

It concluded that "Canadian programming cannot be profitable without government intervention."

Mr. Lacroix also has to consider downsizing expenses.

"I'm hearing that they might want to lay off 600 or 700 people with some seniority," surmised Mr. Morrison. It's a figure that's bandied about a lot.

Earning somewhere around $80,000-90,000 year, the unionized employees would likely require 18 months worth of severance pay. In total, this would cost around $500-million.

University of Calgary media professor Bart Beaty said that given the fact that salaries take up 12% of the operating budget, layoffs are inevitable. "They're stretched to finish things like the high-definition layout," he said, referring to an offering that has reached selected markets across the country, excluding his hometown. "It's ridiculous. You can watch Leafs games in HD, but in Calgary, the fourth-largest market, you can't watch the Flames in HD. They expect us to be happy about this?"

Co-author of Canadian Television Today, Mr. Beaty said this is a pivotal time for large-scale transformation, a reinvention of the CBC's business model.

Some experts think the CBC should shed its dramatic programming, which is relatively expensive to produce, and become more news-oriented.

Others point to the so-called "radio" model.

Similar to the Sarkozy approach, it would mean a total retrenchment from advertising, but this would leave the CBC with even less money and make it more reliant on the government - unless a Sarkozy-like redistribution were arranged.

There is also a chance the BBC model would work: put a professional in charge and provide a 10-year mandate.

"A mandate helps safeguard independence," said Mr. Stursberg, adding that the process of scripting, producing and editing can take up to three years. "With only one year, it's difficult to do your financing in an orderly way."

A new president every two years or three years is also a liability: The learning curve kicks in when he's halfway through his tenure.

"You never get a sense of long-term direction," said Mr. Beaty. "It always seems like they're picking up all over again after every season.

Mr. Beaty said that in the near-term, at least, the CBC could be doing a better job on digital technology. There aren't enough podcasts. You can't download content onto your phone.

Former CHUM executive Stephen Tapp also says that the CBC could focus more on its digital platforms, offering more broadband video and mobile content.

"It's a different world now," Mr. Tapp said. "You have to follow the audience around. They're not going to follow you."

National Post
coffman@nationalpost.com