ST. JOHN’S – Cutbacks, concentration of ownership, reimagining public media, and even the cable bill of president and CEO Hubert Lacroix were all up for discussion at CBC’s 4th annual public meeting. Ahead of its CRTC renewal hearing scheduled for November 19, executives also called for a regulatory framework that will enable the public broadcaster to maintain a presence “no matter what degree of industry consolidation may happen, or how fast technology and demographics might evolve.”
But before they got to the CBC’s numbers, Lacroix, whose future at the CBC remains unclear as his five-year contract expires this December, took the opportunity to highlight his rising cable bill. He noted that even though the Local Programming Improvement Fund (LPIF) is being phased out by September 1, 2014, a fund financed by cable and satellite subscriptions, his cable bill had risen “for the second time in six months.” CBC/Radio-Canada claims it drew over $40 million annually from the LPIF to improve service for viewers in 20 different markets.
Lacroix made the LPIF remarks after outlining how Bell, Rogers, Shaw and Québecor control “almost 85% of the entire television market.” And added that if Bell’s bid to buy Astral Media is successful, Bell would control 36% of conventional TV revenues. He maintained that he was just presenting the “facts for discussion” and would not comment on whether this was “good or bad” for television. He however did not shy away from interpreting what the numbers “mean for Canadians.”
“They tell us that the diversity and range of voices in Canadian media is at stake, and that’s something every Canadian should be concerned about. Despite the almost unlimited quantity and choice of content available, very little of it is Canadian when it comes to English television, and very little of the rest is free from a small number of commercial agendas,” said Lacroix.
With this Lacroix launched into a familiar talk about the importance of public broadcasting. He then commented on a slide outlining the 2012 fall prime time schedules for CBC, CTV and Global which highlighted in red the Canadian shows and in blue the U.S. ones.
“This is where we stand out. And we don’t do it because it’s a CRTC requirement in a benefits package imposed on us as a condition close an acquisition. We do it because this is core to our mandate. Canadian programs cost a lot of money. So why keep producing them? Because a big, diverse, geographically dispersed country that doesn’t have the means to tell its own stories, share its common experiences, debate its issues, doesn’t stay knitted together for long. Television and radio might not be the only means of bringing Canadians together. But they are surely, for now, the most effective and cost efficient ones.”
Lacroix however did not follow up that slide with one indicating the number of Canadians who were actually watching the red versus blue programming.
The president and CEO then spoke of the financial challenges at CBC and how they were making do with a budget that has been cut by $115 million over three years.
“When we add-on unavoidable cost increases and the investments required to continue to transform ourselves, our challenge is a budget reduction of $200 million over three years, plus a one-time hit of $25 million for severance.”
He said that the phasing out of LPIF has only added to its financial challenges.
“As for the justification of eliminating the $2.17 LPIF charge on my cable bill in order to lower costs for consumers, I’m not sure that it works for me given the fact that I just received a notice from my cable company informing me that that the cost of my cable service is going up by $1.99 a month for the second time in six months. This time my cable company is justifying the increase by stating that it needs the extra $1.99 to cover an increase in the cost of the royalties it pays for its programs and an increase in the cost of its digital equipment.”
He claimed that the phase out of the LPIF will not impact the CBC’s commitment to local service but added “there’s no question that it will negatively affect overall local television programming in smaller markets.”
To address the CBC’s “$200 million” shortfall he says they have already saved millions by: moving Radio Canada International to broadcast only on the Internet ($10 million); shutting down all its 620 analog television transmitters ($10 million). It also announced the sale of specialty channel bold, one of our few specialty channels, and cancelled the development of three others. It’s also reducing the range of programming in music, sports and even news, and is aiming to decrease its real estate footprint by 800,000 square feet by 2017.
Suzanne Morris, Vice-President and CFO (pictured) then took to the stage to provide further details on the CBC’s cuts to meet its $200 million operating shortfall and provide an overview of CBC/Radio-Canada’s financial results for fiscal year 2011-2012.
She said 650 full-time equivalent positions are expected to be eliminated over the next three years, resulting in one-time restructuring costs, estimated at $25 million.
The CBC’s financial plans are on track for the year but cautioned that there are a “number of risks lurking on our horizon” For example:
• the advertising revenue market in the current environment of low and fragile economic growth. CBC’s multiplatform strategies are serving it well and it continues to develop innovative sales approaches.
• the delay or potential cancellation of the NHL season would negatively impact advertising revenues. It has developed plans for replacement programming and cost containment.
• CBC/Radio-Canada’s licence renewal hearings with the CRTC scheduled for November 19, 2012. The CRTC intends to consider the corporation’s applications to introduce national advertising on Radio 2 and Espace Musique.
• Due to its rapidly evolving ecosystem and ongoing vertical integration, the CBC will look to create partnerships where possible, a priority for the corporation as outlined in our Strategy 2015.
• In the coming months, government funding decisions are expected to be made regarding salary inflation for 2013-2014 and future budget years.
Morris reported that revenues increased by $26.6 million or 4% in 2011−2012. Advertising revenue was up, “primarily due to a strong television schedule, strong hockey playoffs and revenue from special event coverage including the federal elections.” Digital advertising revenue also increased, mostly as a result of the success of the Tou.tv platform.
In the first quarter of 2012-2013 overall revenues were up $2.6 million compared to the same quarter last year. Higher digital revenue and facility rentals contributed to the increase, as did growth in subscription revenue as a result of more subscribers moving from analog transmission.
Specialty services revenue also increased compared to the previous year, with advertising revenue growing on the strong performance of our news networks and subscriber revenues increasing, but provided no further details.
Operating expenses were higher by $6.6 million or 0.4% compared to 2010−2011. This increase she said reflected one-time costs for various efficiency-generating projects and digital and local service initiatives, consistent with CBC’s Strategy 2015 plans.
Finally, government funding decreased by $5.0 million, mainly due to an incremental budget reduction tied to cost-containment measures announced in the 2007 federal budget.
