October 15, 2010 6 years 4 months ago

"I really doubt that the CBC is going to be able to compete in the future," says former CEO

ROBERT RABINOVITCH guided the Canadian Broadcasting Corporation for seven years, seeing it through a period of unprecedented change in the media business while enduring the apathy, if not utter disdain from the body which holds its purse strings: the federal government.

Running the CBC hasn’t gotten any easier since he left in early 2008. The CBC still faces disdain, if not now open hostility from the government in power and critical funding shortfalls amid global, ongoing media transformations that make even the most flexible organization dizzy and its employees fearful.

We wanted to know what the former CBC CEO thinks of the Corp’s future and were surprised to hear him say that without a complete re-think about what the public broadcaster does, followed by massive changes, Mr. Rabinovitch (pictured) believes the CBC’s future appears pretty grim. He’s also got a few things to say about the dismissal of someone he hired to “make some noise,” Richard Stursberg.

We sat down with the retired executive in Toronto recently, not long after Bell Canada announced its takeover of CTVglobemedia. What follows is an edited transcript of the conversation he and I had.

Greg O’Brien: What are you up to now?

Robert Rabinovitch: Well, basically, I’m retired. I travel a lot. My wife and I made a decision when I left CBC that we would travel. We’ve taken some very long trips. Traveled through Asia for a month. Our very first trip was on the day I left the CBC. We went to Europe, rented a car, and went skiing for two months.

GOB: Oh nice. I’m a skier, too. Sounds great.

RR: I’m a fanatic. I love skiing. Next we are going to South America for a month. So that’s one part of my life.

I’ve also been chair of the Board of Governors at McGill for the last ten years. I just retired from that, but I’m still very involved with McGill. One of the things that takes a lot of my time right now is I’m chair of the Nunavut Trust Investment Committee.

My day job has always been money management, so I’m doing that for them. I’m on McGill’s Investment Committee. I’m on a few investment committees, plus a couple not-for-profit boards, like the Canadian Centre for Architecture, and a couple of for-profit boards.

GOB: You left the CBC in ’07, right?

RR: January 2008.

GOB: Do you miss it?

RR: Yeah. I mean I’m not happy about what’s going on, but I do miss the excitement of it. But it was time for me to leave. I was exhausted. But in fact, of course I miss it.

GOB: Now when you say you’re not happy about what’s going on, in what way?

RR: That was a leading answer, eh? And that was a leading question.

GOB: For sure.

RR: I’m concerned about the future of the CBC, deeply concerned. I think what happened this past week (Bell Canada’s purchase of CTV) is a game changer, and I really doubt that the CBC is going to be able to compete in the future. I think they’re going to lose all of their sports properties.

GOB: I agree with you there. I mean, Hockey Night in Canada...

RR: Toast.

I mean, I did the bid for the (2010 and 2012) Olympics (broadcast) and I even went to Lausanne with (former EVP) Richard Stursberg and we put in the bid – a number which would break even. And that was $93 million. And Fecan bid $153 million. Maybe he made money if you look at it from the point of view of a total global plan for the company. I don’t know.

GOB: Well, they haven’t said. Rogers, the other part of the consortium hasn’t said either.

RR: And that was even before the downturn. At $93 million we were not low-balling. We were stretched.

GOB: Sure.

RR: I think we’re at a point right now where we may have to ask ourselves the question about where is public broadcasting and why do we still have the public broadcaster? So that’s why I’m concerned because the CBC was able to just let 600 people go, not 800 people by selling off a lot of future cash flows.

I left them with a few cash flows. I had sold (music service) Galaxie, which was going to give them $8 million a year for about 6 to 7 years.

GOB: Yeah, to Stingray Digital.

RR: We sold it to Stingray, but we got a cash flow out of it. And the reason I did that was because the music had become a commodity. But Stingray did things with it that a public broadcaster couldn’t. They added karaoke and stuff like that.

GOB: They’re re-packaging things in different ways and moving internationally, too.

RR: Exactly. So it makes sense from their point of view. It made sense from our point of view. And I did it as a stream of income because I didn’t want the government to grab the money. I had done the same thing with Newsworld International (sold in 2000 to Barry Diller), although there I made a deal with the Treasury Board, where they let us keep the money. So we had $70 million with which to renew plant and things like that.

And you add that to the government has not given them any new money since, by my calculations, way back in the ’70s, then you have to ask yourself why do we have a public broadcaster in this type of an environment, one of multiple choice – and you’re underfunding it? If you want a public broadcaster, I think you have to pay for it. If you’re not willing to pay for it, then ask yourself the question: Why do we have this?

As it is, CBC Television is no more than 50% public broadcasting. The other 50% is based purely on revenue. Fifty percent of the revenue must come from ads, and ads only come from eyeballs; therefore you have to generate the eyeballs.

And if you’re also going to lose sports now, you’re going to be even more challenged.

GOB: People often compare CBC to the other public broadcasters overseas, like the BBC or ARD in Germany and others. But if you look at their income level and how much the government and taxpayers contribute to those, there’s just no comparison. It’s completely not that same.

RR: That’s right. CBC has more signals to have to carry, more territory to cover. CBC has 1,200 – 1,400 transmitters when you add them altogether.

GOB: What do those cost even to power?

RR: I don’t remember. But you have to properly maintain them, you have to upgrade them. A lot of them have to go now to digital. The BBC has covered its country with six transmitters and has a budget of about £140 per person (in the UK). ZDF and ARD, both in Germany, are both extremely well financed. All other public broadcasters also have to sell ads to survive and they get a much larger government payment.

So, I’m very concerned that we’re at the point where we have to ask the question, “Why do we have a public broadcaster?” and part of the answer is, “Are we willing to fund the public broadcaster?”

I’m not knocking what CBC programming is. They’re doing what they have to do to raise their audience share, but they won’t be able to maintain that. That audience share, I think, peaked under Stursberg and I think it’s now going to steadily go down, and we’re going to be back where we have a 4 or 5 percent share… and it should not be PBS North. They have a share of 1 to 1.5 percent and they don’t have the money with significant programming. So they’re a BBC rebroadcast.

GOB: And a lot of their programming is, “please give us money,” something CBC has never done.

RR: That’s right. Some people say, well, if we could only have PBS in Canada, I’d watch it. Well, the fact of the matter is, people don’t. The people who watch – the “chattering classes” who would normally be the ones who might support CBC and do support Radio One, don’t watch TV. They pretend to, saying “Oh, yeah, I would watch it,” but, do you remember Opening Night?

GOB: I do. A lot of arts programming, ballet, that sort of thing?

RR: That’s right. We did an hour to two hours every Thursday from 2000 to 2005. The average audience was about 110,000. It started at 170,000 and trickled down to 110,000. And one of the reasons is: Ballet doesn’t work on TV. Symphonies don’t work on TV.

GOB: And it was meant to be a counter programming to all the American shows on Thursdays at 8:00 p.m.

RR: That’s right. As Leonard Asper said to me, the thing you have to understand is when people come home from work, they want to be entertained. But there’s an old line about the CBC, where they sometimes tell people what they should be watching rather than what they are watching. Well, guess what? It doesn’t work anymore.

And with the multiple choices that we have, if we’re not going to fund it well, then we have to ask ourselves why do we have this service. So that’s why I say I’m very concerned. I don’t see a real discussion occurring around “whither the CBC.

When I was there, we got $60 million more from the government for programming. I was able to create some assets, like Sirius, which is still there. I sold Newsworld International. But all that was to try and just keep up with natural inflation so that we could put money into programming. So that $60 million, which I got I think in 2004, today is worth about $35 million.

So the fact of the matter is they don’t have the money to continue to produce programming for the public, significantly.

GOB: So if you were the one in charge, where you would decide, okay, do we let CBC go away or do we increase its funding by a factor of X, whatever that might be. What would you prefer?

RR: Well, I would prefer that they would get funding, but I have to be realistic. For example, one of the things I’m on is the board of the McGill University Health Center, which is the merger of four hospitals. So when you’re competing against education and against health for money from the public first, broadcasting, especially when there are so many alternatives, has a very rough row to hoe.

What I think we need in this country is a real debate… given the fundamental change in the environment that’s occurred, where broadcasters are part of other empires, transmission empires, with the broadcast and music commodities.

So you have to ask yourself what is the CBC for? I don’t know the answer, but I do know the way it is right now is embarrassing. It’s going to get worse and worse. Or maybe just saying we’ll it should just stick with radio. Radio One, I think, is superb.

GOB: Just cut the CBC back to radio and digital?

RR: I don’t know. I won’t pretend to present the answers. I will present the problem. And the problem is we have an underfunded public broadcaster that is not very happy.

GOB: So what if it’s cut it back to radio and national news, but only for digital and not TV. You’d cut out a lot of costs. And maybe it would be better able to provide a deep national news service.

RR: They also have to rethink the news as well. The 10 p.m. newscast makes no sense anymore.

GOB: Oh, come on. Peter is standing up now.

RR: I hear the colors are actually pretty nice. But the point is, CBC’s competition is CNN. It’s not CTV. And it’s the internet. And if you’re a news junky like I am, you have the news by 10 o’clock. I turn on the 10 p.m. news and I roll my eyes and turn it off. There’s nothing new. And it’s so light and mushy at times.

GOB: The only thing I’ll take issue with you on that is I don’t live in Toronto. I live in Hamilton. Now, all of the news surrounding my work or international or sports – I get all that during the day. But if I want to find out about Hamilton, what’s gone on during the day, there aren’t many places: CHCH and the Hamilton Spectator. So I do still tune into late local news or 6:00 p.m. news for my local stuff. But as far as the national stuff that CBC produces, yeah, I’m informed by 10 o’clock.

RR: Well, see, that’s the whole point. Maybe, as the privates withdraw from local because there’s no money in it, redefine the role of the CBC to do more local news. And in the process, you rethink from first principals the idea of a national newscast and what makes sense for a national newscast and the timing of the national newscast. It might make sense to be at 11 o’clock but even then, you have to bear in mind most people who are interested in the news will already have the facts.

So the news has to be of a much more sophisticated level.

GOB: Do you abandon the traditional package of news? Do you treat each story as its own thing and then transmit it in some other way?

RR: Maybe the news will just be on Newsworld. But even then, the way they structure it I have questions about because I don’t think there’s enough news to fill that time – or enough people to generate that information in a way that’s usable. It’s expensive to feed that animal.

GOB: It is. Even in the tiny sector of news that I do, it’s expensive to gather it all up and send it all out.

RR: But I’m not one of those people who believes strongly in Canadian ownership. I believe in strong regulation. In fact, I gave a talk with Konrad (von Finckenstein) on a panel May and I said the 49% rule makes no sense. It’s stupid. I can control a company that’s widely held with 25%. Look at Power Corp. Look at Seagrams. Look at Bell. If you have a 5 to 10 percent position, you can go a long ways in controlling that company.

Why have Custer’s Last Stand built around communications – and why even have it around broadcasting? Why not accept it? Let CTV be owned by ABC. Let NBC own Global. Then regulate them to have a certain amount of Canadian content.

It’s not ownership, is what I’m saying. It’s regulation.

GOB: And that’s a lot of what the cable and telecom companies have said: That broadcast can be owned by anybody as long as you say, this amount of Cancon has to be here, this number of Canadian channels have to be carried or what have you. Then you can still have NBC owning CTV, but they have to abide by our rules.

RR: They have to abide by our rules, and our rules may take a different form. They may say “NBC, you can own CTV, but you must have six hours of local news spread across the country.

GOB: So if you’re (current CEO Hubert) Lacroix looking at all of what we’ve been talking about, what do you do? Do you keep beating the drum for fee-for-carriage? Do you keep beating the drum for local into local on DTH?

RR: You don’t have a choice. Here, it’s easy when you’re not in that job, like me. But when you’re in that job, you have to do what he is doing and go for fee-for-carriage, although they won’t get it. Go for more local carriage, and recognize the government doesn’t want you. Or be very creative and adopt a strategy like this and say “It can’t work. I’ve been here for 3 years. It can not work. Let us have a real study on the future of public broadcasting because Canada still needs a public broadcaster.”

But that’s like saying “my firm is in failure” and I don’t know if he has the courage to do that.

GOB: Well, it would be hard. I don’t know what I would do in that job, and if you could really say, okay, let see if we deserve to exist or can we exist? And can we continue, given all the changes around us, to do what we’re doing?

RR: When I sent to the Parliamentary committee, and said “it’s one thing to run a depleting asset. I’ll do a good job. But if you want this thing to grow, you have to ask yourself are we ready to give it the money it needs?” And the committee really always came out in favour of the CBC. But it doesn’t go any further than that.

I think that asking the government from time to time for more money will not work. We’ve proven it. Several of us, unfortunately, have proven that.

GOB: Well, the government always says, maybe not in so many words, the same thing. “Get lost. We have other bigger things to take care of.”

RR: We have other priorities. And one very senior person in the Liberal government said we’ll never close the CBC, but nor will we ever give it more money. We’ll just let it wither. It’s not worth it.

GOB: What did you make of Richard Stursberg’s departure?

RR: “I think it was very sad. At the end of the day, the president has the right to choose who he wants to work for him. But the fact is, Richard was given a superior rating by his board, by his president, in May. CBC TV had the highest audience share in its history, since the dawn of multiple choices. And his reward was that he was shown the door, and in the most vulgar fashion possible.

I brought him in to make noise. I brought him in to shake up an organization that to a certain extent had a significant degree of entitlement in it.

GOB: He definitely made noise.

RR: He did, but he did good things. He brought it in new people. He created new programming. He showed one thing, which was really important, that if you get good Canadian light entertainment, you will attract an audience. And before him, everyone said no, no, no. You can’t compete against American light entertainment.

Well, whether you like the programs or not, everything from Little Mosque to Dragon’s Den, or (Battle of the Blades), which now may be even franchised, it drew audiences. Why? Because they were catering to what the public wanted and it was all-Canadian. Nobody did that before him…

Richard is a very, very bright person. He comes across as arrogant, but if you listen to him, he has ideas. What he did was hire good people, like Kirstine Stewart. He did programs like Tudors as a co-production and he doesn’t get credit for that. Why? Because it’s too sexy. That was a good program, a co-production, and what did he pay? Peanuts because he got others to pick up a big chunk of the cost. And the result at the end of the day was high ratings, his board saying superior ratings for him, and oh, by the way, you’re out of here.

GOB: Was it just the personalities, do you think?

RR: Yeah. You’re dealing with a man who does not know broadcasting, who’s there as a CEO now and is very intimidated by a person like Richard. Richard can be intimidating.

GOB: Oh, I know. I’ve been around him since 1997 when I started covering cable and he was the head of the Canadian Cable Television Association. My first-ever interview in the industry was him. He could rub people the wrong way, but he came through with results.

RR: You can talk to people in the industry who understand what he was up against, and they’ll say he had one of the best jobs in the country in broadcasting and he delivered. He delivered what he was expected to deliver. And a lot of those guys are arrogant. They’re betting their reputation every time they make a programming change.

But now, the only sports (the CBC) is going to get in the future is going to be sports which are developing, but are not here yet, like World Cup soccer.

GOB: Or like track and field, in non-Olympic years. Or, for example, my son is running triathlons and he was watching that on CBC the other day.

RR: That was one of the arguments we had when I went with Richard to the IOC. They kept saying that it’s not only the money you’re willing to put up, it’s also the commitment you’re going to make in the four years between Olympics to the Olympic event. And we said just look at our track record. We showed all this stuff.

And when we lost, Richard and I went to the head of the Olympic Association, (Jacques) Rogge, and we said, “You guys lied to us. You basically said that it was going to count significantly what we do between (Olympics).” I said, “Look at TSN. They don’t do the programs we do because there’s no audience for them but we put them on the air.”

I remember when I was on the board of TSN, I was speaking to Gord Craig and Jim Thompson. I said, “Jim, why don’t we do more downhill racing?” And he said, “Bob, there are two people who watch downhill racing. You and me. You see my numbers?” Okay, I understand. This is a business. We’re in the business to make business decisions.

Rogge basically said to me, “But look at the numbers. They offer so much. How could I say no?” I said, “Fine, but the next time, I’m not coming.” If I was there… I would definitely advise not even coming down to see me because you didn’t pay any attention to our presentation. I’ll just send you a fax. Here’s our number, because that’s all you were interested in…

Richard also did a piece on about the CBC for the CCTA, something they never forgave him for, which talked about closing down the CBC and reopening it as a series of specialty channels.

GOB: Yes, I remember that. That was a long time ago.

RR: It may not be wrong. One of the problems he had when I was there is he didn’t have the money to make Bold into a good service. He didn’t have the money to go out and do a new sports network, even though he won the right to do it. He understood – well, we all understood – the need to have a family of assets But they were telling him “no, we’re just going to have one public broadcast system.”

That’s not the way the world works anymore.