JAY SWITZER HAS IT bad for the Canadian TV industry.
After less than three months out of work, the former CEO of CHUM Limited dearly misses the people he has worked with for over two decades and the work of providing hours of TV programming to Canadians.
The self-professed "content guy" – who spent some time this summer riding into the sunsets of the U.S. southwest – is not about to ride into the sunset and retire. He’ll be back, but he has months to decide where and when.
Last week, he sat down with Cartt.ca editor and publisher Greg O’Brien to talk about what he’s been doing, what the industry’s been doing and where he thinks we’re headed. What follows is an edited transcript.
Greg O’Brien: First of all, what have you been up to since the takeover?
Jay Switzer: I’ve been enjoying the summer. I’ve been listening and learning and listening and learning… First of all there’s probably a month or two of family stuff that you have to do. There isn’t a year of stuff but there is a month of stuff, so that’s been great since my wife works a lot on the road… I spent a lot more time with my wife because… we live in two cities – she’s in L.A. (Switzer’s wife, Ellen Dubin, is an actress).
I worked on myself, trying to get healthier. Instead of using my trainer once a week, I’m using him three times a week. You know it’s only ten pounds, but it’s great. I don’t know what it’s like for you, you seem like a healthy guy, but I mean we’ve all got full time jobs and responsibilities… and you should be able to work on yourself as well. I never had the discipline to do both, but now I can go for a long power walk every morning.
Long story short, I’m enjoying it. I’m missing the people (at CHUM). I’m being as comfortable as I can with the transition. It’s only been six weeks. Obviously, I have some period of time where I can’t work elsewhere anyway, so I’m making the most of every single day.
GOB: How long does that last?
JS: The contract’s confidential, but it’s very fair and reasonable. (CTVglobemedia) has been terrific and very professional and I’ll begin – I mean I have lots of choices facing me and I’ll begin deciding what to do to in the winter.
GOB: So, it’s not like a two-year non-compete or anything.
JS: Oh, no, no, no. It’s in months, not years.
GOB: And I’m sure you’ve been approached by a fair number of people?
JS: Yes, but – and I want to say this without seeming to be, you know, falsely modest – it’s a chance to actually think about what you want to do and ask: "do I want to get back to something big? Do I want to get something perhaps more entrepreneurial? I love this business. I have great passion for the content business and I sure do miss the people.
But I’m going to take this time, these next few months to decide: "do I want to stay in Canada?" which is my preference, or "do I want to go to the U.S.?" And do I want to get back into something large, or perhaps smaller – and I have the time to actually talk to myself about that… So there’s absolutely no urgency. And I’ve been given this privilege and some time to think about it. I’m going to use that wisely and not rush into anything.
GOB: And at the same time, you’re also working as a consultant through the transition period?
JS: Not officially, no, but yes, I’m available to speak to people, and have helped on some files. I very badly want to make sure that this transition goes as smooth as possible… I’ve been on both sides of the (M&A) desk and this one has been as professional and constructive and complementary as it possibly could be.
Times of change can be stressful for many people and the CTV people and the Rogers people have gone out of their way to minimize that with the whole senior team to get the best out of everybody. A few people are not staying and many people are, and the people who are staying are off to great new futures where new memories will be made and new history will be written, and both on the CTV side and the Rogers side, these channels and people which I care so much about are in very good hands.
GOB: This business is basically in your blood. I mean this is the family business for you. I mean your dad (Sruki) was cable (an engineer who designed and built many of Canada’s original cable systems) and your mom (Phyllis) was on the programming side (as one of the co-founders of Citytv).
JS: Yeah, it goes back a long ways, but I’ve been privileged every day for the last four years to help run it and for, I guess, 22 or 23 years in total. But unless you’re an owner, all work is temporary and I’ve never forgotten that rule and I mean only good things by this but managers work at the pleasure of owners, and my wife and I have never, ever taken that for granted, but what a fantastic run.
GOB: So, when you look back on your time at CHUM, what are some of the highlights for you? What are the main accomplishments that you’re really proud of?
JS: Well, my nature is collaborative and I think building, developing, nurturing, and having the maturity to get out of the way of the people that actually have built this thing, has given me the greatest pleasure. A smart manager surrounds himself with people who are better than they are, people who are smarter than they are. I’m not being falsely modest. It’s a long way of saying I’m particularly proud of the team we built and what they’re going on to do, and their record stands. Our record stands in terms of the radio and the television that we’ve been able to build.
…I could talk about accomplishments on the creative side. I could talk about the financial accomplishments. That’s another metric. I could talk about the strategic decisions the company made in the last 10 years in particular where we decided to build our specialty channel portfolio at a time when others were not.
GOB: That’s the direction the company went really right, when compared to some of the other broadcasters then.
JS: I’m not speaking of the current management off CanWest but in the old days, with WIC particular and the old management days of CanWest, the mantra was conventional and no specialty. That wasn’t a priority. Again, I’m going back 10 years or 15 years.
And in the same way, before my time, the company saw the future in FM radio when it was nothing and if you talk to Duff Roman or Paul Ski about the early days of people pooh-poohing the future of FM. The same case can be made for the television side, specialty and seeing the future and wanting to be part of it.
Same goes for the digital initiatives, some of the work that Roma Khanna and Maria Hale and Stefan Argent have developed, that I think even to this day, others are just catching up. I’m rambling but… however you connect with your audiences, it’s all good. It’s not as though one way is legitimate and one is something to frown on.
Connections with audiences are all good and if we don’t dominate the early evening news, which we didn’t — it was a package that we’re very proud of where we were never top-rated, but were seriously rated – we dominated in the mornings with BreakfastTelevision. That’s something to be proud of. It’s about connecting with viewers in any way you can in ways where you can make a difference and you can be best.
We were best at different things than Rogers or CTV are best at. CTV are clearly leaders, winners, and they’ll be able to come up with something even better on the specialty side and on the A Channel side. As you well know, it’s a very tough time for conventional television but I think their expertise and their deep pockets and their results-orientation and their determination to win will mean very good things.
So, I’m proud of the expansion in specialties and proud of the growth we were able to build in radio, organically. I’m proud of the people development. I’m proud of our ability to get through some very tough years a few years ago. And I’m also proud of the financial performance. In the past four, four and a half years, approximately, we were able to approximately triple the value of what had been a sleepy, small, mature company.
That may not be the most important thing I’m proud of. I’m more proud of the creative and the people elements, but I’m also proud of the financial results.
GOB: There are ongoing challenges for all specialty broadcasters, all over-the-air broadcasters because of what new media and mobility and iPods and everything else that’s out and coming, I mean, where do you think it’s going to go?
JS: I’ll tell you the good news and bad news as I see it… I’m particularly excited and optimistic that Canadians genuinely do want to see Canadian stories and Canadian opportunities. I don’t believe for a second that Canadian parents want their children to know more about American presidents and American governors than they do about Canadian prime ministers and premiers.
When the quality is there and when the brands are right, and focused, and fine-tuned and connected to viewers, Canadian channels are every bit as good and mostly better. I’ll tell you objectively, whether, it’s Showcase at Alliance, or TSN at CTV or MuchMusic or what YTV has done, I’ll put them up against any American channel.
That’s what excites me, the Canadian brands connecting with Canadian audiences… What scares me, however, is the borders coming down in terms of markets and technology is creating a North American market. It’s not a world market.
I’m not afraid of competition, but it sure is nice to have a level playing field, and I worry when the boardrooms of New York and the studios of Hollywood will be able to – I use the word in quotation marks – but ‘dump’ their content, already paid for, directly into the Canadian market via high speed in a way that the Canadian content providers have a structural disadvantage. That’s what worries me.
…I’m not afraid of it. I think it might create opportunity and I think it’s part of the reason why there’s quite a speed-up in the consolidation of the Canadian industry, both for critical mass and financial reasons, as well as creating a brand outreach. And I look forward to the day when there are larger, better-financed, well-positioned, better researched and better marketed Canadian majors that can do a great job with the Canadian audiences so that Canadian audiences can get all the American stuff, as well as Canadian.
GOB: And is that why the consolidation we’ve seen this year is a good thing, with Astral-Standard, CanWest-Alliance Atlantis, Rogers-City and CTV-CHUM?
JS: I can see many good points, perhaps a very small number of negative things, but mostly positive things. It’s a riskier business in terms of the risks you take to finance content. It also is a bit of a positive from the front-end point of view, the content-maker’s point of view. A bit of a positive counterbalance to the consolidation that’s going on with ad agencies.
I’m approximating but even five years ago, there were probably eight or nine agencies that were 60 to 65% of most of the traditional broadcaster’s business. Now it’s probably four or five agencies at the most that are 70 to 80%. That’s neither a bad nor good thing. That’s just business, but I could use it as a another good reason for consolidation on the broadcast side.
…At the end of the day, I’m still a content person; I’m still a programmer in my heart. You don’t have a business if you don’t have unique content that reaches audiences.
…Part of why I’m so positive and optimistic about the future of the Canadian business, however it changes, is the public service part of it. I think the best Canadian broadcasters remember the obligation of using public airwaves. The best broadcasters never forget that.
So yes, it has to be a business, it has to be a strong, sustainable business, but you also have a special obligation – you have the privilege of being in the homes and bedrooms and the cars – in our case, of tens of millions of Canadians every week – and never forget and never take advantage of that privilege because it’s temporary and these are public airwaves. That was also something, I think, that differentiated us – not that others also don’t care – but that’s something I was particularly proud of.
GOB: Well, City and CHUM always went about things a different way. I mean it was clearly different. Being right downtown, you had a window on Canada’s largest city, you had Speaker’s corner. You often did your news standups on the road somewhere and then much of that has been copied everywhere, not just in Canada. You’ve been leading-edge, a lot of fun (and) very original through the years. And when you’re original, you attract attention.
JS: That’s the fire that’s fueled by hundreds of young professionals – and I miss it. I’m not in any way melancholy; I’m not in any way sad. I miss the people and there will be new people I’ll get a chance to work with, and so there’s nothing but fond memories for what we did.
GOB: Sticking with the content side we’ve got the diversity of voices hearing coming up I’m sure you’re aware of and many of the creators – the actors, and the directors and so on – have complained long and loud about the 1999 changes to the CRTC Television Policy changes and how that and consolidation has hurt them and spending has dropped, not to mention the fact that when there’s a good, original Canadian show, they say it’s not scheduled on Thursday night at 8 p.m. and is placed somewhere else. How do you respond to all of that and if you were going to the Diversity of Voices hearing, what would you be telling us?
JS: Well, one of the few times I ever got upset – I’m known for keeping my cool under pressure – but the last time I really got upset was when one of the unions presented their famous coloured card of where Global and CTV were putting their Canadian programming on. I’m not as familiar with the Global schedule as I am with the CTV schedule and it was just grossly misleading. I’ve got no allegiances or alliances; no hidden agendas here, but I actually took out the program grid of that week and looked at what they had and where they had comedies, and yes, they had an hour or two on Saturday night, but they also had stuff on Sunday, they had stuff on Tuesday, they had a Canadian movie on Friday.
I think we all share a desire to have more Canadians watch more Canadian programming and I think the various strategic stakeholders can reach that goal by keeping the arguments constructive, not inflammatory, truthful and not misleading, and on both sides, so that together the stakeholders can figure out the best way to reach those goals.
It’s not only an obligation, but it’s actually good business to create the next Corner Gas or the next Canadian Idol or the next Little Mosque.
And yet I also acknowledge that the business model is still cross-subsidized by American programming. But I guess it’s my collaborative nature that I think the results would be more effective if there’s less inflammatory rhetoric and more constructive discussions.
GOB: Because in the end, nobody is out to "get" anyone else. Everyone wants the same things.
JS: Look, my wife is a hardworking member of SAG in the U.S., she’s a member of ACTRA, she’s very active with ACTRA, so occasionally if she’s mad at me she will call me an evil engager. I live with an artist. I see things from both sides and I have great capacity for the arguments and I think that the best broadcasters share those goals, but it’s how you get there, and how the business model gets rebalanced.
GOB: And in our market, such that it is, there just isn’t enough money to produce all of our content for all of our time.
JS: I don’t have the exact industry numbers in front of me, but I think in conventional television, the CRTC recorded over the last two or three years, average profit percentages dropping from the low 20s to the mid-teens to single digits. I don’t remember what the exact number was, 7 percent, 9 percent, 5 percent, something like that (At last count, it was 4.1%)
That’s not a false number. There’s not a shell game going on. I’ve seen the numbers from the inside and this is a very challenging time… it’s a structural issue. This isn’t a one year thing and it’s not just the smaller stations. If everybody would actually get on a round table and not just argue and debate and arm-wrestle, we’d be better able to figure out how to put more money into better Canadian programming – without getting everyone’s backs up.
It’s not like there’s some magical, huge, monster 48% profit margin, and the scales are out of tilt anyway. From my relatively objective perspective… I’m anxious to see everybody get a little healthier. I guess the BDU side is pretty healthy but I won’t bring that up.
GOB: Well, do we need to revisit the subscriber fee-for-carriage aspect of it?
JS: Well, I read Shaw’s (Communications) response in your report yesterday… and they telescoped the things they want removed but I would argue that the artists and the Guilds will be able to be more effective if the rhetoric was calmed down a little. Broadcasters generally do want to make it better and part of it is the (relationship) with BDUs as well.
And there are things that are not in anyone’s control. It’s a very big issue. The fixed costs, and some of the copyright costs in radio and television are significantly higher than in the U.S. I’m not saying there should be equality, but the fixed costs, all the various copyright issues plus CRTC license fees, as a percentage of business, with margins… almost non-existent, the difference between a license fee going up or down by 2%, hits profitability by 30%. It’s a very big issue
GOB: Let’s talk about the HD upgrade as well, the digital upgrades that are a cost to broadcasters.
JS: I’ve said this publicly that one of the challenges of conventional television – and I don’t speak for any broadcaster – is forget just the investment in hi-def, but look at the challenges of certainly the small, and even medium-sized markets with conventional television stations… if you’re debating high def investments in Vancouver and Toronto, how are you going to deal with Calgary and Ottawa?
GOB: And that again it all depends on the future which none of us can predict. I’ve heard the question over and over and over and it’s always asked in the same way. People use You Tube or MySpace in their question and then they ask the obvious: "What’s going to happen? And the honest answer – the most honest answer I’ve heard – is “I don’t know.”
JS: It’s our system’s ability to regulate and enforce (cultural) contributions… as the universe of the regulated part of the business gets smaller and smaller and smaller, and the unregulated part gets bigger and bigger, it’s frustrating for those left with regulated part because the costs are getting bigger and bigger so that’s all they can tax. And yet, it’s coming at a time when that’s counterproductive… because the unregulated part of the business is getting bigger and bigger.
GOB: And there’s no way to regulate the unregulated.
JS: With the stroke of a pen, over the past five years, many new American channels gained universal access in Canada – and that’s fine – but it’s with absolutely no obligation whatsoever to contribute anything to anybody.
GOB: But how do you change that?
JS: Take a snapshot of who’s contributing to the regulated part and the unregulated part and maybe think before you start to allow, free of charge, five more channels from the U.S. into Canada. No one’s saying we should stop access. All people have to start saying is to create a level playing field.
GOB: So do you think that perhaps 10-cents a month from each Canadian subscriber of Turner Classic Movies should go into the CTF, for example?
JS: I know this is inflammatory to my friends in the BDU community but clearly there is not an even playing field right now.
