An examination of the costs and benefits of commercial advertising on CBC/Radio-Canada, the creation of a “superfund” dedicated to Canadian content, and a discontinuation of all in-house production of non-news and current affairs programming are among 22 recommendations for the public broadcaster in a new report issued by the Standing Senate Committee on Transport and Communications.
The report, titled Time for Change: The CBC/Radio-Canada in the Twenty-first Century, is based on testimony from 44 days of hearings in Ottawa, Halifax, Quebec City, Montreal and Toronto last year, as well as fact-finding trips to Winnipeg, Yellowknife, Edmonton and London, England.
It was prepared in response to a 2013 senate order to examine the role of the public broadcaster in a changing media landscape.
The report said the role of the public broadcaster has become “less clear” in a highly fragmented landscape characterized by growth in the number of TV channels, radio stations and other media sources, as well as the convergence of broadcasting and telecommunications enterprises and the introduction of web-based audio and video.
CBC/Radio-Canada had expenses of $1.87 billion against revenues of $1.86 billion in 2013-14, but the report said it had “steadily” increased expenses despite downward pressure on revenues.
CBC/Radio-Canada took in $491.2 million in advertising last year (an Olympic year), but the report noted the continuing migration of advertising to digital is having the same impact on its operations as those of its private rivals.
The remainder of the public broadcaster’s funding was derived from government funding (approximately $1.09 billion), subscriber fees ($133.3 million) and other funding ($143.4 million) from sources such as the now discontinued Local Programming Improvement Fund.
Groups including the Canadian Media Directors’ Council (CMDC) and the Association of Canadian Advertisers (ACA) all recommended the public broadcaster further explore developing branded content initiatives, arguing it is in a unique position to include brands early in the production process.
The report called the issue of allowing paid commercial advertisements on the public airwaves a “contentious issue” during the study period, with fervent advocates both for and against.
Witnesses such as former CRTC chair Konrad von Finckenstein, for example, argued it should be allowed to carry ads and let the market decide by viewership whether they are appropriate.
CMDC’s Janet Callaghan argued the impact of advertising is even more pronounced in Quebec, where the prime time audience share for Radio-Canada is triple that of CBC Television in English Canada. The CMDC said Radio-Canada’s commercial inventory played a “significant role” in making Quebec audiences accessible to advertisers and ensuring competitive pricing practices.
However, some witnesses argued the pursuit of advertising inevitably leads to a pursuit of ratings, meaning the CBC/Radio-Canada prime time schedule could ultimately begin to resemble that of private broadcasters.
“[A] business model that includes advertising revenue may inadvertently encourage the public broadcaster to compete with the other players in the Canadian broadcasting system, rather than fill in the gaps that currently exist,” says Florian Sauvageau, a professor emeritus in Laval University’s department of information and communication.
Ian Morrison of Friends of Canadian Broadcasting said if the loss of more than $120 million in NHL-related advertising is not met with a proportional decline in future cost-of-sales, the remaining ad revenue could be costlier to acquire. “Thus there may be a business case for the Corporation to consider going ad-free,” says the report.
The report underscores the paucity of government funding available to the CBC, citing a Nordicity study of funding for public broadcasters, which found parliamentary funding for the CBC/Radio-Canada worked out to roughly $33 per person in 2011 – ahead of only New Zealand ($21) and the U.S. ($3), and well below the average of $82. By contrast, Norway’s parliamentary appropriation worked out to the equivalent of $180 per person.
However, it also noted the CBC has never been happy with the level of government funding it receives, citing a chairman’s 1947 presentation to a parliamentary committee in which he said it would be impossible for the CBC to maintain its current level of service without additional funding.
Other witnesses during the hearings characterized the CBC as “obese,” since it isn’t subject to the market forces that govern private broadcasters. While acknowledging it has downsized its staff in response to outside forces, the report said the public broadcaster does not face the “day-to-day task of minimizing costs” that its private-sector competitors do.
For example, the report found the average salary for a CBC conventional television employee is $97,728, compared with $87,228 for the average employee in private television.
The discrepancy is even greater in radio, with the average CBC FM employee making an annual salary of $98,851 and AM employees averaging $94,794 – compared with $67,170 and $62,875 for private sector employees.
The report also found significant differences in staff sizes, with the average CBC/Radio-Canada TV station employing 227.3 people, more than triple the number of employees (66.1) at a private station.
“As is the case with other large, bureaucratic public institutions, once the CBC/Radio-Canada begins an activity, without market constraints, it is difficult to downsize or eliminate that activity,” said the report.
The report suggested several alternatives to advertising that could make up the shortfall in parliamentary appropriations, including a license fee charged to each household with a device that can receive a TV signal (similar to the BBC, which derives the equivalent of $6.9 million in revenue in this manner); a dedicated broadcasting tax applied to the revenues of broadcasters; sponsorships; viewer donations and paid subscriptions similar to that of a premium specialty channel.
