Canadian Heritage Committee on March 22nd, 2007

[The Chair, Conservative, Gary Schellenberger]

Good morning, everyone. Welcome to meeting 44 of the Standing Committee on Canadian Heritage.

This morning we are meeting, pursuant to Standing Order 108(2), on a full investigation of the role of a public broadcaster in the 21st century. We welcome our witnesses this morning from the Canadian Broadcasting Corporation.

Welcome, Mr. Rabinovitch. Please introduce your entourage and proceed with your briefing, sir.

[Robert Rabinovitch, President and Chief Executive Officer and Acting Chair of the Board of Directors, Canadian Broadcasting Corporation]

Mr. Chair, members of the committee, thank you very much for inviting us. We welcome all efforts to clarify the role of public broadcasting.

With me today is Sylvain Lafrance, executive vice-president, French services; Richard Stursberg, executive vice-president of CBC television; and Jennifer McGuire, acting vice-president of CBC radio.

Let me get straight to the point. Canadians could be much better served by their broadcasting system and their public broadcaster.

The broadcasting environment is currently undergoing major changes. We believe this new environment requires a new agreement with Canadians. New ground rules must be established that take into account this new reality. However, I am pleased to confirm for you that CBC/Radio-Canada today is in excellent shape.

Let's start with the traditional media. For a decade now, our radio services have experienced sustained growth in both the size of their audience and the fidelity of their listeners. They have improved the quality of their programming and practically won the most prestigious broadcasting awards, not only in Canada, but also internationally.

Over the past four years, Radio-Canada television has achieved both public and critical success with such innovative programs as Les Bougon and Tout le monde en parle. This success has not gone unnoticed. It is not an accident that Radio-Canada is ranked the fourth most admired business by Quebeckers, according to a survey published by Commerce magazine in March of this year.

Radio-Canada television is approaching a difficult balancing point between programming for the general public and the programming of outstanding quality that is expected from a public broadcaster.

Even English television, which faces the greatest challenges among all our services, is on the move, with a new management team and a bold plan. Faced with ferocious competition, market fragmentation, and change in consumer behaviour, CBC television has maintained a stable prime-time share over the last four years of between 7% and 9%. That is in the same neighbourhood as Global TV, and more than double the largest specialty services.

This past season CBC had 15 of the top 20 Canadian shows in terms of audience size. Both Radio-Canada.ca and CBC.ca are among the country's most visited media sites. At a rate of more than one million downloads per month, CBC/Radio-Canada is one of the leaders in podcasting in Canada. Interestingly, some of our most successful podcasts are our most serious shows, like

Les Années lumière, Les premières à la carte,

Ideas, and Quirks and Quarks, and they are being consumed mainly by 18- to 34-year-olds, putting the lie to the belief that you need to dumb down content to reach a younger demographic. The fact is that new technology opens new audiences for existing content. CBC/Radio-Canada is doing well across the board despite an unpredictable playing field.

A few years back this committee urged us in its report, “Our Cultural Sovereignty”, to look at how we can better serve Canada's regions. We submitted to the government our first comprehensive plan in the fall of 2004. Having had no take-up on that plan, we recently submitted to government a more modest plan that focuses on bringing local radio programming to the eight million Canadians living in centres that do not have local CBC radio service.

In the meantime, technological advances are enabling us to rethink our local news offering. Our plan is not to replicate what the private broadcasters already do. We believe that by aggressively managing our budgets and using technology in new ways we can connect with grassroots communities, and at the same time counter the trend in the private sector of a gradual withdrawal from local news.

I mentioned our efforts to manage our budgets. You should know that over the last seven years we have become much more efficient and focused. We have generated $75 million in ongoing annual cost savings, and last year we generated more than $93 million in non-advertising revenues through everything from merchandising to better use of our real estate assets.

That in itself is a remarkable accomplishment, yet we continue to face serious financial pressures. The plain fact is that if these pressures are not addressed—seriously and soon—there will be no more rabbits to pull out of the hat.

Some still ask the question: Is the CBC delivering value for money? Our answer is yes, absolutely.

According to the Groupe Nordicité study of a sample of 18 industrialized countries, which we tabled with our brief, Canada is where the need for a public broadcaster is the greatest and where the system is the most complex. However, Canada ranks sixteenth in terms of the amount of public funding it receives: less than half the average of $80 per inhabitant. The BBC, which provides service in only one language and in only one time zone, has a budget of $7.3 billion. By comparison, Canada pays $1 billion to its public broadcaster, $30 per capita, to provide services in both languages and to cover five and a half time zones.

We need an explicit contract. The BBC operates under a royal charter that is formally renewed and financed after every decade for the following ten years. This is the kind of clarity and predictability we seek. Anything less is really paying lip service to the ideal of public broadcasting, while watching it wither.

You might ask, what's the rush? Well, in 1997 Canada didn't have 100 digital specialty channels and 100 more foreign satellite channels or 17 pay-per-view and video-on-demand services. Canadians watch TV and listen to radio not on their laptops or their BlackBerrys or their cellphones or their iPods.

In 2004 there was no satellite radio. In 2005 there was no YouTube; in 2006, no iPhone. Canadians want their programming when and where and how it suits them. CBC's future is as a content provider that is “platform agnostic”, not as a television company or a radio network. This is the single reality that is already significantly transforming CBC/Radio-Canada.

So the extent of change is one reason for urgency, and, frankly, the speed of that change makes not reviewing our long-term goals and strategy an unacceptable risk financially, culturally, and politically.

Some people will tell you that public broadcasters aren't needed in an age of choice in technology. If ever that was true, it is isn't now. There is near unanimity on the importance of the role of Radio-Canada in the role it plays in enriching the cultural and democratic life of our francophone community. In French and English, the simple fact is that there are some things private broadcasters either cannot or will not do, but that only we can and will do, such as: Canadian programming in prime time on television; commercial-free, safe, entertaining programming for kids; connections in the north and other remote areas of the country; original current affairs programming; Canadian perspectives on international events; and others that we have listed in our submission. These are the things that others are not in a position to do.

Then, there's the issue of diversity. In Vancouver today, two companies own virtually all the mainstream media on all the platforms. Diversity of viewpoints is disappearing. Canada needs to ensure that those views and voices are heard, and that too is a role for the public broadcaster.

The demand for both quality and diversity of product has skyrocketed, but funding is a real challenge. CBC/Radio-Canada has not received a permanent increase in its public funding base in the past 33 years, since 1974.

I want to thank Minister Oda for her announcement yesterday of the $60 million of additional funding for programming for the next two years. It is essential and it will be well used.

More broadly, as you know, the funding model for commercial television is also seriously at risk. What we need is a long-term, properly resourced strategy for broadcasting for the next decade. We need to engage Parliament and Canadians in a planning process to address the big policy issues, questions such as these: does Canada need quality Canadian programming in prime time; do Canadians want programs that reflect their reality?

Television drama is the most pervasive catalyst of popular culture in western societies. In the last 20 years, every other industrialized country has used its national broadcaster as the anchor in repatriating its prime time schedule. Everywhere else, homegrown drama is the most popular viewing option during prime time.

Another question that arises is how to present international events from a typically Canadian viewpoint. CBC/Radio-Canada already has an extensive network of foreign correspondents relative to other Canadian broadcasters. Should it increase its international presence?

We can also wonder how to promote the cohesion of one of the most diversified societies in the world. How can we support Canada's identity in a world where diversity and fragmentation are the norm? How can we manage to create a sense of belonging and of national pride? In addition, how can we urge Canadians to advance the principles of democracy?

Our radio stations distinguish themselves by their commitment to serve as fora for pan-Canadian debates. Whether it's with Christiane Charette, The Current, Cross Country Checkup or Maisonneuve en direct, our radio services are at their best when they provide a gathering place for all regions, in a single exchange.

In television, the private conventional broadcasters air little if any current affairs and documentary programming—collectively, 70 hours per year on the English side and less on the French. CBC and Radio-Canada both air literally hundreds of hours per year, and that is not including what we air on CBC Newsworld or RDI. Who else will do that?

CBC/Radio-Canada is in fact a public-private broadcaster in terms of its funding, and a public broadcaster in terms of its mandate. Given our mandate and our funding levels, we must find commercial funding sources to maintain our services. Is that the government's wish? This whole issue should be carefully thought out and planned. We need to strike the right balance.

Today, the CBC is at a turning point for which no one-year answer will suffice and no one-dimensional response will resolve. What is required for CBC/Radio-Canada to reach its potential as an instrument of national policy is a new contract with Canadians. Like all contracts, this would lay out the obligations of all parties, and would have a specific term of say ten years. Such a contract would provide guidance on the big questions I have raised above. It would be based on the principles already enshrined in the Broadcasting Act, and serve as the basis for a clearer contract and mandate with our 32 million shareholders. A fundamental principle that underpins any contract is that sufficient resources be provided to be able to meet the expectations set out in the contract. Frankly, if the money isn't there to fulfill these expectations, the contract will fail.

It is our clear hope that this committee will see in the idea of establishing a permanent process to review CBC/Radio-Canada's mandate the opportunity for Canadians to renew their relationship with their national broadcaster and to clarify, through a contract, how Canadians can best be served.

Thank you. We are now ready to answer your questions.

[The Chair, Conservative, Gary Schellenberger]

Thank you very much.

First question, Mr. Scott.

[Andy Scott, Liberal, Fredericton, NB]

I want to thank you very much, Mr. Rabinovitch and your colleagues, for being here today. This is critically important to the country and is overdue.

It will come probably as no surprise that I would generally support the idea that we need to make a new commitment to public broadcasting and to the CBC and Radio-Canada, and that with that commitment would have to come the resources that are necessary to make the commitment be realized in very real terms.

You will also not be surprised that I would place certain conditions on that support, and it is substantial support, having to do with the regional and local presence of the CBC. I think it's fair to say that Atlantic Canada has probably been one of the strongest supporters of television in particular, and it has gone through a bit of a rough period following the decision to move to half an hour at suppertime. In the case of Saint John's pilot project, to the extent to which it's possible for that to have worked, given that the resources were limited, essentially—

In this new vision, this new contract, which I would very much like to support, elaborate a little bit on how you see this manifesting itself in those parts of Canada that have less access to the national dialogue, less access to other opportunities to find their place in the country. How does that work for you?

[Robert Rabinovitch]

Mr. Scott, what I believe we would have to do is have a dialogue with the community at large, and in particular through Parliament, to define what the priorities for the public broadcaster should be.

One of those priorities would be, and has to be, regional extension and explanation services. We strongly believe that is important. It's one of the reasons why we have changed once again our six o'clock news process and what we are trying to do in terms of developing new services for the regions, which Mr. Stursberg can explain. It's the core of our support in the regions, and the services we provide in terms of local radio is what makes CBC radio such a powerful force in the country. So we recognize it.

We are constrained financially. This is one of the reasons why when your committee put forward a report, we responded quite quickly in terms of what it would take to have a quality, regionally based service above and beyond the services we now run, and how they would all link together. A contract is a negotiation. What can you do, what will it cost, what are we willing to do, what are we willing to pay for? If it was the will of Parliament and the House that significant resources be assigned to regional local programming, that is what would be in the contract, and that's what we would be doing.

[Andy Scott, Liberal, Fredericton, NB]

It occurs to me that it's a bit of a chicken and egg exercise when the resources are necessary to deliver the goods and there's a need for some confidence, in terms of the content, in what's at the other end of the expenditure. There's sort of a confidence that's necessary to support that large investment, because I think it is a large investment that is necessary. I'm personally rather confident in what the outcomes would be with that investment. I resolved that dilemma in my mind some time ago.

I know that in other areas it's an ongoing question. So I welcome the invitation for dialogue. I welcome the recognition that the added dimension has to do with new technology and so on. I understand the content piece quite easily.

I do think that as a country, probably, maybe we are even unique in the world because of our proximity to the United States and because of the small population in a large physical space and the challenges this represents. But I would flip it and say it also represents a significant opportunity. My sense is that we probably have to do this first, because of the nature of Canada, and that allows us then to be first, which has with it lots of advantages.

What's the role of the public broadcaster in your mind in that mission for our country? Is it yours to do? Is it ours to do? Is it ours to do together? How do you see Canada pursuing that, and what's your role in it?

[Robert Rabinovitch]

My feeling, very clearly, is that it's ours to do together. There is a role for the private sector. There's a role for the public broadcaster. Very much, there is a role for Parliament, for committees such as this, to define the priorities we should be going to.

As I mentioned in my talk, and perhaps Richard can go into some detail about what we are doing now in terms of regional, I think there's reason for confidence that we can do this very well. There's reason for confidence that we've done it extremely well on the radio side. One of our frustrations, as you know, is that there are eight million Canadians who don't have a local radio service. We believe that it's really important for the future of public broadcasting that they have that, because it means there are eight million Canadians who are underserved in terms of an important local service.

What we would recommend is a process of dialogue between the people's representatives—you—and the public broadcaster and the government as to how much they are willing to finance to help determine the priorities and even to have a schedule of implementation. Then we would move ahead to do it.

[Andy Scott, Liberal, Fredericton, NB]

Am I done?

[The Chair, Conservative, Gary Schellenberger]

Yes. You'll have another opportunity.

[Andy Scott, Liberal, Fredericton, NB]

Thank you.

[The Chair, Conservative, Gary Schellenberger]

We'll go to Mr. Kotto.

[Maka Kotto, Bloc, Saint-Lambert, QC]

Thank you, Mr. Chairman.

Good morning and welcome.

Mr. Rabinovitch, I heard you say that Radio-Canada is in excellent shape. To better understand and assist us in our thinking, could we suggest that everything is going well financially? Is it in excellent shape based on other criteria?

[Robert Rabinovitch]

I'll start, then I'll give the others an opportunity to respond.

We are in excellent shape given the resources at our disposal. There are no doubt other things that we can do and that we want to do, such as increase regional programming in English and French, and take more risks in developing new programs, both in English and in French.

I must say that the resources currently at our disposal are insufficient, but we are very pleased to be receiving $60 million for two years. That sum will help us with our programming because, as you know, it takes time to develop new programs. So we are very pleased to be receiving that amount, but I must tell you frankly that we are under-funded as regards the other things we want to do.

[Sylvain Lafrance, Executive Vice-President, French Services, Canadian Broadcasting Corporation]

I can give you an example. Things are indeed going well in terms of radio and French-language television ratings and use of our new media services. If you consider just use and ratings, things are going very well.

However, because of the lack of new funding in recent years, the gap between Canadians' expectations and what we can offer is increasing. That's what you will observe if you travel around the regions.

Working in the cultural world is like working in a china shop. Everyone is fragile: Francophones outside Quebec, the people in the Gaspé, the cultural and theatre community, the scientific program community. Whenever you touch one of our functions, you touch something extremely fragile. So the gap is increasing between what Canadians would like to get from the CBC and what we are capable of doing.

Furthermore, particularly in television, the economic model is in trouble, particularly for generalist networks like ours. Commercial funding is declining. It is becoming increasingly difficult to finance series. We see this in Quebec with the issue of high-cost series. We see it virtually everywhere. It's hard to launch a new series. Our schedule is still operating well because it makes considerable room for news and public affairs programs, a number of Canadian dramas and high-quality variety programs.

However, it is becoming increasingly difficult to support funding. Over the longer term, that could result, on the one hand, in declining quality in our productions and, on the other hand, in difficulty in ensuring a presence in certain sectors where people rightly think that is absolutely essential, whether it be Francophones outside Quebec, people from the Gaspé, or the cultural or literary community. So that creates an extremely difficult situation. The model is threatened over the long term.

[Maka Kotto, Bloc, Saint-Lambert, QC]

You also mentioned that you had achieved cuts of $75 million a year. Can you give us an idea of the collateral damage those cuts have had?

[Sylvain Lafrance]

Are you talking about the $75 million generated within something else?

[Maka Kotto, Bloc, Saint-Lambert, QC]

No. I heard Mr. Rabinovitch say that you had managed to reduce the budget by $75 million a year.

[Robert Rabinovitch]

I said that better management of our assets had enabled us to save $75 million a year. For example, we lease a floor of our building in Toronto, the Broadcasting Centre, which represents $5 million. We reached an agreement with a neighbouring owner concerning the development of two large buildings, which gives us another $5 million a year.

Our Galaxy music network is improving and is now generating approximately $12 million a year. We can use that money to protect programming and absorb increases in inflation and municipal taxes.

[Sylvain Lafrance]

That isn't a cut. On the contrary, these are savings that we have achieved on all assets that are not programs. These savings are used to generate money for programs. This is not a cut to programs. On the contrary, it's an addition.

[Robert Rabinovitch]

Here's another much more significant example. We've reached an agreement with a major Vancouver promoter. We sold him our air rights and our parking lot for $40 million. That money is enabling us to rebuild and digitize the Vancouver production centre. That was possible as a result of better management of our assets.

[Maka Kotto, Bloc, Saint-Lambert, QC]

All right. Are we talking about large amounts of money?

[The Chair, Conservative, Gary Schellenberger]

You'll have another opportunity.

Mr. Angus.

[Charlie Angus, NDP, Timmins—James Bay, ON]

Thank you, Mr. Chair.

I'm very glad we are speaking with you today. I think we are at the beginning of a very interesting journey in terms of where we can go with a public broadcaster.

I have a few housekeeping questions, I guess, I need to ask at the beginning. It's been about six months now since Mr. Fournier resigned, give or take some time. So you're still the chair, the CEO, the president. Have there been any steps taken—

[Robert Rabinovitch]

I'm the chief pooh-bah, yes.

[Charlie Angus, NDP, Timmins—James Bay, ON]

The chief pooh-bah, in all respects. So what steps have been taken to address this imbalance in governance?