Canadian Heritage Committee on May 8th, 2007

[Sheila Fraser]

We really looked at the question of the program rights they had acquired and how they were managing them. We noted there were fairly significant hours of programming in inventory, and basically said they needed to manage them better.

I don't believe we would have gone into other questions about how they managed. I'm actually just saying that there's negotiation overall and at times it might include new media. But those are really business decisions of the CBC, and we wouldn't look at those kinds of issue.

[Ed Fast, Conservative, Abbotsford, BC]

You went into in a fair bit of detail on the revenue-generating activities. Following up on Ms. Fry's comments, were you able to determine at all whether the current reliance on commercial advertising revenues has in any way influenced CBC's ability to fulfill its mandate?

[Sheila Fraser]

I'm not sure we would have looked at that issue per se. It goes back to defining your public policy role and how you reconcile those two activities or ensure that one does not impede upon the other.

But I believe that those commercial activities are profitable and in some sense would generate money that could be used, for example, in the rest of the corporation.

[Ed Fast, Conservative, Abbotsford, BC]

This committee has heard quite divergent views on whether commercial revenues should be part of what CBC does. Some are suggesting CBC should be completely commercial-free. Some are suggesting there's a small role for commercial advertising to play. Others are saying that if we want a robust CBC we're going to have to keep the current commercial revenues and top them up with additional long-term, stable government funding.

From the testimony you've given, it appears that you're not aware of a significant impact that those revenues have had on CBC's ability to fulfill its mandate.

[Sheila Fraser]

I'm not sure that we would have really looked at that. We did this audit within the context of the mandate that is currently being given to CBC. Discussion about whether that mandate should be changed or not is obviously up to this committee and others. We wouldn't have gone into that kind of analysis.

We simply noted that there was some criticism of the fact that they were in more commercial kinds of activities, and that they should be very clear about defining how they feel they're meeting their public policy role and they should take that into account in addressing that criticism.

[Ed Fast, Conservative, Abbotsford, BC]

You didn't see any obvious red flags.

[Sheila Fraser]

We didn't see any obvious red flags, but we were doing this within the context of the current mandate.

[Ed Fast, Conservative, Abbotsford, BC]

Understood.

Thank you, Chair.

[The Chair, Conservative, Gary Schellenberger]

Thank you for that.

Mr. Angus.

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

I'd like to follow up on the question of managing program rights. You mentioned that in the catalogue for 2005 they had 5,200 hours of available programming in French, and about 5,800 hours in English. They regularly show a program only once or twice, but they have the rights for some time. Have you looked at how that catalogue of present programming is being utilized? Is it being put onto new platforms, or is it sitting on the shelf with the rights tied up?

[Sheila Fraser]

When we did this audit—and it may have changed since, because they have put someone in charge of managing it—we found it really wasn't being managed as rigorously as we would have expected, so it wasn't clear how that inventory would be used. The CBC would have acquired something and have several plays on it, would have done it twice, and there would be no value left, essentially, on the books of the corporation, but it wasn't clear to us. Was there still a value to that? Were they planning to air it again or continue airing it? Then it brings up the question we noted when we compared it to the private broadcasters. When they pay for a certain number of airings of a program, they will generally do that. It raises a question about the value of that inventory and that it needs much more rigorous management, but we didn't see the kinds of information you would expect.

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

To follow up on that, as we've heard—we've heard from producers, we've heard from creators—when a program's made, whether it's CBC or whether it's a private broadcaster, they're going to want to grab the rights for as long as they possibly can, but whether or not they're using the value of that production is a big question.

The other question that comes out of it, if they start to use it on cellphones or iPod downloads or viewing on the net, how are the creators going to be remunerated, whether or not those rights have been given up for any residual payback?

Have you looked at how the royalties would be paid on any of these new platforms or if they're putting in place a structure to deal with that issue?

[Sheila Fraser]

No, I don't believe we would have looked at that. That would simply be with whatever was negotiated within the particular agreements, but we wouldn't have gotten into the broader question. That's something, obviously, they would have to address, have to answer.

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

You've spoken about how staff had undergone “considerable stress as a result of budget cuts, staff reductions, and reorganizations, which had reduced creative opportunities for staff and affected their morale and commitment”. We've looked at the issue. A number of big-buy issues have to come forward very soon: getting ready for high definition, what to do about replacing the analog towers, whether to use them or to dismantle them. There are certainly a number of big capital issues coming before CBC. Given their stretched budget, the question has to be asked: what steps are in place to take on the kinds of investments that will be needed in a very short space of time?

You said “The Corporation needs to demonstrate and communicate the need for additional funding for those strategies to the Prime Minister and Parliament.” Do you believe at this time that CBC is underfunded in key areas?

[Sheila Fraser]

I really can't make a judgment on that. I think it's up to the CBC to demonstrate if they have sufficient funding or not.

What we were relating to here was the very significant investments that will have to be made in new technologies, that there will be funding required for that, that they should begin that discussion earlier rather than later, and certainly make people aware of what is coming. So it was more in that context.

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

When you were looking at their plans, do they seem to have a short-, medium- and long-term plan in place to deal with the kinds of capital investments that will be needed to keep pace in the 21st century?

[Sheila Fraser]

As I said earlier, we mentioned in the strategic planning that they need to have a better strategic plan, which would obviously take into account issues like new technologies. We also mentioned in here, because you mentioned employees, that they need to have much better management of change, given that there will be significant changes over the next few years. They need to ensure that employees are aware of this, and that's incorporated into everything they do.

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

Thank you.

[The Chair, Conservative, Gary Schellenberger]

Thank you.

Mr. Scarpaleggia.

[Francis Scarpaleggia, Liberal, Lac-Saint-Louis, QC]

Thank you, Mr. Chair.

Thank you for being here, Ms. Fraser.

When we talked about the stock of programming that is not being aired to its maximum potential, there's sometimes the perception that private sector organizations are better negotiators, they get better value for their money and so on. Are you able to draw a general conclusion about the negotiating skills of the corporation vis-à-vis the outside world?

[Sheila Fraser]

No.

[Francis Scarpaleggia, Liberal, Lac-Saint-Louis, QC]

Okay, that's fine.

When I speak to people about the CBC, they fall into two camps. There are the people who love the CBC—I'm one of them—and who love its programming and so on. Then I get from other people comments about how much waste there is, how the overhead is too high, and so on. I've heard that from people who have worked inside the CBC.

I'm wondering if you can comment on that. Or would you actually be going back to your point that the measurement systems don't exist to draw that conclusion?

[Sheila Fraser]

That is essentially what our special examination says. We are required to give an opinion as to whether the corporation has the systems in place to demonstrate efficiency and effectiveness. We note the significant deficiency that they aren't able to demonstrate that because of the performance measurement system and the lack of comparative information even between the two networks.

So that has to be worked on before we can draw that kind of conclusion.

[Francis Scarpaleggia, Liberal, Lac-Saint-Louis, QC]

As I understand it, you're required to do this kind of audit of the CBC every five years or so. How would you compare conclusions? I mean, you must have come to pretty much the same conclusions five years ago. Have you noticed any improvement?

I'm sure someone said to them five years ago, ten years ago, even fifteen years ago that they didn't have the systems in place to measure if they were efficient or not. This is an old corporation. It seems odd to me that 50 years after its founding--or even more than that, 80 years after its founding--we still don't seem to be able to draw a conclusion as to whether it's an efficient operation or not.

I would like your comments on that.

[Sheila Fraser]

We did the previous special examination in 2000. In that report, we actually noted four significant deficiencies. We noted significant deficiencies in the strategic management; in governance relationships, performance information, external accountability; people management; and facilities management. We have noted a significant improvement in many of the areas, as we note throughout the report. I would say that facilities management in particular was a major issue in our report in 2000.

Quite honestly, the corporation has done a lot of work in a relatively short period of time to address those deficiencies. The fact that its performance management is somehow a little more...well, it doesn't bother me quite as much. Performance management is very difficult, and many government departments and crown corporations are struggling with that as well. It does often take time to identify the measures and then to put the systems in place to be able to capture the information. Then you need a timeline over that.

So the fact that they haven't resolved all of that within five years is not surprising. That they have resolved the other three significant deficiencies is to their credit, I think.