Mr. Chairman, thank you very much.
I have many things to say. That why I'm going to be closer to 15 minutes than 10.
Mr. Chair, members of the committee, good afternoon.
It was almost a year ago that I appeared before your committee to tell you about CBC/Radio Canada's plans and priorities. In fact, I spoke about my three priorities, “my three Ps”: our people, our programs and our strategic planning.
Those priorities have not changed, but our environment has become substantially more complicated. The collapse in television advertising in the past six to eight months has taken a huge chunk out of the operating budgets of Canadian broadcasters, both private and public. CBC/Radio Canada is no exception.
The need for everyone to cut costs to face this reality is affecting the ability of broadcasters to continue to provide the levels of service Canadians have come to expect. This is especially true of local broadcasting.
I am not here to blackmail you this afternoon.
I'm not here this afternoon to blackmail you.
In fact, I rather like to start off with one of my deepest convictions: CBC/Radio Canada must remain firmly rooted in the regions.
We must, at CBC/Radio-Canada, remain deeply rooted in the regions.
We play a key role in the social, cultural and democratic life of this country, and we cannot do that unless we are in Canadian communities. This is how we ensure that the issues and challenges people face in one community are heard and shared by people living across the country. That identification with the lives of people in other communities is the very essence of a national identity, the very essence of our mandate. And it will remain a priority for us as long as I am president and CEO of CBC/Radio Canada. I am not here to threaten to pull out of the regions. I do want to say something loud and clear, however, so that you realize it: how effectively we deliver these services to Canadians across all the regions is determined in large part by our funding structure and the scope of our mandate. I am here to talk about that today.
How do we fund our mandate? Yes, CBC/Radio-Canada receives just over $1 billion a year from taxpayers. Every one of the broadcasting and cable company representatives who sat in these chairs over the last couple of weeks referred to it. Every time someone wants to challenge our access to additional government or CRTC funding initiatives or wants to throw rocks at our services, they start with our government appropriation.
However, these broadcasters and cable companies conveniently failed to remind you in their presentations that CBC/Radio-Canada also has a mandate directly out of the Broadcasting Act that no one else has: to provide an incredible range of programming and services to Canadians across the country, across six zones, and in two official languages. With a third of our total budget coming from commercial sources, we now have fewer dollars to fulfill this mandate than we did when I was last here, less than a year ago.
We've had to make some really hard choices at CBC/Radio-Canada over the past few months. I really don't like what I've had to do, but there was simply no way we could address a projected shortfall of $171 million without affecting all of our services, including our regional services.
You should know that as we tried to balance our budget, regional broadcasting was protected in disproportion to the rest of the corporation. For CBC, spending on regional services represents about 38% of the total budget, yet the regions are bearing 20% of the cuts. For Radio-Canada, regional services represent about 18% of the budget; they're bearing 14% of the cuts.
We kept our geographic footprint pretty much intact. To cut somewhat deeper at the network so that we could protect our regions as well as we could was a choice we actually made. Does that mean I'm happy about taking seven persons out of Sudbury or six out of Sydney or seven out of Windsor? Absolutely not. We are taking smart, dedicated, passionate employees out of these stations, and our services will be affected.
To give you just a small glimpse of what that impact will be, let me quote from an e-mail I received from one of our employees who works on the Information Morning show out of CBC Cape Breton. I think I can't say it better than she does, so I won't try. I'll simply read a couple of sentences from her e-mail:
My heart breaks for the CBC and the loss that Canada has not yet realized it will sustain. I'm so deeply saddened that I can see a day when no one will tell the story of the 10-year-old girl in a tiny community in Cape Breton who took it upon herself to clean up the garbage at a local picnic area because she was worried about the deer walking barefoot in the meadow. No one will then hold forums and generate discussions about issues that matter to communities that are bleeding people. No one will give the tiny cogs a voice.
If we had more resources, or if the measures we have taken generate some flexibility that can be sustained, or if our commercial revenues bounce back and hold, I would like to put people and dollars back into the regions. As I said, our connection to the regions of Canada is an important part of our mandate.
There have been a lot of rumours over the last few weeks that the government is considering some form of support for local broadcasters. I'm afraid I don't know much more about those rumours than you do, but I can tell you that we would welcome any immediate financial support from government so that we could reinvest in the regions.
There is a larger problem. The business model on which conventional TV, both public and private, is based is no longer working. You've heard a lot of information about this in the last days. It hasn't been working for several years. The current economic crisis has only accelerated what was already a steady decline in the value of television advertising. For CBC/Radio-Canada, the current economic challenges are particularly frustrating, as they come at a time when our services are enjoying tremendous growth in popularity among Canadians. We have more information on that in our submission, which was sent to you last week. These successes are increasingly at risk because of a funding model that is no longer sufficient to provide all the services Canadians want from their public broadcaster.
And so, what are the possible solutions? Part of the solution lies in support for things like first-run, prime-time Canadian programming that is original, of high-quality and broadcast on a whole host of platforms. These concerns are the focus of the recently announced Canada Media Fund. It will be important to stay on course with these directions throughout the fund's guideline development process.
Another part of the solution lies in allowing conventional broadcasters access to fee-for-carriage—the same subscriber fee revenue specialty channels have enjoyed for years. As we stated repeatedly to the CRTC, we believe that fee-for-carriage should be tied to specific priorities the Commission feels are a priority—like improved local services—and it should be included in a broadcaster's conditions of licence.
Finally, there is the CRTC's Local Programming Improvement Fund (LPIF). We believe that the LPIF will mean better local services if it remains focused on smaller markets and is based on each broadcaster's track record in investing in specific communities. For CBC/Radio-Canada, access to this fund is vital and will allow us to improve and enhance our local programming in 8 English-language and 12 French-language stations, according to the terms that have already been announced. Indeed, our 2009-2010 plans and budgets were established based on our access to the fund according to the terms that have already been announced. Any changes to the terms or our eligibility to access the fund would have a major impact on our plans.
These are solutions that would assist all conventional broadcasters, both public and private. However, for the public broadcaster there is something else. We need a new contract with Canadians. We need a memorandum of understanding that would clearly lay out Canadians' priorities for their public broadcaster and the resources necessary to fulfill those objectives. Without that clarity, we must focus on finding in the commercial markets the missing resources we need to operate all of our services. Without the financial flexibility available to other commercial broadcasters—and the current economic crisis has really demonstrated this problem—CBC/Radio-Canada has no access to capital markets or to commercial borrowing to manage its cashflows. In an economic downturn, that means we cannot use a simple line of credit to lessen the impact of the decline in revenue and smartly manage ourselves out of a slowdown. That means that for every dollar of revenue lost, the corporation must immediately cut a dollar somewhere in order to balance its budget in the same fiscal year.
By freezing spending and slashing costs, we were able to balance our books for the year ending March 31, but for 2009-10, facing an estimated $171 million shortfall, we simply couldn't balance our budget without making deep cuts. As you know, I announced a reduction of 800 positions across our corporation. In addition, we are proceeding with plans to try to generate $125 million of cash through the monetization and sale of some of our assets.
Selling assets to balance your budget, selling assets in fact to pay for your downsizing costs and your severance obligations, is not the best of management decisions, but we have no other choice.
Some programs therefore had to be eliminated; our staff in many stations has been reduced. As a backdrop to these cuts, we've attempted to protect certain key priorities as much as possible: including keeping radio advertising free, enhancing new media, protecting our regional footprint and maintaining our distinctive Canadian programming and our cross-cultural initiatives.
I'm not happy about what we've had to do, and I know that a lot of Canadians are worried about the effect of cuts on services in their respective communities. I must say that we have been working closely with our employees and unions to develop ideas to reduce the impact of these cuts on our services and our people. These past few months have shown me, once again, that our employees are the most important asset we have, and that we need to do everything in our power to keep them working for us. Each individual is important to us, and each of these people should receive credit for delivering distinctive, nation-building programming day after day in an unstable, shifting and difficult environment. Everyone of these people is deserving of our respect and support.
All of our decisions have been guided by three key principles. First, the corporation must continue to focus on becoming a content company rather than a simple broadcaster. Second, CBC/Radio-Canada will strive to remain the most important creator and distributor of Canadian content across all platforms that Canadians use. Third is the commitment I spoke of earlier—the desire to remain deeply rooted in Canada's regions.
We are no longer just a broadcaster with separate television, radio, and Internet media lines. We are moving to become, and in fact are becoming more and more, an integrated content company.
Let me give you just an example. During the last federal election, we broadcast election analysis, profiles, and reports on radio and television, but on the Internet Canadians could get much more, from streaming of video and audio to in-depth riding-level profiles and results from an interactive map. A reality check site put the candidates' promises and statements to the test. A voter tool kit provided specific information as to where and how Canadians could vote.
The Internet allowed the public broadcaster to really become the public forum. Thousands debated local issues in forums set up for every riding. There were over 10,000 comments posted in these areas of the site alone. En ligne, citoyens! linked francophones across the country in a political discussion about issues. Canadians asked questions directly to political candidates, and they posted thousands of their own photos and videos. We had over a quarter of a million postings to our sites as Canadians debated the issues. That's political engagement.
On election night, our websites were another source for up-to-the-minute election results. CBC.ca's Canada Votes website had close to four million page views on election day alone. Radio-Canada's website had the third heaviest traffic day in its history. That reach even extended beyond our borders, as over 10,000 people watched live streaming of our election coverage from outside of Canada.
All of this, in addition to our audiences on audio and television—