CBC calls for fewer licence conditions, looks for footing among private broadcasters

GATINEAU—CBC/Radio-Canada said it needs regulatory flexibility to innovate under a shrinking budget as the public broadcaster deals with questions about how to avoid operating more like a private broadcaster. A panel of CBC executives appeared before CRTC commissioners Monday, the first day of hearings to renew CBC’s broadcasting licences. CBC has asked the CRTC for more regulatory flexibility and to approve new sources of revenue, including fees for cable and satellite broadcast distributors’ carriage of its local TV signals and advertising on two of its national radio networks, CBC Radio 2 and the French-language Espace Musique. The public broadcaster is looking for new revenue streams as it deals with a $115-million cut to its $1.1 billion in annual parliamentary appropriations by 2014-2015. CBC president and CEO Hubert Lacroix told CRTC commissioners Monday that the public broadcaster is following trends in how the public is consuming its services and looking at where it can increase revenues from its existing and emerging platforms. “Those dollars flow to the whole corporation. They protect the service and they actually allow us to continue delivering service to Canadians in the regions,” he said of new sources of revenue. In an opening presentation, Lacroix emphasized CBC’s five-year strategy, “Everyone, Every Way,” which aims to reach more Canadians, particularly in Canada’s regions, through digital services, radio and TV. The strategy involves doubling CBC’s digital platform spending from 2.5 to 5 per cent of the broadcaster’s budget. “What we have stepped away from is a host of lower level commitments that, in our view, are not compatible with the world we live and operate in. We are pleased to make a series of regulatory commitments, but we want them to make sense in the current, and future environment,” Lacroix said of CRTC regulations. “In our view, why have genre-specific commitments for a particular platform when audiences may well move away from that platform or their preferences may shift, or both. We should not be required to come back to the commission every time we need to change what we are doing in order to serve Canadians properly,” he said. The broadcaster has also requested accounting flexibility so it can move revenues and spending between its news specialty channels, CBC News Network (CBC NN) and Réseau de l'information (RDI), and its local, conventional television stations. CBC’s licence does not currently permit the shared accounting though private broadcasters’ licences do. On Monday, CRTC Chair Jean-Pierre Blais said CBC’s specialty channels were historically reported on separately from conventional stations to avoid issues of cross-financing. He said with the licence condition removed, critics would accuse CBC of mixing public funding with specialty channel revenues while moving content from multiple genres across multiple platforms. “There was a recognition historically that the conventional platforms, radio and TV, were one thing and that your presence in the specialty world was closer to being in direct competition with some private operators, and that the cross-funding of those two was inappropriate,” Blais said. He referred to regulations in the European Union that apply to publicly or state-owned enterprises’ activities in areas where they compete with the private sector. “How do we ensure that there is not inappropriate activity in cross financing of public money into more private, commercial activity?” Blais said. Steven Guiton, vice-president and chief regulatory officer at CBC, said the accounting conditions were originally put on CBC’s news specialty channels because they were not traditional CBC news services and they could compete with the private broadcasters’ channels. Guiton said the environment is now more competitive and the licence conditions are no longer necessary. “The issue is a lot more prevalent now as there are a lot more platforms and more innovative services in which we participate. At the end of the day, the commission has to recognize that what we do, in a lot of cases, is new platforms. We’re doing the risky stuff, risky programming, innovative programming,” Guiton said. The CRTC last year deregulated news and sports specialty channels, removing their genre protections and carriage privileges. Concerns about cross-financing would limit CBC to a “narrow range of opportunities” when the CRTC should encourage the broadcaster “to be going out onto new platforms,” Guiton said. Generally, the Broadcasting Act does not see CBC as distinct, but as a partner broadcaster supporting the statute’s objectives, Guiton said. Lacroix said the broadcaster’s five-year strategy guided it as it made cost-cutting decisions to deal with budget reductions announced in the spring. The broadcaster made an effort to protect CBC’s services for regions, he said. Lacroix said 89 per cent of the reductions the broadcaster made came from the network level and 11 per cent came from regional services. He added that 84 per cent came from television services and 16 per cent from radio, because radio is more present in Canada’s regions. He said CBC decommissioned its analog, over-the-air TV services last summer, many of which have been replaced by digital over-the-air signals, because Canadians were no longer using those services. CBC also migrated RDI from shortwave radio to online to follow how people are listening to the service, Lacroix said. It is difficult for CBC to develop a long-term strategy beyond 2015, Lacroix told commissioners, because CBC is financed “on a 12-month basis.” “It makes some of the choices we’re making right now, obviously, vulnerable to the stability factor,” Lacroix said. CBC also responded to questions about its online music service CBC Music. Competitors Quebecor Media Inc. and Stingray Digital Group Inc. complained this year that CBC was using public funding and advertising revenues to support its free, online music service that competes with other commercial services. CBC Music has projected ad revenues of $700,000 to $800,000 this year while it costs $5 million to $6 million per year to operate, according to CBC officials’ testimony at a Copyright Board hearing in October. Commissioner Stephen Simpson asked whether services like CBC Music are intended to become profitable. “Every single initiative at CBC/Radio-Canada has to have some way to either break even, in terms of new initiatives, or to give us some idea of a business model, and if that’s not the case, then it has to be a service that’s absolutely core to our 2015 plan,” Lacroix said. Lacroix said a few extra tens of millions of dollars in 2017, generated from advertising on Radio 2, would make a difference. “Every single dollar that we can raise to protect content, jobs, and to ensure that we can deliver 2015, is important to us. Those millions of dollars count,” Lacroix said. Angus McKinnon, a spokesman for CBC, said by email the broadcaster expects Radio 2’s and Espace Musique’s advertising revenues to start at $15 million in their first year, growing to $35 million in the seventh. sdoyle@thewirereport.ca

CBC calls for fewer licence conditions, looks for footing among private broadcasters

Broadcast | November 19, 2012

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CBC calls for fewer licence conditions, looks for footing among private broadcasters

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