CBC cites role of ‘financial crisis’ on final day of CRTC hearing

GATINEAU, Que.—CBC/Radio-Canada's call for more regulatory flexibility in its broadcasting licences is necessary to deal with an internal “financial crisis” brought about since the Conservative government’s spending-cutting budget was announced last March, said Hubert T. Lacroix, president and CEO of the public broadcaster. “The financial crisis is real and has been demonstrated,” Lacroix said Friday, the final day of a two-week CRTC hearing to renew CBC's licences. “This is not about bookkeeping.” CBC has asked the CRTC for fewer licence conditions in part so that it can move around spending and better distribute programming in a multi-platform environment. As part of the hearings, the broadcaster is dealing with questions about how far it may wade into competition with private broadcasters, and use public funds to do so, as it deals with a $115-million cut to its $1.1 billion in annual parliamentary appropriations by 2014-2015. The broadcaster must decide where to focus the resources it has, Lacroix said. “There are trade-offs that the public broadcaster is charged with balancing,” he said. “For example, between those who want to be better informed and those who want to be entertained, those who want to favour regional expression and those more space for national content.” Last spring, CBC announced it would cut 650 full-time positions, shut down its 607 analog transmitter television system, move Radio-Canada International (RCI) online and seek permission to advertising on CBC Radio 2 and French-language Espace Musique to deal with the budget reductions. Discussion Friday looked at the request for advertising on the national music radio networks as Cogeco Cable Inc. and Corus Entertainment Inc. told commissioners they oppose it. Yves Mayrand, vice-president of Cogeco, said Friday that CBC's plan to enter the commercial radio market is “clearly ill-conceived and self-defeating.” He said allowing advertising on CBC Radio 2 and Espace Musique would lead to advertising on CBC’s other radio services. “Once you let the fox into the chicken coop, it’s hard to tell him he can only eat twice a day,” he said. The proposal is also opposed by the Ontario Association of Broadcasters (OAB), which said Monday that allowing advertising on CBC Radio's music services would have the same effect as introducing a new station into radio markets. Lacroix said Friday that CBC would not take revenues away from existing radio stations and that advertising dollars for local, small-market radio stations would remain “untouched.” “Through all this noise, we are targeting about one per cent of all national advertising revenues,” Lacroix said. He said CBC would take a “phased-in approach” to incorporate advertising onto the two national music networks. In the first year, Lacroix said, CBC would broadcast a weekly average of five minutes per hour of national advertising. That would increase to a weekly average of seven minutes per hour in the second broadcast year and nine minutes in the third year, he said. “In each subsequent year of the licence term, there are no restrictions on the number of minutes of national advertising,” CBC said in a document filed with the CRTC Friday afternoon. CBC added it would ensure that 40 per cent of musical selections on Radio 2 would feature emerging Canadian artists. Chris Pandoff, executive vice-president of Corus and Corus Radio, said CBC’s justification for introducing advertising on the radio services is that its regulated broadcasting services are measured by their ability to generate revenue. CBC projects that Radio 2’s and Espace Musique’s advertising revenues would start at $15 million in their first year, growing to $35 million in the seventh. Mayrand said CBC should not be permitted to move around public funding and commercially generated revenues, particularly between regulated broadcast services and non-regulated, online services. Through CBC’s expansion of digital platforms like CBC Music and Espace.mu, Mayrand said, CBC is “engaged in a headlong rush for expansion, leading it to dip into the financial yards of its private sector neighbours.” Competitors Quebecor Media Inc. and Stingray Digital Group Inc. this year criticised CBC's online music service, CBC Music, saying it mixed public funding and advertising revenues to support the free, online service that competes with commercial services. CBC argues that expansion onto digital platforms is part of its mandate, Mayrand said, but there is nothing in the broadcaster's statutory authority that requires it to increase the number of its digital services. “We’re not saying the CRTC should stop the CBC from utilizing these new platforms,” he said, but the public broadcaster should not have the freedom to put funds from its regulated services towards non-regulated services. Kristine Stewart, executive vice-president of CBC English services, said Friday that the public broadcaster is committed to quality Canadian programming in audio and video. “We got cut at the worst possible time to continue this upwards trajectory,” she said. Stewart said CBC has listened to what Canadians want, but that it is limited by television and radio schedules and inconsistent funding. “We’re juggling a Rubik's Cube on a wakeboard, trying to give Canadians what they’ve told us in their words, their clickers and their dials, what they want CBC to deliver to them,” she said. On the French-language side, Radio-Canada has also requested that the CRTC approve mandatory distribution, or a “must offer” right, for arts and culture specialty channel ARTV in anglophone markets. The channel currently receives mandatory distribution only in francophone markets. Mayrand said Friday that CBC should not receive a mandatory carriage order for the specialty channel and that it should be required to reach commercial carriage agreements with broadcast distributors. “It’s up to us to find the solution in the context of affiliation contracts with ARTV/CBC,” Mayrand said. “It’s not necessary to impose a general mandatory distribution order for ARTV. It’s up to us to find it.” Louis Lalande, vice-president of CBC French services at CBC, said mandatory distribution is needed for ARTV as 74 per cent of cablecos don’t offer the channel. Stewart said CBC was prepared to meet a proposal from Mark Slone, senior vice-president of Alliance Films Inc., to require CBC to broadcast one new Canadian film each month. Slone said the measure would help build awareness and audiences as well as generate support for the next generation of Canadian filmmakers. Lacroix said CBC will work harder to stay in touch with Canada’s regions and small communities by holding public meetings in them every two years. “We’re going to take some initiative to communicate with communities in a more frequent and formal way,” he said. The CRTC said Friday the deadline for final written comments for the proceeding is Dec. 11, 2012. dgrenier@thewirereport.ca

CBC cites role of ‘financial crisis’ on final day of CRTC hearing

News | 11/30/2012 10:05 pm EST

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