LESSONS FOR THE CBC: Public broadcasting funding models, challenges and successes in the 21st century Prepared by Rachel Barsky for Professor Joseph Weiler Student Number: 50146091 Law 449C April 28, 2011 0 In this time of rapid technological change and economic hardship, television broadcasters everywhere are hurting. Viewers can watch programs on their computers, on their phones, and at whatever time is convenient for them. Advertising revenues are plummeting, networks are cutting their budgets, shutting down stations and shrinking their staff.1 In Canada, CTVglobemedia Inc., owner of CTV, forecast a $100 million loss in 2009 and took a $1.7 billion writedown. It closed two stations in Ontario that year, cancelled its local newscasts on its A channel in Ottawa, laid off employees across Canada, and offered its station in Brandon, Manitoba, to the CBC for $1.2 In March 2011, CTVglobemedia was sold to BCE Inc. for $1.3 billion.3 Shaw Communications bought CanWest Global Communication Corp.‟s Global television network and specialty channels out of bankruptcy in February 2010.4 The situation is just as tough—and maybe tougher—for public broadcasting. The Canadian Broadcasting Corporation, already in a precarious position prior to the industry‟s upheaval, is dealing with a serious cash flow crisis. Recent cuts include the 800 jobs slashed in 2009, the sale of $125 million in CBC assets to make up for a shortfall of $171 million5, as well as a $12.6 million reduction from the new Canadian Media Fund to finance independent television productions6, to list just a few. However, the CBC‟s problems go deeper than the private broadcasters‟, and that is because the CBC is facing an identity crisis. The CBC is meant to be Canada‟s national public broadcaster, yet many argue the MotherCorp is just another 1 Craig Offman, “CBC tunes in to new reality,” National Post (13 March 2009), online: <http://www.financialpost.com/scripts/story.html?id=1387536>. 2 L. Ian MacDonald, “The future of television in Canada,” National Post, (7 March 2009) online: <http://www.friends.ca/news-item/7896>. 3 Ottawa Citizen, “$1.3-billion CTV sale wins approval,” (8 March 2011), online: <http://www.ottawacitizen.com/entertainment/billion+sale+wins+approval/4400149/story.html>. 4 Dana Flavelle & John Spears, “Shaw buys control of Canwest Global,” Toronto Star, (12 February 2010), online: <http://www.thestar.com/business/article/764426--shaw-buys-control-of-canwest-global>. 5 Travis Lupick, “CBC to lay off 800 employees,” straight.com, (25 March 2009), online: <http://www.straight.com/article-209318/cbc-lay-800-employees>. 6 CBC News, “CBC sees $12.5M drop in program funding,” (7 April 2010), online: <http://www.cbc.ca/arts/tv/story/2010/04/07/cbc-media-fund.html>. 1 commercial broadcaster, funded largely by taxpayers‟ money. If the CBC wishes to fulfil its mandate as a true public broadcaster—distinct from private broadcasters—it it will need to alter its current path, which could include changes to its funding model. To aid the Corp in determining what kind of broadcaster it wishes to be, it would be valuable to review its recent challenges (focusing on its English television services) and those of other public broadcasters, particularly the funding models of the British Broadcasting Corporation (BBC) and Public Broadcasting Service (PBS). During the 1930s, American radio networks were rapidly invading Canada, and Canadians were concerned about the influence that this U.S programming would have. To maintain a distinct and separate Canadian cultural identity, the Government of Canada established the CBC on November 2, 1936.7 The CBC‟s mandate has changed over the years, but always proclaimed the network as a full-service broadcaster. Today, Canada‟s Broadcasting Act states that the CBC‟s programming should: i. be predominately and distinctively Canadian ii. reflect Canada and its regions to national and regional audiences, while serving the special needs of those regions iii. actively contribute to the flow and exchange of cultural expression iv. be in English and in French, reflecting the different needs and circumstances of each official language community, including the particular needs and circumstances of English and French linguistic minorities v. strive to be of equivalent quality in English and French vi. contribute to shared national consciousness and identity vii. be made available throughout Canada by the most appropriate and efficient means and as resources become available for the purpose, and 7 Leonard Brockington, “CBC Radio Takes to the Air,” CBC Digital Archives: On This Day, (2 November 1936), online: <http://archives.cbc.ca/on_this_day/11/02/12529/>. 2 viii. reflect the multicultural and multiracial nature of Canada.8 With its current funding, many argue it is extremely difficult or even impossible for the CBC to fulfill its broad mandate. Through the current model, the Corp receives approximately $1.1 billion from Parliament to subsidize its 29 services, and makes approximately $600 million in advertising revenue. Its English television division receives 38 per cent of the funding, except for CBC News Network (formerly Newsworld) which is funded by advertising and subscriber fees of 63 cents per month9). Its Francophone counterpart takes 25 per cent.10Although $1.7 billion is certainly a large amount of money, broadcasting is extremely expensive. English Canadian broadcasters have the lowest per capita TV ad revenue compared to other English language networks‟, with advertisers spending an average of just $82 per capita, compared to $103 in Australia, $112 in the U.K, and $246 in the U.S.11 Furthermore, Canada‟s level of public broadcasting funding is the fourth-lowest of all 26 Organization for Economic Cooperation and Development (OECD) countries. In Canada, government support for public broadcasting was 0.08 per cent of its GDP in 2003, meaning that for every $1,250 dollars generated each year in Canada, approximately $1 is used to fund the CBC. The average in the OECD countries is one of every $714.12 For the CBC English TV, this means that taxpayers contribute about $33 per capita annually of its approximately $634 million budget. Funding for the Corp has not increased in 30 years, save for salary increases.13Government cuts to the CBC amounted to 20 per cent of its budget over roughly the past 15 years have taken a toll.14 During the 1990s alone, $415 8 Broadcasting Act, R.S.C. 1991 s. 3(1), accessible online: http://www.canlii.org/en/ca/laws/stat/sc-1991-c- 11/latest/sc-1991-c-11.html 9 Rachel Barsky, “On Trial,” Ryerson Review of Journalism, (Summer 2008), online: <http://www.rrj.ca/m4140/>. 10 Offman, supra. 11 Laura Bracken, “Canadian license fees don’t stack up,” Playback, (7 January 2004), online: <http://www.friends.ca/news-item/3320> 12 Ian Morrison, “Is Public Broadcasting Still Relevant for Canada in the 21st Century?” Harry Somers Lecture, Stratford Summer Music, (4 August 2010), online: <http://www.friends.ca/speech/9612>. 13 Barsky, supra. 3 million was chopped by both the Conservatives and especially (facing large deficits), the Liberals.15Though the CBC and its supporters have asked for increases in its annual license fee (most recently a recommendation for $40 instead of $33 originated from the government‟s own Standing Committee on Canadian Heritage16), no party has agreed to one. Accusations of political bias have long been thrown at the CBC, and charges of government apathy or even resentment towards the Corp has also been at issue. Being funded as it is, the CBC is hugely dependant on the government of the day for revenue on a year to year basis, and some argue this arrangement does not allow the CBC to have complete editorial independence. The CBC‟s president and 12 member board of directors (who cannot fire the president) are appointed by the Prime Minister. Ninety-two per cent of CBC board appointees have been affiliated with the governing political party, and 83 per cent of the Canadian Radio- television Telecommunications Commission (CRTC)—which regulates the CBC—is similarly affiliated.17 The CBC‟s current president, Hubert Lacroix was appointed by Prime Minister Harper in 2007. Lacroix, formerly a mergers and acquisitions lawyer, has been a supporter of the Conservative Party,18however this has not stopped the Conservatives from accusing the CBC of Liberal bias. Harper‟s campaign director, Doug Finley, launched an anti-CBC fundraising campaign in 2010, asking for donations to fight the Liberal “vested interests” at the public broadcaster.19 Later that year, Parliamentary Secretary to the Minister of Canadian Heritage 14 Knowlton Nash, “CBC on edge of its ‘biggest crisis,’” Inside the CBC.com, (23 April 2007), online: <http://www.insidethecbc.com/nashcrisis/>. 15 Barsky, supra. Also see Fraser Institute, “Lessons from Liberals’ 1995 budget offer Conservatives a blueprint for cutting spending and balancing budget,” (17 February 2011), online: <http://www.fraserinstitute.org/publicationdisplay.aspx?id=17270>. 16 Friends of Canadian Broadcasting, “Re: Pre-Budget Consultation Submission,” (13 August 2010), online: <http://www.friends.ca/brief/9653>. 17 Canadian Press, “End patronage at CBC, groups urge Martin,” (23 September 2004), online: <http://www.friends.ca/news-item/5400>. 18 Ian Morrison, “Stephen Harper’s hidden agenda for the CBC,” The Georgia Straight (16 March 2009), online: <http://www.friends.ca/news-item/7956>. 4 Dean Del Mastro publically discussed the possibility of killing the Corp altogether. Mused Del Mastro: “Maybe it‟s time we get out of the broadcasting business...The $1.1 billion, plus a whole bunch of other stuff that we‟re investing in the public broadcaster, should we look at reorganizing that in some fashion?”20 Liberal governments have not been overly friendly to the CBC either.