Brief by Tous Amis De Radio-Canada Presented to the House of Commons Standing Committee on Canadian Heritage in the Context of the 2016 Prebudget Consultations

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Brief by Tous amis de Radio-Canada Presented to The House of Commons Standing Committee on Canadian Heritage In the Context of the 2016 Prebudget Consultations

February 2016

Tous amis de Radio-Canada – Prebudget Consultations

Foreword

Tous amis de Radio-Canada appreciates this opportunity to discuss the public funding of the Canadian broadcasting system with you. We hope that our contribution will be useful and that our participation in the debate will be positive and dynamic.

The grassroots mobilization campaign Tous amis de Radio-Canada was launched with a view to defending the integrity of our only national producer and public broadcaster. It was organized by the Syndicat des communications de Radio-Canada (SCRC), which represents 3,200 members in Quebec and Moncton, and is backed by the Confédération des syndicats nationaux (CSN) and the Fédération nationale des communications (FNC-CSN).

Tous amis de Radio-Canada is appearing before this meeting of the House of Commons Standing Committee on Canadian Heritage as a citizen and member of Canadian civil society and as a representative of its members.

Introduction We have a well-structured television service in Canada that comprises both private and public elements. It offers Canadian creators an open and dynamic environment that promotes the production and broadcasting of high quality television products meeting the cultural, social, political and economic needs of our citizens.

Canadians have access to 700 Canadian and foreign television services. There is vast choice, strong competition and diversity commensurate with our expectations. This $4.1-billion industry is a key economic driver for the country and is the cornerstone of our cultural industries.

The public and private components of this industry are essential to the identity of our broadcasting system and are representative of the approach that Canadians have chosen for a number of other national and provincial systems, including education and health. They are also evident in the increasing involvement of public and parapublic organizations in financing our country's cultural activities.

Impact of the CRTC’s new approaches In recent years, the Canadian Radio-television and Telecommunications Commission (CRTC) has developed new approaches aimed primarily at private television, but with important implications for the public sector, of which the CBC/Radio-Canada is the flagship.

Allow us to cite three examples:

1. The decision to reduce the Canadian-content requirement for private broadcasters to 35% during the day; quotas during the prime-time hours of 7:00 p.m. to 11:00 p.m. remain unchanged.

This decision puts pressure on our national broadcaster by forcing it to focus its investments on very high quality products in order to address the shortfall in revenues resulting from Canadians watching Canadian-made programming for pleasure rather than because of quotas. The Chairman of the CRTC appears to consider quotas to be regressive. We believe that these remarks should be qualified, as does Quebec’s Minister of Communications, Hélène David, who commented:

I believe that the reduction in quotas for the presentation of Canadian programming, the elimination of the genre exclusivity policy and the failure to recognize the

Tous amis de Radio-Canada – Prebudget Consultations

particularities of the francophone market give us cause to fear the negative effects for our television and cinema. [Translation]

Our world has been turned upside-down by this CRTC decision, and although it is too early to draw final conclusions, we can say that as the decision is implemented, there will be adverse effects on the quality of Canadian television and its ability to create jobs. This increases the moral responsibility of CBC/Radio-Canada to support the production of high quality programming for those viewing periods in order to fill the void left by private broadcasters. This responsibility will require more resources.

2. The unbundling of television services, which, although we find it interesting in itself, will also have a direct impact on CBC/Radio-Canada. Consumers will be able to choose the specialized services to which they want access. This decision will encourage broadcasters to offer products of the highest quality and programming that goes beyond the ordinary in order to carve out a niche in this increasingly competitive world.

3. Discontinuing the Local Program Improvement Fund (LPIF). This funding helped to stabilize programming expenditures and prevent them from eroding, particularly during difficult economic times when everything is called into question. Can we afford to move forward with such a decision and give this costly responsibility back to broadcasters? This local programming is very important; it is a public service that promotes freedom of expression and is attentive to the needs of all types of citizens. Its profitability is unlikely to be ensured by market forces alone.

These are the three major changes for the Canadian television industry that have a direct or indirect impact on CBC/Radio-Canada, its operations and its responsibilities.

The mission of CBC/Radio-Canada remains unchanged The mandate of CBC/Radio-Canada as a public broadcaster is defined by the Broadcasting Act (section 3(m)). It is to provide radio and television services with programming that informs, enlightens and entertains. The many obligations imposed on the corporation include contributing to shared national consciousness and identity, being predominantly and distinctively Canadian, actively contributing to cultural expression, being of equivalent quality in French and English, and reflecting the multicultural and multiracial nature of the country.

CBC/Radio-Canada is a public broadcaster that acts in the public interest. Its mandate is rooted in the country’s social, political, economic, and most of all, cultural, reality. It is a gathering place and a beacon for the citizens with whom it engages in dialogue across the country.

The financial context of the public broadcaster

Appropriations In 2013–2014 CBC/Radio-Canada received some $976 million from the Canadian Parliament for all of its operating activities, including $783 million for television broadcasting. Public funding represents 63% of CBC/Radio-Canada's operating revenues. Advertising brought in $331 million, including $138 million for the French-language television network.1

In 2014–2015, parliamentary appropriations for operating activities were reduced by $47 million.2

1 Sources: Annual reports for CBC/Radio-Canada and analysis by the Centre d’études sur les médias. These do not include appropriations received by the corporation for its capital assets and working capital. 2 Source: CBC/Radio-Canada Annual Report 2014–2015.

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Between 1990–1991 and 2013–2014, annual parliamentary appropriations to CBC/Radio-Canada increased by slightly less than 0.5% in current dollars, while government spending rose by 74% and the CPI, by 51%. Had the parliamentary appropriations received by CBC/Radio-Canada simply been indexed annually to the CPI, they would have totalled around $1.6 billion in 2013–2014, which is $547 million more than the amount actually allocated by Parliament in that year.3

If the parliamentary appropriations received by CBC/Radio-Canada in 1990–1991 had increased at the same rate as total expenditures of the Canadian government for operations and programs, they would have totalled $1.8 billion in 2013–2014, approximately $801 million more than the actual amount received that year.4

The cuts of $115 million announced in the 2012 Budget resulted in two periods of reductions. Approximately 1,300 full-time positions were lost, accompanied by a significant shortfall for original programming. We cannot forget that in addition to this radical cut, the budget of CBC/Radio-Canada had been chopped by $400 million in 1995.

The Local Program Improvement Fund The LPIF, which was created by the CRTC in 2009 and discontinued in 2014, provided wonderful support for the financing of local television productions and their broadcasting outside metropolitan markets. CBC/Radio-Canada received $33.1 million annually from this fund.

The loss of this fund has directly affected the programming of CBC/Radio-Canada, specifically local programming outside metropolitan markets. Radio-Canada’s French-language stations received about 50% of the LPIF funding between 2009–2010 and 2013–2014. We would like to point out that for francophone populations outside metropolitan markets, this loss is proportionally greater than that resulting from the reduction in parliamentary appropriations.

Own-source revenues Government underfunding of CBC/Radio-Canada has forced the corporation to turn to advertising revenues to address the shortfall. This approach by CBC/Radio-Canada has a number of consequences that some would call negative in terms of competition with the private sector, programming that is increasingly outsourced to the private production sector, and the ability to produce relevant information programs that meet the needs of Canadians. The search for advertising dollars can have an obvious impact on programming, as the focus on audience ratings reduces the complementary nature of public programming. The corporation will seek content not because it aligns with the corporate mission, but because it has commercial potential.

Is the mandate of our public broadcaster in danger? Some would say yes, while others would suggest that the race for audience ratings in a commercial world should cause the decision makers who shape our broadcasting system to ask the critical questions regarding the survival of public broadcasting in this country.

In terms of growth, unlike parliamentary appropriations, which rose only slightly between 2005–2009 and 2010–2014 (1.4%), own-source revenues increased by just over 18% during the same period, twice the CPI (9%).

Finally, advertisers are increasingly turning to new platforms to advertise their products, and are gradually abandoning the traditional idea of television. This poses a threat to CBC/Radio-Canada,

3 Source: Data compiled by Michel Houle in his study “Radio-Canada Funding,” 2015. 4 Ibid.

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and particularly Radio-Canada, whose total budget consists of approximately 40% own-source revenues. All media are confronted with the convergence of platforms and the erosion of advertising revenues. It seems dangerous to impose on the Crown corporation increasingly higher advertising revenue targets that may negatively affect the ability of private broadcasters to adapt to this new environment.

If we want CBC/Radio-Canada to continue to play its role of public broadcaster and offer quality content that defines Canadian realities, its funding should not be overly dependent on highly fluctuating advertising revenues.

Funding that meets our expectations and requirements Having analyzed changes in appropriations from the Canadian government, it seems fitting to compare ourselves with other countries in which the presence of a public broadcaster is an essential element of the national television system.

In Europe, for example, public service broadcasting is protected by Article 10 of the European Convention on Human Rights. The Council of Europe emphasizes the close connection between the free flow of information and freedom of expression. It confers on public service broadcasting a specific role in guaranteeing political pluralism and cultural diversity.

In 2011, Canada ranked 16th out of 18 major Western countries for per capita funding of public broadcasting, ahead of only New Zealand and the United States. At $33 per capita, public broadcasting funding in Canada was 60% lower than the $82 average for the 18 Western countries in the study.

Today, funding is around $29 per capita (slightly less than 8¢ a day), while in 1990–1991 it was $39. This represents a small fraction of what people are willing to pay for cable television services.

We saw in the preceding paragraphs that the parliamentary appropriation has been reduced by $515 million since 1995, and that its rate of growth has not been reasonable. This has resulted in a per capita contribution of $29 (8¢ a day), when even the 1990–1991 level of $39 was well below the international average. In addition, the Local Program Improvement Fund has been out of the picture since 2014, resulting in a loss of approximately $40 million for Radio-Canada.

To these shortfalls must be added the direct and indirect financial impacts of certain CRTC decisions that redefined the private component of our broadcasting system. Finally, over-reliance on own- source revenues, which continue to shrink despite all efforts, is endangering the capacity of CBC/Radio-Canada to fulfill its public broadcaster mandate.

We therefore conclude that the $150 million that the government intends to invest in CBC/Radio- Canada is more than necessary in the current technological, cultural and economic environment.

The $150 million is proof that our government believes in a strong public broadcaster that acts in the interests of Canadians and has the stable, multi-year funding it requires to carry out its mandate and take back its rightful place in Canadian broadcasting.

These funds will be administered by CBC/Radio-Canada, but we still believe that the corporation should identify a number of priorities involving programming, i.e., the production and broadcasting of high quality programs that meet the needs of Canadians and present our country’s social, political, economic and cultural realities.

We need to create cultural wealth and high quality intellectual property for Canadians and foreign countries.

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Of the new technologies, digital is the most rooted in our reality and is shaping our relationship with image and our consumption habits for entertainment, information and societal products. People prefer the immediacy and the screens that differ from traditional television. We must embrace this new reality in terms of both broadcasting methods and production. Digital language must be mastered and used creatively.

European states have all required their public broadcasters to invest in digital platforms so they can pursue this fundamental role—the online offering must above all extend, complete and enrich the radio and television offering.

The involvement and the quality of the work of Canadian artists and artisans are at risk. In 2008– 2009, CBC/Radio-Canada accounted for 8,368 positions, while in 2014–2015 the corporation reduced its staff to 6,739 positions. It is obvious that careful thought must be given to the use of these resources, which are essential to the proper functioning of the organization.

Investment in public television leads to significant economic spinoffs. In 2013, Deloitte estimated that CBC/Radio-Canada’s gross value added to the Canadian economy was $3.56 billion, arising from an expenditure of $1.69 billion, with a spend-weighted multiplier of 2.11. Direct government funding of $1.1 billion injected into CBC/Radio-Canada generated $1.3 billion more in added value than would have been generated had the money been put to some alternative use.

Conclusion Faced with this financial reality, programming and its products suffer, and it is the collective imagination of Canadians that pays the price. The public has expressed its desire to have a public component in the Canadian broadcasting system. We therefore need to be creative in identifying financing models that would allow broadcasters to be healthy and Canadians to receive highly professional services in a system that focuses on the mission and vision of our public television by being imaginative, productive and efficient. In short, our Canadian television system should strengthen the capacity of citizens to engage in important societal debates and respect freedom of choice and the diversity of voices. It is a difficult decision, but the time has come to act.

Several countries are questioning their relationship with over-the-top programming services and Internet service providers. We wonder about these companies that use our technological infrastructure to access Canadian users without contributing to either national taxes or the financing of the system.

Argentina now imposes a tax on all electronic devices (video equipment, computers, cell phones, video games). Chicago has also decided to take action, and there are other countries that have challenged these service providers. The numbers are impressive, and Canada could charge high enough royalties that we would finally be able to adequately fund our public and private broadcasting companies.

In Germany, adequate funding of public service media organizations is guaranteed by the constitution, and 85% of their revenues stem from royalties.

These are not easy decisions to make. There are many obstacles, and resistance is very strong. We believe, however, that if the political will is there, we could implement solutions in which these companies would help to finance Canadian cultural products, as broadcasting distribution undertakings are already doing.

Canada has significant credibility in the cultural and technological world and could become a leader on this issue, with approaches that are democratic and respectful of the rights of citizens.

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The Canadian government should therefore consider implementing a transparent system of fees paid by citizens to help finance the television broadcasting and production. There should also be a strategy for receiving contributions from content distributors like Netflix. Meanwhile, it is essential to provide the public broadcaster with the necessary financial resources to enable it to achieve its mission without having to directly compete with private television for content and advertising revenue. In our view, a reinvestment of $150 million in CBC/Radio-Canada is the minimum required to catch up after the financial strains that have been imposed on the corporation for the last twenty years. It goes directly to its ability to contribute to Canadian society.

Tous amis de Radio-Canada – Prebudget Consultations

Appendix

Since 2006, Nordicity Group Ltd. has periodically published tables of annual per capita public funding for public broadcasters in 18 Western countries.

Per capita public funding for public broadcasters, 2011

Source: Nordicity Group Analysis of annual reports of public broadcasters.

The per capita public funding of CBC/Radio-Canada amounts to only one third of that of the public broadcasters in the UK—the BBC and S4C.

The level of Canadian funding was less than one fifth that of Norway, the leading country, whose public broadcaster, NRK, received the equivalent of $180 per capita in 2011. Funding for CBC/Radio-Canada decreased as a result of the implementation of the federal government’s Deficit Reduction Action Plan (DRAP).

Of the 18 countries studied in 2011:

• Six provide a high level of government funding to their public broadcaster (over $100 per capita);

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• Eight provide a moderate level of public funding (between $50 and $100 per capita); • Four, including Canada ($33 per capita), provide a low level of public funding (less than $50 per capita).

Of the four countries with consistently low levels of public funding, only Canada has a national public broadcaster that broadcasts in two official languages on both radio and television throughout the country’s vast geographic area. In the other three countries, the national public broadcaster broadcasts in only one language. This makes Canada's performance in the group even more disappointing.

Categories 2004 2007 2011 Over $100 Switzerland, Norway, Norway, Denmark, Norway, per capita Germany, United Switzerland, Germany, Switzerland, Kingdom, Denmark, United Kingdom, Sweden, Germany, Sweden, Sweden, Finland Finland Denmark, Finland (7 countries) (7 countries) (6 countries) Between Austria, France, Belgium, Austria, Ireland, France, United Kingdom, Austria, $50 and Ireland, Japan Belgium France, Belgium, Spain, $100 (5 countries) (4 Japan, Australia, Ireland per capita countries) (8 countries) Less than $50 Australia, Italy, Spain, Japan, Australia, Italy, Italy, Canada, New Zealand, per capita Canada, New Zealand, Canada, Spain, New United States United States Zealand, United States (4 countries) (6 countries) (7 countries) Average of $80 $76 $82 18 countries Canada $33 $34 $33 Source: Data compiled by Michel Houle in his study “Radio-Canada Funding” using analyses from Nordicity and the CBC/Radio-Canada 2008–2009 annual report.