Proceedings of the Standing Senate Committee on
Transport and Communications
Issue 4 - Evidence, April 2, 2014
OTTAWA, Wednesday, April 2, 2014
The Standing Senate Committee on Transport and Communications met this day, at 6:45 p.m., to examine the challenges faced by the Canadian Broadcasting Corporation in relation to the changing environment of broadcasting and communications.
Senator Leo Housakos (Deputy Chair) in the chair.
[Translation]
The Deputy Chair: Honourable senators, I now call to order the Standing Senate Committee on Transport and Communications.
Today we will be continuing our examination of the challenges faced by the Canadian Broadcasting Corporation in relation to the changing environment of broadcasting and communications.
[English]
Our witness for today is Barry Kiefl, President of Canadian Media Research, an independent firm that conducts research for numerous broadcasters in Canada and the United States, in addition to various organizations of the Government of Canada. He also worked as the research director for the CBC between 1983 and 2001.
Mr. Kiefl, welcome to the Senate of Canada and the Standing Senate Committee on Transport and Communications.
Mr. Kiefl has a presentation to make to the committee, and after that we will go to a period of questions and answers. Welcome, you have the floor.
Barry Kiefl, President, Canadian Media Research Inc. (CMRI): Thank you very much.
As you mentioned, we're an independent research company doing work for program producers, broadcasters, industry associations and government. For example, the Copyright Board just awarded one of our clients a $10-million annual increase in royalty payments based on our analysis of TV viewing.
CBC has been a focus of our research because it is central to the broadcasting system. The CBC is one of Canada's oldest and most important public institutions, but it is clearly in crisis, which was the subject of an article I wrote recently for The Globe and Mail. One former CBC president expressed the view after reading the article that ``tweaking the current formula isn't going to work this time.'' Another former president commented that the piece ``reflects pretty well what I hear many people say.'' I believe the status quo is not an option, nor is a variant of the status quo.
During the 1940s and 1950s, CBC Radio commanded a dominant audience share, achieving mass audiences for many programs with ratings larger than the most popular TV programs today. ``The Guiding Light,'' the U.S. soap carried by CBC Radio back then, had ratings as high as today's Super Bowl. The ten o'clock national news had an audience share of 50 per cent.
But by the late 1950s, CBC Radio began suffering audience losses, as rock `n' roll stations, aided by the invention of the transistor radio and the car radio, as well as TV, stole CBC Radio's role. At the time, CBC even considered shutting down its radio services.
Instead, CBC managers made some important decisions. For starters, they reduced and, by the mid-1970s, eliminated all advertising on radio and allowed some of their smart programmers to experiment. These programmers realized that a large and important audience niche could be served with intelligent, thoughtful and balanced news and information, and it could be coupled with substantive cultural programming that revolved around literature, the arts and classical music.
The experiment was so successful that much of that programming still exists today. Today, CBC Radio captures 15 per cent of all radio listening, not quite the share of 1950, but still substantial.
The current 15 per cent audience share means that the average Canadian, including non-listeners, spends about 125 hours per year listening to CBC radio. Regular listeners spend almost 400 hours of their year listening to CBC. That's as much time as most of us spend at work in any three-month period.
CBC radio is by far the most successful CBC service in numerical terms. By comparison, we spend only one to three hours a year with the CBC's Internet services, like music.cbc.ca and cbc.ca. Those last numbers indicate that, if CBC Radio and TV were to shut down their tranmitters today and depend on the Internet for delivery of programming, they would lose most of their audience.
Curiously, current CBC Radio management seems to have forgotten its origins and has once again started to compete with private radio stations, airing pop music on its second radio network and employing a journalistic style that is starting to sound a lot like that of private radio. Commercials have even crept back in.
It's important to recognize that CBC has taken over $50 million from the annual budget of CBC Radio in the past five years, which, in net terms, has been given to the CBC television service.
These massive budget cuts have worked their way through the radio schedule, and listeners now have far more repeat programming, less investigative journalism, less entertainment programming, less local programming and local news that sounds more and more like private radio.
Turning to CBC TV, CBC TV finds itself today in a very fragile position, as desperate as radio's 50 years ago. Today, CBC TV is only one of hundreds of channels, with less and less to distinguish it from private channels.
Yes, CBC programs are mostly Canadian, but too many programs look and sound much like what one finds on other channels. Most important, CBC TV airs virtually all of the same commercials aired on private TV, making it seem like any other channel.
CBC TV does have an audience ``reach,'' which I'll define for you, if you wish, much larger than CBC radio, but the share of total viewing time is now about 5 per cent, a tiny fraction of what it once was. The average Canadian spends only about 70 hours a year watching CBC TV, and half of that is hockey and foreign programs.
CBC TV chose a different path from radio. Rather than creating a strategy to serve a large niche with intelligent journalism and entertainment, CBC TV strove to be popular and to attract a mass audience and advertising revenue.
The problem is more than a philosophical one. Over the past 15 years, CBC TV's revenue-driven strategy has never delivered the mass audience that was needed to sell to advertisers. CBC ad revenues today are less than they were 15 years ago.
Next year, CBC TV will derive no money from ads on NHL hockey, and its ad revenue, overall, will fall to $100 million, just barely more than the cost of operating the sales and promotion departments.
The kind of ad revenue CBC TV has dreamed of can only be achieved with programs with regular audiences of 1.5 million to 3 million viewers, with large numbers of adults aged 18 to 24, the demographic that interests most advertisers. The only CBC programming that achieves that kind of audience on CBC is NHL hockey.
In conclusion, many Canadians still cherish the CBC and support the idea of public broadcasting.
As you know, CBC depends on annual grants from Parliament. I believe our broadcasting system would be better served with an annual licence fee or a programming fee, or a dedicated communications tax. The report I provided to the Senate provides details on how this might work.
If properly funded, CBC Radio could reinstate the well-thought-out strategy that worked for almost 50 years and cease competing for advertising revenue and audiences with pop music. Both CBC Radio and TV could return to the journalistic standards that have built CBC's reputation.
CBC TV could finally get off the ratings treadmill. Free of the commercial albatross, programmers and planners could be more creative. I believe CBC would be surprised how much Canadians crave intelligent, substantive news and current affairs, and distinctive drama and entertainment.
With or without a new funding mechanism, CBC TV faces a crisis and must find a new audience strategy. The current one has not worked. A new strategy is needed, built on high journalistic standards, serving a substantial segment of the population, and valued by enough Canadians to justify the expenditure of public money.
Thank you, and I would be happy to take your questions.
The Deputy Chair: Thank you, Mr. Kiefl. Very appreciated. Very informative.
Senator Mercer: Thank you much for being here. It is very informative. Your background obviously gives you great insight, and your history helps us an awful lot. It would be nice if they could go back to the days of ``The Guiding Light'' and get those kinds of ratings.
You talked about the retooling and readjustment of focus of CBC Radio in, I think it was, the 1970s. Do you think that is actually possible with CBC TV, under the right leadership and with the right vision?
Mr. Kiefl: Yes, I do actually. I think it's probably late in the game. I think that CBC television was actually facing a crisis like this starting about 15 years ago. It's worsened in recent years as budgets have gotten tighter and tighter. I remember Pierre Juneau, after he left the CBC, saying to me that he regretted that he didn't institute the de- commercialization of CBC television. That, in and of itself, would have distinguished the service and, at the time that he was the president, there was money to do it, to forgo the advertising revenue.
We have an example of PBS in the United States. PBS comes into Canada, as I'm sure you're all aware, and derives an audience of about 1.5 to 2 per cent, compared to the CBC's 5 per cent and, yet, PBS offers something that is very distinctive. It has sponsorship. It doesn't have advertising. I think that PBS could be a model. Just a model; I'm not recommending that CBC try to copy what PBS does. PBS depends upon its local stations to a much larger degree than the CBC does, but there is still room today, in the television environment, for something that is truly distinctive, that is noncommercial.
When we ask people, in our surveys, if there are too many commercials on TV, of course we get the answer, ``Yes, there are too many commercials.'' We even go so far as to ask what they'd be willing to pay to have less commercial content. It's surprising the proportion of people who are willing to pay. Each year, something in the range of 25 per cent to 30 per cent of Canadians make a donation to PBS stations or to TVO. We don't distinguish between the two.
There is a desire out there for something that is different from everyday commercial television and I think that the CBC has the bare essentials to start. It has its journalism. Television journalism on the CBC, despite some of the flaws that I pointed out in the document that I presented to you, is still regarded as the very best, and it has been for the 10 or 11 years that we've been undertaking national surveys of anglophones. The same is true on the francophone side of having the very best national news. It's not considered to be the best at local news, although there has been some slight improvement in recent years. Both English and French CBC are considered to be journalistic leaders, to be very believable, to have the high credibility scores and so forth. Using journalism as the bedrock, one could imagine that the CBC could turn itself into something that is far more distinctive.
It might not reach, as the CBC presented here and as I've talked about in the document I gave you, as many people on a monthly or weekly basis. It might take longer in the course of a year to reach all Canadians with something that would be important on CBC Television, but I think that there is the potential to produce a far higher quality service that treats its audience as individuals as opposed to consumers.
Senator Mercer: We've heard from a number of people who have suggested that a retooling of CBC TV would go along similar lines that you've suggested of news and investigative journalism, but they've also talked about documentaries, children's programming and an outlet for Canadian films. Do you see that mix as doable with the ``new CBC?''
Mr. Kiefl: My experience working at the CBC for many years and following the industry for almost half a century is that it's not wise to think so much in terms of program categories. I think the reason why CBC Radio became successful is that the management of the CBC stepped back and said to the programmers, the creative people who make the programs, ``What would work?'' Some very smart people came up with what we have today on CBC Radio, in both English and French. I believe that is probably a better path that set the guidelines for a new CBC but which allowed some creative minds to come up with some of the program categories that would work.
In terms of drama, for example — and that's something you didn't highlight — drama is an area which has always been underserved in Canadian television, whether on private television or public television, and I'm talking here about English TV. If you look at the schedules of CBC today, I would imagine that you'd be lucky to find two hours a week in prime time of Canadian drama. It's very expensive to make. They don't have the money to do it, and they've never really had the money to do it.
Going back in television to the 1970s and 1980s, there was a little bit more leeway at that time. However, the amount of entertainment programming, scripted drama, is so little on CBC television. That's an area where if there were proper funding and the organization organized itself in such a way to create the funding for drama, I think that would be the case. Certainly CBC would be an excellent outlet for Canadian movies.
Senator Mercer: You're suggesting that CBC get involved in the production of drama, but should they not also be buying the rights to films that are being made privately anyway and giving them greater airing than they get now? They don't stay in a theatre very long, if they make it to the theatre. I end up watching most of them on airplanes.
Mr. Kiefl: Some noted film directors and producers put together an application to the CRTC not that long ago for an all-Canadian movie channel, and they were turned down. I think it was an excellent idea. The reason why Canadian films are so rarely seen is that they are not available. People still go to the movies today, obviously, but it's very hard to compete in the movie theatre with a Canadian title, especially in English Canada, compared to the some of the blockbuster Hollywood products that are available. Perhaps the only way to get Canadian movies would be through a dedicated channel, or certainly through something like CBC.
Before it was owned by Rogers, Citytv had a commitment that they aired something in the neighbourhood of 100 hours of Canadian movies on an annual basis in prime time, and I think they were quite surprised at how successful it was. It was a way of getting exposure to these products.
A huge amount of creative effort goes into making a two-hour movie. The quality is almost certainly there; it's just that there isn't the exposure. I think that CBC would be an excellent outlet for Canadian movies.
When I was talking about drama, I wasn't necessarily saying that CBC should produce it. In today's world, independent production companies are probably the best source for drama series and other things, and that is the case. Most of the dramas that are on CBC today — in fact, I'd say probably all of them — are done by independent producers.
Senator Demers: Mr. Kiefl, this committee has different people coming, and they are entitled to their opinions. One person was against sports at CBC. They lost ``Hockey Night in Canada.'' I thought they did unbelievably for the Olympics.
What is the impact of losing ``Hockey Night in Canada''? Yes, it is still on CBC. They have no commercials, no money and all that. That would be my first question: What is the impact, to your knowledge?
Mr. Kiefl: The biggest impact is that it has got everybody's attention, inside the CBC and outside the CBC. For the first time in a long time, I think, the corporation is beginning to realize that there is a crisis, that there is a problem. The threat of not having any hockey at all was I think pretty scary for programmers.
But it's not the first time that the CBC has thought about not having hockey. I remember back in the early 1990s, senior programmers were asked to build a schedule without hockey, because it was one of those periods when the contract was coming to an end and there was a threat that maybe CTV on the English side would get the contract. It's something that programming people have thought about. As you know, on Radio-Canada they were very successful at gravitating into a non-hockey environment.
The thing about hockey is that CBC does an excellent production of hockey. I've seen many references during the playoffs last year, in American publications and on American media, to the remarkable shorts that are put together that lead into a major series or a major game. This is the kind of thing that CBC has excelled at, but that kind of talent will gravitate pretty quickly to Rogers, or to Vidéotron on the French side.
Senator Demers: I know it's a 12-year contract, but has it got to the point now, because of bias by the government, where it has become too expensive to present hockey on CBC, or even on the French now? It's a huge expenditure. The contract that they sign, I don't think anybody thought — and certainly you are the expert — that it would be close to that kind of money. Has it got to the point where they just can't afford it anymore or compete with them?
Mr. Kiefl: For the conventional television services, like CTV, CBC, Global or the Rogers conventional TV, hockey all of a sudden changed from ``Hockey Night in Canada'' on CBC, some national games on TSN, and some regional games on Sportsnet, into a whole new category of television program. It's not just TV anymore. Rogers is incorporating this product into the Rogers name.
To get back to your first question about impact, I think I'd be very surprised if CBC or Rogers renews ``Hockey Night in Canada'' — whoever is going to do it — after four years. Rogers has announced that they're going to have games on Saturday night competing with ``Hockey Night in Canada.'' They're going to have games on Citytv, on Sportsnet, on Sportsnet 360 and Sportsnet One. Then there will be a whole raft of games on French television as well.
We are going to see a situation where CBC will not be able to maintain its hockey audiences. They will drop, I estimated at one point, something like 30 per cent. I wrote a piece in The Huffington Post, which you can Google and find. I was surprised, frankly, that Rogers went this way, but I'm also told that Bell put a similar deal on the table and that it wasn't even money that decided which direction the NHL wanted to go.
There was the concept of treating hockey as a product that would not just pull in advertising revenue. The advertising revenue will never make up the $5.2 million; it will be lucky to make up a third of it. The revenue will come from subscriptions that Rogers will sell. There are channels I mentioned, like Sportsnet One and Sportsnet 360, that are still 2 million or 3 million households shy of what Sportsnet or TSN has. I would imagine that many hockey fans will say, ``I want to get those channels now,'' and they'll pay the monthly fee for it, so that will be additional revenue.
There was even one channel, called FX, which Rogers owns, and that only has 2 million or 3 million subscribers in Canada. They're going to put some games on FX. I imagine that if they put a few Maple Leafs games on, a few people in Toronto would be interested in subscribing to FX.
Then they're going to incorporate it into the digital environment and we'll all be walking around with our smartphones. Four years from now, pretty well everybody will have a smartphone. It will have the Rogers equivalent of the NHL.com service on it and you will be able to interact and watch games. Rogers subscribers will probably have access to the mobile service, with free mobile games. They'll probably get it as part of their package if they're a Rogers subscriber.
Senator Demers: You brought up a good point about Bell and Rogers. The figure I was told is $30 million over 12 years, which is peanuts. They obviously wanted to go to Rogers.
Senator Batters: Thank you very much for coming to this committee.
In your opinion, what will the CBC do to replace the hours of airtime that had been devoted to hockey?
They will have hockey still carried for the four-year term while Rogers has it on, and you think that after four years, who knows, maybe the situation will revert to as it was before. However, if that doesn't happen, how will they replace those airtime hours?
Mr. Kiefl: If you do the math, if you look at the programming expenditures of English television — I've never seen the data broken down by prime time versus the whole day, the whole schedule — the hourly cost of a program on CBC TV today is something in the neighbourhood of $100,000. In prime time, it may be a little bit higher than that. What they need to do is find funding that would be able to come to that level of expenditure. They don't have to go out and spend half a million or a million dollars for every hour of programming that would replace it.
As I said earlier, they should be doing more distinctive Canadian drama and entertainment programming. They don't have to put it on Saturday night, though. The programmers at CBC are pretty smart after 75 years in business and I imagine they could come up with a strategy that would counter-program on Saturday nights, that there may be information programming.
Certainly you take a service like Newsworld, now called CBC Newsnet. The programming expenditures of Newsnet are something in the neighbourhood of $65 million to $70 million a year, and it's 24 hours a day, 365 days a year. CBC knows how to produce pretty good quality news programming that could slot in and fill some of that programming time.
It could be a Canadian movie night. In that movie application that was put to the CRTC, there were over 3,000 hours of Canadian movies that they said they could tap into. The CBC would have enough to carry it for a decade or longer just offering Canadian movies on a Saturday night. It's not going to draw 2 million viewers, but it is going to provide something that is very distinctive.
One has to remember that what has driven CBC television for the last 15 years or so is almost all revenue driven.
The board of directors of the CBC met on November 25 and 26 last year. There is a document on their website and I urge your research staff to go to the website and find that document. It is a document that the sports people at CBC presented to the board of directors. In it, it's very clear that the entire push for trying to get some kind of a deal with Rogers is revenue driven, advertising driven, that that is the be-all and end-all.
As I said in my opening comments, without the hockey revenue, there's only about $100 million, and maybe that's an optimistic estimate. Currently, in the most recent data available from CRTC, they're spending $70 million a year in sales and promotion. That's 100 versus 70. If you dramatically reduce, if you don't have any sales costs, the promotion costs could be reduced. A lot of them are driven for sales. They are not really to get people to watch. They are to get advertisers' attention. I think that some significant savings could be made in terms of finding money that could be put into replacement programming for hockey.
Senator Batters: I'm also interested in finding out if you have information about this. You may not, but, being the CBC's research director as you were for a number of years, you might.
Is it true that Canadian producers who are submitting show ideas for CBC's even initial consideration have to sign a release form which would allow them no recourse or compensation if CBC was to use their show idea using a different producer? In my mind, that would be a huge disincentive for promising up-and-coming Canadian producers. Do you have any information about that?
Mr. Kiefl: I have none whatsoever. I have never heard of it.
Senator Batters: I thought I would ask, but it could be I will get some information from someone else.
I found your document you provided us very interesting. It had a number of interesting areas and I will ask about one of them now. If there is a second round, I would like to ask about a couple of others.
``Head Office Losing Control'' was one of your headings in here and I'm wondering if you might have any information about how many lawyers CBC currently employs. We understand from the CBC CEO that there are a number of them in Montreal and Toronto combined and, in addition to that, CBC also outsources legal services. Do you have any information on how much they spend annually on that outsourcing?
Mr. Kiefl: I'm sorry, I don't have any information, but I can comment on what I was driving at in terms of the head office losing control.
For about the last 15 years, the CBC has had a president who doesn't reside in Ottawa. I think that is part of the problem. It's a personal decision for the people who have held those jobs, but to me, head office is like the Senate. If you tried to always hold your meetings outside of Ottawa, I think it would be a pretty complicated way to run the Senate.
I think that the head office structure changed over those 15 years. About 15 years ago, the then-president, Bob Rabinovitch, who lived in Montreal and came to Ottawa to attend to head office, did away with a key job at head office. It was a job called ``executive vice-president,'' and that job was normally held by a veteran broadcaster.
The president of the CBC is an appointment by the PMO, and I think in the last 50 years there has only been one president who came from within the CBC. It is usually someone from outside the CBC and often someone without any real programming experience. Usually a distinguished Canadian became the president of the CBC. Traditionally, that person relied on this executive vice-president, who more often than not was someone from the CBC and knew the CBC backwards and forwards.
In doing away with that key job and then residing outside of the head office, the head office seemed to be disconnected from the body, from Montreal and Toronto. I gave some examples of things that head office has said in recent times that totally contradict, and these are often statements that are put out to set the record straight.
There was one example I gave of advertising revenue being 50 per cent of total revenues of the CBC, then another reference from head office that it was about a third and then another that it was about 20 per cent. These are very contradictory things and I think it's indicative of the fact that the president doesn't have the resources around him and isn't present in the head office, and this has caused an issue for the running of the corporation.
Senator Greene: You mentioned earlier PBS. I think that if you took hockey out of the CBC, which is about to happen, I would be watching more PBS than CBC. There are a lot of programs on PBS that I really like, and I think a lot of them could be applicable to Canada.
We've heard commentary from our witnesses about the need for Canadian stories and telling them properly. On PBS there is ``American Experience,'' that wonderful documentary program. Why isn't there a program on CBC called ``Canadian Experience''?
Mr. Kiefl: One of the reasons, I think, is to go back to the issue of advertising and if your whole programming strategy/audience strategy is to bring in advertising revenue to offset the cost of the programming. I think the data that I've presented to you is pretty clear that the CBC today is much more dependent on public funding, on taxpayers' funding, than on advertising revenue. Post-NHL advertising revenue this time next year, 80 per cent of the expenses of CBC English television service will be taxpayer funding, and only 20 per cent will be advertising revenue.
Unfortunately, for a decade and a half there has been this strategy to try to derive as much revenue as you can and put aside some of the quality programming that you might do that, yes, is not going to get a million viewers or even a half a million viewers; it might only get 200,000 or 300,000. That's a huge number still and those 200,000 or 300,000 will come away from the experience of watching something like ``American Experience'' or even something like the PBS evening news hour. It doesn't get the same audience as ABC, NBC or CBS nightly news in the States, but it gets a pretty substantial audience and people recognize it as something quite different from what you see on commercial television.
Senator Greene: It seems to me that if the CBC is going to survive, or if it's going to maintain its government funding, which are pretty much one and the same, then it has to be doing something different from the other commercial networks. Would you agree with that?
Mr. Kiefl: I think absolutely. That's why CBC Radio is so successful. There's not another radio service that even comes close. There are a couple of talk radio stations. Here in Ottawa we have CFRA and the all-news station, and they provide a valuable service for their audiences. The audience that follows CBC Radio here in Ottawa and in most communities across the country is a remarkably large audience, very substantial and incredibly loyal.
I have one thought on your comment about whether the CBC will survive. It's been around for 75 years and I think it will be around for many, many years to come. It's really just a question of what kind of CBC do we want, not whether it's going to survive. There is a body of support for it.
If, for some reason, a government — and I'm not referring to any particular government — decided that it had to cut CBC Radio and set it loose, I think there would be quite a public outcry. Our government would find that a very unpopular thing to do.
Senator Greene: It depends though, really, as to where the public is at the given time that the plug is pulled. I think the public increasingly doesn't care about the CBC. I think it's in part a generational thing. Can you comment on the generational aspect of loyalty?
Mr. Kiefl: There's no doubt that younger people have a different attitude toward the CBC. I have provided one or two findings from our annual media trend survey that we've done for going on 10 or 11 years now that show Canadians say they value the importance of the CBC.
Let me point out that when we do media research surveys, we don't do a political poll and just ask about one party. You ask about all of the parties and which ones you support. When we do a survey that touches on the CBC, we ask about all of the other television services as well.
One finding that is most interesting about testing whether people think the CBC is important, rather than just asking for their opinion, is that we ask them whether they would be willing to pay for it and we provide them a list of about 100 television services in the case of TV. No one knows that this is a survey that is about any given channel and it isn't. It's a syndicated survey, like a BBM survey, where different channels can purchase it or not. CBC doesn't purchase it, by the way.
We have asked people in eight or nine of these surveys if they'd be willing to pay 50 cents in addition to what they currently pay for cable or satellite and, in the most recent survey, out of 100 stations the CBC was number one. People place a value on the television service, even though it's suffering some difficult times.
Senator Greene: You mentioned in your opening remarks that you were not recommending the PBS model for Canada. Could you explain why, or why or why not PBS might or might not be applicable?
Mr. Kiefl: I said that PBS could be a model but that it's not something we would want to duplicate. One reason is that we have PBS already available widely in Canada. In terms of its attitude toward advertising, that's something we should copy. The business model that CBC Television tried to develop for many years no longer works and the loss of hockey ad revenue, I think, brings this home.
CBC should jettison the commercials and organize itself financially in a way that it can afford to be out of the commercial game. Obviously, there are some significant savings in areas like the sales department and so forth. If you didn't have advertising, you wouldn't need a sales department.
One critical thing is not having ads, similar to PBS. Having the kind of thoughtful interviews, the in-depth interviews that are done on a daily basis on PBS that are not intended to try and catch somebody, is very valuable.
CBC English television, which is what most of our discussion has been about, has an awful lot to learn from CBC French television. I'm sure that many of you watch CBC News Network and probably a lot of you watch RDI as well. There is a distinct difference between the two services. RDI has a visual quality to it. They have incorporated much of what French television has when it comes to talking heads. They are not talking heads; it's a different kind of program.
In France, talk shows are considered one of the highest forms of television and I think Radio-Canada has been about to develop that. ``Tout le monde en parle,'' for example, is almost like a sporting event. I think that CBC English television could look at that kind of experience in Radio-Canada and consider whether some of the same techniques being used here in our French television service could be used in the English television service as well.
Then, when it comes to quality drama, many of the high-quality dramas that you see on PBS are British programs. You probably have heard that PBS stands for ``primarily British service.'' I think that a revamped CBC could probably look at some of those high-quality U.K. productions.
It wasn't that many years ago that CBC decided that it needed to have a daily U.K. soap, and it's been very successful. It's one of its most successful programs. ``Coronation Street'' is the show I'm referring to. In the summertime, it is sometimes the number one rated show on CBC television.
Senator MacDonald: Mr. Kiefl, thank you. Sorry I was a little late, but I did read your presentation.
I'm not surprised, but I'm interested when I read that CBC Radio has a much better track record of maintaining market share as opposed to CBC Television. I'm of that generation, like most people around this table. Even though I'm increasingly aggravated by CBC Television, I have a sort of historical empathy for it. When I was growing up, it was the only television channel and represented the country.
I would like to know why you think that CBC Radio has been much more successful in maintaining market share in a multi-channel radio reality, as opposed to CBC Television, which has increasingly lost market share for the last 40 or 50 years.
Mr. Kiefl: I will start with CBC Television. If you turn the clock back to 1952, when CBC Television first started, to 1960, that almost decade period, CBC Television had the market almost to itself. There were a few Buffalo stations or English American stations that got into Montreal, but basically CBC TV was the only television service and you could say for all intents and purposes it had 100 per cent share. However, a lot of that share was developed with programs like ``Ed Sullivan,'' Major League Baseball and NFL football. CBC carried NFL football for many years. A lot of it was American content. Over the 50 years since, all of that American content has grown dramatically in the amount that is available, but none is available on the CBC. It provided the American programming and was successful with it for a number of years. Now it finds itself competing with that all that American programming.
There was one number in the document I provided to the committee that I think tells it all in terms of why CBC Television finds it so difficult to succeed. I've promoted the notion for you to look at and consider some kind of special fee that would go to both private and public Canadian television to improve the quality of Canadian drama and other programming. The reason why Canadian television, public and private, finds it so difficult to compete with American television is contained in that number, which is $165 billion. That is the amount of revenue that U.S. television generates — not all of for programming, but for comparative purposes. It was $165 billion in 2011, and it was advertising revenue, money that cable subscribers pay for specialty channels and a bit of money that goes to PBS from the American government.
By comparison, Canadian television has revenues of about $7 billion English and French. Take away the French and it's about $5 billion English. It is $165 billion in revenue a year compared to $5 billion. How can you compete with the money that is available for the creative ideas that come out of Hollywood and the rest of the American industry?
Radio does not have to compete with American content at all. It is a totally domestic industry. There are a few Buffalo stations that have an audience in Toronto, and a few Montreal stations that have an audience in Montreal, but it is a Canadian medium.
The model of CBC radio going back to that period of the 1970s was destroyed. Its model was that it had great Canadian programming, but it also had Jack Benny and all sorts of American drama that was playing on CBC radio back in the 1940s and 1950s. That model was destroyed and they found a new model which was local.
First, you have to be local in radio.
The local morning show on CBC radio stations will pull in 20 or 25 per cent share of the radio listening in a given market. Another 15 or 20 stations are competing for the other 75 per cent. It's local and it provides news and information about the community that you didn't find. With private radio, most of the stations have very little budget for news or any kind of information gathering.
Senator MacDonald: It's all canned stuff.
Mr. Kiefl: It's just canned stuff. Many stations are basically a computer down in Hamilton that is feeding stations across the country. I'm exaggerating; I don't know really know where the server is, but that is what private radio is. Basically, it is a way of playing music for people. It is still valuable.
Maybe one of the most valuable services on private radio is advertising. You are able to learn about local sales going on in your community and the special at the local Loblaws, and so forth. You can get the traffic and the weather, and so forth, too.
The CBC was local and was providing in-depth information. In the last five years, CBC English Radio had its staff cut by 20 per cent; CBC Television had far less than that. When you take away the staff from radio — that is, the reporters, the researchers, and so forth — many of them were the people who were out there digging up stories, talking to the local newspaper reporters, collecting information on the community, and providing a real service to the community. Obviously, CBC Radio has been able to produce a lot of national programming and a bit of comedy and variety-type of programming that has made its contribution. It is a whole melting pot of different programming concepts that, particularly since they are non-commercial, are appealing to people.
Senator MacDonald: I want to stay with radio for a second. Looking at the numbers in here, I find it disturbing that CBC would bleed money out of CBC Radio, which is a winner in relative terms, and pump it into CBC Television which, by all criteria, is a loser. What sort of mind set is working inside the CBC when these are the decisions they make?
CBC, which I inherently would like to support, has basically three headquarters: one in Toronto, one in Montreal and one here. It was intriguing to hear you raise the fact that the president of the CBC doesn't live in Ottawa. Long term, I think it is a problem. How can a corporation that basically has three headquarters be spending its money wisely with just the bricks and mortar alone?
You say that CBC Television has to do something different but maybe they can't. Most of the channels that have come online in the last 20 years are specialty channels that target a certain audience and create revenue. It is like general stores. Eaton's and Simpsons were general stores and they had something for everybody, but now they have nothing because they did not appeal to everybody across the board. CBC Television seems to be turning into an Eaton's or a Simpsons.
Mr. Kiefl: Right. I did see that Zellers is re-opening some of its stores.
Senator MacDonald: I am interested in your take on this, but I think a lot of the problems are self-inflicted here.
Mr. Kiefl: In terms of radio, I think you are right. But if you put yourself in the position of the management, they have things like an NHL contract that was signed six years ago. They can't get out of it — at least, I don't think they can get out of it. It's a commitment. They have to find the money to pay that NHL contract come hell or high water. They look at where they can find the money and they know radio is successful. This is what I'm thinking may go on behind the scenes. If they take away a little bit over a five-year span, then it will not make any difference. In the end, the radio audience has still not been hurt, but I think the quality of the listening experience has been hurt. The next thing to fall will be the actual ``listenership'' that will decline.
Senator MacDonald: But a little bit of money for CBC Television is a lot of money for CBC radio.
Mr. Kiefl: Yes it is, and I think $50 million. In the most recent year, 2013, it didn't continue. The revenue grab stopped because some attention was brought to it. There was a local reporter for the Ottawa Citizen who did an excellent piece, Chris Cobb. I urge the research staff to find his piece. It was done six month ago on this very issue. He must have called me seven or eight days in a row to try to get to the bottom of this issue. He was on the phone with CBC, met with them, and so forth.
In the end, he did something unusual for a journalist — and he is a top-notch journalist. He decided to not reflect CBC's view in the piece because they stonewalled him constantly and tried to say that it was not really a cut in the radio service. In the end, his take on it was that the cut is there and they won't even admit to it.
This is part of the issue. When the CBC appears before you — and it is not the first time I've seen this; it's happened over recent years — they tell a story that everything is okay; that even with CBC Television, there is no problem; that their audience reach is 75 or 80 per cent; and that their audience share is the same as it was 10 years ago. There seems to be an unwillingness to face the problem, deal with it and admit it.
When you look at the four main services of CBC, French television is still very successful, as I'm sure you know; and French radio has grown its audience over the last decade or so. English radio — not Radio 2, but Radio 1 — has grown its audience. The service that is in trouble is English television, but there's unwillingness.
Maybe it's politics. There's a worry that, if you admit that it's a problem, you are admitting you're not competent or can't get along with the money available and so forth.
I was going through some old files, and I found a brochure, a couple of them actually, that were from the fiftieth anniversary of CBC in 1986. All of the same arguments are contained in these brochures that you see in the promotion literature today, that everything is fine, that everything is great, even the famous $34 dollars a year. There, it is expressed as nine cents a day. The average Canadian only spends nine cents a day; that works out to about $30 a year. That's very favourable compared to, in those days — I was there at the time — the cost of a cup of coffee or a bus ticket; it's a bargain. Right now, the monetary problem for English television has become so severe that they have resorted to taking the money from CBC Radio.
In this brochure, all of the arguments are the same, except there's one little chart that shows the audience share of CBC Television. It was about 20 per cent in that era, as opposed to 5 per cent today. There has been an inability to accept that CBC Television has actually been forced into being, basically, a niche service. It still has a couple of major properties, including NHL hockey. That will still be an important part of the schedule this coming fall, but, as I said, it will definitely lose audience because it will be competing against a lot of other hockey that it doesn't want to compete against.
Senator MacDonald: CBC has enormous infrastructure in the country — towers, bricks and mortar. It also has a brand. It's a very old, established brand, and branding is important. Has the time come for us to keep CBC Radio and reinforce it, and to sell CBC Television and privatize it and let private people come into Canadian assets, take them over and see what they can do with the assets?
Mr. Kiefl: I would say no, not yet. CBC Television should be given an opportunity to use the resources it has and, hopefully, this committee can find a way of recommending increasing the funding and maybe channeling it to the service, CBC English television, that is in such dire financial circumstances.
I think that it would be wise to give the country an opportunity to see what a noncommercial, focused CBC television service could look like. I think that the creative minds that came up with CBC Radio, 40 years or so ago, could come up with something pretty interesting for the television service as well.
I heard a little bit of discussion about the towers, and I smiled when I heard it because it reminded me of discussions that I heard at CBC 30 years ago and 20 years ago. There has always been this issue of the towers and the transmission system. One thing people forget — I don't know if it was presented by the CBC — is that there was, at one point in time, over 600 television transmitters that the CBC had. Two years ago, that was reduced to 27. They dropped all of those analogue transmitters and now rely just on 27 digital transmitters, and there are a lot of communities that do not have CBC over the air any longer. I think the cut-off point was any city of fewer than 200,000 people lost CBC over the air. They made a big step in that direction two years ago. If I remember, the corporate literature said that it would be represent a $10 million annual savings. That is one of the ways they've been trying to survive.
For a lot of towers out there — and I don't have the expertise to know how many there are — I can bet you that, on almost every one of them, there is one transmitter that the CBC really needs, and that's the radio transmitter.
I remember writing, not that long ago, that there are about 100 million radios in use in Canada at this time — 100 million. They are in cars and trucks, in offices, throughout our homes and so forth. Very, very few of them are equipped to receive anything except an over-the-air radio signal. Radio is an over-the-air medium. It's a transmission medium. Occasionally, if I miss a show, I can sign on, on my iPad, to a Vancouver CBC radio station and pick it up a couple of hours later, but that's a rare circumstance. Most radio listening is on these 100 million radios that are out there, and, if you pulled the plug on the towers, CBC would still have to find a way to get the radio signal out there. That's a question that I think you should ask somebody in the engineering department of CBC.
The Deputy Chair: I would like to take this opportunity to remind the audience that we are continuing our study on the challenges faced by the CBC/Radio Canada in relation to the changing environment in broadcasting and communications and, of course, we're the Standing Senate Committee on Transport and Communications. I remind the audience that we have with us today Barry Kiefl, President of Canadian Media Research Inc.
[Translation]
Senator Verner: I would like to begin by apologizing because I arrived a few minutes late. I missed the beginning of your opening remarks but I took the time to read them. I read in your blog that you have a contractual relationship with the Senate of Canada; out of curiosity, what is that exactly?
[English]
Mr. Kiefl: It was several years ago. CPAC was a client of mine, and I had discussions with some of the staff at the Senate and provided a regular report, for a couple of years actually, on the audiences for the Senate committees that were televised by CPAC. I was reminded of it, actually, when you had your sessions with Senator Duffy and so forth. How CPAC would dearly have loved to have had television cameras on that committee.
[Translation]
Senator Verner: That was not what I wanted to ask you, it was simply out of curiosity.
I would like to raise an issue you referred to that has also been referred to by other witnesses, and that is the discrepancy between the performance of the French and English-Canadian broadcasting networks.
Based on the numbers, it appears that the French network is doing much better than the English network. However, would you say that the French network is better prepared than the English network for the future and for technological change?
[English]
Mr. Kiefl: I think the circumstances that Radio-Canada finds itself in are quite different. The French television industry in Canada is very similar to many of the European environments, where there's far less actual fragmentation. As to the number of mainstream broadcasters, there are four in French television — TVA and two other private operators and Radio-Canada — and then there is a selection of 30 to 50 specialty channels.
The environment in Europe is very similar. There is usually a major public broadcaster and, perhaps, a private broadcaster that will still have a very large share of the total audience, and that's true of Radio-Canada and TVA, in particular. They, combined, account for about 50 per cent of all French TV viewing.
In English TV, if you took CBC, CTV and Global together, you'd be lucky to get to 25 per cent.
It's a combination of things. It's because there aren't as many competitors. Instead of hundreds of channels, there are 40 or 50 channels available in most households.
There are still many Quebec homes that don't have cable or satellite that are satisfied, and this is true in Europe as well. They are satisfied with over-the-air transmission because the broadcasters have a good mixture and high quality programming. Both TVA and Radio-Canada offer such a good quality product that I think they are better positioned and not likely to have as much competition.
The barrier to entry in the French market is that there is not the population, obviously, to support as many channels as there are. I think that's partly true in English Canada, as well. In the English industry, there are many specialty channels that are suffering that draw very small audiences and, as we move into a more consumer choice environment, we will see a lot of the English channels perhaps disappear.
I think that Radio-Canada seems to be in a pretty good position still.
When I referred to the CBC audience being in the 20s, 25 years ago, French television had a substantially larger audience than it has today, but it still is commanding a pretty good chunk of viewing time.
I didn't make a comparison like I did between CBC English Radio and CBC TV. The number of hours that francophone Canadians spend with Radio-Canada is still very substantial. I said it was only 70 hours on the English side. The calculation probably would be that 150 or 200 hours a year would be spent with Radio-Canada.
[Translation]
Senator Verner: I read an article that said that funding for English CBC and French Radio-Canada should reflect the percentage of the Canadian population that they serve. Currently, the English network receives 60 per cent of CBC Radio-Canada's budget, and the French network receives 40 per cent As you have worked in the past for CBC, I assume that you could quite easily imagine what the reaction would be if the budget for French Radio-Canada were cut in order to increase that of the English CBC?
[English]
Mr. Kiefl: I do remember that within the CBC, it's almost an untouchable topic, that people don't want to discuss. It would be interesting to see. The financial data, actually, that was released in that 85, 86 looks to me as if the ratio was slightly different, that it favoured the English more back 25 years ago.
There is a very interesting book written by a man by the name of Ron Devion, who was the head of sports and the regional director at CBC, and he wrote about the way the English would come to head office with planning books, studies and so forth to try to get their share of the budget, but on the French side, the French VP would come to Ottawa and he'd just take the president out to lunch or dinner or something, find a way to negotiate and seemed to be successful.
I think it's very tempting to say, well, Radio-Canada maybe gets a disproportionate share, but maybe another way to look at it is it gets the right dollars for the job it is trying to do, and the English service is not getting the right dollars. I don't know whether it's wise to take away from a successful service to try to bolster one that is not successful. Perhaps it would be more advisable to try to find the resources. It's not to say maybe some efficiencies couldn't be made in Radio-Canada. Again, it's one of those topics that people shy away from.
We're talking about towers and transmitters. CBC has transmitters serving the very small francophone audience in Calgary, Edmonton, and Vancouver. Are those transmitters needed for the very small audience that those stations attract? Is that where the service should be delivered via the Internet to cable and satellite? I don't know if there is any substantial money to be saved, but those sorts of efficiencies could be examined.
One of your senators, Senator Marie Charette-Poulin, used to work at CBC and when she was at CBC, she came to me once and said that we had to have audience numbers for our services across the country, but it turned out that no matter how we cut it — and I'm pretty smart at trying to find efficient ways to do research — it was in the millions of dollars we would have to spend to try to develop more reliable audiences for French services in mainly English environments. Somebody joked at the time in the era of the videocassette that it would be cheaper to send videocassettes to the number of people who watch. It's not to say that the service shouldn't be there, but the delivery of it today, now that we do have another means of delivery, might be more efficient.
I think I heard somebody speak to you, Richard Stursberg, and one of the few ideas that I agreed with him on was greater sharing between English and French. I mentioned that in terms of RDI it is an exceptional service, which has quite a significant audience share. The numbers that the CBC presented were for prime time, so it downplayed the importance of the RDI. It has a much larger share in the rest of the day, and it's whole day share is actually closer to 3 per cent of the total audience, and that's not far from CBC's 5 per cent.
[Translation]
Senator Verner: In November 2013, you proposed two measures in your blog that would solve the issue of underfunding for Canadian broadcasting, more specifically that of CBC, and increase quality Canadian content production.
You suggested that there be a $240 annual family television licence as well as a 7 per cent corporate tax for all broadcasting, cable and telecommunication corporations, which would generate $3 billion a year.
My question, which I am asking on behalf of millions of Canadian families that already spend several thousands of dollars a year on cable, Internet and wireless phone services is this: in the current economic situation, how do you think this annual family television license could be implemented?
[English]
Mr. Kiefl: Yes, the data that I examined that led into this suggestion, again, like the Rogers-NHL deal, surprised me to see the growth in the revenues of the cable and satellite companies and the telecommunications companies. CBC has an annual grant of about $1 billion, and I mentioned that number of $7 billion a year total revenues, the grant plus specialty channels. All of the Canadian English and French services combined amount to about $7 billion.
The revenues of cable and satellite grew from — I'm going from memory here — about $3 billion three years ago to $15 billion. They quintupled in the last 15 years. Revenues for conventional television and CBC have been flat. Specialty channels have gone up, but the television content part of our system is not growing at anywhere near the rate of the distribution systems — quintupling of revenues.
You look at the telecommunications industry as a whole, not just the cable and satellite, but the mobile services, the smartphone business and even the home phone business. The combined revenues of all the telecommunication companies in Canada — the Bells, Rogers, Vidéotrons and so forth — are almost $45 billion. That's where those thousands of dollars a year per family are going, but they seem to be going mostly into the distribution system. The content side of the industry isn't getting the same kind of revenue.
I mentioned the concept of some kind of a license fee, but people don't like the idea of licences, so it is better to call it a program fee. There should be a program fee. In five of the G7 countries there is a program fee that households pay and it is collected in various ways. In Britain it used to be collected by the post office; now it's done by the BBC itself. In some countries it is the hydro company that collects the television program fee. Everybody gets hydro, so if it's on that bill you've got to pay it.
What I'm suggesting is some way of trying to redirect some of that money that's gone into the distribution system, and it has made a lot of very wealthy people and a lot of wealthy investors as well. There is a lot of money in the distribution side of the industry. Some of it could be redirected into the content side of the industry.
We know that Canadians are willing to pay. You said thousands of dollars. I estimated recently that it was a little over $3,000 a year on average per household that is spent on communication services. The CBC, on a household basis, is less than $100. There is a huge amount of money that households are willing to pay for communication services today.
The willingness to pay, I think, is there, so if it could be positioned in the right way, if people got something out of it, if they got a better program service, I think there would be some willingness to actually consider this.
Senator Verner: It's less than 9 cents per day, as I said earlier.
Mr. Kiefl: It remains less than 9 cents a day, all these years later.
The purpose of my blog analysis and of the analysis I presented to you is to try to bring home that we have a lot of money put into the system, but very little of it is going into program content, into the content side of the industry. If that can be addressed, one way of doing it that wouldn't be a direct tax on consumers — and again, I'm not the tax expert — but perhaps the corporate tax that's paid by telecommunication companies could be raised. Yes, it would have to come out of the rest of their business, and maybe they'd try to pass some of it on to the consumer, but if there could be an increase in the corporate tax rate of telecommunication companies.
The Rogers-NHL deal brings this home. This is not a television deal; it is a telecommunications deal. They are going to be selling this through advertising. They will be making money out of advertising on Citytv and CBC-TV and they will be making money out of the specialty channels, the subscriber fees; and making money out of Internet. People will be able to sign on on their iPad and will be able to look at it and they will be paying for a package of games or whatever that will be available on all of the various carriers. This is a telecommunications deal.
You see in some of the data that I presented that the independent company comScore monitors the amount of Internet use in Canada and it's showing tremendous growth in online video usage. What we now have is a lot of video being presented, being put through the pipes of Rogers and Bell, and no one is being asked to make a contribution to the industry. It's outside of the regulatory system. The CRTC doesn't regulate Netflix or these other services. A way of ensuring that there is a contribution is some form of program fee or a corporate tax that could be applied to a Bell or to a Rogers, and bring them into the system. In some ways, they would benefit because they own a lot of these television services that the money would flow to.
The Deputy Chair: I would like to exercise my privilege as the chair and ask some questions myself and launch the second round of questions. I listened carefully to your testimony as we started the hearing earlier this evening. A lot of what you said just brought back and reinforced what we've been hearing so far as a committee.
Last week we travelled out to Western Canada on a fact-finding mission. We talked to stakeholders and people from CBC, to private broadcasters in the industry, and to friends and foe alike. They all seemed to be identifying a long list of what the CBC should be doing and to some extent they are doing, but you never are able to take any one of those elements from that list and put it on the column and say, ``They're doing this; they're great at it; they're fantastic at it.''
When it comes to promoting Canadian motion pictures, they are the only ones doing it, but they are not doing enough of it or they're doing less of it. When it comes to promoting local news broadcasting, if you are a francophone Manitoban in St. Boniface, you're going to say, ``It's the only game in town; we absolutely need them. However, we only get an hour a day now of local broadcasting here in St. Boniface, so they should do more of it and they're doing less.''
The list goes on and on of all the elements that traditionally the CBC was known for, and the Canadian Broadcasting Act requires them to promote Canadian culture and content. I agree with you, the general sentiment I seem to be hearing from people so far, and it's the early stages of the study, is that the CBC is something we all need. Even though it's early in the study, we keep hearing that over and over again.
But everyone seems to say, including yourself, you said it tonight, what kind of CBC do we want? The question also begs to be asked: What kind of CBC do we need?
In our study so far, I have come to the conclusion that while everybody comes and says this to us, at the same time what seems to be a recurrence is what the CBC does really well is news, investigating reporting, hard news broadcasting, locally, nationally and internationally. When you probe the CBC, both the middle and upper management are slowly coming to the conclusion that the vast majority of their resources, their monetary budget, goes into producing news.
There are a couple of questions in the preamble here. The first one is, is that really their mandate? Is the national or international news on CBC news really Canadian content? Is it really something that no other private broadcaster can provide? Are they doing this at the expense of what their original mandate was, which was to promote Canadian culture and Canadian content, which means Canadian motion pictures, Canadian shows, cultural programming that reflects Canada and Canadians? Is all this effort on news on their part all these years being done at the expense of what their original mandate really was?
We've all come to the conclusion that they're so good at news. I saw a poll recently how Peter Mansbridge is one of the most popular Canadian anchors, 37 per cent, I remember the polling company that did it, and I'm a big fan as well. I keep asking myself, if they do it so well and he is so popular and the program is so great, how come their ratings are the worst in the country compared to their competitors? Can you comment on that?
Mr. Kiefl: To start, I would say yes, the CBC that hopefully will evolve — starting with this process — should be built on news and investigative journalism. If you go back to the very beginnings of CBC when it was established in the 1930s, it was finding its ground, and then when the war struck in 1939 it really became evident that the main service that the CBC was going to provide was news on the war front. It provided that through the Second World War, and then into the 1950s it became very important. I mentioned even in my opening comments that the CBC national news on ten o'clock on radio — coincidentally, the same as it is on TV today — had a 50 per cent share of the audience. It was a very important service.
News has always been the lifeblood of CBC. Maybe it had other kinds of things that were on the radio services in the 1940s and 1950s, but news was always a critical part.
If you look at the very early days of television, in the 1960s and 1970s, television was a new medium and news was important. There was the landing on the moon, the assassination of the president and so forth, these major international stories that CBC was there to cover.
But it really began to make its mark when the CBC took a very risky move. It was in 1982. At that point in time, they were facing the similar dilemma that you were describing, that they weren't doing well in audience terms. The CBC national news was losing out to the CTV national news, and they were both on at eleven o'clock at night.
A lot of broadcasting is where you put something, where you schedule something. The Olympics were great, but not at seven o'clock in the morning for a lot of people, to see the gold medal hockey game or whatever. It's important where you put it.
In 1982, the CBC took a major risk and produced something that was on earlier but much more in-depth. It was going to be a full hour, whereas the old eleven o'clock news was 25 minutes, I believe. It was going to have this thing called ``The Journal.'' One of same architects of the radio service developed the concept of ``The Journal.'' It went on for many years, until 1992. For 10 years, that one hour was often in the top 10 rated programs in Canadian English television, so it was a critical service.
Today, CBC national news is facing the same sort of situation it did back in 1982. You see a situation where ``The National'' and its second half are no longer in the top 10. They have a much smaller audience than they did, and they are roughly in the same situation as they were in then. The CTV national news has a larger audience than the CBC national news.
So, something new needs to be done and maybe some of it is something old, maybe looking at the concept of ``The National'' and ``The Journal.'' It slowly but surely evolved into what we have today, and I think it's fair to say that the CBC national news today is not what it was 15, 20 or 25 years ago.
People in this city love to tune into things like the ``At Issue'' panel that is on CBC national news. The last one I looked at was 14 or 15 minutes long. For people involved in political life, it's interesting, because mostly it's about politics and it's journalists talking about their take on political issues and so forth.
The CBC should perhaps, if it had the money, be investing in other things than a few journalists talking about the political issues in Ottawa. It should be doing something that it was able to do when it had the funding in the 1982 to 1992 period, but slowly but surely the resources have been taken away.
When you look at the total budget — this is readily available on CRTC's website — the amount of money that English television puts into news and information programming today is about $200 million, the last time I looked. That represents something like a third of the budget. It isn't putting all of its money into news and current affairs. Observers have been saying lately that even CBC television news is starting to look and sound a little bit like American television news, that they don't have the resources to be able to do the kind of investigative journalism that they once had.
The Deputy Chair: Again, based on the experience we've had so far, the CBC puts a lot more of its resources in news than the private broadcasters do. You are the expert in the field and you've done research on this matter. Would you agree with the perspective that Canadians today are not that much into hard-nosed news as they used to be? You talk about the glory days of years gone by. A lot of private broadcasters in our fact-finding mission gave us the impression that the audience today wants their news on the fly, that kind of thing. The most popular shows are prime-time TV programs, movies, reality shows and sports shows.
The question I have is that, if we're going to take the approach that despite the fact that there isn't a big audience for it, but we need to have an agency that gives national and international news at a high-quality level, which is an argument that we are open to, then don't you have to redraft the Broadcasting Act? That was not the mandate of the CBC originally. The way I understand it, the mandate was always to promote Canadian culture and Canadian content.
Mr. Kiefl: To me, to go back through history, there always has been some important role that CBC journalists have played. CBC News today wins far more industry awards than anything in the privacy sector.
When we've asked people about which network has the best of different categories of programming, the CBC invariably comes up as the best at national news. Even with the trials and tribulations they have had, their financial difficulties, people still consider CBC to be the best at national news, and they consider it to be the best at international news when it comes to Canadian coverage. CNN is neck and neck with CBC, but no other Canadian broadcaster comes even close.
There's a core group of people. I'm not just expressing my opinion. I'm the researcher who relies on scientific surveys. In terms of our annual survey, we talk to 1,000 people, chosen randomly, and use a top-notch research house to undertake the interviews and so forth. It's reflective of the population. There is a real sentiment that CBC is excellent at news. It has great credibility.
On the English side, CTV is a close competitor in terms of credibility. Certainly CTV and Global are considered to be excellent at local news. There is a divergence in terms of national, international and local news.
Another thing we do in annual surveys is look at what categories of programming people think are the most important. We have had a list of about 40 or 45 program categories, depending on the year. Each year, we have found that the most important category of programming to people — and it outstrips the next closest category by far — is local news. Local news on TV is considered the most valuable category. National and international news are also high on the list, higher than drama series, sitcoms and so forth. There is still a great interest in TV news.
In research out of the States and research we've done here — not just CMRI but other sources — even with all the fragmentation of the industry, even with the Internet making incredible inroads in terms of being the major source of news, TV still continues to lead. It is still considered by the average person the most valuable source for news. The Internet is growing in importance, but it hasn't overtaken TV yet.
I think there is still a reservoir, and it's partly because what you get on TV news is pretty compelling. A huge amount of effort goes into putting together a newscast on any given evening. News continues to be, I would say, the backbone, and it's even true in the private sector. If CTV all of a sudden didn't have Canadian content regulations, I think they would continue to do their national news and their local news in the evening. It is something that they, for one thing, are probably making money at; and, for another, it's a service they feel they can provide and it draws people into a channel.
People do watch programs. They turn on the TV and they have hundreds of choices to make, but they often go to channels that they've been to before. The national or local news, depending on the channel, is going to be a kind of anchor for the schedule of pretty much any broadcaster.
Senator Batters: I'm glad you talked about local news and said that local news is what people indicated is their most valuable programming. I'm wondering about what may be a problem for CBC. I think they don't tailor to local preferences. In Saskatchewan, CBC has a 90-minute dinner newscast. We heard from the CBC CEO that that is the case nationwide. In Saskatchewan, it runs between 5 p.m. and 6:30 p.m., but nobody's home at 5 p.m. They repeat their stories many times throughout that time frame.
In Saskatchewan, CTV absolutely rules the roost in dinner newscast ratings. Those are the prime advertising dollars for CTV in Saskatchewan. We have seen charts from CBC with all of the American primetime programs listed and showing us that we have all Canadian programs in our primetime. However, none of those American primetime shows that CTV has on in the evening raise as much ad revenue for CTV Saskatchewan as their dinner newscast does. They used to stagger their dinner newscast around CTV's but now they go head-to-head. I imagine their ratings have plummeted. To me, CBC is not tailoring to local preferences because of their desire to have uniformity across the country.
Also, news and sports are becoming widely known as the two categories of programming that people don't PVR — they watch them live. They're very valuable for advertisers because they want to make sure that people aren't just zipping through those commercials but are watching them and getting some benefit out of that.
In your preferred model, advertising dollars are not the be-all-and-end-all, but in reality, for CBC, that is a huge dollar generator. In my view, they're not using it appropriately. What would you say to that?
Mr. Kiefl: Going back in history, for about the last 30 years there's been a constant debate about whether the CBC television service should be in local news at all. Back in 1992, when the famous ten o'clock news was suddenly shifted to nine o'clock, which was a disastrous move, the audience plummeted. About a year later, it was moved to ten o'clock. At that same time, CBC management — and it was a different set of circumstances than today — decided they would close all the local television stations and in their place was going to be, instead of a local supper hour news program, a regional supper hour news program. It, too, was a disaster. The audiences weren't good even in 1991 and 1992 for CBC local news. This has gone on for decades in many markets.
In some markets, like Charlottetown and St. John's, Newfoundland, and some of the Atlantic Provinces, some stations are the only local news. You can't generalize that there are markets where the CBC does quite well and others where they don't. There's actually been a long history of not performing well.
It was somewhat surprising a few years ago when CBC decided that instead of just having a 60-minute supper hour news, they would go to 90 minutes. Shortly thereafter, they added an eleven o'clock local newscast, just a short, little burst. Only a short while ago, they started on Saturdays and Sundays at six o'clock. I happened to be watching CBOT news in Ottawa the other Saturday, and I think there was one local story. It was about a fundraising thing in a local restaurant. The rest of it was all stories culled together from other CBC stations or international stories, such as the missing jetliner and so forth. It really wasn't local news. That is part of the problem today. There's been an expansion and a heartfelt effort to try to improve the resources, but I don't think the resources were there to provide the programming.
I have heard stories that local anchors for some of these shows say that they are pretty tired of always having crime and accidents and other stories to deal with instead of something that would be maybe more interesting for a journalist and for the audience to deal with. There's a bit of an issue in terms of the resources. Maybe the expansion into local news was too soon.
On the other hand, look at the local service in radio. Listeners to CBC radio are extremely pleased with the local news and information they get on CBC radio. Perhaps if the resources were there, something better could be put on the air in terms of the television service.
Senator Batters: I wanted to also give you an opportunity, because I really appreciated the material you provided us, to expand on something for us and Canadians watching this.
You have one section in here: What is the truth about CBC audiences? I found it very interesting reading. Could you tell us and Canadians watching what you've written in that section?
Mr. Kiefl: Well, there are a number of points, and some of them are kind of technical and will need explanation.
I pointed out that the CBC presented some audience reach figures. Reach is one of the metrics used in the television and radio business. It means basically that if you listen to the CBC once a week or a month, you're counted in the reach calculation. If you listen 10 times, you're still only counted once. It's what's referred to as the un-duplicated number of people who tune into a service.
The numbers they presented gave no definition of what ``reach'' meant. They didn't say how long you had to watch or listen. Normally, that's presented when one talks about reach. Reach can be very misleading because you can build up a large reach if you have a very small amount of time. Sometimes it's only a minute — if you watched CBC television or used cbc.ca for one minute a month. It's pretty easy to build up the number of people who are going to tune into CBC once a month, especially if it's only for a one-minute period. It was somewhat misleading.
A better measure is audience share. You can express share in terms of the percentage of the total time spent viewing or, as I did in one of the documents I gave you, the number of hours in a year that Canadians spend with CBC Radio or CBC Television. Using share or hours spent with a service, you then have a handle on how important it is to the audience.
Senator Batters: That was the number you were giving us about 5 per cent total market share of CBC Television. You said about half of that was hockey and foreign programs. Is that right?
Mr. Kiefl: Yes, that's right.
Senator Batters: When they lose hockey, it's going to go down considerably. For $1 billion a year, they're going to have potentially 2.5 per cent or 3 per cent of the market.
Mr. Kiefl: When the NHL lockout happened in 2004-05, we saw what happened without hockey.
Senator Batters: What was the market share down to at that point?
Mr. Kiefl: I think the CRTC data put it at about 4 per cent last year when half the season was missed as a result of the NHL lockout. Hockey is a very important product for the CBC. Even retaining the hockey they have now, it's going to lose some of its audience, as I explained earlier because of greater competition.
Senator Batters: They will be making their NHL package that you can buy and you'll have all these sports channels.
The Deputy Chair: If I could ask a supplemental question. The impact on revenues with the loss of ``Hockey Night in Canada,'' in my humble opinion, is one aspect, but to fill up 350 hours a year of broadcasting prime time is another aspect. In your opinion, what would that cost to produce good quality Canadian content to fill up that space? To my knowledge, to come up with 15 hours a year of a terrible show costs millions of dollars. Can you imagine having to fill up 350 hours of great content? How many millions could that possibly cost the CBC?
Mr. Kiefl: I think that some of the creative minds at CBC Television will probably come up with some ideas that I would never think of and I think one has to give them the opportunity to develop some programming concepts that would be interesting.
One of the most popular shows on Radio-Canada is a Sunday night talk show. You don't have to spend millions of dollars to do a show like that. If you come up with a really great concept you can do it inexpensively.
Probably the most famous show that was ever on CBC Television was ``This Hour Has Seven Days.'' I suspect that it was produced with very little money and yet it pulled in millions of viewers on a nightly basis. It is possible that you can come up with something that would be less expensive than we think.
I mentioned earlier that there is something like 3,000 hours of Canadian movies that are available. The rights have to be purchased, but I would imagine that since no one is knocking on the door of most of the owners of those movies they could be purchased for a pretty good price. Those 3,000 hours of Canadian movies would fill those 350 hours for eight or nine years, so you could have a Canadian movie night and maybe couple it with international movies as well. There are many international movies. There are more movies made today than ever before in history. Movie channels have been developed. I think CBC could turn Saturday night into a movie night, if not a ``This Hour Has Seven Days'' evening.
To go back to your question about PVR and the importance of news and sports, there is a link in the material that I provided that's in the electronic version that would lead you to the TV Bureau of Canada. They are a group funded by the various broadcasters and they have extensive information on PVRs. They show that even today, and maybe it would surprise you, that only something like 7 per cent of all viewing in Canada today is recorded on PVR. Still, 93 per cent is live viewing.
Senator Batters: You were speaking about transmitters. When they go to those digital transmitters and no longer carry over the air, that won't go to communities that have fewer than 200,000 people. In Saskatchewan that would mean everywhere other than Regina and Saskatoon, so 60 per cent of Saskatchewan's population would no longer be covered by that.
Then you were speaking about radio. You were talking about 100 million over-the-air type radios in Canada. Are you also including so that these transmitters would not be effective to transmit radio signals to regular over-the-air type radios in communities where there are fewer than 200,000 people? Do I understand correctly that 60 per cent of Saskatchewan's population would be unable to listen to their signal on the radio?
Mr. Kiefl: I was actually saying that two years ago CBC turned off those television transmitters. For all of the communities in Saskatchewan — and, again, I'd have to check the CBC's list of sites — my understanding is that everywhere but Regina and Saskatoon has no over-the-air television signal from CBC. That started September 1, 2012, I believe, or maybe it was in July 2012. One evening all those transmitters were turned off and replaced by these digital transmitters, but every community of 200,000 or less was cut off for over-the-air signals.
Part of our role back in the 1970s and 1980s was to build the transmitters, to help the engineers understand what side of the mountain the transmitter should go to cover off the 300 people who might live in some little community. That was all basically discarded because of this new digital technology.
Senator Batters: What about for radio?
Mr. Kiefl: A tower may have a number of transmitters on it. It was true, and I suspect it's still true today, that CBC rents space on its towers to many other broadcasters. The tower, for example, up at Camp Fortune here, I believe it's owned by the CBC and the private television stations in Ottawa put their transmitters on it and pay a fee to the CBC for it. It's not just simply black and white that the CBC is running all these expensive towers;, they're actually trying to generate revenue from them.
I believe that even though some of these communities lost over-the-air television, the tower remained and there is still a radio transmitter. I'm sure they did not turn off any of these radio transmitters and can't abandon the tower because it has this radio transmitter on it.
Senator Batters: Thank you very much.
Senator Mercer: Reading your material is very interesting. I think we need to talk at some point about tightening up the management of CBC.
You mentioned that for five years they didn't have a point-of-view tag on Rex Murphy's show and they also didn't point out that Jaime Watt's political commentary was not based on public opinion polling. Those are things that shouldn't happen. It is a responsibility of any broadcaster to have those tags on.
You made a comment about the mess at headquarters. Do you think that the president of CBC should be appointed by the board of directors rather than Prime Minister's Office, perhaps giving it a more professional approach to broadcasting, someone who is in the business, somebody whom you go out and hire as a CEO for your company and you hire the best you can get?
Mr. Kiefl: The 1991 Broadcasting Act created the position of the chairman of the board and the president of the CBC. Prior to that it was one person who held the job of chair and CEO. I think that maybe was the start of the problem that has seeped into the appointment of the president of the CBC.
When that distinguished Canadian was appointed — when I first worked at the CBC it was Al Johnson who was a distinguished civil servant — he was appointed as the chair and the CEO and he depended then, when he took the office of chair and CEO, on the senior management of the CBC.
Senator Mercer: The executive vice-president.
Mr. Kiefl: The executive vice-president, right.
The first chair and CEO, when the job was split into two people, I think at that point in time it probably should have been maybe even stipulated that if there were going to be two distinguished Canadians in the job that one could be from any walk of life, the chair, and the president should have programming/broadcasting experience. That probably would have solved the problem.
Actually the very first chair and president appointed after the 1991 act, one was another distinguished civil servant who took the job of president, and the chair was Patrick Watson. It meant that one of the two had some background in public broadcasting and broadcasting. He worked in both public and private. Somehow or other, what seems to have happened is that both people that were appointed to the job for a period of time have come from other walks of life instead of at least one of them from broadcasting.
That worked so long as there was this executive vice-president position, but when it disappeared a lot of the knowledge base that the president and the chair required to run the organization and to manage it seemed to be lost.
Maybe even just a refinement in the appointment process, or maybe go back to the original; maybe have one person appointed as the CEO and the chair, and that person would then, in all likelihood, insist on having expertise around them from programming and broadcasting.
Senator Mercer: I'm not sure you can answer this question, but I will pose it because it's one that's out there that we need to talk about, following our visit to the West and the North.
Radio-Canada and CBC North reflect French Canada and Northern Canada. It is a huge job to ask CBC to reflect English Canada in all of its diversity, both the makeup of the English-speaking population and the breadth and the size of the country. Are we asking too much? We know that Radio-Canada does a very good job in reflecting French Canada. They do a good job in the North reflecting Northern Canada. Is this a job just too big to do?
Mr. Kiefl: Perhaps CBC has taken on too much at times. Even the introduction of Internet services like cbc.ca — it wasn't in the Broadcasting Act in 1991 that the CBC should operate Internet services, yet it does. How did that happen? I'm not saying it should or shouldn't be, but within the CBC decisions were made to put resources into cbc.ca or CBCMusic.ca. Management of the corporation bears the responsibility to decide what services are most important.
Two years ago, as I said, it turned off transmitters, and hundreds of thousands of people lost over-the-air transmission. We probably all subscribe to cable or satellite and don't depend on over-the-air transmission, but there are people out there, 10 per cent of Canadians, who do not have cable or satellite.
I did a study for the CRTC six or seven years ago that looked at this, and revisited it just recently and it hasn't changed. Despite all of the changes in the system, there are still about one-in-ten households that have no need or don't have the money for cable or satellite. So the CBC made the decision. They didn't get an order from the government to turn off those transmitters. It made that decision. Maybe some of these decisions about the kinds of services it provides — particularly if they can turn off transmitters to 200,000 people, and 20,000 of those people are dependent on over- the-air transmission and therefore have to make some other arrangement; maybe they can stream CBC or go out and find some way of accessing it. I think Shaw satellite offered a service free of charge where you could get a satellite dish and get access to CBC, CTV and a few other channels. The CBC management should be revisiting all of the services, particularly if it's a very small proportion of the population that is being served by something. At a minimum perhaps it should be provided in the least expensive way possible.
Senator Eggleton: I'm sorry I couldn't be here earlier. I was over at the Finance Committee because I have a bill that I'm critic for.
I have two quick questions. There was a little bit of discussion when I came in about local television news. We had another former executive of the CBC here yesterday who suggested that we get out of local news because the private sector is already doing it and why should we duplicate what the private sector is doing? CTV or Global or whoever else has the local stuff across the country. Why should the CBC do local news as well? Could we have your thoughts on that?
Mr. Kiefl: I recounted the history where in 1991 the CBC management decided that it was going get out of local news, and actually it failed miserably. The president was called before a parliamentary committee and it was reinstituted. Ten years later, another president of the CBC did exactly the same thing. He cancelled all the local news, closed all stations, no local news at all. He didn't even replace it with a regional thing. He, too, was called before Parliament and they were reinstituted. This is not a new issue. It has been around for a long period of time.
I think that the CBC has again of its own volition expanded the local TV news to the point where it didn't have the resources to do it and is providing a kind of facsimile of local news. It is called local news on the schedule, but it really isn't providing much of a service at this point.
Senator Eggleton: There are many political challenges in doing it, is what I'm hearing. You may have answered this before; I'm sorry if I'm asking it again. You propose an annual licence fee or a dedicated communications tax. An annual licence fee sounds a little bit like what the BBC does.
Mr. Kiefl: Yes, exactly what the BBC does.
Senator Eggleton: How would either one of these work? On the communications tax, who would pay it? How would it be levied, or how would the licence fee be levied, for that matter?
Mr. Kiefl: For the licence fee, there could be a special agency. The BBC spends about 100 million pounds a year collecting the licence fee, which amounts to several billion dollars. You could have a special agency that collected it. You could have the post office collect it.
In some ways, it could be voluntary. I think that Canadians are actually so supportive of the CBC that if they were given the opportunity to make donations to the CBC, I think you would find there would be some willingness to do it.
The licence fee — or maybe instead of calling it a licence call it a program fee; that would be probably a more palatable term — people would be willing to contribute if they knew they were getting something back. If CBC Television service, because we're really talking TV here, was much improved, I think there would be a willingness to do it. If it took the form of a telecommunications tax, this would not be a new idea; Pierre Juneau recommended such a thing a number of years ago and there was an outcry at the time when his report came out. In fact, the person who appeared before you yesterday was leading the cable companies at that time and was quite keen to take on this corporate tax.
I think I mentioned earlier that if it was some kind of a corporate tax instead of on the consumer, that the corporate tax rate of telecommunication companies was adjusted so that there was a slightly higher tax that they paid, yes, it would eat into profits, but their profit margin is 20 per cent or something.
Senator Eggleton: This would be levied on telecommunications companies, not on the general public?
Mr. Kiefl: That's what I would propose.
Senator Eggleton: Do you think there would be enough revenue to fund that?
Mr. Kiefl: Seven per cent on the existing revenues of telecommunications companies would raise $3 billion a year.
Senator Eggleton: What is the CBC budget a year?
Mr. Kiefl: It's about $1.7 billion, all radio, TV and specialty services.
Senator Eggleton: Thank you.
The Deputy Chair: Mr. Kiefl, I would like to thank you for your contribution tonight. The fact that we have run well over our allotted two hours shows that your testimony has inspired some very interesting discussion. We thank you for your contribution to the study.
(The committee adjourned.)