Proceedings of the Standing Senate Committee on
Transport and Communications
Issue 13 - Evidence, February 17, 2015
OTTAWA, Tuesday, February 17, 2015
The Standing Senate Committee on Transport and Communications met this day at 9:30 a.m. to continue its study on the challenges faced by the Canadian Broadcasting Corporation in relation to the changing environment of broadcasting and communications.
Senator Dennis Dawson (Chair) in the chair.
[Translation]
The Chair: Honourable senators, I call this meeting of the Standing Senate Committee on Transport and Communications to order. Today, we are continuing our study into the challenges faced by the Canadian Broadcasting Corporation in relation to the changing environment of broadcasting and communications.
Joining us this morning are Hubert T. Lacroix, President and CEO, Heather Conway, Executive Vice-President, English Services, and Louis Lalande, Executive Vice-President, French Services, from the Canadian Broadcasting Corporation.
We are happy to see you again, Mr. Lacroix. You were here with us in February 2014. We are reaching the end of our study and your testimony will be very useful for the report we will be soon starting to draft.
In fact, having you here has jacked up our ratings this morning. Thank you for that.
Hubert T. Lacroix, President and CEO, Canadian Broadcasting Corporation: Thank you for giving me the opportunity to meet with you a second time as part of your study on CBC/Radio-Canada.
As you said, I met with you almost a year ago. On that occasion, I described some of the changes that are transforming the world of broadcasting, including the increasingly significant role of digital content. I also explained how CBC/Radio-Canada responded to this situation by establishing partnerships, developing new collaborations and becoming innovative, as we have successfully done to present the Sochi Olympic Winter Games.
[English]
Since then, you've met with our ombudsmen, our heads of news and our managers and staff in eight locations across the country. We've shared with you independent audience research, including an environmental scan, which outlines our performance, our industry and how it's changing.
Yet, in reviewing the committee's discussions, I keep hearing the same misconceptions about us. One example: After 14 months of hearings, some still insist that CBC Television is "a failure.'' As proof, some keep repeating that only 2 per cent of the people in the province of Alberta watch CBC. Senators, both of those statements are wrong.
First, according to Numeris — BBM — the company responsible for viewing measurements in Canada, the prime time audience share for CBC Television in Alberta is 8 per cent. CBC Television's national prime time share is 8.2 per cent. That compares to 12.3 per cent for CTV and 7.8 per cent for Global. I will remind you that their schedules are filled with American programs. CBC's schedule is overwhelmingly Canadian. All of the other broadcasters have shares of less than 4 per cent.
If our numbers make CBC Television a "failure,'' then I suggest to you that every broadcaster is failure.
Let me explain to you what an 8.2 audience share represents. It's the 1.9 million Canadians who watched the first episode of "The Book of Negroes.'' It's the 1.6 million enjoying "Schitt's Creek,'' the roughly 1 million Canadians tuning in each week to "22 Minutes,'' "The Rick Mercer Report,'' "Murdoch Mysteries,'' "Dragons' Den'' and "Heartland.'' It's the 862,000 Canadians, on average, who watch "The National'' on CBC News Network and on our main channel every night. In total, that's millions of Canadians who enjoy the Canadian programs we offer on CBC Television.
Are ratings important? Of course they are. We can't be a public broadcaster without a public. Ratings are also important as we depend on advertising revenue for anywhere between 20 and 25 per cent of our budget. Yes, in our current funding model, ad revenues are critical to the services we provide to Canadians.
But our mandate is much more than a focus on ratings. It's about being relevant to citizens. That is why audience reach — that is, the number of people who actually use one of our services on a monthly basis — is as important as audience ratings. Well, CBC/Radio-Canada's reach is 87 per cent; 87 per cent of Canadians watch or listen to something from their public broadcaster every month.
I can appreciate that the rapid changes to the broadcasting industry can be difficult to keep track of. As you consider your report, I'd like to focus your attention on the four big challenges facing the public broadcaster: first, how to continue to invest in Canadian programs and services in the current environment; second, how to continue to reach Canadians with quality Canadian programming, when an almost unlimited number of global choices are available to them; third, how to serve those Canadians who are quickly shifting to digital platforms, without leaving behind those who still rely on our traditional services; and fourth, how to ensure that we do all of that today, while still remaining financially stable enough to avoid having to cut people and services every year just to balance our budgets.
Those are the challenges we face. And here's what we've been doing about it.
[Translation]
In June, we launched our strategic plan that will take us to 2020. Our priority is to invest our resources in our prime time television programming, in our successful radio shows and in the development of content for our mobile and digital platforms.
To achieve this transformation, significant investments will be needed and, given that our parliamentary appropriations continue to decline, that they are not adjusted for inflation and that advertising revenues are migrating to digital platforms, we are forced to eliminate some of our services and to give up our talented artisans to find the funds we need to achieve this transformation.
Our goal is to double CBC/Radio-Canada's digital services by 2020, so that 18 million Canadians — or one in two Canadians — use our digital services every month and that three out of four Canadians respond, through polls, that Radio-Canada or CBC is very important to them personally.
As you know — since it has been repeatedly mentioned by witnesses who have appeared before you — many Canadians would like us to do more: more local news and more Canadian programs on the radio, on television and on the web. However, our current financial situation simply does not allow us to provide additional services.
[English]
I've been talking about a broken revenue model for months now, and I'm not alone. The heads of CTV and Rogers have been saying this too because it's affecting all conventional television broadcasters. It is putting at risk the continued existence of Canadian programming, particularly local programming, both news and non-news.
We at CBC/Radio-Canada are focused on doing what we have to do to meet these challenges. We have been quick to adapt, and we have made enormous strides in maximizing our resources and streamlining our operations. Few public broadcasters in the world, if any, provide more services for less money than CBC/Radio-Canada.
We have also proven that with targeted investment, we can be industry leaders in areas like digital news. So we continue to shift resources and find efficiencies, but the fact is that our current situation is simply not sustainable over the longer term.
And it isn't just about us. The media universe is at a crossroads. It is increasingly dominated by giant, global digital players — Google, Facebook, Amazon, Apple and Netflix, just to name a few. This period of dramatic change will offer great opportunity for communities with the presence of mind and the leadership to seize the chance.
Some countries are already taking steps to invest in the production of their national content — the European Union, the U.K. and China, for instance. The U.K., from which you have just returned, will spend the next two years planning and debating how to ensure that their public broadcaster plays a commanding role, not just in Britain but in the whole world.
What will Canada do? If I have one wish for what this committee's report might contain it is that you challenge CBC/Radio-Canada to be everything it can be for this country in this digital age. If Canada wants the tools it needs to play in this league, it will have to decide to build them. There is no one outside of the United States who thinks that the market on its own will provide that opportunity. But with the right support, with a public/private approach that has served Canadians for the last 80 years, there is no one that we can't beat. We are as creative, as efficient and as ambitious as any in the world.
So challenge us. Don't shrink us to mediocrity. Challenge us to be great. Give us the basic tools and flexibility to compete in the world and we will shine.
Thank you for your time, senators.
Senator Plett: Thank you, Mr. Lacroix, for being here today. You have already spoken a little bit about your strategic plan.
I want to first of all commend you on "The Book of Negroes.'' I watched the entire series and thought it was excellent. I don't have quite the same opinion of "Schitt's Creek,'' but I like "The Book of Negroes.'' I know there are a lot of people watching "Schitt's Creek,'' and I'm actually one of them; I just don't have the same opinion about the quality of it.
You mentioned, sir, that we were in London last week; and yes, we were. We had about 20 meetings in three and a half days, and I think productive meetings. We met with executives of the BBC. We met with members of the House of Lords in charge of the BBC. We met with members of the House of Commons who are right now writing a report. I'm anxious to see the report that they're going to come up with as to how they're going to continue to operate with BBC, because there are those who think that the licensing fee is not the correct model. It seems that the people like it, but some members of Parliament don't like it. So they're struggling with their funding format as well.
As I said, you touched on strategic planning, but I want you to go into it a little more. In one of the meetings we had with the House of Lords, we talked about funding. They had taken a 20 per cent haircut in their funding. I guess when you have licensing fees, the cuts are made in different ways. In one of their cuts, they didn't get increases as per the rate of inflation. The BBC had to take on certain programming prior to it being paid for by other sources. The BBC had to take that; so it amounted to about 20 per cent. Some of their ratings went down during that time.
My question to one of the members of the House of Lords was: What did you do to bring your ratings back up during this difficult time? His answer — and I'm not sure that this is verbatim but I think it's pretty close — was "quality programming.'' They made a very conscious effort to spend more time and money on developing quality programming to bring their ratings back up. They have a very strategic plan for what they want to do, and the proof is in the pudding, so to speak.
"The Book of Negroes'' is possibly an example of what you've done to bring that back up, but one short series isn't going to do it; we'll have to have more than that.
Does CBC, and you talked about it, have a strategic plan to create quality programming to improve ratings and increase viewership? Who is in charge of that strategy? Before you answer, I believe you said 8.2 per cent.
Mr. Lacroix: Yes.
Senator Plett: I'm not sure whether you're referring to just Alberta or national. I think Mr. Racine said that was the national average.
Mr. Lacroix: Yes — 8 per cent in Alberta and 8.2 per cent national.
Senator Plett: I find that as hard to believe as you find the 2 per cent hard to believe. Nevertheless, I'm not going to argue that. That's what you're saying and of course we can check that.
The BBC has somewhere between 35 per cent and 40 per cent, as they told us. They might be sending us the exact information. How would you explain the difference? It's a significant difference, even if we take the low end of 30 per cent and go to your 8.2 per cent. There's a huge difference in the ratings. You said that you had an 87 per cent reach.
Mr. Lacroix: Reach.
Senator Plett: They said they have a 98 per cent reach. Our analysts told me it might be 96 per cent, but the reach is between 96 per cent and 98 per cent.
Can you talk about the difference? Can you tell me who is in charge of your strategic plan? Is it you? Is it the group sitting there?
Mr. Lacroix: Senator Plett, there are a number of questions in your intervention, so I'm going to try to break it up. I'm going to talk about the BBC and how it positions itself in the U.K. Heather is in charge of CBC and its strategy, which involves the programming piece, and she will speak to that. If you want Louis to add to it, he'll be happy to do so.
One important comment in my introductory remarks is that the current leader in this country is CTV at 12.8 per cent, not 35 or 40. It gives you an idea of the fragmentation of the choices available on the English side, in particular. More than 200 channels bombard viewers with content. The environment is completely different, the culture is different, and the 12.8 per cent, which is the leading number in this country, is the indicator. It's the base from which you compare everybody else. That's why, when you look at CBC and CBC/Radio-Canada and our reaches, I think that's a pretty good number. It's actually a very good number because it means that for certain weeks we're the number two network in this country.
Heather, do you want to talk about programming and how you see it? It's core to Strategy 2020, which we announced in June 2014.
Heather Conway, Executive Vice-President, English Services, Canadian Broadcasting Corporation: Sure.
Thanks for your kind remarks about "The Book of Negroes.'' We're very proud of it too — a great Canadian novel, a great Canadian director and a great Canadian program. I'd also be remiss if I didn't take the opportunity selfishly to pitch for "X Company,'' which starts tomorrow night on CBC. It's a great Canadian show about the training of secret service agents at what was known as Camp X in Ontario. It's set during World War II and is a great drama. I encourage everyone to watch it.
The strategy, as Hubert said, is to privilege content over all other expenditures going forward for the next five years. That means when we have a choice about spending money on infrastructure or real estate or content, we will privilege the spend on content. I think it's fair to say that it's been a very difficult 10 years, but especially the last 5 years. When you're faced with having to execute cuts, a lot of those choices were made to cut programming and to cut, frankly, the promotion of programming, because it's an easy, quick cut to make.
I come partly from a marketing background, so I know very well that when you want to dial down the expenditures quickly, one of the easiest cuts to make is the spend you haven't made yet to promote something. So you cut the marketing dollars. Part of the reason we've had success this winter with the ratings we've had — whether you like "Schitt's Creek'' or not, I find it funny — is that we have actually spent on marketing as well as content. That's important to note.
It's a tough turn to shift programming and to simply say, "Make successful, quality programming.'' It's not an easy thing. It's a collaboration in our case. We make no drama and no comedy in-house. They're all independent producers. We collaborate with hundreds of independent producers to develop and create great content, and you hope you're making great choices.
You're competing for that content with some of the other networks, probably not to the same degree because we're 91 per cent Canadian in prime time, which no other Canadian broadcaster is. Part of the reason for the share challenges that you face in Canada is, unlike Britain, we sit next to the largest English-language market in the world, and it is the largest creator of entertainment content in the world as well.
Senator Plett: If I may interject, we raised that a number of times and the Britons certainly agreed with that. We entirely understand that difficulty, and so do they.
Ms. Conway: It's a legacy problem as well. That's been the case throughout the evolution of Canadian broadcasting. The Brits opened up their market to the world in the last 10 years, but prior to that it was very much BBC-dominated: BBC, Channel 4. Channel 5 was a revolution in Britain; it didn't exist when I did my master's degree in Britain in the 1980s. There was no Channel 5; it was mostly American programming.
Our commitment is to Canada. I believe in Canadian comedy as well as in drama. Comedy is a cultural product. I think to have satire shows like "22 Minutes,'' which was here filming a week ago in Ottawa, is a fantastic contribution to the Canadian cultural framework. I know for Louis as well, comedy programs in Quebec do well.
But it's a hard thing. To make programs is difficult. I look at what's happening now. Our strategy, as we've stated publicly, is to compete with premium cable, because that is where people are increasingly going for comedy and drama. So to be able to create comedies that can compete with ''Veep'' and "Arrested Development" and those kinds of things people are doing, it's not traditional sitcom. To compete with dramas like "True Detective" and the HBO-level dramas, it's difficult to do that and do it in a cost-effective manner. Yes, "The Book of Negroes'' was a six-part mini, but we may find ourselves doing more of that because you can get 6 episodes at a high quality that you can't always get with 13.
We're cognizant of what the competitive set is and we're trying very hard, as are great Canadian creators and producers, to meet that standard. I think the early signs are that we're doing that.
Louis, do you want to speak to the French side?
[Translation]
Louis Lalande, Executive Vice-President, French Services, Canadian Broadcasting Corporation: Yes, the challenges are similar. Although we have often thought that the French market was somewhat protected by the language, we now see that the very significant access to all content is fragmenting francophone audiences even further.
As Hubert and Heather mentioned, all the hard work that went into the 2015-20 strategy focuses on strengthening investment in Canadian programming and content, and, in the case of French-language services, in diversified content, such as drama, comedy and current affairs. We are talking about content that has a real impact on audiences that always appreciate it.
The challenge to succeed has a number of aspects. If the recipe were in a book, we would all use it. In the case of French-language services, I would say that the recipe very much depends on the relationship with all stakeholders, independent producers, artists, and all those in the cultural community, meaning that everyone is committed to maintaining a certain level of French-language content and programming.
English-speaking communities may face the challenge of competing with the U.S. giant, but I can assure you that francophones struggle with that every day, and I am not talking only about French-language content, but about French-language content that is available to all Canadians.
[English]
Senator Plett: What is the market share in Quebec? You spoke about the average and you spoke about Alberta.
Mr. Lalande: It is 18.5 per cent.
Ms. Conway: I just want to add that we are also launching a new arts programming strategy in CBC English. I think particularly for public broadcasters, that's a critical area for showcasing Canadian "creatives.'' It's been a while since arts programming has been privileged on any broadcaster, so we're proud of that. I encourage you to look forward to that.
Mr. Lacroix: Senator Plett, I saw your reaction to the 18 number that was given by Louis. In the French market, the leader is TVA right now at a market share of 22. It gives perspective again to —
Senator Plett: I appreciate that, and we have been comparing that. My colleagues from Quebec have shared a number of times with us how Radio-Canada is actually quite successful, in their opinion, versus maybe English Canada. My reaction was really congratulations, as opposed to anything else.
Ms. Conway, you talked about having more miniseries. Again, the Brits refuse to run any series over six segments. They do not do the American thing of having as many. It's successful.
Ms. Conway: It can be a very successful model. We just have to do more of them.
Senator Plett: My next question, chair, and I'll lump these together if you'll allow me a bit of time to do this, in order to maybe speed up the time. It gets to some of the —
The Chair: You'll have jealous colleagues over here, so —
Senator Plett: They will cut me off when they feel the time is right.
Not yet, Senator Eggleton.
The Chair: It was Senator Housakos
Senator Plett: It gets to be maybe a little more controversial, and of course I think we all expected that these questions might come, but it's in regard to conflict of interest. You've talked about strategy. I don't think CBC is necessarily that unique, but far too often we develop our strategy after the fact or we create solutions after the problem as opposed to ahead of the problem. I find it strange, and we've raised this before about speaking engagements for journalists or others working for CBC and doing other work outside of their work at CBC. Of course, Amanda Lang has been very prominent in the news. I want to touch on this and then I want to touch on one other issue that may be similar.
Here we have a journalist who not only has a personal relationship with somebody at an organization that she is speaking to. She then further gets herself involved in fighting a very good journalist at CBC when this journalist has a story to present to Canadians. She virtually tries to kibosh this story, invites a board member of RBC on and gives him a softball interview. So she's in conflict of interest, in my opinion, in two areas: one, that she's got a personal relationship with a board member of RBC; second, that she's making $15,000, apparently, per speaking engagement working for them; and then tries to kill a story related to RBC.
From what I understand, the punishment she got is, "We will no longer do this.'' My word. CBC is a public corporation. Your journalists are working for the public. To get themselves caught in this and the worst that happens is, "Well, we won't do this any longer,'' leads me into simply —
The Chair: If I may, remember the ruling I made on the fact that if it pertains to the study and the future of CBC, that's one thing. If it pertains to an attack —
Senator Plett: It's not an attack.
The Chair: It's the process or the policy of the group that I'm interested in. If they are individual cases, I would like you to try to frame it in such a way that we're not getting either them or the people you're talking about involved without just cause, because they're not here to defend themselves.
Senator Plett: Thank you, chair. However, their boss is here to defend them.
In a memo, CBC says, and I will quote, "a changing environment in which the public expects more transparency from institutions,'' and that is in a memo that was written by CBC in regard to the Amanda Lang story. They themselves say "a changing environment,'' so I think it very much makes it relevant.
I have another question, and you can answer both of them in light of time.
I read an article in the paper about Maryse Bertrand. She is Vice-President of Real Estate Services, Legal Services and General Counsel for the CBC. She was appointed as a director of Metro. She is also, I believe, on the board of the National Bank. At Metro she will receive upwards of $90,000 a year; at the National Bank about $117,000 a year, I believe; then she works for the CBC. Unfortunately, you do not — and this has been discussed in the past — tell us what the salaries are. You just give us a range, but her remuneration at CBC is between $274,000 and $519,000 annually. I have a suspicion that it's upwards of at least $400,000. It may not be, but I would suspect that it is.
Earning $400,000 working for CBC, to me it would appear that's a full-time job. If she's making over $200,000 a year doing other work, how can she properly service the Canadian public by doing her work in the real estate industry and be legal counsel for the CBC?
Those are two fairly heavy questions, and then I'm done for this round, chair.
Mr. Lacroix: Mr. Chairman, Senator Plett, I will let Heather discuss the Amanda Lang story, and then I will answer the Maryse Bertrand question.
Ms. Conway: To the chairman's point, I don't really want to get into the specifics of any one individual.
Senator Plett: You can talk policy.
Ms. Conway: What I will tell you is that it is under review currently.
To your point about the issue of trying to, as you put it, kibosh another journalist's story, there was no impact on the story. There was a heated conversation about the story. The story went to air as planned that evening.
That said, there is a review under way as to whether the journalism was impacted by the relationship in any way, and that will be completed in the course of time and I think effectively, and it will be dealt with appropriately.
Senator Plett: Journalists are now not allowed to —
Ms. Conway: No, they're not. Well, under their collective agreement they are permitted to engage in outside paid work. There is a restriction on that in that for employees covered by journalistic standards and practices — and I think you met Jennifer and Michel, the heads of news and CBC/Radio-Canada, and they talked about that so I'm not going to go into it — if there is a potential adverse impact on the corporation, then one can put restrictions on that.
As you say, over time, decades, people have been making speeches. They've been invited to do so. A lot of them have been in the realm of what it's like to be a journalist, and they've constituted sort of outreach and community connection for a lot of journalists. I think at a point we looked at it and we've been trying to manage it. We looked at it last year, put a bunch of restrictions in place and said, "Here are a bunch of rules around transparency and the reporting of it.'' At a point you come to the realization that some of this stuff is just not as manageable as you might like it to be.
For example, we've had journalists who do stuff for charities. Charities want them to help with fundraising and have paid journalists to participate in fundraising efforts, and you realize that charities are under examination from time to time about their operations. So rather than continuing to draw all these lines and parse it, you have to make a call. So Louis and I, with Michel and Jennifer, made that call and said we're ending paid speeches, and I think that was the right call.
What's troubling for us about these kinds of incidents is not that you don't expect to have incidents from time to time. There are thousands of employees. It's a big organization. It's that we cover thousands of stories every week, and people do it with integrity and accuracy and fairness and balance and all of the things that you want them to be, and it distracts from the great work that CBC and Radio-Canada journalists are doing every week.
Yes, we'll deal with it. We'll deal with it effectively and properly. It's harmful to the reputation, and so it will be dealt with, and I can give you that assurance.
Senator Plett: I want to commend Kathy Tomlinson for her tenacity in making sure the story got out.
Mr. Lacroix: Senator Plett, women on boards is a key subject matter in this country. Not enough spectacular women make it to boards of directors of important companies. Maryse Bertrand is a really seasoned executive. We were very fortunate, I was very fortunate to be able to convince her to leave her law practice and join us.
In the context of the exposure that we want our team to have and to ground our team in the reality of what Canada is, being invited to boards — and it's possible to have a number of people that can be invited to boards — we have a policy. Maryse came to me both for the National Bank board and for Metro Richelieu. We discussed it, looked at the schedule, and there is no doubt in her mind and my mind that if this influences in terms of time the work that she does for CBC/Radio-Canada, she will not continue, but she has managed it extremely well so far. The addition of the board of Metro Richelieu, again, shines on the fact that we have extraordinary executives running CBC/Radio-Canada, and we are very proud that Maryse has been invited to the board of Metro.
Senator Eggleton: I'd like to get back to the mandate that this committee has from the Senate, and that is to examine and report on the challenges faced by the Canadian Broadcasting Corporation in relation to the changing environment of broadcasting and communications, because I think we get off a little bit too much on these personal situations. Policy, fine, but I think we have to be careful about dragging a person's name around here until all of the evidence is examined.
Anyway, I'd like to get back to the BBC comparison, because this is fresh from our visit last week in London and some 20 meetings that we had with various officials relevant to the BBC. I think you quite properly, Mr. Lacroix, point out that the ratings within Canada versus Britain are in a different context in Britain. The BBC has a lot more channels, so they would logically get more reach and more ratings, more share, with all their various channels. Their competition, while it's growing all the time, is still not to the same extent as it is here in Canada with the competition from south of the border, in particular the 500-channel universe.
It's also worth noting, again from our trip there, that the revenue they gain from the licence program means that the BBC, even with the cuts that Senator Plett mentioned, is getting three times per capita what the government is allocating here for the CBC.
In your remarks, you said "that our current situation is simply not sustainable over the longer term,'' and I think that's quite true. There have been government cutbacks before by a different government of a different colour, but the piling on of the current cuts has, I think, taken it beyond a reasonable base for being able to plan your future.
I want to also talk about advertising, because the BBC doesn't advertise. In fact, any time we raised the question, it was, "Oh, the private sector wouldn't like that; they're the ones who get the advertising revenue.'' So they have no advertising, radio or TV; none.
We obviously do have some advertising, but I wonder how significant that is for the financing model, particularly in light of the loss of the revenue from "Hockey Night in Canada.'' What is the amount of money that you get in revenue? What is the cost of going after that? How has the ratio changed pre-''Hockey Night in Canada'' compared to post-''Hockey Night in Canada''?
Also, and perhaps this is more relevant to English CBC Television, I understand that with some of the programming there has been some deliberate attempt to provide for commercial-free episodes, although perhaps not too often. I'm just wondering if that spells out anything.
One of the things that we certainly found out from the BBC is that they said one the reasons they got their 30 per cent or, adding in their radio, up to 40 per cent was that they don't have any advertising, and people really like that. If people are going to tape a program nowadays, they try to speed up through the commercial phase and try to get as much content without having to look at all those commercials.
I'd like you to talk more about this advertising and any experimentation that you might be doing. Also, of course, Radio-Canada as well, because I think there might be a different perspective on advertising between Radio-Canada and CBC Television.
Mr. Lacroix: Thank you for all of that. I'll deal with the numbers questions. I'll ask Heather to talk about some of the commercial-free attempts and experimentation that she's doing, and I'll ask Louis to add his Radio-Canada perspective.
As to ad revenues, as I said in my introductory remarks, it's about 20 to 25 per cent right now. That's where we think we'll end as of March 31, 2015. As you know, it's our first year without hockey, so that will be an adjustment and we'll see where we land.
Senator Eggleton: Do you have a dollar amount, not just a percentage?
Mr. Lacroix: The dollar amount is between $450 million and $500 million.
Senator Eggleton: That's the revenue, between 450 and 500?
Mr. Lacroix: Ad revenue combined, CBC and Radio-Canada.
Senator Eggleton: And the cost?
Mr. Lacroix: It is about 10 per cent. That's about the cost of sales. When you put all of that — those are the ad revenues. That's the ratio. The 10 per cent ratio would be a good number. That's what we've looked at, and I know you asked that question in the context of the questions you sent us beforehand.
Can I take this opportunity to talk about hockey for one second? I'd like to correct one of the misconceptions about hockey and our contract. Over the life of the "Hockey Night in Canada'' contract, the one that just ended, we didn't make money off this contract. We lost a few dollars. When the NHL decided that it was going to take this on and give it to a single gatekeeper, obviously CBC/Radio-Canada couldn't play in that game. We show about 50 to 70 games a year. We wanted to protect "Hockey Night in Canada'' on Saturdays, which we have done through an arrangement with Rogers. If you want to talk about that, we'll go there. But the concept was that there was no way in the world that we could actually sign a cheque for $5.2 billion and get a thousand hockey games. We don't have the shelf space and the channels to show that.
The most important thing I would like this committee to remember, because you've talked a lot about the hockey contract, is that we have not lost hundreds of millions of dollars on the hockey contract. We lost a few dollars. When you look at the broadcasting rights and the cost to produce hockey and the revenues on the other side, and when you look at it over six years, we didn't make money on this contract. It did many more things for us. It was a locomotive to sell our schedule. We could bundle some of the shows with "Hockey Night in Canada.'' I'm not saying that it didn't have an indirect impact on the ad revenues, but the hockey contract itself didn't make money for CBC/Radio-Canada. That was one of the first things I told our employees when I met with them to announce that the NHL had decided to go to Rogers.
So hockey misconception; I told you about the ad revenues; I told you about the cost of sales. Maybe Heather can go to ad-free episodes and what you're trying to do there.
Ms. Conway: The advertising question is a very complex one for everybody in the traditional media sector, as you know. Ad dollars are shifting and have been shifting over the last 10 years. The big shift that first occurred was from conventional to specialty broadcasters to the point where they surpassed them in 2007-08. Specialty was garnering more ad dollars than conventional.
As you all know from your study and travels, the shift that broadcasters are struggling with now is to digital properties. The challenge you have there is even with the number one digital news site in the country, the vast majority of ad dollars that are going to digital are going to search. They're going to Google; they're going to Facebook. They're not going to display ads on news websites. We get our share. We do very well. Where we have digital properties, we've been very successful and we're proud of that, but the vast majority of those dollars are going to products and services that simply aren't ones that we offer. We're not Google. We're not going to become Google. We've got lots of content on YouTube. We have lots of content on iTunes. There are 2 million downloads a month of CBC podcasts on iTunes alone. We're there and we're present in that market, but those dollars go to iTunes. Those dollars go to Google.
As you struggle with how to replace the shrinking ad dollars from television, it's not an automatic one for one. I think you probably heard the phrase that a lot of people use, which is you're trading analogue dollars for digital dimes. The price point for digital advertising is not the same as what it is for conventional television. The cost per thousand or the CPMs are not the same. It's a real issue.
The experimentation that we're doing is very limited. We looked at a program like "An Honourable Woman,'' which is a BBC production of very high quality, with Maggie Gyllenhaal. We ran it in the fall as a prime time show with ads. It was made without ads because it was made for the BBC. We're running it late night in a repeat as it was intended to be run, without ads, the same as it ran on the BBC. We will see what the viewership is.
We can also look at sponsorship models. One of the most telling experiences I've had looking at programming in the last month is a show called "Transparent'' made by Amazon Prime, so a non-traditional, non-broadcast entity. It won a Golden Globe for best actor. It is a half-hour drama. It cannot be seen in Canada on any broadcaster, so nobody bought it. It went from Amazon Prime digital player to Shomi, an on-demand service. It bypassed —
Senator Eggleton: You can't get advertising in it, and that's why the traditional broadcasters don't want it?
Ms. Conway: It wasn't built for it. It's a half-hour drama with a little bit front and back, but yes, it was the full 30 minutes.
Senator Eggleton: In a drama with 10 minutes of commercials —
Ms. Conway: Twenty-two is what you end up with. A half-hour of anything is really 22 minutes, and hence the name of the show.
It's shocking to me that such a high-quality piece of television was made completely outside the traditional ecosystem of broadcasting and is reaching millions of viewers completely outside the traditional ecosystem. It's really difficult. If I want to make a half-hour drama, I have to go to my head of sales — who is also Louis' head of sales because we've integrated our sales teams; in the post-hockey world we have one sales unit — and say, "Can you find a sponsor who might want to look at doing a half-hour show and just be there at the front end and back end?'' In a way, it's interesting to me because it's a throwback to the old days of the Westinghouse Playhouse model where you have companies that want to be associated with causes or with particular content. That might be something we'll look at.
What I'm going to do is try out different models and see what happens in terms of whether I can monetize them digitally or other ways.
Senator Eggleton: Okay.
Radio-Canada?
[Translation]
Mr. Lalande: Five years ago, we launched the ICI Tou.tv platform, a web platform accessible to all Canadians that provides a way to catch up on the Radio-Canada programming, but also all kinds of programs. This platform is used by 26 per cent of French-speaking Canadians, so it is very successful.
Last year, we developed the Tou.tv EXTRA segment offering exclusives and programming without commercial content. The EXTRA segment is offered at an affordable price, and this is a way for us to check the interest of francophones for programming without commercial breaks.
As for the rest, I want to perhaps mention two points about the French-language market. In the francophone market, advertisers have always wanted to have a choice of different broadcasters to buy advertising from. As you have seen, broadcasters still have quite similar positions. So the advertising community would like to see some healthy competition and diversity in terms of services.
Three years ago, France did an experiment, where the government asked France Télévisions to eliminate advertising during prime time by replacing the advertising costs with an increased government subsidy. After a few years, everyone is scrambling because the government subsidy is not making up for the shortfall, the funding gap is much larger than expected, thereby placing France Télévisions — and the government — in an uncomfortable position. That's sort of the picture of the issues related to advertising revenue.
However, I would say that, in this whole issue, there is a point that comes up all the time: stable funding. In media, it is important to achieve stable funding to be able to plan properly, because the production cycle presupposes investments that often have to be made two years before a program is broadcast. Therefore, any mechanism that will help the public broadcaster achieve stable funding is really important.
[English]
Senator Eggleton: Let me go to digital platforms. I understand that you actually are the leader in the Canadian market when it comes to online news. You do have more than CTV does in that particular case. Maybe you could just confirm that.
Secondly, when we were in London, we talked a little bit about iPlayer, the BBC's expansion into its entertainment and informing its entire mandate, just moving more and more into that platform. Are you going to do something similar to iPlayer here?
Ms. Conway: We have an iPlayer, and every CBC show is available on it. If you want to go and get any CBC content on cbc.ca, you can do that.
We are the number one digital news site. As you know, part of our Strategy 2020 is to increase our presence in digital. That's partly because people's habits are changing, and it's very particular to the news product. A lot of news content is becoming commodity content in the sense that everybody is reporting on the same thing at the same time, and so you're not waiting for a whole day to get to the 10 o'clock news. If you're not a CBC watcher, which I just can't believe is even possible, you're not waiting until 11:00 for somebody to tell you what the news of the day is. People are getting their news all day, every day. So part of our 2020 plan is to put in place a mobile digital strategy so that people can get their news for 18 hours a day — regular updates on mobile — and to create interstitials through the day so that, at the top of the hour, from 2:00 to 9:00 or 3:00 to 10:00, you will start to see news content so that people are kept up-to-date locally on what's happening or on breaking news.
So it's increasingly digital. News is a particularly great match for digital because it's about "breaking.'' It's about timeliness, and it works really well for that.
Mr. Lacroix: Just to complete Radio-Canada and Tou.tv, Tou.tv - Extra and what you're doing there, the closest thing that we have to the iPlayer is what Radio-Canada is doing in terms of context and expanding beyond Radio-Canada content.
[Translation]
Mr. Lalande: As I said earlier, Tou.tv is really a separate platform. It is a platform accessible on the web, so it is a platform in itself that provides access to Radio-Canada's television content, but also to the content provided by partners who do business with Radio-Canada.
Actually, two weeks ago, the chair of the CRTC said in his speech that he wished there were an accessible platform such as Tou.tv that would focus on Canadian content and that would be accessible to the anglophone market, because it really is a platform that complements the conventional and specialty broadcasting programs, a platform that is well positioned to compete with new broadcasters that deliver content through those outlets.
As I said earlier, 26 per cent of francophones are using the Tou.tv platform in addition to traditional broadcasting services. So, for us, it is a great way to keep in touch with our audience.
In terms of going digital, we launched our digital initiative at Christmas in the regions. As a result, in a few months, each of our regional stations will provide a digital, mobile platform of which we are very proud, because it is really another way to keep in touch with our audience in each region in the country, providing them with relevant information.
[English]
The Chair: As you saw, I was very generous with the first two questioners, but just so the next four understand, it won't be that long for everybody else.
Senator Housakos: I have a number of themes I would like to tackle, and I'll try to be concise so that we can have our guests respond as concisely as possible.
I want to deal with ratings. Since this committee started its work, I think we've all understood. None of us are expert in the media field, but we have come to understand that ratings are the number one barometer to measure success in this industry. Even the chairman of your own board says that ratings are the number one most important thing in identifying success or failure.
We just visited London, as my colleagues pointed out, and the BBC and a number of the interlocutors we talked with all stated that ratings are the most important thing. I was stunned because the BBC, as you know, doesn't rely on ad revenue, but yet they said it's so important because that is the basis of building a brand stream and of justifying and making themselves relevant when they go to the government and ask for more funds.
I agree with my colleague Senator Eggleton that they get three or four times the funding, but they also have five times the audience. Per capita, obviously Great Britain is a larger country, but they also have three times the ratings compared to CBC.
We can sit here and talk about numbers all day long. Numbers can say a lot of things, depending how you craft them. Can you tell us, Mr. Lacroix, if there's a single program at CBC that is number one in its respective time slot compared to your competitors? The ultimate thing, when it comes to comparing ratings, is the bottom line. Can you tell us what the comparisons are in terms of ad revenue generated for CBC compared to your two closest competitors, which is based in large part on ratings?
This committee has tried exhaustively to study and come to a concise understanding of the BBMs. All of us thought that on October 22, that tragic day, the CBC did an outstanding job of covering what transpired on Parliament Hill. The quality of the coverage was outstanding. We pulled out the BBM ratings for that week, figuring that that particular day and a few days subsequent to that your news coverage should have been — and deservedly — much higher in the ratings. To our disappointment, when we pulled out the ratings, we found out that no CBC show, including "The National,'' was top 30 that week compared to CTV news, to name one.
For us, it's not a condemnation. We're trying to identify and be helpful in finding out why you can do, and I underline, such an outstanding job compared to our competitors in the private sector, yet not attract the audience you deserve. I use that particular tragic day as an example.
I'll let you tackle those questions before I go on.
Mr. Lacroix: We need to talk about the mandate. Every broadcaster has a completely different mandate. Senator, with the greatest respect, the chair said in front of you that ratings are very important, but he also told you that that's not the only thing we do. That's why, in prime time, we make choices that allow Canadians to watch public affairs or to watch drama. I can go through Heather's or Louis' schedule and show you that when we air programs like "Doc Zone,'' "The Nature of Things,'' "L'épicerie'' or "Decouverte" in prime time, nobody else makes these kinds of choices because the only thing they're interested in is the return to the shareholder; and that's correct, as their shares are traded on the public market. We have a concept of the return to citizens.
We're trying to ensure that when you watch CBC Radio-Canada, you get the culture piece. We preserve that, nourish it and show to Canadians Canadian content. We support Canadian creators and we support Canadian music. We simply can't compare what the privates are doing to what we're doing. That's the ecosystem.
One last thing: I gave the numbers in my remarks at the beginning to make sure that everybody understands that CBC in this environment is the number two network, depending on the weeks. With the combined share in prime time, depending how it floats, the interests that week and what's happening that week, we have millions of Canadians that watch us. You can't compare the BBC with us. We told you that, and I think some senators agreed as I saw the body language. Yes, we cannot be a public broadcaster without a public.
Ms. Conway: If I may add to that, one of the great challenges we face vis-à-vis our competition is not only that the content is American but also that the promotional and advertising dollars associated with that content are staggering. At the newsstand, People and all the other magazines that Canadians see promote the American stars of those American shows. If I'm going to put "Doc Zone'' up against "The Big Bang Theory,'' that's a tough competitive slog. I would also add that if you look at CTV/Bell Media or Shaw, Bell has 40 specialty stations where they can use their promotional time to promote their own content and to promote the shows that they have paid Americans for. I've got CBC News Network and a documentary channel, so my promotional dollars available on my networks are nowhere near what my competitors have. It's not a function entirely of Canadians not wanting to watch Canadian because often Canadians do want to watch Canadian and a lot of them seek us out. The tsunami of American content and promotional dollars is pretty staggering.
I would say, look at English radio where there are no commercials and —
The Chair: I will say the same thing regarding the answers as I did for the questions.
Ms. Conway: My apologies.
The Chair: To squeeze in as many questions as possible between now and the end of the sitting, if the answers can be shorter and the questions can be shorter, more people will get to ask questions.
Mr. Lacroix: May I add one thing about the BBC?
Yes, Senator Eggleton, it's three and a half times, or close to that, per capita and close to 5 and a half times in terms of real dollars — one time zone and one language. Everything is in Britain. CBC Radio-Canada covers six time zones and two official languages. Everything that we do is Canadian. So let's put things in perspective when we talk about funding. You've looked at the sheet of where we stand on a per capita basis, and we're at the bottom of this.
Senator Housakos: I'd like to return to the issue of governance, transparency and ethics. I want to go back to the question my colleague Senator Plett asked with regard to Maryse Bertrand. I was a little stunned, Mr. Lacroix, by your answer, to be honest with you, and I'll give my reasoning behind this.
You're a public broadcaster. You get close to $1 billion or more a year from taxpayers' money. The media is a conduit between the government and the governed. You play a tremendous role in building that bridge between those two entities. You also play a tremendous role in setting some of the highest standards when it comes to transparency, at least demanding those standards from public figures and those in the public milieu. With CBC Radio-Canada being so significantly funded, you're part of that public media and people expect you to live by the same standards.
You answered the question Senator Plett asked by simply saying that you find it justified that Ms. Bertrand would be making a quarter of a million to half a million dollars a year as a senior executive in an important role at CBC/ Radio-Canada but yet can serve on a bunch of other boards because she's a qualified woman, and you think that's a positive thing. With all due respect, that's not acceptable. It's the equivalent of me saying around this committee that Senator Batters can sit on the board of CBC/Radio-Canada or Bell Media or CN Rail and that because she's a woman and a capable, qualified individual, there's no conflict of interest. Senator Dawson, we'll talk about it — we'll review the case because he's a man. With all due respect, I don't see how you can come to the conclusion that Amanda Lang cannot be remunerated by RBC because of a conflict of interest while Maryse Bertrand can receive remuneration and sit on the board of the National Bank of Canada.
Mr. Lacroix: Senator Housakos, obviously I disagree with your position. Maryse Bertrand is a qualified senior executive. The fact that she has been invited by the board of Metro shines on CBC/Radio-Canada also, because it means that our senior executives are of such a quality that boards of public companies have an interest in our management talent. I can't see a conflict of interest because when she sits with us, she does her job.
I actually like the fact that our senior executives are exposed to something else that CBC/Radio-Canada is. They do not report the news. We have rules for that. We can go through that conversation again, and Heather can talk to you again about the conversations around Amanda Lang and the policies we have.
With the greatest of respect, Senator Housakos, I completely disagree that the fact of having one of our senior executives sit on the board of Metro Richelieu and the National Bank of Canada — not a bunch of boards but a maximum of two — is an issue for us.
Senator Plett: Mr. Lacroix, you gave a different answer now than you gave to me. When you gave me the answer, you said it's because she's a woman. Women pursue higher education. Almost two thirds of post-graduate degrees — masters, medical, et cetera — are obtained by women. Women make up 67 per cent of law, social behaviour and sciences graduates and 53 per cent of business graduates. I think from that we should be able to find qualified women other than Maryse Bertrand. To use the fact that she's a woman as a reason, we have women right here who would qualify to sit on those boards as well. To use that as a reason I find equally offensive. I agree we need more women on boards, but we don't need one on three boards.
Mr. Lacroix: She's not a director. Maryse Bertrand is not a director of CBC/Radio-Canada, by the way. She is general counsel of CBC/Radio-Canada and is responsible for our real estate portfolio. She's not a director of CBC/ Radio-Canada.
I think promoting women to boards of directors is a key subject matter for all the securities commissions in this country, for the Institute of Corporate Directors. That's a conversation you know is happening right now. We were very fortunate to have her as one of ours, and she's not the only one. I hope, over time, that we'll become the subject of interest of these corporations.
Senator Batters: I want to talk about another issue that's of importance to women in Canada.
Mr. Lacroix, in early March 2013 you appeared before a parliamentary committee, the House of Commons Standing Committee on the Status of Women, as that committee continued its study on sexual harassment in the federal workplace. I think it's fair to say that during that committee hearing you boasted about the record of CBC in dealing with sexual harassment claims:
Today, across the entire corporation, we do not have a single outstanding complaint of sexual harassment. I am proud of our continuing efforts to ensure that people who work at CBC/Radio-Canada can thrive in an environment that is free from harassment of any kind.
Mr. Lacroix, I contrast that statement with this quote from Kathryn Borel, the former CBC producer who complained about sexual harassment by Jian Ghomeshi to CBC managers and her union in 2010:
The CBC allowed —
The Chair: Senator Batters, I've already ruled on your questions the last time you were at this committee. If it pertains to this study, if it pertains to policy, I can understand, but if you're going to be naming names, I will have to call you back and say, listen, this is not about personalities. It is about policy. I think you're being very personal with your question this time. I made that ruling.
The ruling is not one that I make; it's based on the Rules of the Senate. We have a mandate to study the future and the development of CBC, not to look at day-to-day management and issues pertaining to lawsuits.
Senator Batters: Mr. Chair, I noted your statements in the media article that came out just yesterday by Jordan Press, and you were quoted as saying:
Is the question about process? Is it about culture? It's not about individual issues.
Mr. Chair, I submit that my questions are precisely about process of the CBC and CBC's culture. This particular instance of Jian Ghomeshi's matter just provides us with an illustration that allows us to probe CBC's process and culture when they were faced with that serious situation.
The Chair: Then put it in a question without naming names and everything will be okay.
Senator Batters: There have been some other names mentioned here.
The Chair: Again, that is the problem. These people are not here to defend themselves, and I'm not here to do a study on sexual harassment at CBC. We're here to talk about the future of the CBC.
Not that I wouldn't want to have that mandate. I think we'd have some interesting discussions with some of our colleagues at Radio-Canada and CBC on some other issues not in our mandate. But I would want you to ask it in a policy-driven question. If not, I will again have to tell you that it's out of order.
Senator Batters: That's fair enough. I can refrain from using the rest of her quote, but it does directly go to policy and the policy in, as I see from your mandate, the changing environment of CBC in which they find themselves and the challenges with respect to that.
I'm sure, Mr. Lacroix, that when the Ghomeshi story broke in October your words before the parliamentary committee probably rang uncomfortably in your ears that day. During your committee appearance, you told that parliamentary committee:
In 2007, all employees, as well as their managers across the organization, were required to complete "Respect in the Workplace'' training.
You also said:
Right now, we are running an online training session against violence in the workplace, which every employee is required to complete.
I just want you to confirm here, Mr. Lacroix, is it correct that for both of those training modules you discussed, all CBC employees were required to complete them? You said at that committee that it included you. Did it also include Jian Ghomeshi, Chris Boyce and Todd Spencer?
Mr. Lacroix: Absolutely.
Senator Batters: I note one other matter from that committee appearance. Monique Marcotte appeared with you at that committee. She was then the interim executive director for human resources at CBC. In discussing the sexual harassment claims at CBC, she stated:
How our documentation works is that we keep all files for a period of two years. If the file is clean for two years, then we expunge the documents from the file. That's our policy. That's in our collective agreements.
Mr. Lacroix, I'm wondering if that means that if the allegations I was alluding to earlier against Jian Ghomeshi had been properly handled by CBC managers when she says she reported the claim in 2010, would such a claim, even if determined to have been well founded, have been expunged from Mr. Ghomeshi's files in 2012? Was Ms. Marcotte mistaken on that policy matter when she stated that at the House of Commons committee?
Mr. Lacroix: Mr. Chair, what happened in the Ghomeshi case is still the subject of criminal proceedings. A grievance has been filed by Mr. Ghomeshi. The process that happened is germane to those conversations, and I don't want to jeopardize this. I will be happy —
The Chair: I have no problems. Continue asking questions, but they're not obliged to give you an answer on an issue that is not — we asked Mr. Lacroix to come and talk about the future of CBC, not about cases that are pending.
I'm asking you once again to refrain from asking about ongoing cases. If you want to talk about whether there is a policy of vedettariat and have they mistakenly been too generous, without names once again, that I'll agree with. But if he doesn't want to answer, I'll also agree with him. He has to manage day-to-day issues. This is not about the future of CBC. That's about a case you have a certain interest in, but I don't think it's pertinent to our mandate.
Briefly, if you want to talk about policy, but if not I will give the floor to Senator Unger.
Senator Batters: I have a question, then, on a policy basis, about Ms. Marcotte's comment concerning these types of harassment files. Is it the policy of CBC that today they continue, almost two years after she made those comments, to keep that type of file open for two years, and then if it's clean after two years the documents are expunged from the file? That's what she indicated the CBC policy was then. Does that continue to be the policy?
Mr. Lacroix: Senator Batters, obviously the Ghomeshi situation is a serious matter. At CBC/Radio-Canada, the comments I made in 2013 — we take this extremely seriously, particularly when you consider that 47 or 48 per cent of the people who work at CBC/Radio-Canada are female. So we've got great gender balance. We're very proud of that.
Our job is to ensure that they have a safe environment, that everybody at CBC/Radio-Canada can actually do their work without being bullied, being respected. That is why with the CMG, our main union on the English side, we put together these respect workshops.
I look forward to Madam Rubin's conclusions. We'll see at that time what we can do to improve. But you and I, and everybody who works at CBC, have one concern: We have to make sure that situations like this don't happen again.
Senator Unger: Thank you to our witnesses. I do have what I consider a supplementary question to the work that Ms. Rubin is investigating.
The Chair: If you're going to be personalized, I'll make the same ruling as I did with Senator Batters. I will not force the witness to give an answer to something that does not pertain to the mandate of this committee.
Senator Unger: I have a supplementary based on the fact that he just referenced it.
The Chair: First. I'll listen to you, but I'm telling you that the ruling is if it doesn't pertain to the mandate that was given to us by the Senate, then the witness does not have to answer because that's not what he was called for.
Senator Unger: Okay. Well, I'll proceed.
Mr. Lacroix, I'm quoting from a newspaper article written by Howard Levitt, a senior partner of Levitt Grosman. He starts off by saying:
Is the CBC's investigation designed to be a cover-up?
If you wanted to appear to respond to demands for an investigation but ensure there could be no real findings and that senior management keep their jobs, you would do exactly what the CBC has done.
Then the Canadian Media Guild is brought into this.
. . . the union representing CBC employees, that anyone who speaks to CBC's investigator could be . . . disciplined for anything they might say [that] brings light to CBC's mishandling of the investigation.
I believe that, while this story has sort of gone underground, public perception is that you picked the person to investigate this matter for the CBC so it's not an arm's-length investigation. Perhaps the matter should have been handled by a retired judge or someone like that, totally independent from the CBC.
Mr. Lacroix: Mr. Chairman, I'm not going to comment on a commentator's comments about what we do at CBC/ Radio-Canada.
The Chair: Do you have a supplementary, Senator Unger?
Mr. Lacroix: What I'm going to ask, though, is if — we'll give you a very, very short answer of where we are on this file, and I'll ask Heather to summarize the situation.
Ms. Conway: We're awaiting the results of Janice Rubin's report. She's an expert in her field. I think if she has suggestions for things that we can improve on, to Senator Batters' question, if there are policy areas we can improve on, if there are processes we can improve on, we would embrace those. This is not a situation that CBC is not looking to figure out what the right answer is here and how we prevent this in future wherever we can. It's a terrible situation, obviously, and one that we want to see addressed properly.
Senator Unger: Can you tell me if it is true that CBC employees are told not to answer questions or their jobs could be in jeopardy?
Mr. Lacroix: This is a quote from the CMG, Mr. Chairman. I don't know what the CMG said to its members. We're not going to answer that question.
Senator MacDonald: Thanks to the three of you for being here this morning. I'm a person who always has CBC Radio on in his house.
Mr. Lacroix, you were trying to put some mitts down. I want to put down a few myself. I want the CBC to succeed, but I also think it has to be modern and open to self-examination. When you make reasonable comparisons, I think, to per capita funding in other jurisdictions, I also think it's important that per capita funding be allocated after a proper display of resource management on behalf of the CBC to convince those who are giving the funding that the money is going in the right direction.
I want to stick with resource management. You said that you didn't make money on the hockey contract, relatively speaking. I find it very troublesome that the CBC carried NHL hockey for years and didn't make much money on it. If you can't make money on hockey in Canada, I don't know what you could make money on. You end up having to compete with Rogers. You can't write a $5 billion cheque, and I appreciate that. I appreciate that the revenue model is changing. But the CBC and "Hockey Night in Canada'' — a very strong brand and branding is important. Correct me if I'm wrong, but Rogers paid $5 billion to get the hockey rights. They seemed to get the "Hockey Night in Canada'' brand and the CBC logo for apparently next to nothing. As somebody who has been in business for years, this was very poor management of a huge branding advantage. Could you shed some light on this for me?
Mr. Lacroix: Let's talk hockey. You have to remember what happened — maybe Senator Demers will help us here — over the last six years, the length of the contract. There was a lockout in 2010 with a shortened season and then no Canadian teams in the playoffs for the first time in history in 2013. That affects the situation.
Senator MacDonald: It doesn't stop me from watching.
Mr. Lacroix: Well, it seemed to have influenced a number of your friends in Canada who didn't watch hockey in the same way.
Obviously the broadcasting rights are fixed, and the revenues depend on the product and the teams and how that plays. I said that on the hockey contract itself, over time, over those six years, there was no benefit to CBC/Radio-Canada on the hockey contract. But Heather will tell you that it was a locomotive to sell the rest of the schedule, so there was an impact there, clearly, the bundling piece.
The "Hockey Night in Canada'' logo was part of a conversation and a separate transaction with Rogers, so there is actually value paid to CBC/Radio-Canada on the use of that logo.
Senator MacDonald: Can you quantify that then? What's the value?
Mr. Lacroix: That's the commercial transaction we struck with Rogers in the context of us agreeing to have them use our Saturday nights and leasing studios and doing all sorts of things which brought value back to the broadcaster, including not having to find 360-some hours of programming in prime time on Saturday nights and still being able to deliver the hockey contract plus promotions.
Do you want to talk about the philosophy behind the Rogers contract?
Ms. Conway: As you said, Hubert, I think it's about two things. It's about time and content. Faced with the loss of 368 hours of content, even if you put a price tag on that of, say, $500,000 an hour, you're still looking at $170 million. We don't have $170 million. Even if you put a repeat factor on that of double, then you're looking at $85 million. We don't have $85 million, so put a repeat factor of three times on it. You're still looking at a magnitude of money we don't have.
Senator MacDonald: Don't you think Rogers, if prepared to pay $5 billion for the hockey rights, would be prepared to pay something for the "Hockey Night in Canada'' brand and the CBC brand?
Mr. Lacroix: But, sir, they did.
Ms. Conway: Well, the deal we have with them includes producing with a lot of the technical production people, so people kept their jobs. There are a lot of people employed, CBC employees, still producing hockey. There are studios being used at the CBC building. There are the "Hockey Night in Canada'' —
Senator MacDonald: But we're paying the producer, not them; correct? They provide any cash to provide help for this stuff, Rogers. I just think the brand is so strong. From a marketing point of view, I find it frustrating.
Mr. Lacroix: You do realize it's still our brand. We own the "Hockey Night in Canada'' brand. It wasn't sold in the context of this relationship with Rogers.
Ms. Conway: And we have done a couple of deals with sponsors, but it is a period of transition. You don't just walk out and say, "Well, I own the brand, but I don't own the product underneath it for very much longer.'' So it's part of a transition. I think it's actually a pretty sensible deal for us.
Senator MacDonald: I appreciate it's a private transaction.
The Chair: Final question, Senator MacDonald?
Senator MacDonald: I have a few final questions, actually.
The Chair: Bundle them up and we'll make it faster. The only time you're taking up is the time of your colleagues who won't have time at the end to ask their questions.
Senator MacDonald: I've been waiting an hour and a half to ask the questions.
The Chair: You can understand that for an hour and a half some other people were talking.
Senator MacDonald: I'll ask questions on the second round, then. Thank you.
Senator Demers: Thank you so much for being here. There's one thing I'm having a lot of difficulty with, and possibly after I ask the question you can correct me.
I did TV for 10 years. I did CBC and I did Radio-Canada, and now I'm doing a little bit of TV for the Montreal Canadiens and "Tout le monde en parle.'' I'm not trying to say what I did. It's just to try to compare. The most important thing I could remember is the ratings. I don't know what time the ratings come up. Do they come up at midnight the next day, or 7 o'clock in the morning? That was the thing where we found out the importance of the rating. That meant so much for those enterprises, those companies. I remember that "Le Banquier'' beat "Tout le monde en parle.'' Ratings, ratings, ratings.
Mr. Lacroix, as I was listening to Senator Housakos asking about the revenues from CTV Rogers, I don't know if there was an answer on that compared to your revenues. The chair indicated not to be long, but coming back to ratings and revenues, in our opinion we did not have an answer, sir.
[Translation]
Mr. Lacroix: Can you further explain your question about the ratings? What are you asking?
Senator Demers: Based on what we are hearing, it seems that ratings are not paramount for CBC/Radio-Canada. For all the other stations, like CTV, the ratings are what matters most for wage increases for employees. When things are not going well, some employees are fired. When broadcasters produce programs, people in a position to ask questions want to know the ratings of those programs. You are now competing with RDS and TVA; they have a program after the game, with all people want to know, right after the game if possible, or the next day, is if the ratings are higher than those of other broadcasters. That is what my question is about.
Mr. Lacroix: In terms of culture, I will ask my colleague Louis to comment after me.
First, as I reminded you in my opening remarks, with the funding model that we have inherited at CBC/Radio-Canada, advertising revenue is definitely important. I said that the advertising revenue represents approximately 20 to 25 per cent of our total revenue.
I also said that, under the mandate of the public broadcaster, we need to strike a balance with what is on the prime-time schedules. Louis will tell you about the choices being made in terms of balance and revenue — it is a very sensitive issue in our current climate — and our mandate under the law.
Mr. Lalande: Ratings are definitely important. As Hubert said earlier, there is no public service or public broadcaster without a public; so yes, it is important, but it is not the only measure.
In terms of the francophone market — and you were able to see that document — there is competition on the market between general interest television and specialty television. Clearly, competition is what prompts decisions at all levels, but it is not the only factor.
Radio-Canada is the only broadcaster that provides, at prime time, current affairs programs such as "Enquête,'' "Découverte,'' "La semaine verte,'' "La facture,'' "L'épicerie''; programs which the public appreciates and which go after a wide audience. The notion of audience is therefore important, but it is not the only important notion. We broadcast debates or programs target far smaller audiences than they should because they have some meaning for the public debate. That is important to us, and we will continue to do that.
So that is not the only dimension, but in the examples that you gave, it is important and I think it is healthy.
[English]
The Chair: Colleagues, we have 25 minutes left. We have six people, so you have about four minutes each. That's for the question and the answer. I would like the answers to be as short as possible. If we stay pertinent to the subject of the committee, we won't be debating if it's on subject or if it's not. That time, as you know, will be taken off your own time.
Senator Plett, you have the first question.
Senator Plett: Thank you, chair, and hopefully my colleague opposite will agree that this one does pertain to policy.
When we were in London, Mr. Lacroix, I asked representatives of BBC whether or not they had shown video of the tragic burning to death of the Jordanian pilot, the beheading of the Japanese journalist, so on and so forth. It has been a subject of debate in our country as to what we show. I know that CBC chose not to show some of that, and I support that, first of all.
After the horrific incident in Paris, CBC chose not to show the Charlie Hebdo cartoon of Muhammad. David Studer, CBC's director of journalistic standards and practices, said CBC had decided not to show the Charlie Hebdo images because it is offensive to people in a mainstream religion. I support that you didn't show that.
But, sir, on July 21, 2010, CBC showed an image of a crucifix in a jar of urine. They also have shown an image of the Holy Eucharist as a condom.
The mainstream religion that David Studer was talking about is 3 per cent of the Canadian public. From the way you are looking, you may not be aware of this, and you may be able to get back to us on it. The mainstream religion that was offended by the two images that you did show, and I'm part of that religion, is the 69 per cent of Canadians who consider themselves Christian. CBC chose to offend 69 per cent of the people with an image they showed. They chose not to show an image that would offend possibly 3 per cent.
I want to know what your policy is on what you show and specifically on these instances. If you don't want to comment on these incidents specifically today, I'm okay with you replying in writing, but I want to know what the policy is.
Mr. Lacroix: Senator Plett, you're quite right. I don't know what we did on July 21, 2010, and the other examples. I will take them for granted because you are saying that we did. I will ask Heather to explain the decision CBC came to when it chose not to show the images of the Prophet.
Ms. Conway: We did actually show some of the cartoons online. We did not show the specific one you're referring to. The policy we had that day was not that different, and it was the same for Radio-Canada, which was, do you need to show something to tell the story properly? In some cases you do and in some cases you don't.
In this case, in the same manner that we chose not to show the execution of the policeman that day, which was very graphic, and we had footage of that, a decision was made in the editorial policy, which I don't interfere with, to not show that particular image. It was deemed that we did not need to show those images that would, by the way, offend that group in the population but was not necessary to tell the story. The editorial choice that was made was, is it these specific cartoons? Are these people attacking Charlie Hebdo because of these specific cartoons? These people are attacking because these people are attacking, and they're attacking because of this or that cartoon. Frankly, whether it's this one or that one, the view is it probably wasn't material to the decision. It's a terrorist act. It was directed at those people, and it was directed at those people for regularly showing cartoons that people may find offensive.
Senator Plett: Thank you. I would agree with you. I would like to know what story CBC is trying to tell with this.
Ms. Conway: I actually don't know that one either.
Sorry, can I just get the date of the second one? I got the date of the July 21st one.
Senator Plett: I don't have the date of the second one, but I can get it for you. I saw the cartoon but I don't have the date.
Senator Eggleton: We've had some discussion around the table from time to time about local news. I've always thought, well, yes, we need local news. It feeds into national news. Last night, the first item on "The National'' had a local flavour to it as well as the international. It's been raised in the context of ratings that a lot of the private broadcasters have very successful — and this is English TV again — local news broadcasts. So why should be the CBC be duplicating that kind of thing? Maybe the CBC should be backing out of local news. Could I have your comments on that?
Ms. Conway: I think there are lots of reasons why people have success in local news. Honestly, I struggle with it because when I look at our product in local news, I would put it up against anyone's. I think we deliver a great product in local news.
I think there are some legacy reasons for it. I think CBC has, over time, been in and out of local news. As you know, it's a product that's a bit of a habit that people get into. People pick their local news and they stick with it.
I grew up here in Ottawa, and Max Keeping was a fixture. Everybody watched Max Keeping, and that was program that was the supper-hour winner in this market. People watched it.
I think that what we are doing as part of our strategy 2020, going to the shift to mobile and going to local branding and allowing local updating during the day, is going to help us in those markets.
Senator Eggleton: The issue is: Should public funds be used to duplicate a service that the private sector is providing?
Ms. Conway: It's a condition of licence.
Mr. Lacroix: It's a CRTC-driven obligation; it's a condition of our licence. You also, I'm sure, will understand that for those markets in which the private broadcasters are doing well, Vancouver, for example, where Global has a stranglehold on that market, there are a number of other markets where they are not doing well. Kevin Crull, the CTV head, when he was sitting before the CRTC, clearly said that, "Unless there is support to local programming, we're going to close.'' I think he identified 12 different stations because there's no business model for it. Senator Eggleton, when the CRTC were doing their Let's Talk TV, step number one or two, and asked Canadians "What do you really care about in this country?'' everybody said local news. It was their number one thing. So there is no business model for it.
The public broadcaster thinks it's part of its public service to deliver local news to Canadians, and that's why absolutely at the heart of our digital transformation is our presence in local news.
Senator Housakos: I'm going to try to bundle a couple of questions into one because I see our chair is quite disciplined today.
A broad question: I've been listening with a great deal of curiosity to your testimony today, and I hear loud and clear that you're in a very competitive marketplace, especially CBC English. We're not naive to the fact that we're next to a cultural giant to the south, and there's an inherent advantage that private broadcasters have when they're able to tap into that. You have to live within the confines of your mandate.
But I've also studied carefully your new strategy going forward. I have said this on a number of occasions at this committee, and now you get an opportunity to comment. I feel CBC/Radio-Canada, especially CBC, tries to be all things to all people: local news, national news. Obviously you have to respect your mandate in terms of Canadian content and Canadian film, yet you're also into sports. Up until recently, you were doing "Hockey Night in Canada.''
In this ever-changing environment where the environment has become so competitive and there are so many players and platforms, is it realistic for a public broadcaster that is funded by taxpayers' money to be able to complete in all of those platforms and areas? A suggestion I made is: Could it not be more strategic to focus on certain niche areas that the private sector cannot be in and be bold in trying out new strategies and putting on the table to get out of advertising revenue? I harp on it, for example.
I don't think that, given your mandate, you'll ever be able to compete for ad revenue with the private sector. I look at the model of the BBC, and I think it's a good model that they don't have any ad revenue. Probably two thirds of the reason a Brit will tune into the BBC is that he does not have to see those annoying ads, for example.
It is a very broad question. Can you give us a sentiment of whether your strategy — a broad strategy like you have — to try to compete everywhere is a good one or whether you should bring it back to a narrow strategy, to certain areas?
My last question is with regard to Radio-Canada French. They certainly have a strong brand in Quebec. They certainly have a great viewership and I, as a Quebecer, find them very relevant.
The Chair: Senator —
Senator Housakos: I'm getting to the point. I have two minutes. I'm certainly not over the two minutes.
The Chair: You have one minute left for the answer.
Senator Housakos: Let me use my minute, please.
Every time there are cutbacks at CBC/Radio-Canada, I get the impression that the cutbacks are done across the board instead of going to areas where we don't have an edge, and I think Radio-Canada deserves more funding, rather than less, based on the service they provide.
[Translation]
Mr. Lacroix: I have one minute to answer five minutes of questions, Mr. Chair. I will do my best to do that.
[English]
We are making choices. The first example I will jump at obviously is professional sports. We're out of professional sports. The rights are crazy. We can't play there. We have a sports strategy which is completely different. That was very clearly evidenced, Mr. Chairman, by our partnership with Bell and Rogers, as we became the lead broadcaster on the 2018 and 2020 games, because we believe in Canadian athletes. We believe that if we don't do that, nobody else will, so we will promote them. We're very happy with the partnership. It's going to work. It's an example of Strategy 2020.
As for ad revenues, I told you a few minutes ago, Senator Housakos, the size or the importance. Twenty to 25 per cent of our budget is ad revenues. Find a way to write us a cheque for that difference, because if not, imagine the services that Canadians will lose. You keep comparing us to the BBC. They have six times the dollars — 6 billion bucks to our to our 1 billion dollars — so let's put that in perspective.
Senator Plett: Four and a half billion dollars.
Mr. Lacroix: Well, we're not using the same exchange rate.
BBC Worldwide, the commercial entity, declares a dividend every year to the mother. There are all sorts of ways. They are actually really involved in commercial revenue at the BBC, but they don't have ads.
So, Mr. Chair, I've tried to sprint through a whole bunch of answers to five minutes of questions.
Senator Unger: You stated, Mr. Lacroix, that you're focusing more on local and regional news because people tune in. You may or may not know that I'm from Alberta, and the news programs in Calgary, Edmonton, Regina, Windsor, Montreal and Fredericton will be cut to 30 minutes versus 60 minutes in Toronto. I think that's a reference to digital, but I think that, speaking for Alberta, most people would want to watch it on TV.
Ms. Conway: It's a function of a number of things. It's partly about a shift to investing more in digital and going where people are going, and in fact they are.
It's also a function of ad revenue. So we looked at every single market and said, "What are the criteria that we should use to make decisions about whether to be at 90 minutes, 60 minutes or 30 minutes?'' One of the criteria was: Is there a revenue opportunity there? Where you don't have audiences, you don't have a big revenue opportunity. So part of it is driven by that.
That said, we didn't want to exit any of the communities where we're currently operating locally and having local news. We wanted to maintain the footprint and see if we can be more successful by offering a digital-first strategy in some of those communities. To be honest, I think we will have an edge on some of our competitors when we roll out a mobile and tablet and digitally-based service.
We would, by the way, also like to expand in some communities in Alberta where we have an opportunity. If we had money, we think we'd like to go in and do a —
Senator Unger: Just a quick comment. By providing worse service to Alberta, somehow, when you're ready, you believe that what you have will be a winner, and you will be trying to recoup ground that you indeed have already lost. I don't understand that logic.
Ms. Conway: I'm not trying to produce a worse product. I'm trying to produce the most relevant product I can for audiences. That's where the investment in mobile and digital is coming from.
Senator MacDonald: I have one reference to an older question going back to the CBC's "Hockey Night in Canada'' logo. When it came to production, Rogers obviously is going to have to pay for the production anyway, so I don't see that it's part of any compensation for the CBC brand.
I do know that the Ottawa arena was called the Palladium, the Corel Centre, Scotiabank Place and now the Canadian Tire Centre. They put the logo on it, and they have to pay for it. They get compensation. I think CBC was out-negotiated when it came to the use of their logo and brand. You should have gotten some financial compensation for it. I don't think there is any way around that.
I want to go to something else. In terms of managing the resources inside the CBC, there's one thing we hear in all provinces: We need more money for health care and education. You look and there is more money for health care and education, but it's not going into health care and education; it's going into salaries, compensation and pensions. It's going into all types of things that have nothing to do with the delivery of these services.
What has CBC done to review the various compensations at the CBC? Is your pension plan, this flex plan for pensions, comparable to private broadcasters' pension plans? How much does the CBC spend to accommodate flex plan top-ups in the past two years? I'm curious to know how resources are managed. I want to be convinced that resources are managed well before increased resources are allocated.
Mr. Lacroix: Senator MacDonald, that's why we have a board of directors to look at our plans, our compensation programs and our salary adjustments. That's why we have the Auditor General who comes in to audit our books. That's why the CRTC looks at our programming and what we do. Look at all the accountability we have in terms of reporting to different committees of the House of Commons and of the Senate, obviously all under the umbrella of our minister and Parliament.
Bottom line: There is nobody as transparent and as clear in terms of where the funds are going. Strategy 2020, and I have to come back to it, is all the about taking the dollars we have and, if they're in buildings, trying to transform them into dollars for content. We want to do this because in this environment, with this business model, and I keep repeating the same thing, we are not going to be sustainable over the longer term.
Senator Batters: You referenced the Rubin investigation earlier. The Globe and Mail has reported that participation in Ms. Rubin's investigation will be voluntary for CBC staff and management. In fact, CBC's head of public affairs, Chuck Thompson, has acknowledged, "No one is obligated to speak to her.'' Can you tell me whether participation is voluntary? Will the results be binding on CBC? If not, should those results be binding in a future situation? Should participation be mandatory?
Mr. Lacroix: I have the same issue, Mr. Chairman.
Senator Batters: Sir, the particular aspect of this matter hearkens me back to a quote from a recent memo from Jennifer McGuire, General Manager and Editor in Chief, CBC News, dealing with the Amanda Lang matter.
The Chair: Senator, I'm going to be using your time again because I will take you to the ruling of the Senate on the fact that questions have to be pertinent to the mandate that's been given to the committee. I made a ruling to you a few weeks ago about the fact that if you want to discuss a policy matter, I have no problems. If you want to personalize your questions, I will rule you out of order. Taking two minutes to rule you out of order is two minutes that you're losing.
Senator Plett: Mr. Chair, they used the Amanda Lang story and they said it's a changing environment, that CBC —.
The Chair: If she asks a question about changing environment, I can live with that. She's asking a question about people that are not here to defend themselves.
Senator Batters: No, I'm asking a question about what Jennifer McGuire said, their employee. She said, ". . . it is unfortunate that our internal processes are fodder for external debate by people who have their own agendas.'' I'm wondering if that particular quote accurately reflects the corporate culture at CBC regarding openness and transparency to the taxpayers of Canada. Mr. Lacroix, you just indicated in your previous answer that no one is as transparent as CBC.
[Translation]
The Chair: That will be the final word, Mr. Lacroix.
[English]
Mr. Lacroix: I want to remind this committee that Access to Information is a process by which a number of Canadians come to us. I would just like to remind this committee that the last two times the commissioner gave marks to CBC/Radio-Canada, she gave us an A. That is because of the culture at CBC/Radio-Canada, which is, when we can and we don't violate privacy matters, we put that information out. If you look at the hundreds of thousands of pages we have put out on Access to Information requests on not only the question but actually the content, you will see that we are indeed trying to improve on that.
Senator Batters: Are you saying that it's a matter of privacy whether an investigation is voluntary or mandatory?
Mr. Lacroix: We will let Ms. Rubin sit with the people that she wants to invite to her hearings. We will see what Ms. Rubin has to say, and we will share the conclusions of this with the people that need to know and with Canadians, because that's very important.
The Chair: Thank you, Mr. Lacroix. I hope senators think we're coming out of this meeting with more information than when we started. Thank you again for your presence.
[Translation]
Thank you to your colleagues. Mr. Lalande, Ms. Conway, thank you very much for being here. Our next meeting is tomorrow evening, and we will hear witnesses from CBC I Care.
(The committee adjourned.)