Standing Senate Committee on Transport and Communications
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Proceedings of the Standing Senate Committee on
Transport and Communications

Issue 3 - Evidence, February 26, 2014


OTTAWA, Wednesday, February 26, 2014

The Standing Senate Committee on Transport and Communications met this day, at 6:45 p. m., to examine the challenges faced by the Canadian Broadcasting Corporation in relation to the changing environment of broadcasting and communications.

Senator Leo Housakos (Deputy Chair) in the chair.

[Translation]

The Deputy Chair: Honourable senators, I now call to order this hearing of the Standing Senate Committee on Transport and Communications.

[English]

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.

[Translation]

Tonight we have with us M. Hubert Lacroix, President and CEO of the Canadian Broadcasting Corporation.

[English]

With Mr. Lacroix we have Mr. Mark Allen.

Before I invite Mr. Lacroix to give his presentation, and with his agreement, we will be running a little bit past the 8:45 usual hour to 9:30. Without further ado, I give the floor to Mr. Lacroix.

[Translation]

Hubert Lacroix, President and CEO, Canadian Broadcasting Corporation: Ladies and gentlemen senators, thank you for having invited us this evening for your study of CBC/Radio-Canada and the changing broadcast environment.

[English]

I have asked Mark Allen, Director of Research and Analysis with CBC/Radio-Canada, to join me this evening because he put together the environmental scan document that we shared with you and will be able to answer any questions or comments you might have. I understand our scan has useful for your work and I'm happy about that.

Your study is extremely timely. You already know that our environment is changing. Let me tell you that it's happening fast. It's furious and it's relentless. A good example of this is how we covered the recent Olympic Winter Games in Sochi.

Over 33 million Canadians tuned in to watch our athletes compete. Even more significant, more than 10 million Canadians, one in three, followed the Olympics on computers, tablets and phones; 2.5 million francophones and anglophones downloaded our Olympic app, consuming over 10 million hours of video content offered live and on demand. While the majority of Canadians still watched television, mostly in the evenings in prime time, online viewing grew significantly.

How, your may ask yourselves, could we afford to broadcast these games and deliver our content on all of these platforms?

Let me start with the rights. Some observers say we competed with the privates to obtain the rights to these games, that we somehow outbid them with public funds. Wrong. When the bidding started for the rights to Sochi and Rio, CBC/Radio-Canada was in a partnership with Bell and Rogers. Our joint bid was rejected by the IOC and over time the other two private broadcasters chose to exit our partnership. They were no longer interested in broadcasting these games. CBC/Radio-Canada was the only broadcaster left at the table. If we did not step up, our Canadian athletes would have had no Canadian coverage. Think about that. These young men and women work to prepare for years and nobody in their home country gets to see them perform.

This could not happen, so we went at this by ourselves and submitted our own bid, but to make the numbers work, we completely restructured our relationship with the IOC. Basically, we partnered with them. Then we turned around and created broadcast partnerships with TSN and Sportsnet, and a very historic partnership with RDS and TVA Sports, to allow the Olympic coverage to be enjoyed by even more Canadians in French and in English, and all of these agreements obviously also served to reduce our costs.

Then we focused on the production of the event itself and adapted the latest technology to improve our service and again lowered our costs. We sent 287 employees to work in Sochi. With that crew, we did 1,519 hours of TV coverage, and 1,500 hours of online coverage with 12 live feeds. NBC had around 2,800 people on-site for only 539 hours of TV coverage, about one third of ours, and 1,000 hours of online coverage, about two thirds of ours. The BBC had 100 people in Sochi for barely 200 hours of TV and 600 hours of online coverage, only six feeds.

So how did we do it? Let me show you. I have a video.

[Video presentation]

[Translation]

The key to what you have just seen is that all of the cutting, editing and switching were done here in Canada by a team of 245 people divided between Toronto and Montreal. These employees used to travel to the games like the NBC and BBC employees. Well, now they no longer do because we pioneered another way of producing the coverage of the Olympics Games. This is your modern public broadcaster.

And by the way, NBC and the BBC took notes throughout the games and now want to know how we did it. But while we are able to shine in this kind of coverage, our environment is changing and so are the realities that come with it.

Let me ask you a question: do you believe in Canadian content? If you do, well there are really only two policy tools available to government to ensure its promotion; one is regulation through the CRTC, and the other is public investment. As other witnesses have told you, regulation in an Internet world is increasingly difficult.

[English]

That's why most Western democracies have focused on investment, particularly in public broadcasting.

In your folders, you have a chart which shows the per capita funding for public broadcasters in 18 democracies. Canada ranks third from the bottom; only New Zealand and the United States have less than we do.

Canada's funding to CBC/Radio-Canada is about a billion dollars, for which we are grateful. That money, which includes our capital budget, is divided amongst all of the 33 services we provide: English and French, eight Aboriginal languages, radio, television, online, and all of this across six time zones.

Now compare this with the BBC, which receives close to $6 billion in public funding and works in one official language and one time zone.

Right now every Canadian pays about $29 per year — that's about $2.33 per month — for all of the services that we provide. A lot of people actually pay more than that for their coffee every day. That's a lot less than your monthly cable bill or the price that you pay for your newspaper.

We use our government appropriation to produce quality Canadian programs in every region of the country. These are shows audiences actually enjoy. Each week, 1.3 million Canadians tune in to watch Murdoch Mysteries, about a million watch Dragon's Den, The Rick Mercer Report and Heartland; 2 million watch Unité 9, 1.5 million watch Les Enfants de la télé, and over a million tune in to Les Parent and L'Auberge du chien noir.

These programs in turn support an independent production industry as well as local businesses and communities across the country. In fact, a 2011 study by Deloitte found that every dollar invested in CBC/Radio-Canada actually creates almost four dollars in economic value for the Canadian economy.

Four years ago we looked at the broadcasting environment, and we developed a five-year strategic plan that we called "2015: Everyone, Every Way," which set out three key priorities and a road map to get there. We needed to be more Canadian, more anchored in Canada's regions, and more digital. Let me tell you where we are today.

Canadian programming now makes up 86 per cent of CBC Television's prime time schedule and 91 per cent of Radio-Canada's, both well above the minimum conditions of licence.

Let's look at that for a second. These charts are again in your folders. They show our prime time schedules, over here. They compare them to the private broadcasters. Everything in red represents Canadian programs. If creating and showcasing high-quality Canadian programs is important to you, CBC/Radio-Canada is your only solution. Private broadcasters can't do it. They simply can't afford to do it. Their business models don't allow them to do that.

In fact, in 2013, in that broadcast year, CBC/Radio-Canada's combined investment for Canadian programming totalled $732 million, while the Canadian programming expenditures for all of the private broadcasters combined totalled $614 million.

We are now more firmly anchored in Canada's regions. We expanded our local news programs and created new regional radio services in communities like Kitchener-Waterloo, Saskatoon, Kamloops and Rimouski. You'll find in the folder a list of our 2015 investments.

[Translation]

We have invested in innovative digital services in Hamilton, and the south and north shores of Montreal. We created new online music services; cbcmusic.ca and espace.mu — giving Canadian artists greater exposure than they get anywhere else. We established a safe online place for children. With kidscbc.ca, pre-schoolers create their own customized play space. Radio-Canada.ca launched a new web series, Le chum de ma mère est un extra-terrestre, which helps children aged 9-12 develop their Internet skills. Our new educational portal, curio.ca, puts our archives in the hands of teachers and students, informing, enlightening and entertaining children across the country.

I am very proud what we have done, but the truth is it is less than we had planned to do. We had to scale back our plans in order to absorb budget cuts including the $115 million reduction in our parliamentary appropriations. This was our contribution to the government's deficit reduction action plan.

[English]

In 2014-15 alone, we will be dealing with a $45.5 million cut from DRAP; a $14 million cut from an additional freeze on inflation funding for salaries; and a $27 million cut for local programming because of the elimination of the CRTC's Local Programming Improvement Fund. And, yes, we will have to deal with the loss of the NHL hockey contract. This will have a ripple effect in our ability to package and sell advertising on our other television programs.

I've told our staff that we will have to make some really tough decisions this year and in our next five-year strategic plan, not just to balance our budget but more fundamental decisions about who we are and what we do. We cannot keep resizing the public broadcaster every second year.

We need to develop a long-term sustainable financial model for public broadcasting in Canada. That is a key part of our thinking as we are presently developing the strategic plan which we are calling right now "Beyond 2015." And we need government, the CRTC and the stakeholders who have an interest in public broadcasting to realize that we need more flexibility in order to shine. This is what I meant when I referred to "dark clouds on the horizon" in a note to our employees last month.

I do not believe that the answer is to become some kind of niche broadcaster limited to only doing what private broadcasters will not do or have no business incentive to do. No other public broadcaster in the world is put in that kind of a box.

[Translation]

Canadians continue to show that they rely on CBC/Radio-Canada for news and current affairs, for quality Canadian drama and comedy, and for thoughtful, provocative radio programs. The Broadcasting Act mandates us to deliver a wide range of programming that informs, enlightens and entertains. It is in the act.

By the way, that was the first comment from the new CRTC chair to me when he set out his expectations of us as we started our licence renewal in November 2012: a wide range of programming. However, do not take my word for it. Talk to Canadians for yourselves. We do. Find out what they want. Visit CBC/Radio-Canada facilities across the country and see all the things we do for communities. Talk to our staff. You will find that the broadcast industry is changing, and CBC/Radio-Canada is changing with it.

[English]

Senators, before I close, I would like to address one other issue that has been in the media and that some of you have already commented on. I hope that we will be able to devote most of our time this evening to the many challenges facing CBC/Radio-Canada, but I feel that first I should say a few words about my expenses.

An error was made by me and by the corporation in the way my Ottawa business expenses were reimbursed, expenses that had been signed off, posted and audited quarterly.

As someone committed to the highest standard of integrity and transparency and who has devoted his career to the development of corporate governance, I can tell you that this has been deeply embarrassing. The error was discovered last summer in the course of a human resources inquiry on another subject matter. When I was told, I was stunned. I immediately asked for a full accounting and I voluntarily paid back every cent. We notified our board of directors, the Auditor General of Canada, and the Government of Canada.

I am angry at myself for not having clarified the rules surrounding my expenses when I was first appointed. And I'm deeply distressed that this could damage the integrity of CBC/Radio-Canada and its management of public resources.

I want to apologize to my fellow employees at CBC/Radio-Canada. I have preached transparency and accountability for the last six years. We are now entering a period of great challenge, and I want to assure our CBCers and Radio-Canada that they can continue to have faith in their leaders.

I also want to apologize to all those Canadians who support CBC/Radio-Canada for this careless error. I've taken measures to ensure that this kind of mistake will not happen again. We will continue our commitment to openness and transparency. That has been one of my priorities at CBC/Radio-Canada.

Thank you. I would be pleased now to take your questions.

The Deputy Chair: Thank you, Mr. Lacroix. I want to remind the audience that this is the Standing Senate Committee on Transport and Communications, and we are continuing our study into the challenges faced by the Canadian Broadcasting Corporation in relation to the changing environment of broadcasting and communications.

Thank you again, Mr. Lacroix, for your presentation.

I want to remind my colleagues there is an extraordinary amount of interest on the part of all of you to ask questions. If you could keep the questions short on the first round, and I would hope that everyone can keep their questions to two or three. Please try not to bundle 20 questions within each one so we can give everyone a chance to weigh in on this and give Mr. Lacroix an opportunity to help us do our work. There will be subsequent rounds.

Thanks to the generosity, again, of time on behalf of Mr. Lacroix, we will be here until 9:30. We'll take a five minute break at the halfway mark of this committee this evening.

I give the floor now to Senator Mercer.

Senator Mercer: Mr. Lacroix and Mr. Allen, thank you for being here.

I'm very impressed with the presentation, Mr. Lacroix. I declare my bias here. I'm a big CBC Radio fan. You didn't spend much time talking about CBC Radio, and I would appreciate hearing your thoughts.

Let's go directly to your presentation on Sochi. We are all very proud of our athletes, but I'm interested in the cost of your commitment to Sochi and delivering the product and the revenue you received from advertising.

First, did you make any money on this deal, and if you did, please tell us how much?

Second, what is the cost of 287 employees going to Sochi? I appreciate your very good chart showing the comparison with other jurisdictions; that's very helpful.

Finally, you talked about a long-term plan for CBC-Radio-Canada. What would that look like?

Mr. Lacroix: Senator Mercer, thank you for your questions. Let's talk about dollars first.

The partnership agreement we signed with the IOC has confidentiality clauses to it, but I'm going to try to give you a good feel for what's in it without going into the content. It's obvious we can't give you this number because the IOC negotiates with all the countries in the world. If one country similar in size to ours and with that kind of broadcasting environment was to disclose what it paid, then they would use that against them in the negotiation phases.

When we announced this deal and the negotiations we did with the IOC, we said to Canadians we had made a fiscally responsible deal: the 287 people that went there, the production costs and the broadcasting rights we paid. And with the revenue that we generated — and we're exactly on target with what we forecasted — we think we're going to generate a few million dollars for CBC/Radio-Canada. We were hoping to break even and make a few dollars. That's exactly as planned and that's what we hope, because remember it's a two-Olympic package deal. We have to go to Rio now.

We always do better and the advertising is always easier to get for Winter Games because, as you've realized, as a country we do better during the Olympic Games in the winter and there is more interest in viewing at that time. We hope the assumptions that we have made for Rio will allow us, on the two-Olympic deal, to have made a good deal for Canadians.

We're into the long-term plan now. We're four months into it. We've been working hard with the strategic committee of our board and the board of directors of CBC. We have involved 150 CBCers and Radio-Canadiens in building this plan up. We hope it's going to be delivered by the end of this year because the 2015 plan obviously ends in 2015. Our tax year is March 31.

We hope by the end of 2014 we'll be able to tell Canadians how we view and what we think CBC/Radio-Canada is going to look five years from now, but it's going to continue building on Canadian content. It's going to be about us being firmly rooted in the regions. And the web has taken off in a direction — if you saw the numbers on Sochi — that is obviously going to affect the way we deliver our services.

Senator Mercer: And radio?

Mr. Lacroix: Radio is a key portion to it. It is one of our trademarks. We're very proud of what we do on radio. It's a signature. It's completely integrated because we don't call it radio anymore. We call it "audio" the same way television is "video." For example, the people who work in news now deliver it in a seamless way. They feed radio, television, and the web in an organic way.

Senator Eggleton: Thank you very much for your presentation and congratulations on your efforts with respect to broadcasting the Olympics to Canadians and doing it an economical and efficient manner. I think you've demonstrated that.

You ask early on in our presentation, "Do you believe in Canadian content?" I want to tell you that I firmly believe in Canadian content. I firmly believe in telling our stories and having Canadian perspectives in news and information programs. I know it's no easy challenge in terms of getting the viewers because of the American entertainment industry. It's a formidable competitor, and being right next door to them makes it all the tougher. As much as that is popular with a lot of Canadians, I think it's important that we continue to have our own stories.

As you also point out, there are two ways of getting there. One is regulation through the CRTC, although you later said that if you take away a lot of the American content that the private stations have, they probably would not be private for long; they would be losing money.

The other is public investment. Public investment doesn't necessarily mean a public broadcaster in the traditional sense. You operate, as do the major networks in the United States, as a general broadcaster or a main network. Looking forward, is that the best way to do this? You already have the specialty news network channel. That makes sense. Would it make more sense to evolve into specialty channels for drama or other Canadian content programming as opposed to the general public broadcaster that you are, or can you make a further case for us keeping the public broadcaster as it is?

Mr. Lacroix: As you know, our raison d'être and our mandate come from the Broadcasting Act. The Broadcasting Act says, "CBC/Radio-Canada, you need to deliver to Canadians a wide range of programming that informs, enlightens and entertains."

That's why I was referring to Jean-Pierre Blais' comment. When we sat for two weeks and went through the renewal of our licenses in 2012, there was no way in the world the people in that room didn't think our job — because they read the mandate and that's correct — is to deliver a wide range of programming. That's the challenge that we have. That's why we have a number of services and have always tried to modernize the broadcaster in whichever way Canadians enjoy our services and want to watch our programming.

One of the issues is that the Broadcasting Act dates back to 1991. It has not been amended since that time. It doesn't reflect, obviously, the broadcasting environment in which we are. It doesn't refer to the web. It doesn't refer to the services, the whole ecosystem. That's also important. The number of actors in that ecosystem have a contribution to make.

That's why — and I'll throw this to Mark in a second — when we talk about public funding, it's not only about funds that come to CBC/Radio-Canada. What government has done is that the system itself funds the private broadcasters in a number of ways. I'm going to ask Mark to refer to something in our environmental scan. He will explain to you so that you understand the environment that's really key.

Mark Allen, Director, Research and Analysis, Canadian Broadcasting Corporation: The underlying point Mr. Lacroix is suggesting is if we want to have Canadian programming, we need to have some kind of support. That support is delivered to the regulated sector. The regulated, private sector wouldn't exist if there weren't interventions, which you can see on slide 11 of the environmental scan.

There are a number of direct and indirect supports that the private sector receives and some of them are priceless, like the cost of renting a business. Having a specialty channel licence or a licence to buy American programming like Big Bang Theory and offer it to Canadians are things you would need to get a licence for from the CRTC. You wouldn't be in business otherwise.

The indirect benefits, if you add them up, are about $1 billion a year that the private sector receives in indirect subsidies.

So if we want to have a strong Canadian broadcasting system, we need to provide some support. Unfortunately, public policy has been putting most of its eggs in the regulated system, which you can see on slide 39. If you look at the funding of public broadcasting over the last couple decades compared to the growth of the private sector, funding the public broadcasting has been flat, and in real terms it has declined.

Mr. Lacroix: So the moral of the story is that we have an ecosystem and a number of actors, by virtue of the rules of the Broadcasting Act, contribute to it. They have different roles in relation to getting a licence or being protected, X number of specialty channels doing sports or movie networks, for example. Because of that, they contribute back to the different pieces of the ecosystem. I think it gives you a pretty good picture.

Senator Eggleton: What are the options in terms of how can we keep developing Canadian content? What are the options to doing it the traditional way you've been doing it?

I know you talk about the Broadcasting Act and it needs amendment, but how do you foresee things in the future in terms of making sure we preserve Canadian content?

Given the changes in conveying and messaging all the different programming, the Internet and everything else, how could the Broadcast Act be amended to meet what you think would be the future needs?

Mr. Lacroix: It's all about the expectations of Canadians and what you want that Canadian content to be.

Right now I think it's pretty normal, because that's our role, to keep developing Canadian content. The message in my opening remarks and the comments about how this is funded show you that there is no such thing as a broadcaster in this country that is not supported by government. In the cost of delivering one hour of Canadian content as against the cost of purchasing one hour of American television and putting it in prime time at the same time that ABC, NBC, or CBS puts it, there is no contest. That simply does not work.

If you believe in Canadian content, then you either regulate the environment and force people to do it, which will not work for the private broadcasters because their private broadcasting model doesn't work, or you support them and the public broadcaster in the way you're doing it now.

Senator Plett: Thank you, gentlemen, for being here. Let me congratulate you and CBC on the great coverage of the Olympics. I don't think I've ever watched so much of an Olympic Games as I did this time around on both television and the computer. It was the first time I'd ever watched it on a computer and on my iPad. It was available wherever I went. It probably got in the way of a lot of productive work for many people, but nevertheless, we all enjoyed it.

Mr. Lacroix, you said that you hoped that tonight's meeting would focus on certain things. I may deviate a little bit from what you would like it to focus on, but I believe that we are all responsible to the same taxpayer, whether it be the $89 million that the Senate costs the taxpayers or the $1 billion and some that the taxpayers put out for the CBC.

I will elaborate and go into an area that is away from maybe where you would like it to be. Lately there has been a lot of attention — "public outrage" were the words Peter Mansbridge used — on Senate travel, and I have been the focus of some of that. I may get into that on the second round.

I imagine, sir, that you were probably at the Olympics in Sochi for part of the time.

Mr. Lacroix: No, I didn't go.

Senator Plett: Of the people who went, did any of them fly in business class or did they all fly economy?

Mr. Lacroix: I don't have that information, Senator Plett. If you want, we will find that information and deliver it to the chairman of your committee.

Senator Plett: I would certainly appreciate that. I would like to know how all of them flew there because that seems to be a very important issue for CBC.

Can you tell me whether CBC has certain policies when it comes to travel expenses? If you have them now, that's fine. If not, if you could supply that to the clerk as well, I would appreciate it.

Mr. Lacroix: We have policies, Senator Plett; and it would be my pleasure to file them with the chairman.

Senator Plett: Thank you; I appreciate that.

I will go to the next topic, which you alluded to somewhat, and that is your expenses. We found out only in the last few days that you had claimed close to $30,000 worth of ineligible expenses. I watched Power & Politics when you did an interview with Rosemary Barton. Correct me if I'm wrong, but I got from that interview that you suggested these were not related to living or travel.

Mr. Lacroix: The expenses that were discussed were expenses related to living. The expenses that are the object of the reimbursement are related to my expenses in Ottawa, yes.

Senator Plett: Living expenses.

Mr. Lacroix: Yes. Well, I don't want to have a conversation about what a living expense is. What I told you this evening and what I told Rosemary Barton and what we posted is: We found a mistake. As soon as we found the mistake, sir, I paid back those expenses. I immediately advised my board. We informed the Auditor General of Canada; we informed the Government of Canada. We apologized, and that's where we are today.

Senator Plett: You say you paid them back immediately upon finding out you had done this.

Mr. Lacroix: Yes, sir.

Senator Plett: Yet, what I have read and what you said on Power & Politics was that you found the mistake in June and you only paid it back in September. Why would you not have paid it back in June if you found the mistake in June?

Mr. Lacroix: As soon as we totalled the numbers, sir, as soon as we went through every single voucher — it was done not only by ourselves but it was done by an independent third party, Deloitte. They went through every single expense. As soon as they totalled that amount, within 48 hours a cheque was made and I repaid.

Senator Plett: You repaid in September and we found out about it through Sun Media in February. Would you not have considered doing some kind of release in September to let the people know you had done this? I think the taxpayers in Canada have the right to know. You're a broadcaster.

Peter Mansbridge continuously uses the words "public outrage" over Senate expenses — us travelling business class, us possibly misreporting or not reporting some statements.

The Deputy Chair: Senator Plett, I would like your questions to be focused more on the CBC. Forget about the Senate issue. If you have legitimate questions on the CBC, ask them; but don't draw parallels to issues that this committee is not studying right now.

Senator Plett: Chair, I want to do a comparison and find out why CBC is doing one thing and why they aren't doing the other thing for the president. I really clearly think it is related. They have done one thing to parts of the public, and they are not reporting the same thing there.

Do you not think, sir, that the public would be just as outraged about your misappropriating expenses as anyone else?

Mr. Lacroix: Senator Plett, at the risk of repeating myself and telling you what in my opening remarks I said, what we've posted on line, the work that has been done, to be extremely clear and transparent about what happened, it was a mistake. We found out — or I found out through an HR person that was looking at something else and said, "Oops, we have a problem." As soon as we saw that problem, I told my chair, told my HR committee chair; we told the whole board. We went back and told the Auditor General, told the government, documented everything and made sure of the amount of money. It was not like these expenses, Senator Plett, were hidden. They had been on our website and posted.

The way we do this, senator — you have to remind yourself — is that my expenses are filed. The director of finance looks at them to make sure they are in line with what has been done. Then the chair of our board approves them and they're posted on our website. All these 29,000 have been there since January 2008 when I came in. As soon as we saw the issue, I repaid these dollars. We advised everybody; we disclosed. Again today I'm apologizing because these kinds of mistakes go to the integrity of what we do every day; and that doesn't work with me.

[Translation]

Senator Maltais: Let me join my colleagues in congratulating you for your broadcast of the Sochi Games. We know that there are costs involved, but I do not intend to question you about that. What I am interested in is CBC Radio.

I live in Quebec and when I leave Ottawa to return there, I have to change the channel about four times. Do you have agreements with other broadcasters?

Mr. Lacroix: Do you get SiriusXM in your car?

Senator Maltais: I could but I cancelled that because the service is too expensive.

Mr. Lacroix: Unfortunately, that is the result of your negotiations with SiriusXM. Radio-Canada offers some of its channels on SiriusXM. If you were a subscriber, Radio-Canada would follow you and you would not have to change channels. The answer is no. You are picking up our off-air network.

Senator Maltais: When you change cars, Sirius offers you two free months. Afterwards, you receive a monthly invoice.

Mr. Lacroix: And you find that less interesting.

Senator Maltais: I think it costs too much to listen to my state music.

You have Quebec channels, however. I will not talk to you about the BBC. There is Radio Canada and ARTV.

Mr. Lacroix: On CBC/Radio-Canada television.

Senator Maltais: On CBC/Radio-Canada television.

Mr. Lacroix: We have Explora.

Senator Maltais: Does Prise2 belong to you?

Mr. Lacroix: No. We also have RDI, our news network. So we have three specialty channels.

Senator Maltais: Is a channel like ARTV profitable, or is it just there to provide cultural information?

Mr. Lacroix: ARTV is to us an important platform. When you look at the three specialty platforms, they represent 5 per cent of our listening share. We are very happy with what that represents. We have a partner, Arte France, which allows us to broadcast cultural programming on that band, and programming that is different from what you may see during peak hours on CBC/Radio-Canada television. We find that it is a very good way to add to the services we provide to the Canadians who listen to us.

Senator Maltais: I would like to go back to ARTV. What kinds of ratings do you get for it, without including the other channels, at any broadcast time?

Mr. Allen: At peak hours, our share represents 1 per cent.

Mr. Lacroix: I talked about the 1.5 per cent for RDI. The three specialty channels represent 5 per cent in total.

Senator Maltais: You only have 5 per cent for RDI?

Mr. Lacroix: That is the total for the programming on all three channels.

Mr. Allen: Together.

Mr. Lacroix: Together.

Senator Maltais: Who competes with RDI? Is it LCN?

Mr. Allen: Yes, LCN.

Mr. Lacroix: Yes, LCN.

Senator Maltais: And what sorts of ratings do they get?

Mr. Allen: They have about the same market share.

Mr. Lacroix: It is about even.

Senator Maltais: I am surprised by the figures.

Mr. Lacroix: When you watch RDI or LCN, you do so for a certain period of time. You will probably not settle down at 7 o'clock to look at the first program, then a series, then the news. You go to RDI because something interests you or you want to take in a news bulletin. That is why we do not have continuous listenership.

Senator Maltais: I want to share a comment we often hear about the Radio-Canada newscast. In the Senate, we hear people's comments. They find that Montreal Radio-Canada radio is far too centred on Montreal. I repeat this remark just as we hear it. How should I answer them?

Mr. Lacroix: You know, I am not smiling to be mean. My in-laws come from Matane. When I go to Matane, they always tell me that when they listen to Matane radio, they do not hear Matane but Rimouski. When we get to Rimouski, we are told that it is about Quebec. When we are in Quebec, they say it is Montreal, and when we are in some other area, there is always a more powerful antenna or one which means that people would like to hear themselves more on radio or see themselves better represented on television. We are very well aware of the issue. Increasingly Radio-Canada artisans are attempting to diversify the news while making it very local when news bulletins are local.

We are also very aware of the francophone population that is our audience. Ninety-two per cent of our market is in the province of Quebec and the Ottawa-Gatineau region, and 8 per cent of francophones listen to us in the rest of Canada. We have to reflect their history and concerns on Radio-Canada television and radio. We are very well aware of that. We are following that closely and we seriously do not want people to continue to think that Radio-Canada radio is only about Montreal. That is not how we see things.

[English]

Senator Batters: Gentlemen, thank you for coming this evening. I want to turn to the reason that perhaps this study was initiated. I'm not a regular member of this committee, but I appreciate the opportunity to be here this evening.

Turning to the Rogers' NHL deal, I have a few questions with respect to that. I'm wondering how much advertising revenue CBC will lose as a result of that deal. Will CBC be asking taxpayers for more money to recoup that loss? What is the CBC's recovery plan to offset that revenue loss?

Mr. Lacroix: All good questions, because that's what we are now looking at, trying to assess the consequences of losing the hockey contract.

The hockey contract has different aspects to it. First off, there are the broadcasting rights. There's a cost to that that we pay the NHL over the years to have the privilege of Hockey Night in Canada. Hockey Night in Canada was also a great locomotive for us. It was a must-buy to advertising. Everyone wanted Hockey Night in Canada, and we could actually hook up other programs on our television schedule and sell them as a bundle. That will no longer be possible.

So there's the direct advertising. Everyone wants to know what that represents, because some of the things that we said at the beginning is the broadcasting rights were high and the revenues kind of washed out. We had a really rough six years with the NHL because you can go through the recession of 2008-09 and then have a very good hockey year when Vancouver goes to seven games so everyone is watching us; then no Canadian team passed round two, so almost nobody watches. Then we bump into the lockout, and here we are in the last year of the contract. So the contract was not as lucrative for CBC/Radio-Canada as we had originally expected.

Bottom line, we have about, right now, $400 million of total advertising, CBC/Radio-Canada together. Let's say 275 to 300 for CBC. In a good year, maxed out, 40 to 50 per cent was Hockey Night in Canada. Everybody knows that. About $125 million to $150 million of advertising came with that. What we're telling you is that it was sort of a wash when you look at the broadcasting rights that we had to pay. So there are consequences to that.

I said ripple effects, trying to replace the programming. That's why we turned around and did a deal with Rogers for 360 hours of programming because, as you know now, Hockey Night in Canada lives on for four years. We don't get the revenues but we don't pay anything for that; we just get the content. But we have the option and the opportunity to sell our programs during those minutes, because that's important. We want Canadians to know about our programming schedule during the week.

So we're assessing this. We won't know, frankly, until next year what the ripple effect will be. We have to discount some of our numbers right now, but we don't know, not having lived through one year of trying to sell our programming schedule, what that impact will be.

Senator Batters: Dealing with advertising dollars, as I'm new to this committee — maybe others on this committee are very familiar with it, but I'm not, and I imagine many in the public are not — maybe you could briefly explain. Because you're a public broadcaster, is the amount of advertising that you're allowed to do on television limited? If so, what is the limited amount?

Mr. Lacroix: The answer is no, we're not limited. There are a certain number of minutes that we can put on the air, but frankly it's more about different revenues and the number of people that watch us; hence, the whole Senator Eggleton question about Canadian programs and American programs. And if you have a chance to watch Big Bang against Arctic Air, what will you watch — the production value of one hour of CBS in its high drama series against the production value of a one-hour CBC show? That's the challenge that we have.

Senator Batters: What's the approximate amount you earn from advertising per year right now?

Mr. Allen: For CBC Television?

Senator Batters: Yes.

Mr. Allen: About $250 million.

Senator Batters: I'm from Saskatchewan. In Saskatchewan, CBC has a 90-minute-long dinner newscast. I'm not sure if that's the case across the country.

Mr. Lacroix: Yes, it is.

Senator Batters: What are the ratings for that? Because in Saskatchewan, the program runs from 5 p.m., when no one is home from work yet, until 6:30 p.m., and there are many repeated stories throughout that time. In Saskatchewan, CTV basically rules the roost for ratings for dinner newscasts, and those are prime advertising dollars for CTV. All those programs you put on that chart, CTV's 6:00 to 7:00 dinner newscast in Saskatchewan is the highest advertising dollars that they have, and CBC and Global previously staggered their local dinner newscasts coverage around CTV's. Now it's head to head, and I imagine that ratings potentially have plummeted. I wonder if CBC is not tailoring to local preferences because of a desire to have uniformity across the country. How would you respond to that?

Mr. Lacroix: In the context of "Beyond 2015," we have to look at the way we deliver our services. We have always believed in the current strategic plan that, to be the public broadcaster, we have to be deeply rooted in the regions, and that local news matters, and that the business model around local news, depending on where you are in the country, is really not evident. The conventional broadcasters will have to make some really tough choices. We think that as a matter of our mandate, being in those regions and delivering local news is something that we should be doing.

Will we continue doing it the same way? For example, we have a station in Hamilton that doesn't have a TV transmitter nor does it have a radio transmitter. It's a completely web-based station in Hamilton. It's a test case. We're trying to see where and how Canadians would consume this.

So the answer to your question or comment is that we care about local programming. We care a lot about local news because we think that is part of our mandate. Should we or will we continue to deliver it in the same way that you're seeing it, on a wheel, from 5:00 to 6:30, forever and ever? I don't know, but we're looking at this right now as we are trying to reinvent the broadcaster.

[Translation]

Senator Demers: Mr. Lacroix, thank you very much for your presentation. As for the Olympics Games broadcasts on CBC/Radio-Canada, I can tell you that everything I heard, both in French and in English, was of exceptional quality. Given the question put by Senator Batters, I would not want you to have to repeat yourself.

I will give you and Mr. Allen an opportunity to reply.

[English]

Rogers will take over CBC network airwaves on Saturday night for the NHL hockey broadcast and nightly during the playoffs. Rogers will get all the financial benefit. I know you talked a little bit about that on Senator Batters' questions, but I will go ahead.

Sales will be managed by Rogers, and Rogers will keep the revenues. They will have total editorial and creative control. As we understand it, Rogers will get the use of the Hockey Night in Canada brand and that in building a new studio — I don't know if you're aware of that — with CBC Toronto headquarters, how is that consistent with the mandate of a public broadcaster? Has Rogers paid CBC any money for these privileges? In addition to the use of the CBC network, the Hockey Night in Canada brand and CBC talent, is there anything else that CBC is providing to Rogers? Why should taxpayers subsidize a private company, Rogers, that is prepared to spend more than $5 billion for NHL hockey rights? The Hockey Night in Canada brand is obviously iconic in the country. Sometimes that's all Canadians identify with and that brings us together from coast to coast. Why should control of that brand be given over to a private company?

I had worked at one point for Hockey Night in Canada in French and English. It was, besides coaching, one of my proudest moments because it's so important. Hopefully, we can get some answers for these questions I asked you.

Mr. Lacroix: Senator Demers, thank you for saying that you were proud to be associated with Hockey Night in Canada. We think also it's an iconic brand.

There were a number of questions in your statement, and I'm going to try to answer them. I'm not sure I will remember them all. I tried to put some notes down. If I haven't, throw them back at me.

Here's how the hockey deal went. We get a call from the NHL. The NHL tells us that they have chosen Rogers and that, basically, Bell and us will be left with zero hockey rights to the NHL because they bought everything for, as you know, $5.2 billion.

We then looked at the consequences for the taxpayers of losing this and of having to replace, on Saturday nights, 360 hours of programming. There's a cost to that.

We also had, as you hinted, I think, extraordinary experience and expertise in producing the hockey telecast on Saturday night. I think Rogers saw that. Rogers, I think, also wanted to be associated with Hockey Night in Canada because of what it meant. So we actually had some leverage in that conversation because they had to build, all of a sudden, a hockey infrastructure around their purchase.

So the deal was struck where, for no broadcasting rights — we don't pay anything — you're going to tune in to CBC and you're going to see Hockey Night in Canada. They're also going to take hockey, and they're going to deliver it on six or seven other Rogers-related platforms — CITY TV, Sportsnet, 1-2-3-4. CITY TV is the only conventional broadcaster. Rogers 1-2-3-4 is something you pay for. I suppose they'll decide how they want to do this, and they've said that these games are going to be available to all on our platforms. I don't know what the model is. They're working on it.

We thought and still think that the best deal for Canadians right now and for CBC was to associate ourselves with Rogers, make sure that we could rent out the production teams, because that's what they bought — the expertise — to do this on a four-year term, to then try to see with Rogers what else they wanted to do, whether they wanted facilities within CBC's Toronto Broadcasting Centre and what other commercial links we could actually create with them to lessen the impact of losing Hockey Night in Canada.

We think that the deal that was struck is a very smart one for Canadians and for the taxpayers. Should they not be there in four years or should they no longer want to continue, we will be able to build a plan to see how we would replace that programming. That programming is still going to be in line with our strategic plan, Canadian content, making sure that we show the best on Saturday nights. It's going to have a double challenge because it's going to be against seven hockey games, and we know how much Canadians watch hockey on Saturday nights. We all understood this. We think we struck a very good deal, actually, for Canadians by striking this partnership with Rogers.

I hope I answered your questions.

Senator White: Thank you very much for being here today. I, too, want to congratulate CBC. I don't think I've watched as much Olympics as I have this year, and primarily on an iPad application.

You referred to the cuts as a result of DRAP. I wonder if you could walk through the impact of DRAP, percentage-wise of your budget, also real dollars, whether we have seen layoffs as a result within CBC and whether we have seen layoffs in the executive core. Have we seen a reduction specifically in the bonuses paid to the executive as a result of the DRAP reductions?

Mr. Lacroix: There's a lot of stuff in what you just told me. Let me try to give you precise numbers.

DRAP cuts were $110 million to $115 million. It was about 11 per cent of our budget. It was staggered over three years.

Mr. Allen: There were the indirect costs as well.

Mr. Lacroix: There were direct and indirect costs. We showed the government how the cuts were broken down. I've got this information somewhere. Maybe at the break I can find it and break it down for you in a very precise way.

Same number, percentage, and we calculated that obviously at the end, but the number of employees, CBCers, that we let go across the board — about 11 per cent of our workforce is not unionized. About 11 per cent of the cuts were in non-unionized positions. We worked with the unions to try to lessen what that represented. Close to 750 to 800 jobs were lost. This was a difficult time for CBC/Radio-Canada because it came on the heels of a very tough time.

When you look at what happened in the world in 2009, the collapse of the financial markets and how that affected us from an advertising point of view, there was about $390 million that we took out of our costs at CBC/Radio-Canada, including the 115 from DRAP. So that gives you an idea.

Senator White: A number of layoffs of executives and reduction of bonuses?

Mr. Lacroix: The STIP bonuses, the short-term incentive plans, are a function of the number of people who get them. If you have fewer executives, the payout will be less, but there was no reduction during that time. We reduced and affected our payouts in 2009 and 2010, halving all of the bonuses that were paid at that time. In 2011, 2012 and 2013, as we went through the three financial years of DRAP, we did not change the way the short-term incentive plans were paid out.

Senator White: How much would you pay out in bonuses to executives on an annual basis for 2013?

Mr. Lacroix: In all, there are about 550 people who are eligible for short-term incentive plans. They're all incentivized in a very clear fashion. It's all disclosed on our website; you can see what we pay for what. There's a corporate component, an individual component and how the CBC does as a whole. There are about 550 people for about $8 million or something like that.

Senator White: What percentage would the largest executive employee receive?

Mr. Lacroix: There are a couple of people who get an incentive to 50 per cent of their base salary, because this is all part of a compensation philosophy. We can talk about that because I think that's important. It goes from about 8 per cent up to 50 per cent.

Senator White: Would anyone have received a 50 per cent increase?

Mr. Lacroix: Over time — not increase.

Senator White: Well, it's a bonus at the end of the year, an increase over their salary, right?

Mr. Lacroix: Incentive over time; I don't think we've met and delivered 50 per cent. I would have to go back, but to hit 50 per cent it means we've hit on every single one of our targets and incentives. I don't think that has happened.

Senator White: What was your bonus last year, Mr. Lacroix?

Mr. Lacroix: That's easy, sir. The government gives me a bonus that goes between 14 per cent and 28 per cent. My bonus last year was around 20 per cent or 21 per cent.

Senator White: The total value of —

Mr. Lacroix: That's kind of a number — you can see what the ranges of salaries for Crown corporations are, and you can make your calculations.

Senator White: Mr. Lacroix, please. I'm asking you what your bonus was last year.

Mr. Lacroix: I'm telling you it was 20 —

Senator White: You're not answering.

Mr. Lacroix: This number is a number that goes —

Senator White: He refused to answer.

Thank you, Mr. Chair.

[Translation]

Senator Tardif: I would like to add my congratulations to those of my colleagues for your excellent coverage of the Olympics Games. In your presentation, you indicated that you were able to cover the Sochi Olympics Games successfully thanks to a collaborative effort between CBC and Radio-Canada. You also indicated that there was better communication in the corporation and that you had avoided silos.

You probably know that there is a lot of criticism from certain Canadians with regard to the lack of communication in the upper management governance structure at CBC/Radio-Canada. Some say that there are two solitudes. Following the Sochi experience, what lessons could you apply to the corporation governance structure so that Canada, including both national and regional listeners, is better reflected in all its regions?

Mr. Lacroix: Your comment on the two solitudes interests me. The perception you have of CBC/Radio-Canada and of the fact that CBC does not talk to Radio-Canada is a somewhat outdated perception. In our management team, we have just hired a new, young person to manage the CBC. The first thing Heather Conway did, before she even started work officially, was to sit down at Radio-Canada and observe what the Radio-Canada people were doing in television.

The people who work for radio constantly talk about the exchange of coverage of certain concerts or events they will cover together. You were referring to the Olympic Games, and you can see the major events that we cover.

Not only is this a priority we imposed, but it is a part of our culture and means that in an environment where there are fewer resources, we work to eliminate the barriers between the two enterprises. In the regions, we share cameramen and people in the field.

On the contrary, I think that the two teams of our corporation have never been so close to each other and to all of the other components of what you saw on your screen — and Sochi is an excellent example.

Senator Tardif: I am repeating the comments we heard in this regard.

How do you intend to meet the representativity requirements which the CRTC imposed upon you when your licence was renewed?

Mr. Lacroix: What do you mean?

Senator Tardif: I am talking about representation, that is to say how you consult people in the regions and how you will answer them. When the CRTC renewed your licence, it also imposed consultation conditions, did it not?

Mr. Lacroix: Are you talking about French in minority settings?

Senator Tardif: I am also talking more generally. What do you do to ensure representativeness in the regions? You indicated in your 2015 strategic plan that you wanted to be anchored in the regions.

Mr. Lacroix: Yes.

Senator Tardif: What do you do to ensure that you take the regional aspect into account?

Mr. Lacroix: In every region where we are present, there are people who are in the field and interact with the community, either to fundraise or support certain initiatives where the public broadcaster is a partner, for instance at Christmas or during some other type of campaign.

That is why I put that question to you. I thought you were referring to the improvement suggested by the CRTC which we agreed with, that is to say examine and assess how we deliver our services in French throughout Canada in minority situations. That is a concern for us.

We held some panels on the regions. We have one person who is responsible at Radio-Canada for this aspect of things, and her name is Patricia Pleszczynska. In fact, the House of Commons Standing Committee on Official Languages would like us to present our plan to them. We will be happy to send you the notes and the presentation we will be making there.

So, representativity is a constant concern for us. Our managers go into the regions to listen to people, within the context of the regional panels; we invite people to talk to us. I am constantly travelling in the regions to hear what people have to say to us. We are very close to students, and this is increasing. We invite them to come and talk to us, as there are different sectors or segments of the population that interest us. That is what we do on a daily basis. We are very much aware, Madam Senator, that Canadians consider our presence important, especially in francophone environments in the regions.

[English]

Senator McInnis: Good evening. Thank you very much for coming and for this environmental scan that was forwarded to the committee. I am relatively new to the Standing Senate Committee on Transport and Communications. I came and asked to be on the committee because I wanted to talk about transport matters, and when I arrived, we've dealt with nothing but the challenges of the CBC.

Indeed, you do have challenges. I read recently, a couple of weeks ago, that your audience of age 54 and under is dropping off. You're half the size of your competitors. In fact, with the exception of French TV industry revenue and French radio revenue, where you're number one, you're well behind. Bell, Shaw and Rogers are nipping at your toes in English TV industry revenue and in radio.

Therefore, with your audience dropping, undoubtedly advertising revenue, which is on another chart here, has stalled over the last two or three years. It was going up. Of course, government investment in the public broadcasting has flatlined since 1990.

Governments and politicians are funny people. If the public want it, they normally invest in it. For more than two decades it has been flatlined at little more than $1 billion; and that's all government. So it strikes me that you have some real challenges.

The other week we heard from the former head of CRTC by video conference. I asked him if it's not time for CBC to look at partnering; and he said, yes, indeed it is.

I wonder, and perhaps you can answer, if you have the tools to do that under the Broadcasting Act, or would there have to be amendments? The government would have to provide you with the potential to carry that out. It strikes me that the march at government giving more money to CBC I think is not in the cards, and I think you're seeing it as well. I would like a response to that.

I also want to ask you about — and I classify some of these things in infrastructure — whether CBC/Radio-Canada is spending too much on infrastructure versus Canadian content. You've got 82 radio stations across Canada, 27 television stations, 11 foreign bureaus, 7,304 full-time employees, 469 temporary/ full-time employees, and 1,002 contractors. Those are 2012 figures. Perhaps you could respond as to whether there is some way that could be condensed or consolidated.

You made the comment earlier — and I think it's a good one but I didn't quite get an explanation — that every dollar invested by the taxpayers of Canada into CBC produces $4 in return. I'd like you to expand on that.

I should have prefaced my comments by saying that I'm a great fan of CBC. Over the years in my private life I've written letters to governments in favour of CBC. I'm worried a little bit about TV, but as I said last week at the hearings, you have it 100 per cent correct with CBC Radio. You couldn't be better and your audience proves that.

That's quite a machination. I'd like to come back on the second round because I have another question. If you got all of that, I would appreciate an answer.

Mr. Lacroix: I'm going to try, Mr. Chair. There are six really big pieces in what the senator threw at me, so be patient with me, please, because I'm going to try hard.

Let me tell you first off that I've been in this job for six years, as you heard, and never asked government for a dollar. What I have asked from the government is for one dollar more than we have. What I've asked for is predictability, multi-year funding like all the solid and important broadcasters in the world, and I've asked for a credit line. Because credit line on your Visa is more important than the credit line I have at CBC/Radio-Canada because I don't have a credit line at CBC/Radio-Canada. Every time we have $1 of less revenue or we get a dollar cut, we have to do one of two things: We have to cut $1 from CBC or we have to postpone the $1 expense until next year.

Those are the requests I've made every single time I've had an opportunity to do so, but never more dollars for the CBC. We respect the challenges right now of the environment in which this country works. We respect that.

Number two, broadcasting infrastructure depends on the services that Canadians want from us. If you are in Cape Breton or Nova Scotia and have a CBC station like you have right now, or you could be in Saskatoon and have a station, we might tell you that it would be much more efficient if we had a hub-and-spoke model where we had one station in French in Manitoba and nothing but bureaus in Western Canada because that would be a model that would work to reduce our costs. You might find some people in this country are going to say, "Wait a second, I'm not being treated like everybody else."

So what kind of services do Canadians actually want from their public broadcaster? Every time we talk to them, they say, "We want you to be in our region; we want you to be around us." That's why the infrastructure grew this way.

I'll remind you that it grew because in the 1970s, the government at that time decided that as a matter of policy Canadians needed this signal across the country, and we had to put up and did put up some transmitters across the country. We have the largest infrastructure of anybody in the world.

That being said, we realize that we don't want to be an owner of the premises from which we actually deliver our services. That's why we have shrunk. We have important initiatives in our plan for the way we are dealing with our cuts to shrink the broadcaster, to become tenants and to make sure that we are as efficient as possible in those square feet.

I can give you an example of Matane, Quebec, where we went from 17,000 square feet to 3,800 square feet. We are that interested in small spaces. In Montreal, we were trying to go from 1.3 million square feet to about one third of that. But to be able to do that, we need to reshape the broadcaster, and there are some consequences to doing that.

That is the broadcasting infrastructure and our presence in the country. That's what we think Canadians want and that's what we have.

Condense and partnerships, senator, we do this all the time. What you saw on that screen and a partnership with TVA and RDS in the province of Quebec never happened before. We have 800 partnerships with different people to provide content, to reduce costs, to deliver more music, and to put events together. We realize that we can't do this by ourselves. With the taxpayers' money that we have and the commercial revenues that we generate, we need partners to deliver our services. We're on the same wavelength there.

Mr. Allen: He also asked about Deloitte.

Mr. Lacroix: Yes. Could you speak to the Deloitte study of 2011 and the $4.

Mr. Allen: It's on page 22. It was a study that we commissioned to demonstrate the economic impact of the corporation. There is a very impressive ratio of 1 to 4. I think the simple answer as to why it's high is that when you make an investment in CBC/Radio-Canada, you're really making an investment not in infrastructure but in the people who make content. The media industry is a very labour-intensive business, and it's being made in all kinds of regions across the country. We're in places down east, out west and up north. We're in small towns across the country investing in people. That is why that number is so high.

Mr. Lacroix: Look at our television schedule: Arctic Air is Yukon and Vancouver; Heartland is Calgary; Republic of Doyle is St. John's, Newfoundland. St. John's is as much a character and a live person, if I can say that, as the actors are. I could go on and go through what we do and the impact we have in those communities with the investments we make.

In my opening remarks, I told you about $732 million of investment in Canadian programming as compared to $600 million invested by everybody else combined. That's normal because we're the public broadcaster. We believe in Canadian content and we believe in creating value for Canadians. We are the motor of this economy, no doubt.

I hope I answered all of the questions you threw at me.

Senator McInnis: There's something else I want to ask on the second round.

[Translation]

Senator Mockler: Thank you, Mr. Lacroix, I accept your statement.

[English]

Your statement was that you find the broadcast industry is changing and CBC/Radio-Canada is changing with it.

[Translation]

However, you have a mandate, and you have a role to play in all of the regions of New Brunswick. Do you agree?

Mr. Lacroix: Absolutely.

Senator Mockler: That said, in a previous comment, you put the following question to a senator: do you believe in Canadian content? I would like to reply on behalf of Acadian men and women from New Brunswick — the province I represent, the only bilingual province in Canada. My reply would be yes, but this content must come from everywhere in Canada, and more particularly from areas where francophones are in the minority.

I listened carefully to your discussion with Senator Maltais, as well, but did I understand correctly that 92 per cent of Radio-Canada's audience was in Quebec?

Mr. Lacroix: Taking into consideration the distribution of the French-speaking population, that is correct.

Senator Mockler: So I guess 8 per cent of its audience is outside Quebec.

Mr. Lacroix: In the rest of Canada.

Senator Mockler: You also talked about a still-relevant study, according to which CBC's The National is a better reflection of the country than Le Téléjournal. This study, which was commissioned and carried out by the Research Chair of Acadian Studies at the Université de Moncton, in conjunction with the Société nationale de l'Acadie (SNA), specifically indicates that there is a tremendous amount of Quebec content. The study also clearly shows that, in the Atlantic region, only 1.4 per cent of Radio-Canada's late evening news content comes from outside Quebec.

What concrete measures have you taken to increase the Canadian content value on Radio-Canada's television broadcasts in the Atlantic region?

I would also like to know what is being done in other provinces where francophones are a minority.

Mr. Lacroix: Madam senator brought up this very issue. I just want to respond to your observation and the comments we receive about our 10 o'clock news edition — the famous Téléjournal anchored by Céline, and by Pascale Nadeau on the weekend. That newscast must continue to reflect Canada as a whole for all francophones.

As you probably know, Michel Cormier, an Acadian, is now in charge of news and current affairs. He is fully aware of the situation — including any comments and criticisms. He was actually in charge of the New Brunswick region before being appointed news director.

The first order of business was to recruit two new full-time reporters to create content for Le Téléjournal. One is in Edmonton, and the other one is in New Brunswick, in Moncton. That has provided us with instant news awareness and monitoring for Le Téléjournal, which is changing. Michel's vision of Le Téléjournal will make you consider the top issues. Earlier, I heard senators say that they had never watched the Olympic Games so much on their iPad. Not only are you watching the Olympics on your iPad, but you are probably also getting your news on your smartphone or your iPad well before 10 p.m. So when you do sit down to watch Le Téléjournal, the newscast has to do more than just provide you with the same news stories you have already seen on your tablet. Le Téléjournal is undergoing a transformation, and we hope that you will notice it and be able to conclude with us that, thanks to the measures we have implemented in the regions — our regional panels — we are working increasingly hard to gather information and reflect it on our radio and television networks. I hope that you will notice our efforts. We are very conscious of the issues.

Senator Mockler: Thank you very much. By the way, Acadians are very familiar with Michel Cormier.

There is something else I would like to know. When you say that the content should reflect Canada as a whole, you do mean regions outside Quebec, as well, right?

Mr. Lacroix: Absolutely.

Senator Mockler: You said that, as president, you will have to make some difficult decisions in the coming months. In an email to your employees, you said that you have always felt that they had the right to know about such decisions, and you promised to be as honest and as direct as possible. Is that indeed what you said?

Mr. Lacroix: Yes.

Senator Mockler: I think that is commendable. Under your new structure, can you tell us whether any administrative cuts will be made in human and financial resources, and in the budget for infrastructure renewal in Moncton?

Mr. Lacroix: We are currently re-establishing our presence in Moncton, as the building we were using was no longer adequate. We want to reduce our office space, and we are moving to the main street in order to be even more accessible.

In our "Beyond 2015" plan — and I want to reiterate this — we cannot make significant annual cuts in public broadcasting and then reinvent ourselves every two years. Our "Beyond 2015" plan will have to establish a strategy that will guide us to that point and make Canadians understand that we cannot always be everywhere in Canada. That does not make any sense in an economic environment like ours. These are the decisions we are making together at CBC/Radio-Canada. We are thinking about what the broadcaster will look like in 2020. It is very important for Canadians to understand the significance of this strategic exercise.

Senator Mockler: You did not answer my question.

Mr. Lacroix: I do not know yet how CBC/Radio-Canada's reinvention will turn out. I do not know what that will be like.

[English]

Senator Greene: I too enjoyed the Olympics very much, and especially your online app for tablets. I thought that was a wonderful creation. I think I saw more CBC programming over the last couple of weeks than I have over the past couple of years. You are to be congratulated.

I normally watch CBC only when Hockey Night in Canada is on, but since I'm a Montreal fan, I usually call it "Hockey Night in Toronto" because it seems to be Toronto-centric.

This brings me to a question. In determining what you put on the air, do you look more at the market? I understand that there's more of a market for Leafs games than Montreal games, or do you look at trying to serve all the regions, because those two issues can be in conflict?

Mr. Lacroix: Yes.

What we're trying to do is obviously maximize revenues. The conversation starts with the NHL. Unfortunately, as you know, we only have a few more months to go. The schedule has been set. They're sitting down with Rogers right now. But the context has always been to try to deliver in the East a game that will be interesting that will go to as many hockey fans as possible. And the second game on a Saturday night, obviously because of the time difference, is out West somewhere. That's what we try to do.

Senator, I'm also interested to hear that maybe through the last couple of weeks, as you have been watching a lot of programming on Sochi, that you got exposed to other programming responsibilities at CBC and that you actually might want to watch that.

Senator Greene: Well, let me get to that in a second.

Given the trend with consumers to watch programming on things other than a TV set, and your success with the online app, are you still 100 per cent committed to over-the-air programming?

Mr. Lacroix: Over-the-air programming. Do you mean over-the-air distribution?

Senator Greene: Right.

Mr. Lacroix: We don't have much of a choice. That's why I chuckled. I like Conrad. He actually sent me a nice email a couple of days ago saying that he really enjoyed our Sochi coverage. When I heard from him that he actually suggested — because I read his transcript — that we should no longer be doing over-the-air because Canadians actually get their signal through a satellite or a cable company, I smiled because he was the one that forced all the carriers into the digital era by creating mandatory markets and saying that if you want to be carried in a particular region, you must have an HD transmitter. And we actually said, "No, we don't want this because we don't think this is the way this happens in, at that time, 2011.

So, yes, maybe now that he's no longer the chair of the CRTC he can make those comments. But the infrastructure, the 27 HD transmitters that we actually delivered to Canadians so they can deliver over the air is the result of a CRTC policy, because when you look at the way Canadians now get their television signals, it's not over the air. It's by satellite and it's by cable.

Senator Greene: That's very interesting.

Your mandate was developed in 1992.

Mr. Lacroix: The Broadcasting Act, as it defines our mandate now, is a 1991 piece of legislation that has not been amended since.

Senator Greene: Is there anything in the mandate that you don't like anymore that was appropriate back in 1991 but is no longer appropriate now, anything that prevents you from doing things that you should be doing and vice versa?

Mr. Lacroix: It all depends on the expectations of Canadians about the services we render. The environmental scan tells you, at the beginning, what the mandate is, and there's article 3 that says that we have to do a bunch of things.

It's difficult to have a 1991 piece of legislation. Page 8 and 9, if you look at that, the mandate has to be distinctively Canadian. Obviously, it has to reflect all Canada and its regions. It has to be obviously of equivalent quality. It has to do X, Y and Z. All of these things we believe in.

Now, the 1991 act doesn't speak, obviously, of the Internet, when you realize that there was no iPad in Vancouver during the Olympic Games. That is not too long ago. There was no iPad app to play with. Look at what we did in Sochi.

So is it an act that reflects the current broadcasting environment? The answer is no.

Senator Greene: Right.

So what are you telling me?

Mr. Lacroix: What I'm telling you is that in this environment, the first thing that we, as a civil society, need to determine is what do we want the current broadcasting environment in this country to be?

Senator Greene: That's correct.

Mr. Lacroix: Right now we have a number of actors in it. We have private broadcasters; we have public broadcasters; we have people that are now so integrated, and that didn't exist before, that when you look at the groups — and somebody else hinted at that, I'm not sure which senator, a few seconds ago — as to the groups now and how integrated they are, the Broadcasting Act didn't foresee that when it was written up.

Senator Greene: So are you suggesting that we should look at the Broadcasting Act and the mandate in particular?

Mr. Lacroix: I think the most important thing is what do Canadians want in 2014?

Senator Greene: And beyond.

Mr. Lacroix: And beyond. What do they want as services from all the ecosystem actors in the current broadcasting environment? That's the key question. Then you adjust the resources as a function of those expectations. Because, if not, I mean, CBC/Radio-Canada has no chance to meet the expectations of Canadians if the goalposts keep moving.

Senator Greene: I'm going to think about all this, but I have another question separate from what we just discussed. I thought of it while I was watching the Olympics on my iPad. I was thinking if the CBC can bring me skiing from Sochi — which is, in a sense, Canadian content — why can't the CBC bring me regional theatre from Neptune Theatre in Halifax?

Mr. Lacroix: Maybe it will. The possibilities are interesting, but you've got to remember that 87 or 88 per cent of Canadians still watch their television in a linear way, sitting in their living room.

So, yes, the widgets are fun. They give you an idea of what it is going to become; but when you look at how people actually watch television, they're still watching 27 hours of television a week, not including online.

We've been talking a lot about TV, and there's a senator a few minutes ago that said — I should have picked it up before — that your television schedules are in trouble. You do realize, with the numbers that we put out, that the fall schedule for Radio-Canada was the best ever. Our share was 21 or 22 per cent in prime time. We actually beat TVA for the first time ever, and you know that's really good because what TVA did is TVA and Radio-Canada have, in our market, I think a really good, dynamic relationship with respect to trying to produce great drama. And if it wasn't for us pushing the bar, and then they push the bar — and then the dramas are spectacular. I have great respect for what they do there.

We have, in Radio-Canada's environment, a very different way of creating a star system; so people enjoy Radio-Canada television like never before, so it's very healthy. The radio on Radio-Canada is doing well, when you combine radio, Espace musique and la première chaîne.

Now, shift over to CBC —

Mr. Allen: Not to give CBC Television a short shrift here, but they have got the same audience share from over a decade ago with an environment, compared to 10 years ago, where there's been a total expansion in the number of channels and services that are available; so kudos for CBC Television.

Mr. Lacroix: The last time we counted, there are 748 channels available for you to watch. And for CBC/Radio-Canada to be distinctive — here we go again, Senator Eggleton — it's about Canadian content. It's about you coming to us knowing that you're going to watch Canadian values being shown to you and Canadian programming in an environment that is done to reflect what being a Canadian in Canada in this era is all about.

And the numbers are good. In 21 of 23 markets for Radio One, they are first or second on the latest PPM results; and CBC television, yes, challenged. Prime time will vary between 7 and 8.5 per cent, and it will be affected by the loss of Hockey Night in Canada. We don't know how much yet, but Heather Conway has a plan to try to transform it and make it a little edgier and a little more interesting — well, to continue connecting with Canadians.

Senator Greene: If you would like to imagine where we're going to be five or ten years from now — it is harder with ten, perhaps — and with your knowledge of the marketplace, which is much bigger than mine, would you be interested in submitting a proposal for a mandate change?

Mr. Lacroix: Well, we're into trying to define what the broadcaster should look like in 2020. Armed with that, when we deliver what our vision is, then we'll connect back and see whether we can actually deliver it in the environment that we're in. But that's going to be a change.

The Deputy Chair: Thank you, Senator Greene. I'm very generous with you as always.

Mr. Lacroix: The 2015 strategy ends on March 31, 2015. That's the end of the fifth year. Before that, we will have a framework and a communicated strategy as to what we think the broadcaster looks like in 2020. There are going to be some choices to be made.

The Deputy Chair: I would like also to weigh in with a question. I want to go back to the theme of transparency in governance, and a couple of my colleagues brought it up.

Since the beginning of this study, we have had a lot of witnesses with different perspectives on this, and a lot of us can't get our head around the fact that one of the largest Crown corporations, if not the largest Crown corporation, that takes in more than $1.1 billion of taxpayers' funds a year has a hard time publicly disclosing its senior administrators' salaries — has a hard time disclosing the salary of Peter Mansbridge, for example — while living in an era of transparency and accountability that is more in demand by the taxpayer and citizens than ever before. We ourselves are living proof of that. Every single dime we spend on behalf of taxpayers has to be accounted for. If my friend and colleague Senator Mercer were to get a parliamentary bonus at the end of the year and not disclose the amount of that bonus, there would probably be hell to pay.

I was perusing last week the BBC website and I clicked on a bunch of individuals, senior executives and the director general of the company. They had their annual salary and expense accounts. It was the most detailed accounting system I've ever seen on behalf of a funded government agency.

There will be cases where human beings make mistakes, and we've heard your perspective on behalf of the expense claims. I'm not in a position to judge you. I don't have the facts; I don't know the details. But in any organization, be it the Senate of Canada — and my friend and colleague Senator Plett alluded to it — or CBC or VIA Rail, or whatever the institution, there have to be checks and balances so that administrators, executives and employees are accountable for their actions and we're able to determine if the errors that were made were errors, if the errors were made because structurally there needs to be changes in the system. We as an institution have experienced that in the last few months, but I think the public has seen how rigid we have been with our own colleagues who have been accused of making claims that they claim were mistakes, while others claim other things.

I think as a committee looking at governance and looking at transparency, we have a hard time, Mr. Lacroix, understanding why the CBC holds back certain information. People send me emails: "We'd like to know what Peter Mansbridge earns," and I don't see why an organization that gets three quarters of its funding from taxpayers would have a hard time with that.

Mr. Lacroix: Senator, transparency — key. We think that CBC/Radio-Canada has never been more transparent than today and that we are actually more transparent than many of the broadcasters or the corporations that we work with on a daily basis.

Let me just give you an idea. We file an annual report like everybody else. Our annual report actually won a prize at the CPA's last awards committee for the quality of our reporting in 2012-13. It was just announced a few months ago. It gives you an idea of how good our disclosure on our financial picture is.

We submit a corporate plan. We submit and we post on our site 130,000 questions and answers and pages of people who are actually asking us, under access to information, all sorts of questions. We actively, proactively post it. We went from being inundated by access to information requests — and I'm sure you know that the Sun network, because they disclosed it, we became subject to the Access to Information Act in 2007, in September. We had looked at a whole bunch of other corporations and the number of requests that they were receiving, and we benchmarked ourselves. We looked at the BBC and the corporations in Canada, and it wasn't even close. We got like 700 requests in the first couple of months. We were late; we got an F from the commissioner. We worked as a corporation and turned the F into an A. In the last report from the commissioner, she gave us an A, and she actually spoke of how much the culture at CBC has been better, and we are dealing with every single challenge with respect to transparency in that way. We post stuff. If you go to our website, we constantly post stuff about what's going on at CBC.

Peter Mansbridge, his salary — clearly competitive in an environment like we are. There are all sorts of privacy considerations under some legislation in the country that would prevent us from doing that.

We post our bands. If you go to CBC you will see the bands, the people who work at CBC, how they are paid. You have a pretty good idea of how it works. We have a compensation philosophy that is absolutely transparent and described in our annual report. We try to pay people — and we have independent directors, all named by this government right now, because this government has been there enough years to be able to have named every single one of our directors. They sit on an HR committee. They determine every single compensation aspect of CBC/Radio-Canada, and the governance system works in that way.

So it's a long answer, senator, to tell that you we think that we have never been as transparent. In the environment in which we work, disclosing those kinds of salaries would not be helpful to our position.

The Deputy Chair: On the second round of questions, we will follow the same order. If there are senators who do not want to participate, give me a nod. I would like everybody to be more precise and concise in their line of questioning so we can maximize the use of our time.

You have the floor, Senator Mercer.

Senator Mercer: I'm following up on your question, and the question of Senator Plett, Senator White and others, with respect to transparency.

It seems to me that transparency is a key word around this town. It's a key word that your main broadcaster on The National continues to use all the time. When making reference to senators' expenses this week, he directly referred to it as the public's money that was being spent.

It's the public's money that's being spent at CBC, too, and quite frankly I'm disappointed that you didn't tell us what your bonus might have been. You did not reveal what Mr. Mansbridge's salary might be.

Perhaps you can tell us if everybody, like Mr. Mansbridge, is in compliance with the CBC conflict of interest and ethics policy with respect to earning money outside of CBC, using their position to make money? I refer to an article that appeared in another news media outlet that claims Mr. Mansbridge spoke to the Canadian Association of Petroleum Producers in 2012 and charged a speaking fee of $28,000.

Now, there's nothing wrong with Mr. Mansbridge making money, but I want to know that he's doing that because he's the voice of CBC. He's doing that because he has the eyes and ears, and particularly the eyes and ears of Canadians every night at ten o'clock. If I read some of the points in the conflict of interest and ethics policy, CBC employees:

5. . . . must not use their positions to further their personal interests. . . .

15. Employees may not engage in activities likely to bring CBC or Radio-Canada into disrepute.

16. Employees may not take a stand on public controversies if CBC's integrity would be compromised.

I did not hear his speech to the Canadian Association of Petroleum Producers, but I suspect he talked about the production of petroleum. He probably said something that they wanted to hear. It may not be the message I wanted to hear, but usually when someone is paid to speak to a group, they frame their message to suit the crowd. You wouldn't come in and give a great big environmental speech to that crowd, I wouldn't think.

My final point is that when Rex Murphy was revealed to have had similar jobs, CBC Editor in Chief Jennifer McGuire defended him on the basis that Rex is a freelancer. Good point, I thought. People like Mr. Mansbridge are not freelancers, they're employees of CBC.

Mr. Lacroix: Peter Mansbridge received permission for his speech to the petroleum association. In fact, he clears all of his speaking engagements with senior news management, and each one is looked at to make sure that there is no conflict of interest and that our rules are respected.

He actually makes a whole bunch of speeches. He made 200 speeches, I think, over the last 10 years. It's an important part of our outreach.

I don't know what he spoke about and you just told me that you don't either, so I'm not going to make any comment with respect to the substance. But he knows that he never offers up his opinion or takes a position on anything that is in the news when he makes those speeches. So he could have spoken about leadership, the Olympics and Alexandre Bilodeau giving a hug to his brother at the bottom of the hill. I don't know what he spoke about, but I can assure you of one thing: Peter is a spectacularly respected news person. He is the face of CBC News, as well as a number of his other colleagues, but we all know that The National is about Peter Mansbridge. I'm sure that he respected his standards and our policies when he made that speech.

Senator Mercer: That's it. I'll pass to my colleague.

The Deputy Chair: I wish we had more time, but I'm sure Mr. Lacroix will be back to see us.

Senator Eggleton: I'll get in two quick ones, if I can.

The government announced last October in the Speech from the Throne what is called a pick-and-pay or unbundled system. There has been a lot of commentary in the media lately suggesting that most cable companies, where their prices are not controlled, will just find another way of upping it and no one will save any money by picking what they want to pick. They'll be paying just as much at the end.

I want to know, quite aside from that little issue, how is this going to affect Canadian content? More specifically, how will it affect the CBC?

Mr. Lacroix: We don't know what this is yet all about, as you saw. Jean-Pierre Blais and the CRTC have started a review of what the television history could look like. It's in three phases. We think that when we look at the phases, we'll be invited to comment in phase 3, which is September 2014. We will be ready for that, and we will add our voice and opinion as to what the lay of the television industry is at that time.

Pick and pay, depending on what they do and how it's bundled or unbundled, depends on whether you believe in what we have for years pushed in front of the CRTC, which is what we have called a "skinny basic." "Skinny basic" would be a number of channels that you, as a distributor, must give to Canadians because that's part of your mandate, and everything after that could be pick and pay, depending on what Canadians want. We'll see how that plays out.

Senator Eggleton: What would be a bad model from your perspective for the CBC or for Canadian content?

Mr. Lacroix: If all of a sudden the CBC was no longer mandatory carriage. For the price that Canadians pay — and I reminded you in my opening comments, you know we get about 29 of your tax dollars every year for the whole year. If you don't get any value for that $29, then we're back to the question the senator over there asked: What are we going to do with respect to the Broadcasting Act and the services we render to Canadians? That's how this ripple-effect affects us.

Mr. Allen: We do not have a lot of specialty channels, so we need to bear that in mind. The French market already has pick and pay for Explora and a lot of channels.

Senator Eggleton: That's a different environment.

Mr. Lacroix: And the two major channels.

Senator Eggleton: When Ian Morrison was here representing Friends of Canadian Broadcasting, he said that CBC/ Radio-Canada's current governing structure and senior management do not appear to be sufficiently flexible to respond to the challenges found in the very competitive environment of Canada's broadcasting system. What changes in your structure would be beneficial to give you that greater flexibility?

Mr. Lacroix: If you're talking about the corporate governance structure of CBC/Radio-Canada, that's a question for government. Government appoints the directors, the system works this way, and I'm appointed by the Prime Minister in the job that I have.

Senator Eggleton: You don't want to recommend something?

Mr. Lacroix: I will trust the people who are looking at the broadcaster and any other Crown corporations, senator. If they want to make a change to the way we are named, that's their choice.

But I'm going to bring you back to what you saw on the screens. If you think the CBC management team can't turn around on a dime and deliver for you with the help of some spectacular people — Chris Irwin, Jeffrey Orridge, the people who worked on CBC in delivering the Olympics, such as François Messier on the French side, and Trevor Pilling . When you look at the people on the screen, they're all senior executives of CBC/Radio-Canada.

We got the rights really late in the game. We were concerned that we would not have enough time to sell the Sochi Winter Games, so with the help of everybody at CBC — those 500-some people who worked in Sochi and over here — we delivered to you how nimble we are when faced with some pretty important challenges.

Senator Plett: My question will be somewhat personal on my point — not on Mr. Lacroix's point at all — and his answer should be very general as well. But in order for me to ask the question, I have to relay some facts.

Twenty years ago, there was no such thing as an online story, so any public retraction would have been the only method for a broadcasting corporation to properly do a retraction. They would not have been able to use the online story to do a retraction because there weren't online stories.

Last week the CBC had an online story entitled "Tory senators expense business-class flights with spouses." Then lo and behold there was my photo in between two other senators. In the online story it explicitly said that I routinely purchased round-trip business class tickets for myself and my wife.

Then the story was run on The National, by Susan Bonner and Peter Mansbridge, and on Power & Politics, where they talked about the three senators, generally. On The National, they showed photos of all three senators, and Peter Mansbridge began with: "We begin tonight with a story that may add to the outrage over the Senate these days. In the height of the Senate scandal last fall, CBC News found little restraint. Instead, there was a lot of executive-class air travel, often with spouses — flights covered by you, the taxpayer."

The truth of the matter is, and I explained this both to Mr. Sawa and to others —

Senator Eggleton: Point of order: I don't think this line of questioning is in keeping with the mandate before this committee, which is to look at the future of the CBC with respect to the challenges faced in broadcasting. This is a very particular interest of the senator involved, and I don't think it's relevant to the study.

Senator Greene: On the other side, part of the testimony has been about expense claims, and so forth, from the witness, so I think that opens up —

The Deputy Chair: I have been listening carefully to the question, and I would like for you to lead it quickly towards an issue of governance.

Senator Plett: It's a personal issue, and if Senator Eggleton would have exercised a bit of patience, he would have realized I was now to the question, which was a general question.

Senator Eggleton: I was very patient the last time you did it.

Senator Plett: As the President of CBC, in your opinion, sir, if you misrepresent the facts — and this is not just to CBC; this would be to CTV and Sun and any other organization — is it your duty as a broadcaster, whether a broadcaster fully funded by the taxpayer or any other broadcaster, when you defame somebody with false information, is it your duty to do a full retraction the same way that you ran the story, or is it okay simply to do an online retraction, like was done — so the admission was there — that nobody reads?

This is a general question. This is not in relation to this. I needed to present the case in order to ask the question.

Mr. Lacroix: Senator Plett, I'm sure that you will agree with me that it would be very unwise and inappropriate for me as the President and CEO of CBC/Radio-Canada to actually meddle or challenge the editorial judgment of our news organization.

Senator Plett: That's not what I asked you to do.

Mr. Lacroix: I think that our news organization is one of the best ones in the world. Our journalists are governed by our strict journalistic standards and practices. These standards and practices are the envy of the industry; people come to us to actually copy them and borrow from them.

If you feel wronged, sir, we have a very robust process that leads you to our ombudsman for review of that situation. Esther Enkin, our ombudsman on the English side, is a person of great repute, reputation and experience, and if her review does not satisfy you, yes, you can obviously go to the courts.

But I'm sure that you would agree that for the President of CBC/Radio-Canada to interfere or meddle with the judgment of our news organization would be against every single rule in the book.

Senator Plett: That's not what I asked you to do, sir, but nevertheless, let me finish with this. Clearly, I asked you for a general opinion and not to make a ruling on this case.

My final question is: How is the CBC ombudsman chosen? Do you, as the President of CBC, have any input whatsoever into choosing the ombudsman?

Mr. Lacroix: The ombudsman reports to me. It is a direct reporting line in English and in French. We have a process that is well documented on our web site that says how Esther Enkin was chosen. There is a committee of five, chaired by an outsider. The recommendations come to me, and I have final say on the ombudsman and her engagement.

This process has been going on for years. Again, it's very transparent in English and in French. The ombudsman reports to the board through me and has a direct relationship with the board. The ombudsman reports to the board twice a year. The reports are also public; so are all of their reviews. We are the only organization in the country with an ombudsman.

We believe that this is a distinctive feature of the public broadcaster, and we're very proud of the way this process works.

Again, senator, if you feel wronged, I encourage you to use that process.

Senator Plett: Not a very independent ombudsman.

[Translation]

Senator Maltais: Mr. Lacroix, you said something earlier that many Quebecers and Canadians agree with. You said that Radio-Canada should reflect Canadian values. When you watch Radio-Canada — on any evening of the week, between 6 p.m. and 10 p.m. — do you feel that the broadcaster reflects Canadian values?

Mr. Lacroix: Based on the excellent viewership ratings of Radio-Canada's programming across the country — whether we are talking about 30 Vies, the Fabienne Larouche soap opera, Découverte, Enquête or Unité 9, which has captured the attention of nearly 2 million viewers — the answer is definitely yes. Otherwise, Canadians would not watch our programs.

Senator Maltais: But could Canadians sometimes hear about true Canadian values, national unity, Canadians from British Columbia and Newfoundland? Would we not occasionally like to see positive portrayals of our Canadian values?

Can you tell me when you last heard the Canadian anthem on Radio-Canada Montreal?

Mr. Lacroix: The anthem was heard many times during the Olympic Games.

Senator Maltais: But the Olympic Games are held every four years.

Mr. Lacroix: I was just joking. We heard the anthem often, and we were very proud.

Senator Maltais: But you had to hear it because the anthem was played during the medal ceremonies. I just want to say that it does not feel like Radio-Canada Montreal reflects Canadian values.

All the little talk shows invite only people who promote a political opinion. That is unfortunate because this political opinion is shared by just 33 per cent of Quebec's population. The other 67 per cent of Quebecers do not agree with the "small Plateau clique," as it is referred to outside Montreal.

Mr. Lacroix: My apologies, senator. I now understand that, when you talk about Canadian values, you are referring to the diversity of voices. Earlier, I was thinking about the programming, and what came to mind was Série noire, Mémoires vives and Trauma. I told myself that, if so many Canadians are watching our programs, they must be interested in them.

The voices we are hearing give us the impression that diversity is lacking. That applies to both CBC and Radio-Canada. Our board of directors is very aware of this. We have all kinds of metrics to gauge opinion presentation.

It is important for me to take the time to answer your question properly. If the public broadcaster is doing its job, the program hosts should not be sharing their opinions. On both radio and television programs, a host's job is to ensure that they are surrounded by enough people with different views, so that the audience can form an opinion based on what they hear. The host should not be imposing a point of view on the audience.

All CBC employees involved in the news or programming components are well aware of this. At CBC or on Radio-Canada's radio — the Première Chaîne — that information is reported to our board of directors.

Moreover, Senator Maltais, twice a year we poll Canadians. As part of our report published on our website called "our report card," we asked Canadians what they thought about CBC/Radio-Canada's performance. We asked them whether our network reflects their region and whether they can hear the diversity of Canadian voices.

Several thousand people participate in those polls, which indicate that Canadians feel that we meet their expectations in this area. I will ask Mark to tell you about the "report card."

[English]

Mr. Allen: We do a report card twice annually. In that report card, we ask for Canadians' perceptions about how we reflect the regions of Canada — their culture and specifically their region. The results showed 7.3 out of 10 in terms of strongly reflecting the regions of Canada among francophones.

[Translation]

Mr. Lacroix: I can tell you that you are right when it comes to this. We are not always perfect, and we are sometimes made aware of that through comments.

[English]

We correct and we will continue correcting because if we screw up on this one —

[Translation]

If we are not meeting Canadians' expectations when it comes to the diversity of voices, we frankly no longer have the right to be the public broadcaster.

[English]

Senator Batters: Mr. Lacroix, I want to return to the matter of your expenses. We haven't spent very much time at all tonight talking about that. Could you outline the process for approving your expenses at CBC and tell us who grants approval for reimbursement and whether that person is also responsible for ensuring that reimbursed expenses are in accordance with your bylaws? Obviously, that failed in the case that you mentioned. Has that person been disciplined for this matter?

As well, on your own network, on Power & Politics on February 21, you stated, "For years I have been opening and looking at every single reimbursement request for a person or for people that report to me," and that you think the CBC has a "very robust process." So I'm wondering if you also review your own expenses before they're submitted and if all the people who are responsible for overseeing the proper charging of expenses, including you, the President and CEO, were unaware of a basic rule regarding reimbursement. How does that comprise a very robust process?

Mr. Lacroix: I will tell you about the process. I file an expense claim; the director of finance looks at it as to how and whether this meets our criteria. That is then sent to our chairman. He looks at it and approves it, depending, or asks questions. That is then posted on our website on a quarterly basis. You can see where I've been and what I've done, line by line, Tim Hortons by Tim Hortons. And our internal auditor, Deloitte, an outsider, comes in on a quarterly basis and delivers an opinion as to whether the review of my expenses meets our criteria.

That being said, I'll repeat it again, senator, you're right. There was a mistake. We found it. We blew the whistle on it. We paid back the dollars. We disclosed it to our board, to our chair, to all these people. We went to the Auditor General and told the Auditor General. We told the government to make sure that this was perfectly transparent. And again, we apologize. I think you seemed to have listened to Power & Politics. I apologized there and I apologize again this evening.

Senator Batters: I noticed, sir, earlier when you apologized —

The Chair: Thank you, Senator Batters. I really cannot allow for supplemental questions so we can get everyone in.

Senator Demers, the spotlight is yours.

[Translation]

Senator Demers: Mr. Lacroix, on February 11, the Honourable Konrad von Fickenstein appeared before our committee. After his testimony, my understanding was that he felt that CBC/Radio-Canada was not doing as well as you are saying it is.

You were honest about your viewership ratings, but Mr. von Fickenstein did not seem to be optimistic about CBC/ Radio-Canada's future, as you and Mr. Allen are.

Do you think he said that without thinking or he is simply unaware of some of the things you know about?

Mr. Lacroix: There is no doubt that Mr. von Fickenstein is an expert in this field. He has become an industry expert through the work he has done and the responsibilities he has taken on.

I hope I have not painted a happy and glorious picture of CBC/Radio-Canada, but rather a picture of a company that is operating in a very competitive environment, where 750 television stations are overwhelming Canadians with all kinds of channels and options.

Mr. Allen can tell you about a passage on page 54 of the book we talked about, to give you an idea of the environment we are part of.

We are facing some major challenges, in addition to the loss of hockey. We are dealing with challenges in terms of options and infrastructure. We also need to find a business model that will not force us to cut parts of the company to save some other parts.

A few years ago, I even said that the furniture has been sold off to keep the house, to pay the mortgage.

[English]

In such an environment, we are challenged on all fronts.

[Translation]

We have some challenges to meet in a difficult environment, where we think the value we provide Canadians is that of Canadian content and information. Our role is to reflect Canada to Canadians and to the whole world as seen through the eyes of our people.

If you are following what is currently happening in Syria and taking into account the outstanding job our French and English news teams are doing to help you grasp the Syrian issues, you will understand that no other Canadian broadcaster is currently doing this. That is our expertise.

[English]

Senator White: I appreciated your comments earlier about the apology. I don't know that I've heard you apologize to Canadian taxpayers, however.

My question actually refers more to our discussion earlier about bonuses. I know you referred to them as STIPs, I guess for expediency. The bonus is paid. I realize you don't want to mention names, obviously, although I think every province in the country right now has salary disclosure.

Could you provide a list to the chair of how many executives are in the 5 to 10 per cent range — executives only, of course — 11 to 20 and so on up to the 41 to 50 per cent range, as well as the pension plan funding ratio so I have an understanding as to whether it's 1 to 1, 2 to 1, 3 to 1, 4 to 1 or 5 to 1, of all people who would fit into the executive description?

Mr. Lacroix: I'm not sure what you're looking for when you say pension whatever.

Senator White: I'm trying to figure out if CBC puts in $3 and the employee puts in $1, or is it $4 to $1, or is it $1 to $1?

Mr. Lacroix: The Government of Canada was clear a few years ago, and Mr. Flaherty said it again, that they expect Crown corporations to fall in line with government policy with respect to funding of the pension plan. We are actually ahead of the game on this one. We went from 34 to 40, and the conversations we're having right now with the unions are to bring us to 50-50.

Senator White: I'm talking about non-union executives whose salaries you won't disclose. I'm talking about those individuals working within CBC, the Peter Mansbridges of the world.

Mr. Lacroix: The compensation policy philosophy of CBC/Radio-Canada is very simple. Again, we have a very robust way of looking at the industry, of comparing ourselves with Crown corporations, with other companies in our sector, and trying to match with experts, reviewed by independent directors who sit, senator, on our HR committee. We look at trying to meet what we call a median, the P50 of those ranges. We disclose the bands. We disclose the people who are in the bands —

Senator White: Mr. Chair, my two questions refer to bonuses and pension ratios. They don't refer to the bands.

The Deputy Chair: I'm aware. Maybe the witness will give us the answer.

Mr. Lacroix: I'm not too sure what pension ratios you're referring to, but we'll find out if this is something that can be made available to you.

What was your other question, sir?

Senator White: If it's available to CBC, I would argue that both of these should be made available to us. I'm not asking for names of people. You've made it clear that you don't think you should have to give us those, but I do want to know about the bonuses. I was shocked to find out some were eligible for up to 50 per cent bonuses.

Mr. Lacroix: Two people in our corporation are eligible for that in the context of making their employment a position that is not even comparable to what the industry pays for those jobs.

Senator White: That's fine, Mr. Chair. I'd just like the information, if I may, if he could provide it to the chair. Thank you.

[Translation]

Senator Tardif: Mr. Lacroix, are there any representativeness criteria for the board of directors in terms of official languages and regions?

Mr. Lacroix: When it comes to diversity or representativeness?

Senator Tardif: Representativeness. Are there any criteria whereby a certain number of the board of director members should come from specific regions and a certain number of them should speak French?

Mr. Lacroix: The government makes those decisions. We have no idea. Like any corporation of our size, in a market like ours, we are asked what kinds of expertise we would like to see reflected on the board of directors. We may be talking about expertise in finance or in media. We explain what kind of expertise we would like to have, and we leave the decisions up to the government. We do not recommend individuals, but rather expertise. For instance, if the chair of the audit committee is being replaced, I would like to have an auditor or someone with accounting expertise. However, we have no decision-making power, and no influence over whom the government appoints to our board of directors. So I do not know the answer to your question.

Senator Mockler: But we do agree that CBC/Radio-Canada should reflect Canada as a whole?

Mr. Lacroix: Absolutely.

Senator Mockler: Will the percentage of cuts at the Montreal and Ottawa offices be the same as in Moncton?

Mr. Lacroix: I cannot make any such promises. All I can tell you is that, the last time we made decisions under the federal government's deficit reduction program, they were based on our strategic plan's priorities. So we decided to protect Canadian content, our regions and, as best we could, our investment in digital service, since that is the future.

We will use the same kind of perspective when it is time for us to think about our budget issues for 2014-15, and about what the future will bring, beyond 2015.

Nothing is proportional. We cannot tell someone that we will cut 3 per cent of their budget. That would not be logical in a broadcaster reinvention environment. We will choose our priorities and try to protect them as well as we can. We will consider what is at stake and reinvent the services we provide to Canadians.

[English]

Senator McInnis: There's a wonderful British sitcom, Yes, Prime Minister, and Humphrey, the deputy, is always saying, "Prime Minister, I'm here to help you." Of course, it's always very skeptical.

I want to help you tonight, if you can accept my words of wisdom. Whenever there is a dollar of Canadian money put into an institution, a Crown corporation, there is an obligation to tell the public exactly the expenditure. In many provinces there are public accounts and a supplement showing all salaries.

Today, CBC likes to talk about the BBC. I googled, and I was able to get a list of salaries, listed out in entirety, the CVs of the people if you wanted them and so on.

All I'm suggesting to you is that it is coming. My advice to you: accept it, embrace it. You cannot contract out of it. Everyone in this world can be replaced.

I remember Lloyd Robertson. They struggled. How are they going to get someone? Lisa LaFlamme is doing a wonderful job. Everyone can be replaced.

I can tell you this —

The Deputy Chair: Senator, do you have a question?

Senator McInnis: I said I was going to help him. Now I've just done that. Thank you.

Senator Greene: I just want to give you an opportunity to clarify two things that you said. Do you really charge for your Tim Hortons coffee in your expenses?

Two, what did the Auditor General do or say when he became aware of your ineligible expenses?

Mr. Lacroix: I don't charge $2.25 to taxpayers.

Senator Greene: I just wanted to give you that opportunity.

Mr. Lacroix: But I like Tim Hortons and I have lunch there on a regular basis. It's probably going to be in the car when I come back to Montreal this evening.

That being said, the Auditor General took note of what we did, asked some questions about how we came about — how the error was made. I wasn't party to those conversations, because obviously, as soon as that happened, a wall was put around me. The investigation or the review of what happened was done by the independent chairman of our audit committee, one of our directors — again, an independent director. He took on this responsibility. He did whatever he had to do and, with our internal auditor, spoke to whoever he had to speak to with the Auditor General.

The Deputy Chair: As we come to an end, I want to ask a couple of questions as well.

How many in-house lawyers does CBC/Radio-Canada have, and what does CBC/Radio-Canada spend annually in total budget for legal advice and legal fees?

Mr. Lacroix: Oh, boy. How many lawyers do we have? I will give you the number. Fifteen, maybe, Montreal and Toronto combined.

The Deputy Chair: So 15 lawyers in-house?

Mr. Lacroix: Fifteen, eighteen, twenty lawyers in-house, something like that, to cover all of our programming, and then we buy legal services from outside, whether it's to negotiate collective agreements or to do contracts or Maison de Radio-Canada, whatever.

The Deputy Chair: The other question is in regard to your infrastructure, the buildings that CBC/Radio-Canada owns. Do you have a division that leases out and rents out —

Mr. Lacroix: Absolutely.

The Deputy Chair: — to entities outside of the CBC?

Mr. Lacroix: Yes.

The Deputy Chair: Is it a significant revenue source?

Mr. Lacroix: We've challenged that group. We wanted a significant amount, close to $100 million, of turn-around in terms of improving our real estate. We worked for months and months with Public Works. We thought they were going to take a place in the broadcast centre. We just signed a lease with une ferme — that's what we call them — une ferme d'ordinateur. It's a company that basically installs servers and treats information, so a server farm, a data server. They are going to be taking close to 200,000 square feet for a number of years. We do that all the time. We rent to a Boston Pizza.

This is the only way for us to maximize the revenue.

The Deputy Chair: How much source of revenue is coming to CBC/Radio-Canada?

The Deputy Chair: From that real estate, offhand I don't have a number. I will find the number and we will deliver it to you. It's important and it's going to become more important as we shrink the broadcaster.

The Deputy Chair: I'd like to, first, thank all of my colleagues for their cooperation this evening. We did two full rounds of questions. There was a lot of interest, a lot of participants. We appreciate it very much.

I would like to thank Mr. Lacroix and Mr. Allen for your patience. It has been a long evening, and we've touched a wide range of issues.

We will continue our study. It's an intense study that will take place for the next 18 months on CBC/Radio-Canada. We think it's an important study. It's important to the Government of Canada. It's important to the taxpayers. It's important to the CBC and the institution. We hope that at the end of the exercise we will have some advice that will be helpful to all the players and, in particular, to the organization for the short term and long term.

We would like to reserve the right to have you back again in the future —

Mr. Lacroix: Absolutely.

The Deputy Chair: — yourself and anybody else who could help us broaden the study and make it as complete as possible.

Mr. Lacroix: I would be happy to come back.

(The committee adjourned.)