Technology Driving Change at CBC

Commentary, Disruption, Roland Renner

Technological change is challenging traditional broadcasters, including the CBC. The status quo just will not fly. It is always difficult to start talking about changes to the CBC because of the political dynamics that surround the institution. In this case, technology is driving change, not government budget cuts or political interference.

The growth of Over-the-Top (OTT) or online video has been hitting broadcasters’ revenue and smothering the growth of cable and satellite packages.

Some have called traditional TV “appointment TV.” One has to watch the program when the broadcaster or cable company decides to air it. The whole point of OTT is that one watches what one wants, when one wants. What, then, is the point of having a broadcaster in the way, selecting a program schedule for viewers?

The loss of Hockey Night in Canada to Rogers accelerated changes across the board. Rogers will show hockey on its specialty channels, and the CBC will lose an important revenue-generating program category as well as the audience share, to say nothing of a Canadian icon.

The Senate Standing Committee on Transportation and Communications has been holding hearings on options for the CBC, and this has provided a platform for some of the commentators who are joining the discussion of what role the CBC should play in the future. 

All of them are agreed that change is necessary to adjust to emerging conditions.  The CBC mandate is too broad in the era of specialty channels and online selection.  Canadian Media Production Association president, Michael Hennessey thinks it is time for the CBC to take the risk of focussing on high quality Canadian drama, some of which of course would be produced by CMPA members. Former CRTC chairman Konrad von Finkenstein recommends that the CBC leave children’s programming to the private sector and concentrate on local and Canadian niche programming.  The Frontier Centre for Public Policy has suggested that the CBC become an online archive of Canadian programming.

These suggestions are all in the direction of making the CBC a kind of Canadian programming specialty channel.  All of them would wreak havoc on the CBC’s traditional revenue model but that is not working any more as it is.

Barry Kiefl, of Canadian Media Research, argues that Canada has built up excellent video distribution systems but that programming is under-funded.  The BBC spends almost as much on programming as CBC, private broadcasters, pay and specialty channels combined spend on Canadian programming.  Revenue growth in the past ten years has come from pay and specialty channel subscriptions and the cable and satellite distributors get a good cut of that.

Kiefl gets to the heart of the matter.  Advertising in the Canadian English speaking market can generate maybe 30 percent of the cost of quality programming as opposed to the U.S. market where programming can generate a profit from advertising alone.  In response, Canadian specialty channels have formed cross-border arrangements where programming from the Canadian History channel, for example, are shown on the U.S. version of the History Channel.  International syndication and sales have also provided additional revenue.

Most other countries are in Canada’s position in this respect and many of them have licence fees to fund national channels.  Voluntary contributions to the CBC, similar to the PBS model in the U.S., could be organized on a more systematic basis through the cable billing system.

More thorough solutions, Kiefl proposes, include a licence fee of about $240 per year or a 7 percent distribution tax that would flow both to CBC and private sector Canadian production.  That would take the federal government out of the business of organizing what former CRTC Commissioner Tim Denton calls “Broccoli TV” – watch it because it’s good for you.  Neither solution will be particularly popular and both will require legislation. 

The federal government recently directed the CRTC to look at pick and pay as opposed to the complicated structure that has been built up over the years to package and promote Canadian programming including the CBC.  Even though the CRTC has been slowly liberalizing this system over the past ten years, long term technology and market trends make it unsustainable and much of the public has had enough of being told to watch Broccoli TV. 

Kiefl’s suggestions would allow for movement towards pick and pay and create a more efficient way of funding Canadian production and keep a more efficient version of the CBC and private Canadian production industry that would then compete for viewers.  The Canadian public can decide if it wants to do that.