Wednesday 30 May 2012

How Does CBC Use the Money it Gets from Parliament?

The CRTC has made available previously unknown information about how CBC uses the money it receives from Parliament.  

For the year ending August 31, 2011 CRTC financial data show that the Parliamentary appropriation increased modestly from $1.14 billion in 2010 to $1.16 billion in 2011.  However, the public funds that went to CBC TV increased to $839 million or by some $45 million in 2011, while CBC radio's federal funding declined to $327 million or by some $20 million (compared to 2010).  Presumably the CBC Board of Directors approved this significant re-direction of federal monies and had approval from the government.  Public monies are the most important source of funds for both CBC TV and radio.  They represented 69% of CBC TV's expenditures in 2011 and virtually 100% of CBC radio expenses.  These data combine English and French TV; a breakdown by language is available here.

CBC radio is considered the CBC's crown jewel but in 2011, surprisingly, CBC TV spent four times ($1.22 billion) the amount spent by CBC radio ($310 million).  The most expensive CBC specialty channel was CBC News Network, which cost $72 million in 2011.  RDI clocked in at about $44 million.

CBC took in $168 million more revenue than it spent on its main services and specialty channels in 2011.  Total revenues were $1.84 billion and total expenses were $1.67 billion.  Some of this $168 million may have been spent on or other internet activities or perhaps management was putting some money aside to help offset expected cuts in government funding.  Advertising revenue on the main CBC TV channels increased to some $370 million; the Corporation's specialty channels had modest ad revenues, with CBC News Network generating the most in ad revenues ($14.5 million) and bold generating the least, only $56,000 in ad dollars.

The number of people on salary at CBC was basically unchanged in 2011, at about 9,500.  Average salary increased to over $93,000, with employees at CBC News Network averaging over $97,000.  (Don Newman left too early!) Salary expenses grew by about $50 million in 2011 and were just shy of $900 million last year.

Tuesday 29 May 2012

A CBC Just for Digital Elites?

The idea  floated recently that CBC change from a broadcaster to a content company is just one of many that would ultimately see CBC abandon traditional broadcasting and focus on the internet.  The internet is so cool and sexy CBC (and many other broadcasters) have never been able to resist its siren call in favour of old-fashioned, stodgy broadcasting; many a career within CBC has been made promoting dreams of internet domination.

Recently the CBC has taken to streaming exclusive content on the internet and has put increasing emphasis on other digital and internet-related media.  This risks diverting the CBC from its core mandate, which is to serve all Canadians, not just the digital elite. It's very smart to use the internet as a complement to cable and satellite to distribute CBC radio and TV programs that already air on CBC's main channels.  The CBC radio app is a wonderful tool allowing one to listen to their local CBC radio station anywhere in the world. But trying to compete on the internet with exclusive internet content is the broadcast equivalent of playing Loto 649.

For example, CBC boasts that is the number one "Canadian broadcast media" web site but this ignores the fact that other web sites owned by Canadian broadcasters are not the competition.  The competition on the internet is Google, Microsoft, Facebook, CNN, the BBC, the Globe and Mail, all the other Canadian and foreign newspaper sites and the thousands of other sites not owned by Canadian broadcasters.  According to comScore, news web sites account for less than 5% of internet use and has only a tiny fraction of that 5%, which pales by comparison to CBC's audience share of the radio and TV market.  5% amounts to only about 30 minutes per week for the average Canadian and Canada's broadcasters and newspapers and all the world's major news outlet are dividing up this 5%., the Globe and Mail, the Toronto Star, etc. all face the same competitive dilemma, making the challenge of developing an internet content strategy a Herculean task.

How can the CBC ensure that an internet, or radio/TV, service is a valuable use of its (our) resources?  Well, CBC must first return to basics and understand what public broadcasting is. There are two key features of public broadcasting.  First, public broadcasting is paid for involuntarily by citizens, either through mandatory licence fees or direct government funding.  Citizens don't have a choice to pay or not to pay, as they do with pay TV, cable, etc.  Second, the audience for public broadcasting must be substantial enough to warrant spending public money.  Independent audience surveys must demonstrate whether there is a substantial segment of the population being served.  Without the latter, there can be no accountability for the use of public funds. The audiences for many of the CBC's internet services are not measured by an independent, third-party, such as BBM or comScore, precisely because they may be serving a limited, perhaps unmeasureable audience.  I refer here to services such as CBC and the recently launched Hamilton 'digital' CBC station.  Unless they are measured by a legitimate audience measurement service, no one, including CBC, will ever know if they are successful or should be funded continuously.   

Our ten-year study of media use has demonstrated that old-fashioned TV viewing levels are as high today as ever and that internet use (web surfing, email, Youtube, etc.) has stabilized at roughly half the levels of TV.  Our studies show that radio too still maintains its place in the media hierarchy.  This is not likely to change for many, many years.

Yet the CBC seems to believe the old TV/radio model is broken.  The analogue world of broadcasting has been replaced, they believe, by a new digital world that allows viewers in particular to watch a program anywhere, on any screen (TV, computer, smartphone, tablet), at the time of their choosing.  They believe viewers are now in control, not broadcasters, and they can watch a program stored on their PVR or their smartphone at a time and place of their choosing.  To quote a former head of CBC English TV and radio:  “Appointment television and radio, consumed watching a screen or listening to a radio in the house is finished (My note: listening to radio in the house was finished ca. 1965). Now shows are available everywhere, whenever and however the participants want them. Distance and time are abolished. The days of being bound to a particular television show at 8 p.m. on Thursday nights are over.”  Technically, this is true but it misses a quintessential aspect of radio/TV/movie storytelling. 

Show business depends on generating a buzz for a new movie or TV series.  Interest in a new movie is created by intense pre-release publicity and promotion leading to a launch on a chosen day, creating a desire to be among the first to see the movie the day it’s released or soon thereafter.  TV programs are similar.  Studios and networks don’t want people to store the content and watch it whenever they want on their phone, they want to capture the audience in the moment on the silver screen or TV set.  No better example of this is the new Kiefer Sutherland series, Touch, which aired to a world-wide audience in some 100 countries the same day, coincidentally on a Thursday night, creating a real time viewing experience across continents.   

CMRI's Media Trends Survey has tracked usage and attitudes toward Canadian media, TV, radio and the internet, for the past ten years.  Elsewhere we have examined why people use radio.  But what do our surveys tell us about how and why people use TV and the new media devices like smartphones?

One important thing we have learned is that only a relatively small cohort of people exercise the technical ability to watch programs when they want, that is, on a pay-per-view or on demand basis.  For example, less than 1 in 10 people over the past ten years indicated that they order pay-per-view movies or events with any kind of regularity; this has changed very little over the decade.  Another 1 in 5 order PPV rarely and some 7 in 10 never do so.

For the past 6 years we have asked people about the likelihood of using video-on-demand.  Once again, less than 1 in 10 people say they already use VOD and small numbers say they will likely do so in the coming year.  The overwhelming majority simply indicate they are not likely to exercise the ability to watch programs (usually for free) at the time of their choosing.   I suspect most people use VOD only when they can’t possibly watch a show when it is broadcast.   
There is unquestionably a segment of society who are cutting edge and who can afford and use all the benefits of the newer technologies, including video on demand, videostreaming, PVRs, mobile TV, etc.  However, it is small cohort of digital elites in relative terms and is unlikely to become a majority in our lifetimes.  

On the other hand, TV for the everyman is a universal phenomenon and its most salient feature is that it is ‘here and now’.

Thus, when we have asked Canadians if they usually just turn on the TV and look for something to watch, we find remarkably strong agreement, which, if anything is stronger the past few years.  3 in 4 people agree that they just want to relax, turn on the TV and see what's on. 
Finally, since 2006 we have tracked cellphone/smartphone usage and the results are very telling.  Yes, roughly 3 in 4 Canadians now have a cellphone or smartphone and more and more people use it to text and send photos but less than 1 in 10 download music or video with their mobile device and there is scant evidence that downloading music/video to your phone is considered important or likely to grow. 

People, for the most part, want to partake of TV at home on a primary screen in real time, not delayed for days or even hours. And I am not referring to just news and sports, which will always be real time programming. Most of TV (and radio) programming is here and now. The internet, new digital media,  especially mobile devices, are important but are an adjunct, serving to promote and enhance the core TV/radio experience. Only a small, elite proportion of Canadians will consume media in the way envisioned by journalists and others who proselytize the new technology.

If an all digital, internet-based CBC were ever to be pursued, broad Canadian support for public broadcasting would dry up, the raison d’etre of CBC would disappear and the calls for the privatization or closing of CBC would intensify.  CBC should experiment with new media and the internet but always remember that its core business is broadcasting for all Canadians, not just the digital elite.

The Media Trends Survey has been conducted for ten consecutive years and has surveyed over 15,000 Canadians in total in this period. It is the only survey to have measured media use and attitudes continuously over this decade. The Media Trends Survey is not sponsored by any one industry or affiliated with a media company.  Therefore, the surveys are scrupulously designed not to bias respondents into favouring one medium or media outlet over another.

Tuesday 22 May 2012

from Stardust: Best 2012 Book on the CBC

Ron Devion’s memoir of his life and days at CBC, from Stardust, is 2012’s must read book about the trials and triumphs of managing and programming the CBC.  It should be required reading for current CBC managers. 

Devion started his career at CBC in 1955 and took on numerous senior roles, including Head of TV sports, head of scheduling and station director in Toronto and Vancouver.  He oversaw the plethora of sports contracts that made the CBC a world leader in TV sports, including coverage of the NHL, CFL, the World Cup and the Olympic games. He retired twice, the last time in the mid-90’s after organizing the CBC’s coverage of the 1994 Commonwealth Games in Victoria. He made a $5 million profit for the Corporation, despite the warning from the sales department that the Games would lose money.  He recommended that the profits be used to fund a radio station in Victoria, which eventually did get its own CBC station. His exemplary career is a beacon for how to manage the CBC, especially in difficult financial times.  Ron guided local TV stations through the Mulroney budget cuts to the CBC, which were similar in size and impact to the cuts the CBC just received.

from Stardust is naturally and fluidly written and starts out with the fascinating tale of Ron’s early life in Winnipeg, which prepared him for the challenges he faced in his career.  Like Ron, I grew up a Catholic and attended an all boys school and his thoughts about organized religion are intriguing.  He evokes the question: why is it that celibacy seems to have affected the behaviour of so many Catholic priests?

Ron had the good fortune to grow up in St. Boniface, so he was fluently bilingual which helped him to understand the French side of CBC.  He tells the hilarious story of how Radio Canada managed to get more than its fair share of corporate funds, by wining and dining the CBC president in lieu of making him read detailed planning books full of numbers.  He brings to life many of the wonderful men and women who worked at CBC in the 1960’s, 70’s and 80’s, including Norn Garriock, Trina McQueen, Peter Herrndorf, Al Johnson, Gordie Craig, Wayne Skene, Hugh Gauntlett, Dave Martin, Brian Williams, Don Goodwin, Ivan Fecan and many others.  He hints that Fecan may not be finished yet.

Ron first hired Don Cherry for Hockey Night in Canada in 1980 for the grand sum of $50/game and knew that Cherry was a hit by watching the audience reaction of patrons in Toronto bars.  Not exactly scientific but effective!

Without knowing it Ron basically invented specialty channels and he describes how he did so in detail.  When faced with enormous budget cuts he found ways of developing very inexpensive programs, often funded by sponsors or the private sector, which allowed local stations to maintain numerous hours of local programming that audiences could relate to and which would later find their way to HGTV, Slice, Bravo!, etc.  He recognized thirty years ago that local programming was critical to the success and survival of CBC.

One central impression that one is left while reading from Stardust is the deep sense of respect and loyalty that Ron and his colleagues at CBC had for one another.  They used their knowledge and intelligence, not to compete with each other or to promote their own careers but rather to build a better public broadcaster, program by program.  Ron Devion exemplified the very best at CBC and this comes through in his book, without a word of conceit.  Success came to the CBC because it put people first, whether it was employees, partners, politicians or members of the public and they all responded positively.  It is a joy to read. 

Friday 18 May 2012

CBC Cuts: Does Mother Know How to Budget? (Part 2)

The CBC has been through a tumultuous period but it is only going to get more challenging.  The CRTC financial data on the state of CBC indicate that CBC’s planning and basic budgeting tools are not up to the task of the changes and priorities CBC must choose from as it enters a period of reduced government funding.  Part 2 analyzes CRTC financial data relating to CBC staff levels and advertising revenues.  The data reveal that CBC French TV accounts for an inordinate number of staff and that despite reductions in government funding CBC staff levels are the same as in the late 1990's.  The data also show that CBC TV ad revenues haven't increased in a decade and a half, lagging the rest of the conventional, over-the-air TV industry.

CBC Staff Numbers

·  according to CRTC financial data, there were just under 9,600 full time employees at CBC for the year ending August 31, 2010, excluding staff working in unlicenced activities such as; CRTC data show in the years 2006 to 2008 total CBC staff was just over 10,000 people, meaning that there has been only a small reduction in CBC staff in recent years, despite the financial crisis in 2008-09.  Preliminary data for the year ending August 31, 2011 show that the staff count was unchanged from the previous year.  CBC claims that its resources have dwindled under both Liberal and Conservative governments, yet CRTC data show that the CBC has basically the same number of staff as it had in 1999. The average annual CBC salary in 2010 was just over $87,000, about $9,000 more than in the 2006-08 period
·        the CBC, like any bureaucracy, can be an unmanageable hydra. CBC has announced layoffs in the past two years, yet the numbers do not reflect much of a net loss in staff positions.  Without proper management systems the president and the Board can authorize staff cuts one month but have little control over hiring in the following months. An example of the left hand not knowing what the right hand is doing: in 2007, the CBC’s VP of human resources contradicted the CRTC data and publicly claimed that his “records” showed there were some 2,000 fewer CBC staff than the Corporation reported to the CRTC. When CMRI shared some of these 2010 staff numbers with a CBC vice-president he expressed surprise because he couldn’t “match the numbers...with the reality that I observe…day-to-day,”  meaning that while many people have been laid off or left CBC in the past year, they seem to have been soon replaced, perhaps at lower starting salary
·        one anomaly in the salary data: while CBC TV (-11%) and CBC Radio (-13%) decreased salary expenses in 2010, CBC News Network increased salary expenses by 12%
·        CBC Radio had 2,500 employees in 2010, while all commercial radio stations employed just over 10,000 employees in that same year. In other words, CBC Radio employed roughly 20% of all persons working in Canadian radio.  The number of people employed in private commercial radio has been basically unchanged in the past 5 years (find details on commercial radio at this CRTC link)
·        CBC TV had 6,200 employees in 2010, which represented about 50% of all the persons working in Canadian TV broadcasting.  Commercial TV stations and networks (i.e., CTV, Global, CITY, TVA, V, etc.) had just under 6,300 employees that same year
·        one striking trend in the CRTC data is that commercial TV stations have reduced the number of persons they employ by approximately 2,000 in the past 5 years (find details on commercial TV at this  link to the CRTC data).  That is, private TV, facing a more competitive media landscape and a recession, reduced its staff by about 25%, while CBC seems to have maintained its staff numbers basically at pre-recession levels
·        one critical number not available anywhere publicly is the number of unionized vs. non-unionized (management) staff at CBC.  It is possible that if good management systems were in place, a large number of managers could be cut from the payroll and savings could be re-directed to creative, programming areas
·        another example of how for no apparent reason one area of CBC can swell in size compared to other areas is to be found in the different staff levels of the four major CBC program areas.  CBC English radio had 1,500 staff in 2010, while CBC French radio had 1,000, that is, the French service had roughly two thirds as many people as the English radio service, a ratio that on face value seems reasonable given the services provided by the two radio services across the country.  Yet that same year CBC French TV had more staff (3,200) than CBC English TV (3,100), which appears irrational given the services requirements of the two TV services, not to mention the staff ratio in radio.   In 2010 the CBC French TV service generated about $100 million less in advertising revenue and had a budget almost $200 million dollars less than its English counterpart, yet had more people on staff.  In my 40-year association with CBC I can't recall this discrepancy in staff levels having ever been discussed.  It is one of many indicators that CBC management lacks the necessary controls to manage the organization properly.  These CBC-specific data can be found at the CRTC web site.

Advertising Revenue

        in 2010 advertising revenue for CBC TV increased by a seemingly robust 14%, above the industry average, with total ad revenue of $367 million.  This was partly accomplished and offset by the $20 million increase in sales and promotion expenses noted earlier.  Note that CBC TV sales and promotion expenses were a far greater proportion of ad revenues than was the case for private TV in 2010
·        advertising revenue for the industry in general rebounded after the recession by almost 10%, meaning CBC ad revenues, all else being equal, would have increased regardless.  The $367 million revenue figure is considerably higher than the ad revenue CBC reported in its 2009-10 annual report and seems an amount larger than can be explained by the different fiscal periods used by the CBC and CRTC reports
·        according to CRTC, ad revenue from the two main CBC TV services was some $338 million in 2010.  CBC has revealed to the CRTC in the past that in the mid-1990’s the two main CBC TV networks generated roughly $350 million in annual ad revenue, meaning that CBC sales has not grown revenues in well over a decade, not even keeping up with inflation. Canadianizing the schedule cannot be blamed because, if anything, there is less Canadian programming on CBC TV today than 15 years ago
·        Private conventional TV, which has been subjected to the same audience fragmentation and other economic pressures in the past decade and a half, has grown ad revenue by almost 30%, an indicator that CBC sales is not tightly managed and perhaps the strongest indicator that CBC management lacks necessary controls over the organization and is ill-equipped to deal with the $115 million-plus budget cut
·        a person knowledgeable about the ad business with whom I consulted believes that advertising “skews their mandate and in any case it costs them more than they make.”  If advertising is to be pursued by CBC TV, which is certainly arguable given past performance and the cost of sales and promotion, then Sales needs to be managed and be a central pre-occupation of senior managers.  The sales function within CBC can be the most perplexing and challenging for senior management.  Often no senior manager at CBC has had any sales or related experience and sales is treated as a difficult, arcane function best left to its own devices.  The head of sales must be involved in key executive meetings and decisions or risk being further isolated. Sales in most companies will go to great lengths to closely guard information that can be used to set their targets and evaluate performance.  Thus, controlling basic data and establishing effective systems to manage Sales should be a priority for senior managers.  The president at the push of a button should be able to monitor revenues on a daily basis and answer any query about which programs are producing revenues and which are not.  For example, how much revenue is generated by sports, especially the NHL?  If Sales cannot be tightly managed internally, then perhaps it should be outsourced, which would be a logical step if CBC were to only carry advertising in sports programming
 ·        the minuscule ad revenues for bold, ARTV and the Documentary Channel should lead CBC management to question why these channels are in the ad business and might be better re-positioned as ad free services. bold and The Documentary channel generated only about $100,000 each in ad revenue in 2010 yet had sales and promotion budgets roughly seven times that amount
·        the ad revenues of CBC News Network and RDI combined, while more substantial than the other specialty channels, accounted for less than 5% of all CBC ad revenues, which again should lead CBC management to question the relative value of this source of revenue in today’s multi-channel universe.  CRTC and subscribers could be convinced that in exchange for ad free news channels, a small increase in subscriber fees would be warranted which could make up for lost ad revenue
·        If advertising sales were a main pre-occupation of senior management, CBC could generate considerably more revenue from the main TV networks and improve CBC’s specialty channels by reducing or eliminating advertising

The CRTC financial data reviewed here are a valuable source of information about the CBC.  These CRTC data shed light on the underlying management processes within the CBC, permit macro-evaluation of management decisions and point to potential new strategies, new revenues and cost savings for CBC TV and radio. That is, analysis of the CRTC data can be used by policy makers and the CBC as a first, rudimentary step toward establishing improved management systems and controls at the CBC.   Such controls are essential if CBC is to deal with its $115 million budget cut.


Monday 14 May 2012

CBC Cuts: Does Mother Know How to Budget? (Part 1)

“It must be remembered that there is nothing more difficult to plan, more doubtful of success, nor more dangerous to manage than a new system. For the initiator has the enmity of all who would profit by the preservation of the old institution and merely lukewarm defenders in those who gain by the new ones.”  -Machiavelli

The CBC is a complex organization.  It operates in both official languages on a national, regional and local basis and in several aboriginal languages in the north.  It has both TV and radio networks and stations, numerous audio and video specialty channels, a substantial internet presence, rents or owns dozens of buildings and hundreds of transmitters and equipment.  It has thousands of employees from a wide variety of disciplines.  It is more complex than most other large companies or government departments.  It is without question our most important cultural organization.   

However, CBC, like all public services, is facing budget cuts and the following analysis indicates that the CBC may not have the right management skills or systems for implementing cuts of the magnitude announced recently by the federal government. For years CBC has gone along without effective management systems and this could prove disastrous today as the CBC must cut millions of dollars in expenditures and maximize revenues.  Improved management would mean significant savings, along with increased revenues, and go a long way to meeting the Corporation’s need to cut $115 million (plus no inflation funding for salaries and no funds for severance payments) from its budget over the next  three years.

Background: When new employees join CBC it takes a few years to understand where they fit in the vast and byzantine organization.  When a new CBC president is appointed, which tends to happen every five years, it takes the better part of the five years to grasp the scope and complexity of the Corporation.   What most new presidents fail to understand is that the organization is so complex, it is all but impossible to manage, unless state-of-the-art management systems are in place. 

Over the years efforts have been made to implement better ways of managing resources but an organization made up of so many competing interests tends to undermine those efforts, especially when it is known that the president will be replaced in a few years.  One technique that two presidents have used is to put one person in charge of all CBC English and one responsible for all CBC French services.  This can have the effect of favoring one area over another, e.g., TV over radio, and may not solve the basic issue of developing effective management systems and controls. 

This is especially true when the senior people involved have little or no experience working in or managing a large broadcasting organization.   The senior management team of CBC should have a healthy mix of seasoned broadcasters, who have actually made radio/TV programs, and people familiar with the business tools for managing and overseeing the human, technical and financial resources of a large broadcaster. 

Appointing a president every five years, who in reality can be no more than a figurehead, but who has the power to hire or promote inexperienced people into senior roles, has led to a situation where the senior management team may have less actual broadcasting experience today than ever before in CBC’s history.  The Prime Minister has traditionally appointed CBC presidents to a fixed 5-year term but the president is not accountable to the CBC Board of Directors, only to the Prime Minister.  The Prime Minister should appoint the president to a no-fixed term and make the president answerable to the CBC Board.   The president is effectively answerable only to the entity that appoints him or her so the PM should delegate the selection of the President to the Board, or agree to ratify through an OIC the choice of the Board.

Current Situation: Richard Stursberg’s new book about his time at CBC, The Tower of Babble, is rife with factual errors but it does confirm the hodgepodge of management systems and lack of business planning at CBC. 

When management finds an organization difficult to manage, a first response is to issue snap-shot reports on financial and other performance.  Performance reports, however, can just be papering over the fact that there are no real management systems in place.  In addition to the above mentioned reports, CBC issues an annual corporate plan, numerous reports on corporate policies, reports on transparency and accountability, reports on corporate bylaws, reports on official languages, environmental performance reports, reports on Access to Information requests and it just began issuing quarterly reports on revenues, expenses and programming achievements.

Reports from consultants are another technique to try and establish independent “facts.”  In 2011 CBC hired Nordicity to do a report on how Canadians compared to other countries in terms of financing their public broadcaster.  The report supported the idea that CBC is under funded relative to other countries.  Nordicity was also asked in 2011 to write a report defending TV advertising on CBC, using some unconvincing arguments and repeating much of the first report.  Seemingly independent of its work for CBC, Nordicity took the comparative international analysis much further and presented the findings to a U.K. audience last summer.  In this report Canada (CBC) is the worst performing public broadcaster on the basis of audience ratings, an element missing in their reports for CBC.  The entire thrust of the U.K. study seems philosophically at odds with their CBC studies.  All of these reports are available on the CBC’s or Nordicity’s web sites.  Reports can serve many useful purposes, including conveying the impression, especially externally, that management is in control and on top of all issues facing the Corporation.  Reports on performance are a necessary (sometimes even legal) requirement but they are not a replacement for good management systems. 

One small window we have on the CBC labyrinth is the annual financial reports of the CRTC.  For the first time in 2011 the latter contained more complete data on CBC revenue, expenses and staff. It is the only public source for information about the number of staff employed by the CBC. 

CBC’s Finances All the reports issued by CBC are woefully lacking information about CBC staff.  The CBC’s annual report and the corporate plan report the number of visible minority staff but do not contain data on staff in total or by medium.  This is unusual since CBC staff account for a majority of CBC expenses, as much as 60% according to CBC president Hubert Lacroix. The CRTC financial reports provide year-over-year comparisons of CBC staff numbers, revenues and expenses, as well as comparisons with private TV and radio.

The CRTC financial reports contain data on all the licenced broadcasting outlets of CBC/Radio Canada, including five specialty channels.  CRTC reports do not contain any information about unlicensed CBC activities, such as or satellite radio channels.  The latter accounted for approximately $100 million in annual expenses and an estimated 500-1,000 additional staff in 2010.  This is basically the difference between the total expenditures shown in the CBC’s April 1- March 31, 2009-10 annual report, and the results in CRTC’s September 1-August 31, 2009-10 financial report. The staff and expenses of CBC Head office may also be excluded from the 2010 CRTC data. The CRTC data we review here deal only with licenced activities of CBC.  It would be beneficial if the CRTC reports were to provide data on and other such services and breakout data on all English and French radio and TV separately. The CRTC financial reports, including a more detailed breakdown of major private station groups and CBC English and French finances can be found here.

The table in part 2 provides a summary of the information contained in CRTC financial reports per the CBC. CMRI has compiled the data from the original CRTC reports. 

Some highlights in the CRTC financial data, comparing 2010 to 2009:

     Revenues and Expenses

·        CBC revenues declined by 2% in 2010 to $1.767 billion; the Parliamentary grant represented $1.14 billion (65%) of total revenues
·        despite the reduction in revenues, total CBC expenditures actually increased very slightly to $1.663 billion in 2010; program expenses increased modestly by 3%
·        but one area, sales and promotion expenses, increased by 15% overall.  Sales and promotion accounted for $136 million in 2010, with increases of 17% at CBC TV and almost 40% at CBC News Network and RDI; an explanation as to why sales and promotion expenses of the CBC’s main TV services increased so markedly seems in order. Combined these increases in TV sales and promotion budgets accounted for roughly $20 million, which seems to have been taken from CBC radio budgets (see below)
·        CBC administration expenses accounted for $210 million in 2010, a decline of 18% from the previous year, led by a 34% reduction in CBC radio administration expenses.  This begs the question as to how this was accomplished in a one year period.  It would be useful if CRTC were to provide more details on this large $200-plus million expense category
·        CBC reduced salary expenses by almost $100 million in 2010 to $837.6 million (-10%), a remarkable achievement for one year and one needing some explanation
·        overall expenses of CBC TV (+3%) increased in 2010, as did the expenses of CBC News Network (+13%), ARTV (+7%), bold (+16%) and the Documentary Channel (+4%). Reseau de l’Information had a modest decline of 3% but CBC radio decreased expenses by 9% or by almost $35 million, meaning that radio services took a major financial hit in 2010 and appear to have been singled out, inadvertently or not, to bear the brunt of CBC cost cutting.  The result was noticeable on air as mid-day local programming was reduced by half and many daytime time slots consisted of repeat programming. 
·        Just weeks ago CBC filed limited 2011 financial data with CRTC and it shows CBC radio suffered an additional $27 million dollar reduction (-10%) in 2011.  Both CBC English and French TV services increased their expenses in 2011, meaning that radio has been sacrificed to fund CBC TV.  Does anyone at CBC other than the VP in charge of the books realize this?

Part 2 reviews 2010-11 staff numbers and advertising revenue....

Thursday 10 May 2012

Who Subscribes to Netflix?

Netflix and Apple TV (second version) launched in Canada in September 2010.  Both services are delivered via the internet, bypassing traditional cable/satellite companies as well as threatening the sale of DVDs.  Together they are in part responsible for the closing of video rental stores in your neighbourhood.   

Apple has been very low key in its marketing of Apple TV and only those who have purchased an iPad have likely ever been approached to mate their iPad with the Apple TV gadget. It is about the size of a hockey puck and provides on demand access to the latest Hollywood movies and TV programs and offers a vast library of older movies, TV shows, podcasts and sports. Apple TV also allows one to wirelessly “throw” music or video from an iPhone, iPod or iPad to your TV and surround sound system, so that one doesn’t have to walk around with ear buds or dock their iPod to a small player with poor sound. The small Apple TV device is remarkably easy to hook up to your TV and has one hidden advantage over cable and satellite: there is no HST on any content you order. 

Netflix on the other hand has been very aggressive and advertised extensively and today about 1 in 12 Canadians report that they are subscribers to Netflix.  Netflix offers on demand access to a large library of older movies and TV shows and some exclusive programming and costs only $8/month.  Various devices allow one to access Netflix, including some Blu-ray players. Ironically, I access Netflix through my Apple TV gadget.

CMRI's Media Trends Survey for the first time this year asked Canadians what they thought of the new ‘channel’, Netflix.  Netflix has found a sweet spot with middle aged adults as shown in the first chart.  The channel also skews toward women.  Who better to target than women aged 35-54 who are too busy at home with the kids and at work to go out to the movies?

What else do we know about Netflix subscribers?  Well, we know they are much more likely to own an HDTV set; over 50% have an HD set, which means they use a lot of bandwidth to watch movies in HD.  They are also much more likely to use Facebook, visit the CBC’s web site and almost three times more likely to order a pay-per-view movie once a month or more from their cable/satellite company.  So, these Netflix subs do not appear to be canceling their cable any time soon. However, they are too busy to use Twitter, being just like the average person when it comes to tweeting.

Netflix subs are also heavily into mobile media.  Almost all have a cell phone and many have smartphones.  The great majority text message and large proportions send photos, surf the net and download music or video with their mobile device, eclipsing the average person in the population on all these measures.

Netflix subs are, naturally, much heavier users of the internet but listen to slightly less radio than average and watch about the same amount of TV. The latter finding runs counter to research sponsored by the CBC.  The CBC research employs an impressive number of respondents and adheres to many good principles of survey research but is it slanted by internal politics?  For example, would CBC’s surveys ask which network is best at various categories of programming and report the results?   You can purchase all the CBC survey results for about $25,000, a bargain given that the CBC pays something like $400-500,000 each year to undertake the surveys.
When we asked Canadians which network had the best movies, Netflix finished second only to TMN/Movie Central among Netflix subs, a notable marketing feat given the limited time the channel has been available to Canadians. Showcase also fared well among Netflix respondents but not a single Netflix sub in our survey said the CBC had the best movies, despite CBC's continued reliance on Hollywood movies in the summer and over the Christmas holidays.
The 2011 survey results are from CMRI's Media Trends Survey conducted November-December 2011 among a representative national sample of approximately 900 Anglophone respondents aged 18-plus.  Margin of error +/-3.3%.  The Media Trends Survey has been conducted for ten consecutive years and has surveyed over 15,000 Canadians in total in this period. It is the only survey to have measured media use and attitudes continuously over this decade. The Media Trends Survey is not sponsored by any one industry or affiliated with a media company.  Therefore, the surveys are scrupulously designed not to bias respondents into favouring one medium or media outlet over another.

Saturday 5 May 2012

CBC's 5% Audience Target

When Richard Stursberg was the head of Telefilm he established an audience target for Telefilm.  Canadian films were to achieve a 5% share of the box office, which they never did during his term (or afterwards).  Telefilm has since adopted other measures to judge its performance. 

When Mr. Stursberg left Telefilm to become head of CBC English TV he once again made audiences a primary goal, as detailed in his book, The Tower of Babble.  Ironically, he achieved his 5% target at the CBC.  The following chart was presented by CBC to Parliament in 2009 and is based on CBC's analysis of its audience in the 2007-08 broadcast year.  By Mr. Stursberg's fourth year at CBC, CBC TV had exactly a 5% audience share.  Inexplicably, Mr. Stursberg claims that he achieved the highest ratings in CBC's history but in truth 5% is probably the lowest audience share in CBC TV's history and perhaps explains why the federal government had few qualms about cutting CBC's budget this year. Mr. Stursberg was fired by the CBC about a year after this information was presented to Parliament.

As CBC grapples with its current budget problems, it should pay more attention to its analysis of the broadcasting environment and recognize and understand the varied options audiences have today.  Programming as if it is still 1970 with a schedule that tries to capture the largest audience share is not a winning strategy. 

(Taken From CBC Submission to Parliament)

Note to readers: the preceding observations on audience are based entirely on CBC's published analysis of its audience performance.