The Hon. Perrin Beatty, President and CEO, Canadian Broadcasting Corporation
THE BENEFITS OF YOUR INVESTMENT IN THE CBC
Chairman: Gareth S. Seltzer, President, The Empire Club of Canada
Head Table Guests
Bill Laidlaw, Third Vice-President, The Empire Club of Canada and Director, Government Relations, Glaxo Wellcome; The Rev. Dr. John Niles, Minister, Victoria Park United Church, Scarborough; Dimitra Psomopoulos, Grade 12 Student, Riverdale Collegiate Institute; Richard O'Hagan, Director of the Board, Canadian Broadcasting Corporation; Michael Coates, President, Hill & Knowlton; The Hon. J. Trevor Eyton, Member of the Senate of Canada and Senior Group Chairman, EdperBrascan Corporation; Faheem Hasnain, VicePresident, Commercial Operations, Glaxo Wellcome; James Sward, President and CEO, Global Television Network, Canwest Global System; and David Edmison, Past President, The Empire Club of Canada and Director, Martin Lucas & Seagram.
Introduction by Gareth Seltzer
In my usual introductory remarks, I spend a few minutes outlining the organisation that our speaker represents and why we are fortunate that our guest has accepted our invitation to address us. After having reflected on Mr. Beatty's accomplishments, I thought that it may be more appropriate to focus on our guest, and the skills and experience that Mr. Beatty brings to the Canadian Broadcasting Corporation.
Mr. Beatty was educated here in Toronto and at the University of Western Ontario and at the age of 22 was elected to Parliament. At 29, he became the youngest cabinet minister in Canadian history. I used to be proud of myself for being the youngest ever President of the Empire Club. In addition to serving as Secretary of State under Joe Clark, Mr. Beatty held six other portfolios including Minister of National Revenue, Solicitor General, Minister of National Defence, Minister of Health, Minister of Communications and Minister of External Affairs. Not content in making the rest of us feel wholly inadequate, Mr. Beatty has always played an active role in communications, public policy and broadcasting. In fact, he wrote a weekly column for The Toronto Sun--a good conservative paper--on government and politics.
If one now looks at the mission of the CBC, "to provide radio and television services throughout Canada," it is clear that an individual with Mr. Beatty's experience lends himself well to the role of chief executive of Canada's national broadcasting organisation. The CBC has one of the world's most complex and sophisticated broadcast technologies. Some of the 1400 transmission systems are located so remotely that they can only be accessed by Skidoo or helicopter. Through two core national television networks, four radio networks, two specialty channels, and radio services for remote English, French and aboriginal peoples, the CBC is moving towards a new financial environment where the corporation will still receive some $800 million in public taxpayer support per annum.
Notwithstanding the concerns over public funding, people and debt management, the newly awarded FM frequency and other issues which are part of the day-today business of the CBC, we look to Mr. Beatty to provide us--and the television and radio audience--with a picture of what the corporation will look like in the future and the challenges ahead. Please join me in a warm welcome to The Honourable Perrin Beatty, President and CEO of the Canadian Broadcasting Corporation and Societe Radio-Canada.
Like thirty million other Canadians, everyone in this room is a shareholder in the CBC. Every Canadian has the right to judge our return on investment, to assess the increase in shareholder value and to hold us to account.
How do you measure an organisation like the CBC? The comprehensive audits by which public-sector institutions are often assessed have three components: financial; compliance; and value for money. The value-for-money aspect, specifically, focuses on whether resources are managed economically and efficiently and whether operations are carried out effectively. The CBC can and should be judged on all those standards--financial and non-financial.
My report to you today as citizens and shareholders is quite simple. Three years ago, the CBC was in a state of chaos. But out of chaos has come progress, out of conflict has come direction, out of crisis has come discipline and out of hard times has come stability of funding and clarity of purpose.
Plenty of people were ready to throw in the towel on the CBC three years ago. They thought the financial imperatives could never be squared with our cultural aspirations. There were those who claimed the CBC would die of inflated bureaucracy and others who thought it would die from massive cutbacks and a lack of vision. Both camps were completely wrong. You can't have a wake without a corpse and the CBC that today broadcasts record amounts of Canadian programming is alive and well.
It is true that the past 36 months since I came to the CBC have been turbulent. A planned government cut to the Corporation's budget was both confirmed and deepened. Coupled with other cost increases and revenue impacts, it meant that the financial challenge to be met more than doubled to over $400 million per year.
New channels, open borders, copyright reform, industry convergence and audience fragmentation have dramatically altered our perspective and challenges. Unprecedented labour negotiations posed an ominous threat to our ability even to stay on air. Technology has unleashed a multi-channel and multi-media universe.
The CBC met the challenges head on. We undertook a massive corporate turnaround. We slashed spending by the largest amount in our history. We reduced administrative and managerial personnel to the point of matching and bettering private-sector benchmarks. We gave creative control to people who actually produce the programmes and imposed financial accountability on everyone. We simplified and streamlined the CBC from top to bottom. It is a very different Corporation from the way it was in the past.
All too often, when institutions are confronted with major challenges, services are cut, but the head office remains untouched. I felt it was important that we lead by example, starting at the top and at the centre before we touched our programmes.
In the past 36 months, the CBC has cut its annual expenditures by more than $400 million, and we did it without closing any stations. In fact, we went back into Alberta where we had consolidated our supperhour newscasts a few years before and re-established separate programmes in Calgary and Edmonton.
While we didn't close any stations, here is what we did do:
• First, I reduced the number of Vice-Presidents by almost half and headquarters staff by about 60 per cent. Throughout the CBC, we have eliminated more than 3,000 staff positions.
• We sold off the head office building and consolidated its staff into our existing production facilities in Ottawa, connecting head office with the reason for our existence.
• We reached new collective agreements that modernise our work practices.
• We reduced corporate management costs to the point where they are now just over one cent on the dollar.
And what is the financial picture today? When we made our reductions, the government provided funding to meet some of our one-time downsizing costs and lent us a further $50 million to cover the rest. We negotiated a 14-year repayment schedule. Today, I am able to announce that the CBC has repaid that $50-million loan 12 years ahead of schedule. Additionally, we have deliberately managed our finances this past year in a way that will allow us to reinvest in programmes and services for our audiences.
There is other good news as well. On the first of this month, we began a five-year period for which the government has guaranteed stable funding. Taken together, these facts mean that we have now emerged successfully from a long dark tunnel that only a short time ago appeared to have no end.
Producing these results was not an easy academic exercise. It was a painful real life experience. I am particularly grateful to the managers and staff of the CBC because they not only met every financial target set for them, but they did so while providing Canadians with substantially improved value for money. Thanks to the dedication of our employees and the commitment of our unions to seeing the Corporation survive, we have been able to reach new collective agreements with all our talent unions and seven of our eight traditional unions without having to endure a strike that could have caused us to go off the air. We have been working to reach agreement with the eighth on terms comparable to those agreed to by the other seven.
Our employees have surprised the critics and may even have surprised themselves. They have introduced new programmes, new services and new technologies to serve Canadians better at the same time as facing up to the huge financial restructuring.
Well, we have Canadianised English TV prime time. That has meant replacing 200 hours of American shows a year.
Francophone Newfoundlanders now have a supperhour news programme based in Atlantic Canada, instead of getting their supperhour news from Montreal.
Radio One now provides listeners with the best in the world 24 hours a day.
We're opening a new radio station in Victoria, and new pocket bureaus in London, Trois-Rivieres and Sherbrooke, and additional services in Kapuskasing, Hawkesbury and on the Arctic Circle in Cambridge Bay.
Alone or in partnership with others, we are applying for six new specialty channels that will allow us to serve TV audiences in new ways.
And just this Sunday, 20,000 people took part in our Open House as we moved our Radio One service here in Toronto to FM. CBC is now readily available to the 50 per cent of the Toronto radio audience who never flip to the AM dial. Earlier this year, we did the same thing in Montreal for both English Radio and French Radio.
The CBC is leading the industry in preparing for digital radio and TV We have both the content and the expertise to benefit from these new technologies.
CBC Radio became the world's first public broadcaster to offer programmes live on the Internet.
For its part, Newsworld launched the first Canadian news service with full motion video on the Internet. RDI provides a similar service for francophones here and around the world.
We are the only Canadian broadcaster with a major presence on the World-Wide Web. We are already doing much more than simply distributing the spillover from our broadcast services. We are developing uniquely designed programming for the web. As an example, for the last several months, our French services have maintained an Infoculture site, which uses this new technology to bring cultural news and activities from across the country to francophones.
I can inform you today that we will launch a similar site in English in June, which will allow us to strengthen our partnership with Canada's cultural community. This will be Canada's most extensive on-line culture magazine, an up-to-date resource for arts and cultural news from across the country and around the world. It demonstrates how the Corporation is embracing new technology to serve Canadians in new and innovative ways.
All of these programming, service and technological improvements are buttressed by both subjective and objective tests of value for money.
Last month, the CBC won more than three times as many Geminis as our closest competitors. French television has also recorded continuing successes at the Gemeaux. We brought home an international Emmy from New York. And I leave tonight for Montreux, where we will receive an honorary Golden Rose recognising the ongoing quality of CBC programmes as the festival's leading first-prize winner from among all the broadcasters in the world.
Last season, despite the cuts and increased competition, ratings were up for both television and radio in both French and English. We intend to extend both the reach and the share of our services.
And what better value for money could there have been than opening a new radio station during this year's ice storm to meet the needs of those locked in darkness on Quebec's South Shore? While the ice storm lasted, French Radio used our new FM frequency in Montreal to put a temporary service into the Black Triangle.
I am not claiming perfection for the revitalised CBC, but I am claiming solid examples of genuine value when compared even to the big boys operating from New York and Los Angeles.
This February, our services broadcasted over 600 hours of the Nagano Winter Olympics, compared to 135 hours broadcasted by CBS--and we did so with fewer than one-third of the people. Our ratings were up over 20 per cent. Theirs were down substantially. And, contrary to predictions, it didn't cost the taxpayers a cent. We covered all of our direct costs and generated several million dollars to put back into the operation.
Major dailies in Detroit, Buffalo, Seattle, Houston, Sacramento and New York all wrote that CBC came out with the gold medal for coverage. The International Olympic Committee recognised the quality of our work in Atlanta and Nagano last month when it awarded us the rights for the next five Olympic Games. That is quite some distance to have travelled for a corporation many believed to be on its last legs just a couple of years earlier.
The CBC is, quite simply, healthier, more efficient, more flexible and better received by the public. And the guarantee of five-year stable funding means that, for the first time in a decade and a half, we can plan based on our opportunities, and not on our limitations.
These are all significant steps forward. They meet the first two tests of any comprehensive audit: financial responsibility and value for money. That leaves the third measure of corporate accountability: compliance.
For the private sector, compliance means following laws and regulations. For the CBC, however, meeting the tests of public policy and wishes of the public are not just regulatory requirements. They are our raison d'etre. The CBC's mandate is not profit. Its mission is not a higher stock price. The CBC's role is to serve Canadians.
When we were one of only one or two services in each community, part of our mission was to make sure Canadians had access to American programmes. In 1998, that role is not only unnecessary, it is irrelevant and financially irresponsible. Canadians do not subsidise the CBC in order to have it be a carbon copy of CTV or Global. Seventy years ago this year, the Aird Royal Commission on Canada's broadcasting system found unanimity on one fundamental question--that Canadians want Canadian broadcasting.
These words underlie the purpose of the CBC now and as far into the future as we can imagine. To be resolutely Canadian. To provide a home for Canadian voices. To display Canadian images. To be a Canadian meeting place. To guarantee the flourishing of Canadian expression, Canadian diversity, Canadian content, Canadian culture and Canadian identity.
What identifies the CBC is its Canadian programmes. Anyone can offer programming but only the CBC has Canadian programming as its mission and its mantra.
As a public broadcaster, we have special responsibilities. If private-sector television stations were required to drop their American programming in prime time, they would go out of business. It can cost 10 times as much to produce a Canadian drama as to import an hour of American television. There is nothing inherently good or bad about that. It is, however, a large part of why the CBC exists.
If French-language radio stations with razor-thin profits had to finance serious radio journalism, they would also go out of business. That, too, is a real reason why the CBC exists.
The CBC can and must accept the challenges of broadcasting programming that others cannot put on. We can and must offer a broadcast schedule designed in Canada. We can and must ensure healthy, Canadian-based programmes for Canadian children. We can and must celebrate the arts in Canada. We can and must put Canadians in touch with each other across the barriers of geography, culture and language.
Those are the touchstones that will keep the CBC relevant to Canadians. That is the basis on which we will work to earn our way with Canadians every day.
Let me give you an example of our ability to bring Canadians together. Today we are announcing Remembering Canada at War; a slate of special programming that pays tribute to Canada's war veterans. Between May 9 and June 15, CBC Television will run a series of 11 outstanding documentaries, news specials and drama. It will include, among others, "VE-Day Remembered," "D-Day Plus Fifty," "Forgotten Warriors," "No Price Too High," and "Dieppe." Our goal is to help audiences better understand the extraordinary contributions made by Canadians at a critical period in the world's history. No other broadcaster could or would broadcast such a series to a national audience of this size. But no other broadcaster has either our resources or our responsibilities.
The CBC has always been at its worst when it tried to copy somebody else. It has always been at its best when breaking the mould by pioneering with "As It Happens," the live double-ender interview, "La Petite Vie" or "This Hour Has 22 Minutes." To secure our future, we need to play by our own rules, not Hollywood's.
To be identifiably and innovatively Canadian is at the heart of the ongoing move to Canadianise CBC English television throughout the entire day every day. That's why it is our plan next fall to replace almost 1,000 hours of programming a year. It will not be easy but we will do so with extraordinary enthusiasm.
We are going Canadian because it is what we do best. It is what people search us out for. It is what makes us distinct. And it is what Canadians want and the country needs.
Sometimes people like to point nostalgically to the past as the Golden Age of Canadian broadcasting. I believe that the best years of Canadian broadcasting are not behind us: We are living in them right now.
When we were packing up our old head office in Ottawa, we found a milk glass that the CBC distributed during Canada's centennial year. Printed on the glass is the schedule for our English Television network. The highlights are such shows as "The Beverly Hillbillies," "Ed Sullivan," "Get Smart," "Red Skelton," "Green Acres," "Bob Hope Theatre," "The Man from Uncle," "Rat Patrol," "Hogan's Heroes," and "Bonanza." No doubt they were all great shows, but they were shows reflecting someone else's culture and values, not ours.
I am saving this glass, and I will use it to drink a toast when we complete full Canadianisation of our English TV schedule. That is when we will finally have done our part to accomplish Aird's vision from seven decades ago.
The Canadian broadcasting system is built on two complementary pillars, one private, the other public. If either were lost, the whole structure would be weakened.
To serve Canadians better, the CBC will use every opportunity to build partnerships with the private sector. We have already entered into production agreements with Global, Netstar and WIC. And we have forged creative new agreements with TVA, Atlantis, Bell, Power Broadcasting, Vision TV, ExpressVu and Rogers Wave@Home, to name just a few.
Today, we broadcast more programmes produced by independent producers than ever before. There may have been a time when we were so large or dominant that we could afford to go it alone, but that time is long since past. The way I look at it, every dollar we can save by sharing infrastructure or leverage out of new partnerships is one more dollar we can devote to Canadian programming. Our job is not to own transmitters or to fall in love with technology. Our mission is to connect Canadian eyes and ears to Canadian content.
There is no better example than the recently announced undertaking of the first-ever television history of our nation: "A People's History of Canada/Une histoire populaire du Canada."
This sweeping series will be produced simultaneously in French and English for audiences in both official languages, providing one of the first occasions when Canadians from every background will see a common interpretation of our history. It will be broadcasted over two years beginning as the new millennium dawns, and will cover the entire sweep of our national saga from the arrival of the first inhabitants more than 12,000 years ago up until the end of this century.
This is the CBC's millennium project. It is a completely Canadian project. It will draw upon the CBC's best creative minds and upon leading experts from outside the CBC. We will find the money to pay for it, not by turning to government for special funding, but by developing partnerships with the private sector. We would welcome the chance to build those partnerships with many of you in this room. This epic history project is a stellar example of why Canadians support the CBC and an example of the CBC's unique role in forging bonds of identity.
Looking ahead, we know that we face a number of crucial decisions about the CBC's future:
• As the range of choices available for every hour of viewing and listening grows exponentially, the competition for audiences will become even more intense. We need to ensure that the CBC is able to connect with Canadians.
• Changes in technology present 100 new ways to serve our audiences, but they can be both expensive and risky. We must decide whether and when to introduce technologies like high-definition television.
• At present, the economics of distributing our signals makes it cost effective to maintain our terrestrial distribution system. But the economics may change in the future, making it worthwhile for us to redirect resources from distribution into programming.
• To protect our brands and to use our content on both old and new media, we need to own more of our programming. Otherwise, we risk losing the assets we need to strengthen our identity and build partnerships with others.
• We are proud of our progress in reflecting the changing face of Canada, but I believe we must do more to serve young people and Canada's many cultural communities.
All of these are important issues, and there are scores of others to be faced as well. We are currently engaged in an intensive exercise to determine new strategic directions for the CBC. What is important is that we have gone from being a corporation that many people were writing off just three years ago to one that is stronger and better positioned for future challenges and opportunities than we have been for a long, long time.
We will demonstrate sound stewardship of financial resources, value for money and compliance with public needs. Through economy, efficiency and effectiveness, we will maximise the benefits of your investment in Canadian culture, Canadian content, Canadian programming and Canadian creativity.
The CBC owes that to you as shareholders. We owe that to you as taxpayers. We owe that to you as citizens.
The appreciation of the meeting was expressed by Bill Laidlaw, Third Vice-President, The Empire Club of Canada and Director, Government Relations, Glaxo Wellcome.