Creating Value in a Competitive Media Industry
The Empire Club of Canada Addresses (Toronto, Canada), 4 Mar 2004, p. 265-276
Greenberg, Ian, Speaker
Media Type
Item Type
The "value promise" that media companies make to their consumers, to their advertising clients, and to their shareholders. Astral Media's financial performance and how it drives the value of its stock. Reflecting Canadian values to audiences. Establishing the reputation of a company. Two other facets of value that are critical to underpinning the company's financial performance and the media industry in general. Details of the speaker's company and how it plays an important role in generating our sense of national identity. Key trends in the personal values of Canadians, with discussion of each. A third facet of value about "intangible corporate values," with explanation. Astralness and the four corporate values on which it is based.
Date of Original
4 Mar 2004
Language of Item
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The speeches are free of charge but please note that the Empire Club of Canada retains copyright. Neither the speeches themselves nor any part of their content may be used for any purpose other than personal interest or research without the explicit permission of the Empire Club of Canada.
Empire Club of Canada
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Full Text
Ian Greenberg
President and CEO, Astral Media Inc.
Chairman: John C. Koopman
President, The Empire Club of Canada
Head Table Guests

Verity Craig, Principal, Carmichael Birrell & Co. and Director, The Empire Club of Canada; Susie Jacobsen, Grade 12 Student, North Toronto Collegiate Institute; Rev. Canon Prue Chambers, St. Nicholas Anglican Church; Ron Waters, Vice-Chairman, Board, CHUM Television; John Cassaday, President and CEO, Corus Entertainment Inc.; Sydney Greenberg, Vice-President, Astral Media Inc.; Sharon Rudy, Vice-President, Spencer Stuart and Director, The Empire Club of Canada; Michael MacMillan, Chairman and CEO. Alliance Atlantis Communications; Andre Bureau, Chairman of the Board, Astral Media Inc.; Walter Murray, Vice-Chairman, RBC Capital Markets; and Phil Lind, Vice-Chairman, Board, Rogers Communications.

Introduction by John Koopman

It is easy to be smug about television. Critics blame television for everything from child obesity to the murder rate.

In the early days of TV with only three or four broadcasters, television was forced to assume all people were essentially alike and accordingly had to deny the most obvious fact about consumers and citizens--their prodigious, efflorescent diversity.

The 500-channel universe we are moving toward, not all of which Astral Media owns-yet-reflects not the psychology of crowds but the creativity and inspiration of millions of individuals reaching for something higher. We are all sharply differentiated in our cultural pursuits. We are alike only in what is base and prurient.

At the dawn of the television age it was believed that TV would exacerbate social tension and lead to ever-increasing class distinctions as the rich, through television, gained access to culture and training that the poor could never afford.

We should never forget that some good things have happened because of television. One example: the signal role of television in the great civil rights struggle of the mid-sixties.

U.S. citizens had been reading about the civil rights struggle for decades, but it was visceral potent television images like the 1963 attack by the Birmingham, Alabama, police and police dogs on young civil rights protestors; the fire department using hoses to push peaceful black protestors down flooding avenues, like rubbish in a street cleaning; boycotted and deserted buses in Montgomery; the shame of Governor George Wallace blocking the door to Foster Auditorium at the University of Alabama to stop two black students from enrolling, that brought these pictures into the living rooms of the nation and showed the greater American public the daily realities of Jim Crow.

As the networks news divisions broadcast the bombings and burnings of black churches, the network's entertainment divisions contributed by casting black characters in other than stereotypic roles. Shows like "The Defenders," "Naked City," "The Nurses" and "Peyton Place," all of whom portrayed inter-racial cooperation and black characters, were for the first time depicted as intelligent and heroic.

It was not the House of Representatives but television that ultimately buried Jim Crow. Mr. Greenberg's industry has the potential to achieve much good.

Mr. Greenberg is one of four brothers who some 40 years ago established a retail photo business. That business grew into a national chain of 125 Astral Photo stores.

Named President and Chief Executive Officer of Astral Media in 1996, Mr. Greenberg initiated the transformation of the company as it divested its photographic, and other businesses to concentrate on its media businesses.

Today, Astral Media is the country's largest operator of specialty, pay, and pay-per-view television services and is currently involved in 19 network licenses. Astral Media is the largest private-sector supporter of Canadian feature films. Astral also owns 24 radio stations.

Ladies and gentlemen, please join me in welcoming Mr. Ian Greenberg to the podium of the Empire Club of Canada.

Ian Greenberg

Good afternoon ladies and gentlemen. I would like to thank the Empire Club for the privilege of speaking to you today. I also want to say how honoured I feel to see so many leaders of Canada's media industry here this afternoon.

A few weeks ago, the Empire Club staff asked me for a one-sentence description of the topic of my speech today. Now, people in my organization know that I'm someone who likes things boiled down to their simplest form. But getting to the essence of things can be a hard, time-consuming job. It was Winston Churchill who apologized to the British parliament after speaking for an hour and a half, saying that his speech would have been half as long had he taken twice the time to prepare it. Meaningful brevity takes time, a luxury I did not have. So I simply told the organizers that I would be talking about "creating value in a competitive media industry."

What couldn't be captured in that one sentence were the multiple facets of the word, value. Because what I am really going to talk to you about is corporate value in a number of its incarnations.

First, financial value, of course. But then, in the context of our industry, the values of Canadian society, and last, the intangible values that must be part of successful companies today, be they in the media sector or not.

What I want to do is discuss the complexity of what I call the "value promise" that media companies make to their consumers, to their advertising clients, and to their shareholders. To put you at ease during my presentation, you can probably safely assume there will be no major value created in the media industry until after lunch because just about everyone in the industry is here today. In fact, that's why I arranged for Ron and Phil and Michael and John to be at the head table--so that I could keep an eye on them while I was busy doing this today.

Like any public company, Astral Media's financial performance drives the value of its stock. Once upon a time, it was the only kind of shareholder value that we discussed in boardrooms across the media sector or in any other sector for that matter. And frankly, two years ago, I probably wouldn't have discussed any other value with you.

Of course, financial performance remains the dominant measure of a public company. The bottom line--whether you call it net earnings, earnings per share, EBITDA or cash flow--is value number one! And Astral, as you may know, has an enviable financial record. The company has a market capitalization of $1.6 billion. Our revenues will surpass the $500-million mark this year. Moreover, Astral is expected to deliver strong earnings growth for an eighth consecutive year. The company's market capitalization was but $200 million when this streak began, so by any standard, Astral has created and continues to create real value for its shareholders.

But financial value is highly dependent on the other values I mentioned earlier and really, the end result of successfully creating them. Essentially, if we don't strongly reflect Canadian values to our audiences, we are not going to optimize our financial performance. And, if we don't establish the reputation of a company that operates with a high degree of expertise and ethics, both internally and externally, we expose that financial performance to a very high risk. I therefore want to talk to you about these two other facets of value that are critical to underpinning our company's financial performance and, I think, that of the media industry in general.

The fact that we operate in the cultural sector makes us different from many other industries. To some extent, our products must express and reflect the values of Canadians as distinct from those of people from other countries. This is the second kind of value that media companies' deliver. The media products we create and offer consumers, be they in television, radio or print, play an important role in generating our sense of national identity.

Astral Media is one of the country's largest operators of English and French-language specialty, pay and pay-per-view television. On our own, or with partners, we operate 16 television networks and are a substantial player in radio and outdoor advertising, as well.

Each of them is a powerful medium in its own right. And, in terms of our role as a media company, we see that we have a responsibility to present, reflect, and, in fact, help shape society's changing values to a certain extent.

Astral plays a leadership role in supporting the creative and unique talents of the Canadian film, television and radio industries, whether through our programming services or such vehicles as the Astral Media Harold Greenberg Fund. Last year alone, we spent over $74 million on the development and purchase of Canadian content, original programming and the support of emerging talent.

In order for Astral Media to ultimately deliver financial value, we first need to understand and reflect Canadian societal and cultural beliefs. And this is an area we monitor and study carefully, in order to align our television, radio and outdoor products to the real and shifting values and beliefs of Canadians.

Values are, at their root, the set of beliefs and ideas that make up our individual personalities. And socio-cultural trends are not easy things to measure and quantify.

There are many questions we need answered in order to be able to target our programming and in order to add value for those who consume our products. Most fundamentally, we need to know what is important to our audience: is it social success and materialism, personal development or autonomy? What are people concerned about: balancing family and work responsibilities, financial issues, or are they focused on the need for status and recognition? How are Canadians feeling about the economy? How are we coping with the "certainty of uncertainty"? And what about technology--how are we adapting? Canadians are increasingly using tools that simplify tasks or save time--like making airline reservations or banking on-line. On the other hand, Canadians' expectations of technology tools have increased. We want them to be high-performance but they also need to be simple and hassle-free.

To give you a personal example: I now have four remotes in my family room and I still haven't fully figured out what does what. I don't want to operate the space shuttle; I just want to be able to tune into the Canadian television premiere of season five of "The Sopranos" on "The Movie Network" this Sunday, March 7 at 9 p.m. Eastern.

Let me highlight some of the key trends in the personal values of Canadians, taken from a study that the research firm CROP has been doing annually since the early eighties. This socio-cultural study is one of the tools that our organization uses to give us greater insight into the public's expectations about television and radio content.

Based on this year's study, Canadians are demonstrating an increased level of comfort with uncertainty and we are showing greater flexibility and adaptability than we have in the past. This follows a period from 1996 to 2001, when, according to CROP, our society was dominated by a sense of fatalism among people, where Canadians seemed to lack specific goals in life and felt excluded from society.

One of the emerging values that we started to notice as early as 2002 was the whole do-it-yourself phenomenon, like home renovation, landscaping, interior design, etc. Now, I have to tell you that recently I've been having major renovations done to my home, so I alone am probably responsible for the massive increase in the viewership numbers for renovation and interior decorating shows this past year. But apparently, according to statistics, many of you have been joining me, as the ratings for this type of program are growing significantly.

"Decorate Your Life" (or "Decore to Vie"), a show on our French-language specialty channel Canal Vie, has been the top show since its introduction a year ago. In the English market, programs like Debbie Travis's "Facelift" on HGTV or "Decorating Challenges" on W are also amongst the top-10 shows on those channels.

On a more general note, the CROP study concludes that Canadian society as a whole is showing five principal trends.

First, Canadians are showing a trend to personal development, learning, and self-expression. We are demonstrating a growing desire to develop our creative talents at work and at play.

Second, there is a trend towards what CROP calls "pragmatic empowerment" (i.e. the do-it-yourself trend I just mentioned).

The combination of these two trends with a growing attraction to the simple pleasures of life such as gardening or fixing things creates a perfect social context for new products and programming.

Third, there is a growing importance of the family. The primacy of the family is clearly a value with Canadians, who see family taking precedence over other personal priorities.

Fourth, we are, as a society, showing more ecological and social sensitivity. Environmental protection is a growing concern. As is so-called "ethical consumerism," which signals people's willingness to base their consumer decisions on the perceived ethics of the company making the products.

As if to reinforce this point, I note that last Friday's issue of Report on Business magazine features the publication's first-ever corporate social responsibility ranking.

And finally, the fifth significant trend is that there seems to be a greater need for escapism, nostalgia and feeding the imagination, whether through activity or entertainment programming.

It will probably come to you as no surprise that values among our American neighbours have evolved differently from ours. In an upcoming book, Michael Adams of Environics talks about the diverging values of Americans and Canadians. The two principal values in Canadian society today, he says, are self-assertion and respect for the individual, which is curious in a society generally more socialistic than the U.S. On the other hand, south of the border, post 9-11, the two most important values presently are security and authority.

Things that are important to our friends to the south, such as religion, gun ownership, a desire to achieve material success and status recognition and obedience to authority are viewed very differently in Canada, where we are presently questioning traditional authority, where we view guns as a potential prelude to violence, and live fairly comfortably with the multicultural nature of our major cities as opposed to living in gated communities.

The fact that we view our world differently than our American cousins ultimately has an impact on the kind of entertainment and information that we look for in the media we consume.

Reflecting the values of our society in our media properties is an important responsibility. Michael Adams, in his study, states that "Canadians want their media to be a window on the world and a mirror of their values and culture. In fact, today, part of Canadians' identification with

Canada and its `culture' stems from Canadian media companies presenting perspectives that are varied and that reflect our own reality."

And while you can argue that we are like Americans in many ways, and that we are great consumers of American programming, I can tell you that Canadians are an extremely discriminating audience. Yes, of course we like the best of American programming--so does the rest of the world. We like original, creative, well-produced entertainment shows. But we do NOT have an appetite for an all-American content diet. The Canadian media industry is more and more aware that delivering content that is aligned with the particular values of Canadians is good business. The extent to which we do it and do it well is reflected in our bottom line.

Now, at the outset I mentioned a third facet of value which is not about "society's values," but about "intangible corporate values." Let me explain what I mean by this.

In a recent article in the Harvard Business Review, Robert Kaplan and David Norton define a company's more important intangible assets as:

Human capital--the skills, talents and knowledge of employees;

Information capital--a company's databases and IT systems; and

Organization capital--a company's culture and how its people are aligned with strategic goals.

Essentially, I am talking about the way we do business--the way a company conducts day-to-day operations with its stakeholders.

These intangibles are all of those hard-to-measure elements that play into creating the reputation of a company or the personality of the company. In his new book entitled "Re-imagine!" it is what Tom Peters calls "The Experience," "the something more" that your organization provides your customers and other stakeholders, over and above their expectations.

Mr. Peters emphasizes his absolute conviction that the quality of The Experience translates into many millions of dollars of market cap for publicly listed companies. He believes, as do I, that these intangible values enhance the creation of financial value and, just as importantly, protect it when the going gets tough. If one could describe and chart the way one's company does business both internally and externally and the way the company reacts in adverse circumstances or in situations of change, like acquisitions, then one would be that much closer to evaluating how these intangible values affect the bottom line.

In the same Harvard Business Review article I referred to earlier, the authors don't mince their words. "Measuring the value of ... intangible assets is the holy grail of accounting. Employees' skills, IT systems and organizational cultures are worth far more to many companies than their tangible assets. Unlike financial and physical ones, intangible assets are hard for competitors to imitate, which makes them a powerful source of sustainable competitive advantage."

This is particularly true in our business. Think for a moment of how much the success of our businesses lies in the quality of our human relationships, how much depends on the successful outcome of negotiations and the sense of trust that we put in our business associates and that they put in us. The value of our intangible assets is--to paraphrase a popular commercial--priceless.

One important element of these intangible assets, in more and more corporations today, is the corporate Code of Ethics. We have one at Astral and I believe that it has a major impact on the way we work. There is an "Astralness" that distinguishes us as a corporation, that is at the heart of the way we do business.

This Astralness is based on four corporate values:

• Performance: we always strive to deliver the best possible results.

• Integrity: we aim to be transparent, fair and ethical at all times and in all dealings.

• Commitment: we have a passion for what we do and a love of work well done. Working at Astral is not just a job.

• Respect: we believe each individual deserves to be treated with respect.

We are convinced that we can thrive and, as naive as it may sound, still be nice people. Now before you laugh, I happen to know that the only thing Bell I:xpressvu and Rogers have ever agreed upon is that Astral is the "nicest" programmer.

We have long been aware that our reputation is affected by our day-to-day dealings and negotiations with all of our constituents, be they audiences, advertisers, the regulator, cable and satellite affiliates, producers and distributors of programming, as well as employees.

Our attachment to the four values I've just mentioned has been an integral part of our company through more than 40 years of growth as a family-owned business, from our humble beginnings as a photo-finishing store in Montreal to today's successful pure-play media company.

Throughout the evolution of Astral, I am convinced that our emphasis on the principles of performance, integrity, commitment and respect has been a key element of our success. These intangible corporate values are the Astral stamp. My point is that this "corporate personality," born of the historical experience and the operating principles that govern the way a company conducts business, is something that has an influence on the economic value of a company.

Our financial value as a company--and indeed, the performance of our cultural and media industry as a whole--is a direct result of how well we translate our commitment to cultural values and intangible assets into good business. On this account, our dynamic media and cultural industry has demonstrated sustained and significant economic contribution. I am convinced this pattern will continue.

For it to do so, however, we must maintain our steadfast support of a distinctly Canadian broadcasting system, one that happens to be the envy of the world. It is this strong broadcasting system, together with respect for the values I have described today, that will ensure a bright future not only for our industry but for the "Canadianness" of our culture.

Thank you very much for your attention this afternoon.

The appreciation of the meeting was expressed by Verity Craig, Principal, Carmichael Birrell & Co. and Director, The Empire Club of Canada.

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Creating Value in a Competitive Media Industry

The "value promise" that media companies make to their consumers, to their advertising clients, and to their shareholders. Astral Media's financial performance and how it drives the value of its stock. Reflecting Canadian values to audiences. Establishing the reputation of a company. Two other facets of value that are critical to underpinning the company's financial performance and the media industry in general. Details of the speaker's company and how it plays an important role in generating our sense of national identity. Key trends in the personal values of Canadians, with discussion of each. A third facet of value about "intangible corporate values," with explanation. Astralness and the four corporate values on which it is based.