Stay connected

Get the latest insights into Canadian business


Broadcasting the digital revolution

By Christopher Korchin | September 27, 2016
Broadcasting the digital revolution

Despite budget cuts, declining ad revenues and a seismic shift in the communications landscape, CBC/Radio-Canada has maintained its relevance. Now, with a digital repositioning under way and a new financial commitment from government, President and Chief Executive Officer Hubert T. Lacroix feels that the national broadcaster is ready for the future.

When Lacroix left a successful legal career to start his current job in January 2008, he knew there would be challenges, but they far surpassed his expectations. “I had no idea what I was getting into,” he says. “I’ve discovered the meaning of the word resiliency since I’ve been here.”

Within months of his arrival, the Great Recession was shaking world economies, broadcasters’ advertising revenues were softening, and the federal government was looking to cut CBC/Radio-Canada funding. One small change took on symbolic importance: The corporation relinquished the rights (later picked up by CTV Television Network) to the famed Hockey Night in Canada theme song. In 2013, it would even lose the National Hockey League broadcast contract following a whopping $5.2-billion deal between Rogers Communications and the NHL that effectively prompted the corporation to get out of professional sports.

In 2010, streaming service Netflix entered the Canadian market, joining a bewildering range of conventional TV offerings. Meanwhile, tech giants like Apple Inc., Inc. and Google Inc. were evolving into content providers, and private television and radio networks were consolidating under huge telecom entities like Bell Canada and Rogers. Job cuts at the public broadcaster deepened in the wake of a $115-million annual reduction in funding announced in the 2012 federal budget. It is estimated that 2,800 jobs have been eliminated at CBC/Radio-Canada since 2009.

Amid this turmoil, however, Canadians’ attachment to what Lacroix calls an “iconic brand” inspired the corporation to reinvent itself. He cites a recent TNS Canada Mission Metrics Survey in which “81 per cent of Canadians strongly agree that it’s important to have a national public broadcaster.” The corporation’s high recognition factor – from its familiar gem logo to radio and TV programs as varied as As It Happens, The Friendly Giant and Rick Mercer Report and, on the French side, Découverte, Salmigondis and Tout le monde en parle – is a crucial asset.

“We understand the importance of these legacy assets and of the great hosts and programs we have had, en français and en anglais, over the years,” Lacroix says. But he is starting to tell Canadians that “conventional television might not be around in the next 20 years, and that whatever widget they have in their hands is going to be the means by which we deliver our content.”

That conviction is behind the new digital push in the corporation’s five-year plan, outlined in its Strategy 2020 document. A 2014 CBC Media Environment overview of the Canadian broadcasting industry found that advertising revenue from the Internet (including users’ non-media time spent on services such as Facebook and Google, which can be measured and sold to advertisers) has surpassed TV ad revenue from conventional and specialty channels combined. While that may be reason enough to embrace a digital shift (CBC/Radio-Canada depends on advertising for between 20 and 30 per cent of its roughly $1.7-billion annual budget), the most compelling reason is that the corporation knows it needs to keep up with how Canadians are accessing content: namely, with a growing variety of devices. “We’ve inverted our priorities,” Lacroix says. “We start with mobility, then we go Web, then radio, then television. This is a big transformation.”

The changes are starting to bear fruit. Growth in traffic to CBC/Radio-Canada’s digital platforms – up by 3 million unique visits per month compared to a year ago, and now sitting at 15 million visits per month, versus 9 million in 2014 – is “spectacular,” Lacroix notes. He cites the coverage of the 2014 Sochi Winter Olympics – when “33 million Canadians came to us on our different services, with 11 million, a third of that, through our digital platforms” – as a milestone. “That was an indicator that the shift we were making was the right one.” Lacroix expects the conventional-versus-digital ratio to be 50-50 for the upcoming Rio de Janeiro Olympics.

As a Crown corporation, CBC/Radio-Canada is subject to government financial agendas. But there too the news is positive, with the latest federal budget boosting CBC funding by $75-million in the first year and by $150-million in each of the following four, essentially reinstating the pre-austerity numbers and adding $35-million annually to further spur the digital shift.

Lacroix, whose second and final term ends in December 2017, thinks the zeitgeist has changed. “I’m lucky to have a minister that actually cares about culture and speaks about it as a motor for the rest of the economy,” he says, referring to Heritage Minister Mélanie Joly. “For every dollar we get from government, we generate $3.50 of value for the economy and $2.50 for the cultural industries that are connected to us.”

Lacroix maintains that the corporation offers great value . Citizens of other countries pay, on average, $82 per person per year for public broadcasting. The CBC, even factoring in the increased funding, costs each Canadian about $33 per year. “The BBC costs $97 per person, and it has one time zone and one official language,” Lacroix says. “So, in terms of what we give back to Canadians, we’re a pretty good return.” He also believes the broadcaster provides an intangible value that goes beyond dollars and cents: “In corporate markets, we talk about return on investment – ROI; in our environment, we call it return on citizenship.”

CBC/Radio-Canada is under no pressure to turn a profit; rather, it must be accountable for its spending and the relevance of its product. In this respect, it has to answer not only to the federal government but to 35 million “shareholders” across the country. But that’s an ongoing challenge that Lacroix accepts. A marathon runner in his downtime, he says the difference between his job and a 42-kilometre course “is that there’s no finish line. You just start again.”

Lacroix says the future stability of CBC/Radio-Canada will depend not only on the success of its digital shift, but perhaps also the adoption of a financing stream such as the so-called household fee used in many other countries. In an industry evolving at breakneck speed, though, the only given is continued change. For his eventual successor, the broadcasting environment “will change even faster,” Lacroix says.


The content of this field is kept private and will not be shown publicly.
About PwC Canada Hide Footer