Time for the CBC to fight fair

James Cowan on the problem with the Mother Corp.’s digital push


Ash Mishra/CP Images

Kirstine Stewart switched in April from running the CBC’s English service to leading Twitter Canada. Plenty of self-styled media critics interpreted Stewart’s move as a high-profile defection from stagnant traditional media to a shiny digital upstart. That assessment is not just wrong, it’s backward: Twitter hired Stewart specifically to court established, traditional media outlets because it wants to establish paid partnerships with content producers; meanwhile, CBC is a dominant digital player in Canada, competing hard—and successfully—against private news, music streaming, and video-on-demand providers.

The online success of the CBC should be laudable. Its website received an average of 6.2-million unique visitors last year, making it the most popular Canadian website. Around 4.3-million people visit the CBC News site each month, besting both The Globe and Mail and Huffington Post. Adding to this success is an ambitious five-year plan that will open digital-only news operations in cities like Hamilton and Kamloops and allocate 5 per cent of the overall programming budget to digital content. Once upon a time, it was only private TV and radio broadcasters who had reason to grumble about competing with the Crown corporation; in building its online empire, the CBC is taking on everyone from newspapers to Netflix.

In doing so, the CBC has strayed a long way from its original purpose: to sustain Canadian culture when and where the market cannot. The problem is, the CBC’s traditional funding model now allows it to build its digital empire unfettered by economic reality. In its last quarter, 60 per cent of the company’s expenses were paid by government subsidies while just 21 per cent of its revenue comes from advertising. All media companies are struggling to adapt to shifting consumer and advertising patterns brought about by the digital age; only the CBC had $1.2 billion in government cash to fund its experiments and ease the transition.

Broadcasters would argue the CBC has always operated from an unfair advantage. But the current scenario is different in several respects. For one, the Corp.’s legislated mandate to be “predominantly and distinctly Canadian” arguably placed it at a commercial disadvantage. Further, capital and regulatory requirements made it implausible for commercial broadcasters to serve many areas of the country. But nobody needs to ask the CRTC’s permission to create a website, and the startup costs for a digital service are far less than those of a television or radio station. If small cities like Kamloops need a local digital news service, that’s a need that could be plausibly served by entrepreneurs. The CBC is increasingly no longer complementing the market, but instead meddling within it.

And the list of markets now distorted only lengthens as CBC’s digital operation grows in size. Consider Canada’s newspapers: The Globe and MailToronto StarVancouver Sun andVancouver Province are once again confronting layoffs. All have now either implemented or plan to implement paywalls to generate new revenue. But to the extent that newspapers’ survival depends on charging their readers for access, that effort is imperiled by free and plentiful content on the CBC News site.

That same content feeds heavily aggregated sites like Huffington Post. In the borderless Internet, Canadian taxpayers end up subsidizing foreign news sites while homegrown news sources flounder.

There is no clear solution to this dilemma, particularly if you see value in a public broadcaster— but not publicly funded Top 40 radio, publicly funded local blogs, or, for that matter, publicly funded newspapers. As its digital footprint has grown, the CBC has effectively become all of these things. It amounts to unintended government-funded intervention where it is either unneeded or destructive. As the traditional broadcasting model has become antiquated, so too has the CBC’s financing model. Its digital presence must grow in a way that is self-sufficient. The Mother Corp. has shown it can compete in the new media world; now it’s time it actually does.

James Cowan is deputy editor of Canadian Business

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Time for the CBC to fight fair

  1. If small cities like Kamloops need a local digital news service, that’s a need that could be plausibly served by entrepreneurs.


    Doubtful when even the big guys are struggling. Talk about misapplying simplistic business concepts in the real world!

    And CBC’s foray into providing music by Canadian artists of apparently any level of notoriety has been extremely impressive and worthy of support.

    • I thought that was a strange comment too. If it was commercially viable to do then why hasn’t one of the private giants already stepped in. Clearly they are not interested in spending even if “..the startup costs for a digital service are far less than those of a television or radio station.”

      The whole article seems to be one big whine and an insistence that CBC standards should fall to a level equal to those of the other media outlets, rather than insist the rich men who own those outlets raise their own standards.
      All the cuts to other media outlets are because those media outlets are the voice of their owners and their own agendas, the CBC still speaks for the majority of Canadians. Maybe that’s why the plutocrats hate it so, it’s one of the few government organs that they don’t own.

      • I agree. My first reaction to the article was “Waa waa waa…” Second reaction was “Good for the CBC for thriving in spite of the constant attacks from the HarpieCons and digital noise merchants like Sun Media, Quebecor and Astral.” I know all those organizations have their websites etc., but I trust the CBC for reliable information.

      • I wouldn’t agree that the CBC still speaks for the majority of Canadians. Many, many Canadians yes, and although in principle I still support having a Canadian public broadcasting station, I’m finding myself very disgusted with it’s political meddling, if I could put it that way. It’s for all us us in Canada, not just this group, or that group. Yes?

        • Define political meddling?
          Politics is a huge topic that the media should cover in detail. The media should hold all parties to a decent level and it should ensure that a majority government that doesn’t look to rule by consensus is scrutinised fiercely.
          The corporately owned media doesn’t do that, hence articles like this in this corporately owned journal. The CBC is the only independent voice we have and those who like their news to be partisan tend not to like the CBC and think it should be done away with.
          I find the CBC to be a bit too conservative and nice for my tastes, but I find it is pretty fair to all the politicians without sucking up to them.
          Like politics in Canada everything is either in the centre or to the right, there is no organised left here.

      • I believe the argument is competition. Little guys won’t step in because CBC has already eaten the market share that’s available to take.

        In essence, where there is no chance of making a private profit for a service, public enterprise should step in to make sure the service is provided, but in places where a profit can be made by the private sector, the public sector should not compete with it and thereby reduce that profit potential.

        Personally, I believe the best way to handle this is to legislate that the CBC is no longer allowed to provide advertising — that their entire funding must be publicly sourced, and, equally as important, of arms-length nature from the government. Hell, ideally it’d be an automatic “take” from government revenues. Currently we give them around 1.1 billion, from revenue of 254 billion. That’s about 0.4%.

        Legislate that 0.6% of federal revenue goes to the CBC (the extra to make up for the loss of advertising), and do whatever can be done to make changing that amount extremely difficult for any House of Commons. With that funding, the CBC needs to meet certain local coverage and content goals or the executive lose their jobs. They are prohibited from selling any private advertising, and can only fund-raise like PBS does.. drives and specific show sponsorships.

        With that kind of funding setup in place, no media station can complain that CBC is stealing advertisers from them, CBC gets stable and predictable funding amounts to work with, and with the funding enshrined, they are free to provide content without fearing that their reporting would jeopardize their funding if they piss off a corporate or government interest.

        • I think that there would be a lot of push back from the politically active by insisting that the hands of any future government with respect to spending are tied. Any future government must be allowed at least the possibility of defunding any aspect of any government service.
          Also how long has Kamloops been waiting for anybody else to step in? If the CBC hadn’t stepped in wouldn’t they still be waiting?

  2. In Digital transformations, only the early adopters win, with the laggers left with crumbs or forced into bankrupcy. We should be proud that our CBC/Radio Canada are forging ahead in this new gold rush and staking their claim and experimenting with new business models to see which one could make money in a new era.

    Vertically integrated companies do not have motivation to jump into the new digital era business models because they need to protect their very high profit margin BDU operations. So their timid digital services re still tied to a BDU subscription (designed to raise ARPU instead of lowering prices to compete agaist guys like Netflix).

    It is because CBC is not in the BDU business that it can afford to experiment in the digital arena and perhaps it will find a way to generate sufficient digital revenues to continue to find canadian productions beyond its legacy linear television.

    • I guess they had no choice to survive today. Im sure it was expensive, was it worth it? I suppose the “core” network would be a good public broadcasting system. (even if it is rarely used) I for one, found I was drawn towards CBC lately for some reason. Why? I dont know why, maybe legacy or programing. As far as the online content goes, why not. Everyone else is going to jump on the internet if they are not already on board.

  3. The concern here is ‘does Canada want a multi-media world’ that is essentially state controlled? It’s one arena in broadcasting where ‘air space’ is limited but in the land of the internet there is plenty of room. Why spend millions of government funds and limiting the entrepreneurs in a new media world that is global and no longer contained in any countries borders. Is Canada limiting it’s ability to be a future player on an international market? Is it limiting it’s own media development? Look at TV now – so much of it is essentially imported U.S. content. With the number of U.S. channels on the cable systems and so little ‘local or national’ programming there are even limited channels for marketing products within Canada. Yes Canada has valuable assets to protect, but there is a balance of opening up to the new world or hiding in a protectionist cocoon.

    • I think the CBC having a well respected profile globally is good for Canadians, it promotes who we are and what entrepreneurs as well as domestic news, arts and entertainment are up to. It is an excellent use of public money.

  4. I have no problem with Huffpo linking to cbc, why not use that content?
    Maybe old media should try actual innovation
    Al Jazeera also does quite a good job on line (better in vid content)
    at least CBC can spend money on researchers and check stories unlike small online only sites
    and a big plus with CBC it isnt owned by one ass hat like Murdoch

  5. “The Globe and Mail, Toronto Star, Vancouver Sun and Vancouver Province are once again confronting layoffs”, you say. That’s because no one is reading inky things printed on newsprint, not because CBC or others use the internet. Your logic is like blaming self-serve liquor stores for the death of the short pencil and notepad industry.

  6. I’m very thankful that we have a CBC, and the fact that it is a “crown” corporation, and NOT some privately owned sewage-pipe, – like Sun Media…

    I just wish CBC would add more “over-the-air” digital service towers for many more canadian cities,…, especially the smaller ones…, but mostly because most canadians can not even afford Cable/Sat/TV anymore.-(especially at the ridiculous rate$ that Rogers’, Bell, Shaw charge !).

  7. Good old capital “C” Conservative Maclean’s :(

  8. I think the CBC should stay just as it is! Proud of the CBC, and an iconic part of Canadian history. Lets get rid of Astral, Bell and all the controlled networks. Fox Canada? Come on!

  9. What’s good for Canadians is the first priority for CBC. CBC’s use of the public airwaves and public digital world, in the best interests of quality service, is the measure to use. What the private profit-hungry guys do is literally their own business. The CBC is MY business and the airwaves and bandwidth for digital communications are public property. Carry on CBC!

  10. The news is a minuscule part of the CBC’s digital presence. Most of its website is extensions of its own programs, news included. The only reason the website is so popular is nothing to do with the dwindling subsidy from the public purse, but because it’s far better edited, designed, written, and kept up to date than the sites commercial stations and newspapers offer. I’m glad my taxes are helping to pay for such a stellar service.

  11. Three things, CBC funding has been slashed regularly with the current government and even the liberal one before it, so you could surmise that whatever percentage it has allocated to developing online content is similarly cut. Second, CBC’s content has long been award winning, both entertainment and news content, public attention to it’s content on the web could very well be a well-deserved consequence of authenticity and quality of broadcast. Thirdly, the decision to allocate the five percent of their budget to their web presence and putting the strength of talent that are drawn to CBC behind it could be an indication of their understanding of the fluid and user centered nature of the media. I think it speaks of CBC’s understanding of the importance of their audience as an active part of the organization, a huge population who very much have something important and notable to say. You could also surmise that CBC has been a public broadcaster or media outlet that branched into TV when it became available, that the internet is simply a media outlet for a broadcaster keeping pace with worldwide communications, and not having a media presence would be ludicrous and foolhardy. The purpose of a publicly funded media outlet (a term adopted by the media no doubt to be more inclusive than the outdated term Broadcaster in the advent of the internet) is to protect reporting from economic sanctions by advertisers who find content deleterious to their continued success, and is a necessary safeguard for providing an overall news media picture that isn’t overwhelmingly controlled by economic forces.

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